Bonneville Dam

South structure of Bonneville Dam on the lower Columbia River.      

BPA moved a step closer to joining the Western EIM on Sept. 26, by signing an implementation agreement with the California ISO that will allow the agency to further consider participating in the market.

The agency released a record of decision the next day that addressed several policy issues and topics related to its EIM participation. The ROD comes after the agency received 28 comments from stakeholders, all in favor of continuing to study joining the market.

Elliot Mainzer, BPA administrator, said in the ROD that the power marketing agency's focus will now shift from deciding whether to join the EIM to figuring out how to implement EIM operations into BPA's operations, transmission tariffs and rates, an effort already underway.

This process is scheduled to end with a closeout letter in late 2021 that will determine whether joining the EIM aligns with principles laid out in the ROD.

A public comment period will follow the letter, and the process will conclude in fall 2021 with a final Bonneville decision on whether to join the Western EIM.

An independent third-party analysis by Energy and Environmental Economics of Bonneville's proposed participation in the Western EIM forecasts a $29 million to $34 million annual net dispatch benefit, against ongoing annual expenses of $6.9 million. That benefit level would allow for quick recovery of an estimated $30 million to $35 million in startup costs (WPW No. 17 [6]).

Several important market issues remain that CAISO will need to work out for BPA to participate. But Mainzer applauded CAISO's efforts thus far to address Pacific Northwest issues related to pricing for hydroelectricity.

CAISO recently filed with FERC a new locational marginal price mitigation section in its open access transmission tariff, which includes a fourth default energy bid for hydro resources.

"This change in the EIM rules addresses one of Bonneville's significant concerns with the EIM," Mainzer said in the ROD. "Bonneville expects this strong partnership with the CAISO will continue as we move through implementation toward EIM participation."

Mainzer also said in the ROD the EIM is just one aspect of a well-designed energy market and that "additional mechanisms" will be required to compensate Bonneville for the capacity value of its flexible, carbon-free hydropower.

"To that end, Bonneville sees the CAISO process to develop a day-ahead market for flexible capability, potential improvements to resource adequacy requirements, and potentially extending the CAISO day-ahead market to EIM Entities (known as EDAM) as positive future steps toward a comprehensive, well-designed market," Mainzer said in the ROD.

The ROD is focused on Bonneville's potential EIM participation, but Mainzer said that "seeing these other market initiatives materialize will be of tremendous value to Bonneville, its stakeholders, and the Pacific Northwest.

"Signing the Implementation Agreement will also allow Bonneville to participate on equal footing with other EIM Entities in the developmental stages of these other initiatives," he added.