The four U.S. senators representing Oregon and Washington said the Bonneville Power Administration has so far failed to make a financial case for joining SPP’s Markets+, a condition they contend should be the key driver of the agency’s decision to participate in a Western day-ahead market. 

Democratic Sens. Jeff Merkley (Ore.), Ron Wyden (Ore.), Maria Cantwell (Wash.) and Patty Murray (Wash.) offered that assessment in a Dec. 13 letter addressed to BPA Administrator John Hairston. It was the second such letter from the delegation since July cautioning Hairston to “act carefully and deliberately” as the federal power marketing administration weighs its choice between Markets+ and CAISO’s Extended Day-Ahead Market (EDAM). 

“Any market choice must be driven by a strong business case; thus far, BPA has not been able to make this case for Markets+,” the senators wrote. “This is particularly worrisome during a time of steep growth in rates, both for public and investor-owned utilities, across the Northwest.” 

In their July 25 letter, the senators urged BPA to delay its final decision on a market beyond its November deadline. That was followed a month later by the agency’s announcement that it would postpone its draft decision until March 2025 and issue its final decision in late spring. (See BPA Postpones Day-ahead Market Decision Until 2025.) 

It’s unclear what will be the impact of the most recent letter, which comes six weeks after BPA staff said they had “not shifted” their preference for Markets+ despite the release of a much-anticipated BPA-commissioned study by consulting firm Environmental and Energy Economics (E3). (See BPA Sticks to Markets+ Leaning Despite Study Showing EDAM Benefits.) 

That study, which relied on production cost analyses, found BPA would realize the most significant net economic benefits — $251 million in 2026 declining to $147 million in 2035 — in a “Westwide Market” scenario that includes California. 

E3 found BPA’s worst outcomes would occur in a scenario in which the EDAM includes California, NV Energy, PacifiCorp, Portland General Electric, Seattle City Light and Idaho Power, where the agency could be expected to see $30 million in benefits in 2026, but then incur $23 million and $28 million in net costs, respectively, by 2030 and 2035. 

But BPA staff played down those findings — and those of an earlier Brattle Group study showing the agency would realize $65 million in annual benefits in EDAM versus $83 million in losses in Markets+ — contending that the production cost models did not capture the complete economic picture. Staff also continued to emphasize the importance of the independent governance and market design of Markets+. (See BPA Execs Lay out Markets+ Benefits, Risks, Reasons.) 

BPA’s position rankled Northwest electricity sector stakeholders who have advocated for EDAM, some of whom evidently have the ears of the region’s politicians. 

In their letter, the senators wrote that the recent studies “have provided important modeling to help shape BPA’s decision-making” and added that “there is no scenario that E3 evaluated that demonstrated net financial benefits by joining Markets+,” while also pointing to the Brattle findings. 

And while the senators acknowledge the importance of independent governance and the potential benefits of a market design stemming from that arrangement, they also argue that “those advantages cannot come at a steep financial cost to ratepayers.” 

“The purpose of organized markets is to improve transmission and generation efficiencies across the market, reducing costs and increasing reliability, while maintaining the integrity of greenhouse gas accounting for participating states,” the senators wrote. 

They echoed another criticism recently made by the region’s EDAM supporters: that BPA appears willing to foot its $25 million share to fund the Phase 2 implementation activities for Markets+ while declining to contribute to the West-Wide Governance Pathways Initiative’s effort to bring independent governance to CAISO’s markets. 

“While BPA has said that this funding decision is not a commitment to join Markets+, SPP has characterized it otherwise, stating that ‘[implementation] activities cannot begin until prospective market participants execute Phase 2 funding agreements, essentially committing to join Markets+,’” the senators wrote. 

“This, coupled with BPA’s decision not to invest a significantly smaller contribution to developing the West-Wide Governance Pathways Initiative, has created the impression among many stakeholders that BPA has already chartered a course despite data from these studies showing that joining Markets+ will increase costs to ratepayers,” they said. 

The letter concludes with the senators asking BPA to respond to seven questions by the end of the year, including: 

• • How will the agency ensure that its obligations under its guiding statutes will not be compromised by joining a day-ahead market? 

• • At what point might BPA determine that the financial cost outweighs any other net benefits from joining either market, and might the agency consider not joining a market as a “viable solution” in the short or long term? 

• • Is BPA’s $25 million funding decision for Phase 2 of Markets+ “essentially a market decision,” as characterized by SPP, and why has the agency declined to invest $25,000 in the Pathways Initiative? 

The senators also asked if BPA plans to perform any additional economic analysis and what process it has developed to engage with the region’s tribes. 

‘Careful Scrutiny’

When reached for comment, BPA told RTO Insider it would not discuss the letter before providing its formal response, but the agency’s website already hosted a Dec. 16 response from the Portland, Ore.-based Public Power Council (PPC), which represents BPA’s “preference” customer base of publicly owned utilities, most of whom strongly support Markets+. (See Public Utilities Urge DOE to Respect BPA’s Day-ahead Decision Process.) 

In its letter, the PPC argued that the cost increases found in the E3 and Brattle studies “merit careful scrutiny” and noted that the group had recently met with the senators and their staff to share that the study models “do not fully account for the qualitative and quantitative benefits that Markets+ provides, particularly for BPA, Northwest utilities and many utilities in the Southwest.” 

“In fact, the analytical assumptions underpinning these modeled approaches omit many real-world differences between Markets+ and EDAM that have significant reliability and economic consequences to Northwest ratepayers that far exceed any estimates produced by E3 and the Brattle Group,” the PPC wrote. “Beyond the limited scope of the analysis, the underlying assumptions can drastically change the results.” 

The PPC noted also that BPA “sensitivity” cases based on E3’s analysis (appearing on slide 45 in a Nov. 4 presentation) showed “more accurately reflect the actual cost of potential market seams” between Markets+ and the EDAM, “and those results increased BPA Markets+ benefits by over $150 million — to levels on par with those stemming from BPA’s participation in EDAM.” 

PPC additionally contended the studies overstated the benefits of BPA’s participation in CAISO’s Western Energy Imbalance Market while downplaying the benefits from the price transparency, congestion management and ability to optimize the use of the agency’s transmission network, among other things, from Markets+. 

As has often been the case, BPA’s largest preference customer, Seattle City Light, offered a view starkly different from its fellow public utilities. (See Markets+ Leaning ‘Alarming,’ Seattle City Light Tells BPA.) 

In an email to RTO Insider, City Light — which operates its own balancing authority area and has signaled its intent to join EDAM despite BPA’s leaning — said it “values the delegation’s leadership in helping to focus the BPA market decision on reliability, affordability and reduction in carbon emissions.” 

“We appreciate the emphasis on the purpose of organized markets — that being instituting efficiencies, both economic and physical, in the operation of the region’s transmission system and generation fleet,” City Light wrote. “We agree that BPA’s continued leaning towards an inferior economic option is worrisome especially in light of their proposed 10% increase in power rates and nearly 30% rate increase in point-to-point transmission rates.”