The Bonneville Power Administration remains on track to issue a decision on which day-ahead market to join by May 2025 despite calls to delay until fall to give itself more time to reconsider its leaning toward SPP’s Markets+.
BPA spokesperson Doug Johnson told RTO Insider on Jan. 6 that the agency is “not contemplating a delay at this time,” while urging stakeholders to view recent production cost models with some skepticism.
Johnson’s comments followed concerns presented in a Dec. 19 letter from Northwest environmental organizations that joining Markets+ instead of CAISO’s Extended Day-Ahead Market (EDAM) could lead to multimillion-dollar cost increases for the agency and its customers.
Ten organizations, including Northwest Energy Coalition, Natural Resources Defense Council, Sierra Club and Earthjustice, signed the letter, which was published in support of four U.S. senators from Oregon and Washington who voiced similar concerns in separate correspondence with BPA.
Antoine Lucas, SPP vice president of Markets+, said in an email that the RTO is “disappointed the letter from the Northwest NGOs perpetuates mischaracterizations of the Markets+ design, benefits and governance structure in ways that have already been addressed.”
BPA previously stated it will issue its market decision by May 2025. The agency has leaned toward SPP’s Markets+, pointing mainly to its governance framework, which BPA believes provides greater independence from California state influence compared to the EDAM option.
However, the environmental organizations urged BPA to delay its decision to at least fall 2025 “to accurately assess the governance structures proposed by EDAM and Markets+ and to ensure that any decision delivers the greatest economic and other benefits to our states and region,” according to their letter.
The organizations argued that Markets+ also faces governance issues. They pointed out that FERC has yet to approve Markets+’s proposed governance structure and that the market’s independent panel “is subject to the direct control of SPP.”
Meanwhile, the West-wide Governance Pathways Initiative, a group of stakeholders, is addressing governance concerns in EDAM by developing proposals to create an independent entity to govern the EDAM and WEIM markets, the letter stated.
In his statement to RTO Insider, Lucas said SPP “remains confident FERC will approve the Markets+ tariff, and we look forward to continued conversations about the competitive benefits Markets+ brings to Western stakeholders and their customers.”
Financial Considerations
BPA also participates in CAISO’s Western Energy Imbalance Market, which has “generated over $6 billion in benefits,” according to the letter. The agency’s investments in WEIM could go to waste in the Markets+ scenario, the groups contended.
Additionally, a study by Environmental and Energy Economics found that EDAM could generate economic benefits “ranging from $65 [million to] $221 million per year compared to Markets+,” the organizations wrote.
BPA has questioned this finding. In correspondence with Seattle City Light, the agency’s administrator, John Hairston, said these numbers are accurate only under a scenario in which there is only a single West-wide market rather than the more likely scenario that there will be multiple markets in the future.
Johnson reiterated this point to RTO Insider, saying, “The model benefits under a single West-wide market footprint should be viewed with some skepticism.”
“For example, a production cost model study does not capture the material impacts of resource adequacy requirements, greenhouse gas accounting, fast-start pricing, scarcity pricing, bid caps, market power mitigation, out-of-market actions and other differences in market design between EDAM and Markets+,” according to Johnson.
He added that those models also fail to consider changes in market rules “or the lack thereof, that are influenced by a given market’s governance structure, which may impact and influence market outcomes depending on the process for updating market rules.”
He also targeted the letter’s claim that BPA considers spending “$25 million in customer money” to fund Phase 2 of the Markets+ proposal despite expecting “to miss revenue projections for this year by $375 million, leading to $280 million in losses.”
The letter relies on information from BPA’s second quarter business review for 2024, and Johnson said the organizations have “extrapolated that into a completely different financial operating year.”
“We would absorb that $25 million cost if we were to execute a Phase 2 agreement with SPP this year, and we haven’t even done a first-quarter report yet, so we’re not even talking about our finances this year,” Johnson said.
A spokesperson for U.S. Sen. Jeff Merkley (D-Ore.) — one of the four lawmakers who signed the initial letter that spurred the environmental organizations’ support — told RTO Insider that Merkley “is following this discussion closely.”
“His priority remains ensuring there are deliberate processes to maximize the benefits for Oregon families,” the spokesperson added.
