BPA To Join Southwest Power Pool's New Day-Ahead Energy Market

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Written by Jill Sampson for Industrial Info Resources (Sugar Land, Texas)--Bonneville Power Association (BPA) (Portland, Oregon) has released a draft policy announcing its intention to join the Southwest Power Pool's (SPP) (Little Rock, Arkansas) Markets+. BPA is a federal agency that delivers hydropower produced in the Columbia River Basin to communities across the U.S. Northwest. SPP manages the electric grid and wholesale power market for the central U.S.

BPA would join more than 30 other Western Balancing Authorities and power producers including Arizona Public Service Company (APS) (Phoenix, Arizona), Tucson Electric Power Company (TEP), and the NW Energy Coalition (Seattle, Washington). The new Markets+ bundles centralized day-ahead and real-time unit commitments that go beyond the current western imbalance market service and has the advantage of a fully independent governance structure.

BPA, which released its draft policy March 5, currently participates in the California ISO's (CAISO) (Folsom, California) driven Western Energy Imbalance Market (WEIM). However, BPA expects the SPP system to better fit its needs for both the real-time market transactions and day-ahead bid generation, load estimates, and optimizing for constraints, including transmission availability. BPA has also been critical of CAISO's non-independent governance systems that rely heavily on the California Legislature.

The BPA manages the sale of electricity from 31 federal dams and a nuclear plant in the Columbia Basin. The agency also manages 15,000 miles of transmission lines to move that electricity through the Pacific Northwest. This makes the BPA one of the largest wholesale power and transmission providers in the Western U.S. As such, decisions that it makes about market participation will play a large role in the energy landscape.

Participation in a day-ahead market would allow Bonneville continued access to a range of trading partners, without increasing hurdles and barriers to transact, so it can continue to carry out its objectives in the day-ahead and real-time horizons. Currently, it anticipates fewer bilateral trading options and less liquidity without moving to SPP.

By joining a transparent day-ahead market BPA anticipates optimization based on access to a more transparent picture of regional operations and tradeoffs, which aids both financial transactions and operational awareness. Bonneville will have better access to resources and loads across a broader footprint compared to current systems. This allows for its more flexible hydroelectric resources to respond to the needs of loads across that footprint and offers broader access to a larger portfolio of resources as the profile of solar, wind, hydro, nuclear, and fossil-fuel changes over time.

Bonneville will gain a larger view of the transmission grid in the SPP market as well, which allows it to manage congestion, constraints and reliability needs by dispatching generation resources to avoid transmission curtailments and costs.

BPA is obligated first to sell power to 140 consumer-owned utilities in the region but then can sell any excess power to other consumers and private utilities in the western U.S. power grid (WECC). BPA has been selling this excess power via California's real-time energy market, managed by CAISO, along with most other WECC Balancing Authorities. Bonneville is also obligated to advocate for the strongest market design that will benefit the agency and its customers, which are not all California centric.

BPA expects to issue a final record of decision on SPP in May.

PacifiCorp (Portland, Oregon), PG&E Corporation (NYSE:PCG) (Oakland, California) and Seattle City Light (Seattle, Washington), are choosing to stay with California in its new day-ahead market. The large utilities are concerned that when BPA is removed from the Western power pool, prices across the region will increase and create complexity in the Western Grid. Stakeholders argue that this move would potentially cost customers in the Pacific Northwest billions in the next decade. BPA said different day-ahead markets have different cost profiles and its analysis shows although the initial costs of joining SPP are higher than CAISO's, the SPP costs are lower over time. Also, possibly at odds with Bonneville's vision, PacifiCorp's 2023 Integrated Resource Plan calls for building 2,500 miles of new transmission lines through the Energy Gateway transmission expansion plan to move power from its generation centers in the Mountain West to load centers near the West Coast that are also served by Bonneville Power.

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