BPA announces intention to split with California and join new Southwest energy marketFree

The nonprofit federal administration that provides one-third of the Northwest’s electricity is preparing to part ways with its current Western energy market and sell its excess energy to companies and electric cooperatives as far away as Louisiana.

Bonneville Power Administration officials announced in a draft policy proposal released Wednesday that they intend to leave the California-controlled “real-time” market they’ve participated in since 2022 and join a new “day-ahead” energy market based out of Little Rock, Arkansas.

The move sparked concern and criticism from public utility commissioners and lawmakers in Oregon and Washington, as well as large investor-owned utilities in the region who say it will drive up rates for their millions of customers and cause grid reliability issues.

This means a new slate of customers would be able to buy power from BPA that has previously only been available to utilities operating in the 10 states covered by California’s “real-time” system, which includes all or parts of Oregon, Washington, Arizona, California, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming. Although California is developing its own “day-ahead” market, BPA does not intend to join it.

BPA officials will issue a final decision in May on joining the Southwest Power Pool’s Markets+ system, instead of California’s Extended Day-Ahead Market, or EDAM, system. BPA officials expect by October 2028 the agency would be operating in the Southwest Power Pool.

If BPA joins the Southwest Pool, it would still sell energy first to the 140 consumer-owned utilities in the Northwest that it is legally required to serve before selling its excess power. BPA would also continue to sell surplus power to Northwest utilities.

Controversy over control

BPA officials have asserted for years that California has too much power over the region-wide energy system because the California Independent System Operator is governed in part by the California Legislature.

The Southwest Power Pool, on the other hand, is governed by a board that includes power producers and utilities. It serves all or some of Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming.

Critics of BPA’s decision to leave the California market and join the Southwest Power Pool say that it would cost Northwest utilities — serving the bulk of residents in the region — big money that they’ll have to pass onto their consumers.

With BPA out, the pool of energy that Western utilities can purchase from would be smaller and from potentially more expensive sources. It would also delay a long-awaited dream of creating a truly regionally integrated Western grid that could help states collectively manage big transmission issues, boost clean energy generation and address safety issues, lawmakers said.

Oregon’s U.S. Sen. Ron Wyden, a Democrat, has called on BPA for months to reconsider its inclination towards the Southwest Power Pool, which several analyses — including a BPA-commissioned study — have shown will cost more upfront and could lead to higher electricity costs for ratepayers across the Northwest.

“This hasty draft decision by the BPA is not good news for electricity consumers in Oregon and the Pacific Northwest,” Wyden said in an emailed statement.

Kandi Young, a spokesperson for Oregon’s Public Utility Commission, which has also been critical of BPA’s leanings towards the Southwest Pool, said in an email that model’s in the BPA-commissioned study show the agency would save customers in the Northwest $4.4 billion in the next decade by choosing to join California’s day-ahead market as opposed to the Southwest Power Pool.

“We look forward to further discussion with BPA on how these regional benefits should be viewed alongside the factors they have prioritized,” she said.

Doug Johnson, a senior spokesperson for BPA, said in an email that the analysis shows higher upfront costs in joining the Southwest Pool but lower costs over time, and that California’s EDAM market would cost more on an annual basis after implementation.

A power struggle

The Bonneville Power Administration is a federal agency responsible for selling hydroelectricity generated from 31 federal dams and a nuclear plant in the Columbia Basin at wholesale rates. BPA is not supposed to collect a profit on its electricity sales, which currently power more than one-third of all the electricity used in the Northwest.

BPA is obligated first to sell power to 140 consumer-owned utilities in the region, and then it sells the excess to other consumer and private-investor owned utilities in Oregon, Washington, Idaho, and areas of Montana, California, Nevada, Utah, and Wyoming. It delivers that electricity via 15,000 miles of transmission lines in oversees in the region, representing 75% of the Northwest’s high voltage transmission system.

In announcing its intent to join the Southwest Power Pool, BPA has the support of most of the utilities it serves by law, including the backing of the Portland-based Public Power Council, a nonprofit industry group representing consumer-owned utilities in the Northwest that get priority purchase power from the Bonneville Power Administration.

Since 2022, BPA has sold its excess power to other Northwest utilities and California’s real-time energy market, managed by CAISO. The California-based market is responsible for energy trading across about 80% of the electrical grid in 10 Western states.

Most of that energy trading happens via a supercomputer in Folsom, California, which can move energy, such as that coming from BPA, where it’s needed in real time and shut down power where it could be dangerous in real-time, like during a wildfire. California, like the Southwest Power Pool, is creating a new day-ahead market where instead of buying, selling and moving energy in real time, members can trade and prices can be negotiated in advance.

The biggest utilities in the West, such as PacifiCorp, PGE and Seattle City Light, are choosing to stay with California in its new day-ahead market. Some, such as Puget Sound Energy and Avista, have been waiting to see what BPA decides.

The large utilities are concerned that if BPA is removed from the Western power pool, it will drive up prices across the region and create expensive inefficiencies.

Letha Tawney, one of three commissioners on the Oregon Public Utility Commission, said if BPA leaves the Western market, it will create needless problems. If a transmission line trips off because of a wildfire, or a coal plant goes down, the supercomputer in Folsom can quickly reroute energy across the region. Without BPA on its radar, a system operator in California would have to call operators in Little Rock to ask what each was seeing on their own maps of the Western energy load.

To try to address these concerns, public utilities commissioners, utilities officials and state leaders have created an initiative meant to move some governance away from California and to spread it more broadly across members.

BPA officials have said they appreciate the effort — called the “Pathways Initiative” — but still see California as legislatively bound to serving its state’s customers before the region’s customers.

“Bonneville staff is concerned that the vast majority of the benefits realized from creating a Westwide market would flow to California,” officials wrote in their recommendation.

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