The Bonneville Power Administration will be on the hook for nearly $27 million in funding for the next phase of SPP’s Markets+ — and potentially more depending on the market’s final footprint, according to a document the RTO filed with FERC on Feb. 21 (ER25-1372). 

BPA’s funding obligation — and that of other Markets+ funders — appears in a table appended to the end of the Markets+ Phase 2 Funding Agreement, which SPP submitted to FERC to gain approval for its plan to obtain third-party financing to cover the $150 million needed for the Phase 2 implementation process for Markets+. 

The agreement details the purpose, terms and timelines of the financing and outlines how Markets+ funders will collateralize the loan up front and then ultimately fund its repayment through future market transactions. Funders who back out before the market goes live would still be liable for paying their share. 

The agreement contains a few provisions that seem specifically tailored for BPA. For instance, BPA’s status as a federal agency prohibits it from posting collateral, so the SPP will instead require BPA to submit a “letter of assurances” committing the agency to cover its obligation. 

Another apparent accommodation for BPA is the carve-out Feb. 13 to Aug. 12 as “Stage 1” of Phase 2. During that stage, Markets+ funders will only be obligated to commit to two-thirds of the total spending for Phase 2 — or $100 million. That will allow a funding entity to withdraw from Phase 2 before incurring full charges, a potentially important option for BPA, given that it has committed to funding the market before issuing an official decision on whether to actually join it. 

Unclear Liability

But regardless of whether BPA will ultimately be liable for its full share of Phase 2 or only a portion, the Markets+ agreement indicates the agency will likely be obligated to cover more than the $25 million that BPA staff had previously estimated. 

The table at the end of the agreement lists the eight entities that have so far publicly committed to funding Phase 2, including BPA, Powerex, Arizona Public Service, Tacoma Power, Grant County Public Utility District (PUD), Chelan County PUD, Salt River Project and Tucson Electric Power. 

Absent from the table are two investor-owned utilities known to be leaning in favor of Markets+ — Puget Sound Energy (PSE) and Xcel Energy’s Public Service Company of Colorado (PSCo), as well as El Paso Electric (EPE), which last month committed to join the SPP market despite not having participated in its Phase 1 development process. (See El Paso Electric to Join SPP’s Markets+ in 2028.) 

The table shows BPA’s “Stage 1” obligation comes to about $26.8 million in a market footprint consisting of the eight committed funders, slightly above — but in line with — BPA’s previous estimate for its Phase 2 implementation costs. 

But another column for full “Phase 2” obligations, which are calculated off the $150 million Phase 2 total, shows BPA’s share increasing to nearly $40.2 million, a figure agency staff did not broach during funding discussions at its most recent day-ahead market stakeholder workshop in late January. (See BPA Considers Impact of Fees in Day-ahead Market Choice.)

Industry sources have told RTO Insider that the $40.2 million figure is likely an outlier and that its Phase 2 funding exposure should decline once entities such as PSE, PSCo and EPE commit to funding, although those commitments are not guaranteed and the agency’s final obligation isn’t clear. 

BPA expressed confidence that its funding obligation will decrease as other parties sign on to Markets+. 

“The $40.19 million represents BPA’s total share of the Phase 2 development costs based on the current list of funding participants,” agency spokesperson Nick Quinata said in an email. “BPA believes, based on discussions with other Phase 1 participants, that other entities will commit to Phase 2 funding, which will lower each entity’s liability.” 

“Each entity’s pro rata share will be recalculated to account for any additional entities that execute funding agreements once their internal and/or regulatory processes are complete,” SPP COO Antoine Lucas said. 

Michael Linn, director of market analytics at the Public Power Council (PPC), which represents the publicly owned utilities comprising BPA’s “preference customers,” said his group isn’t concerned about the $40 million figure. 

“PPC expects additional entities will announce their intention to fund Phase 2 over the coming months and BPA’s costs will be close to the original anticipated costs,” said Linn, whose group has advocated for the agency to choose Markets+ over CAISO’s competing Extended Day-Ahead Market (EDAM). (BPA staff have estimated EDAM will require lower startup costs than Markets+ but potentially higher annual costs.) 

At least one of those announcements appears to be pending. Earlier in February, PSCo filed with the Colorado Public Utilities Commission for permission to join Markets+. The Colorado utility is expected to pay about $20 million to help fund Phase 2. (See related story, PSCo Seeks to Join Markets+.) 

‘Mousetrap Situation’

Both Linn and Quinata said the staged funding approach outlined in the Markets+ funding agreement should work to BPA’s advantage. 

Linn said it would contain the agency’s costs as uncommitted entities “work through their internal processes prior to executing the agreement,” while Quinata noted it “limits each party’s liability should Phase 2 discontinue for any reason.” 

But Fred Heutte — senior policy associate with the Northwest Energy Coalition, which has urged BPA to join EDAM — cautioned that the timelines established in the agreement effectively bind the agency to joining Markets+ before it issues its draft market decision in early March and its final “letter to the region” on the choice in May. 

Speaking with RTO Insider, Heutte pointed out that timelines in the agreement require BPA to provide its “letter of assurances” committing to Phase 2 funding by Feb. 28, a week before it issues the draft letter March 6. 

“So the timing on this is what’s really interesting, because by the time that Bonneville issues the draft letter to the region, they’ll already have put the financial commitment on the table. It’s not just something they’re considering —they’re already in the game,” making them liable for their full obligation if they pull out after Stage 1, he said. 

Heutte laid out a potentially complex scenario in which SPP begins investing in and staffing up for Phase 2 after securing financing this spring, creating an “immediate contingent liability” for the RTO and Markets+ funders such as BPA. Launch of the market in the first half of 2027 would create yet another contingent liability for BPA as it works through its next rate case, because it would then be obligated to begin repaying its portion of the loan whether or not it chooses to participate in the market. 

“This is a mousetrap situation. Bonneville’s going to say, ‘Well, you know, we did what we were asked to do, and now we’re kind of in, so we have to stay in,’” he said. “And I have a feeling that, while they are still under a tremendous amount of pressure to have a letter [to the region] say, ‘Well, we’re not going to decide right now; we’re just not going to make a market choice,’ which is what we [NWEC] strongly prefer. The financial hook on this letter of assurances is a pretty big one.”