The Bonneville Power Administration’s insistence on favoring joining SPP’s Markets+ over CAISO’s Extended Day-ahead Market (EDAM) is “alarming” and could lead to $221 million in economic advantages going up in smoke, Seattle City Light argued in a Nov. 14 letter addressed to BPA Administrator John Hairston.

Dawn Lindell, CEO of City Light, argued in the letter that BPA is ignoring a study by Energy and Environmental Economics (E3) — commissioned by the agency itself — showing that BPA would gain between $69 to $221 million per year in economic advantages if it joined CAISO’s EDAM over Markets+.

Instead, BPA continues to argue that joining Markets+ would provide a much more favorable governance structure, despite ongoing efforts to alleviate those concerns in CAISO’s EDAM, Lindell wrote.

“At a time when City Light and other utilities throughout the region are working to contain costs for our customers, and against the backdrop of proposed double-digit rate increases for both BPA Power and Transmission customers, BPA’s disregard for the economic benefits to customers is alarming,” Lindell stated in the letter, on which Washington’s congressional delegation and U.S. Energy Department Deputy Secretary David Turk are copied.

The municipally owned utility is one of BPA’s largest “preference” customers and has been outspoken in its disagreement with the agency’s “leaning” toward Markets+. The majority of BPA’s customer base of publicly owned utilities have urged the agency to join the SPP market, something agency officials have said will factor heavily into its decision.

Representatives for BPA did not immediately return a request for comment.

The letter comes shortly after BPA’s Nov. 4 day-ahead market participation workshop, in which participants discussed E3’s findings. E3 estimated the comparative benefits of joining either Markets+ or CAISO’s EDAM under various market footprint scenarios and tested under different sensitivities, such as conditions of low hydro or stressed load. (See Rising Tensions Evident at BPA Day-ahead Markets Workshop.)

The study, which supplements the Western Markets Exploratory Group (WMEG) study that E3 produced for BPA in 2023, found the agency would gain significantly more financial benefits from participating in EDAM rather than Markets+, with the largest projected take in a single, West-wide market: $251 million in savings in 2026 — compared with a “Business as Usual” (BAU) case — declining to $147 million in 2035.

But in an Oct. 31 press release announcing the study results, BPA made clear the findings would not shift its leaning in favor of the SPP market, although they would still factor into its final decision. (See BPA Sticks to Markets+ Leaning Despite Study Showing EDAM Benefits.)

Instead, BPA officials have pointed to other qualitative factors not captured in the E3 study, such as the benefit of participating in a market with independent governance from the get-go.

Other factors BPA has cited are more quantitative but still difficult to estimate in a study, such as the absence of scarcity pricing in the EDAM, market power mitigation practices, the impact of energy bid caps and the potential for CAISO — as both market operator and balancing authority participating in its own market — to “bias” operations in its own favor during stress events.

However, Lindell made clear in the letter that City Light remains unpersuaded, claiming that BPA has refused to meaningfully consider both options. For example, BPA has yet to provide any funding to the West-Wide Governance Pathways Initiative, launched to address governance concerns around the EDAM, while committing $25 million to fund Phase 2 of Markets+, Lindell noted.

“If BPA were conducting a fair analysis of market options, we would expect to see them engaging in and funding solutions to each market equally,” Lindell wrote. “Instead, we have seen BPA continue to favor Markets+ and provide significant staff time and funding to this market, while identifying concerns with EDAM but not engaging in efforts to resolve those concerns despite the consistently better economics related to EDAM.”

Additionally, the Markets+ footprint is limited and fragmented due to utilities’ preference for EDAM or the Western Energy Imbalance Market (WEIM), which could “unnecessarily increase costs and risks for BPA and its customers,” Lindell argued. She added that the fragmented market footprint poses reliability issues, especially with large loads looming on the horizon.

The E3 study also revealed that remaining in WEIM and joining no DAM “produced higher benefits for its customers than joining Markets+,” according to the letter.

“We believe markets are a way to mitigate upward rate pressure and to promote efficient usage of the region’s transmission system,” Lindell stated. “However, joining no DAM appears to be more prudent than joining the wrong market.”