The Bonneville Power Administration’s newly appointed Administrator and CEO Travis Kavulla recently issued a letter and an accompanying statement of principles related to the governance of Western electricity markets on behalf of BPA.
In the Sept. 3 letter sent to the Regional Organization for Western Energy, Kavulla notes BPA chose to pursue development of a wholesale centralized power market through the Southwest Power Pool's Markets+ alongside other utilities in the region, following the adoption of Bonneville's 2025 Day-Ahead Market Policy.
“Markets+ on the one hand represents a reversal of a signature accomplishment of the region, the real-time WEIM. On the other hand, the Markets+ effort allowed us to collaboratively design a market from the ground up, tailored to values of Bonneville and Pacific Northwest consumer and publicly owned utilities,” he wrote.
WEIM refers to the Western Energy Imbalance Market of which BPA is a participant.
“The Markets+ footprint offers less depth and liquidity than a more fully unified grid, but at the same time it seemed to provide greater self-determination and a market design better suited to Bonneville's needs,” Kavulla noted.
The 2025 Day-Ahead Market Policy and Record of Decision reasoned that a smaller market was worth that trade.
Kavulla said that as BPA Administrator, he has committed to review this course of action “with fresh eyes and my evaluation is based upon three key principles: 1) the ability to trust in the durability of the rules governing the market, 2) the depth and liquidity of the market, and 3) the impacts on reliability and economic efficiencies resulting from new seams between adjoining markets.”
Seams are a Major Issue for BPA
Kavulla said that seams are a major issue for Bonneville “because our transmission system serves more than 400 customers, most of whom take service that transits our grid as opposed to ‘sinking’ into our network.” He noted that Bonneville has direct interfaces with 18 other balancing authorities.
“The presence of two organized electricity markets adds further complications to this already complex system,” he wrote.
In many places, Bonneville transmission that would be configured in Markets+ overlays the retail service territory of utilities otherwise heading toward the California ISO’s Extended Day-Ahead Market (EDAM) evolving out of WEIM. “In other places, the situation exists in reverse, with Bonneville a power supplier using other utilities' transmission systems.”
Kavulla said that this “poses commercial complications, of course, but it also poses questions for the efficiency and reliability of the markets. To ensure transmission service is provided safely within its system operating limits, particularly where participants across multiple markets maintain transmission rights, Bonneville may have to withdraw certain transmission capacity from optimization within the market-an outcome antithetical to the ostensible goal of efficiently utilizing system infrastructure, which is the bedrock of attempts at well-functioning electricity markets.”
While the existence of seams is inevitable, “the contiguity of a market across significant transmission paths would seem a better point of departure than further balkanization in the West's fragmented grid,” he wrote.
By the same token, “the depth and liquidity of a more unified marketplace allow for greater trade and investment opportunities.”
Based on the latest Energy Information Administration data, average net generation in EDAM totaled 39 GW versus 19 GW in Markets+, and average demand in the same year totaled 48 GW in EDAM versus 19 GW in Markets+, Kavulla noted.
“Moreover, the supply of resources in EDAM is increasing and it has significant transmission connectivity with Bonneville as a result of our previous investments in transmission. As with a more seamless market, a market with greater volumes does not necessarily mean a more efficient market, but it provides a foundation for that objective,” Kavulla said.
He said that what could overwhelm these two aspirations -- a more seamless market, with greater depth and liquidity -- is governance.
In Bonneville's prior evaluation, Markets+ was the clear winner in this respect. “Yet, notably, in just the last year, the State of California revised its laws to offer an opportunity for WEIM and EDAM to be governed by a separately incorporated regional entity with a Board of Directors appointed through an independent process rather than by state actors. This letter constitutes from my perspective what would be necessary for Bonneville to consider joining a market that is governed regionally but operated by the California Independent System Operator (CAISO),” Kavulla said.
Near-Term Decisions
Bonneville faces near-term decisions on whether to further its earlier policy direction towards Markets+, he said.
“Before the end of the year, Bonneville intends to issue a new decision either to continue on that course, to pivot toward EDAM, to remain in its status quo, or to adopt a different approach to markets that suits Bonneville and its customers. In the interim, and described with certain specific steps herein, if Bonneville sees concrete actions consistent with the prerequisites outlined below, I intend to propose a change of our current course of action in the next draft decision that Bonneville releases.”
Before describing what he regards as necessary for that opportunity to materialize, Kavulla said some additional background about how this market is governed must be highlighted.
CAISO currently serves as the Balancing Authority and Regional Transmission Organization for much of California's electricity load and resources and it also operates today's real-time market (the WEIM) across the wider West.
California's governor appoints, subject to confirmation by the upper chamber of the California legislature, CAISO's Board of Governors.
Through the CAISO Bylaws and Western Energy Markets (WEM) Governing Body Charter, the CAISO Board of Governors delegates primary authority over WEIM and EDAM to the regionally appointed WEM Governing Body.
The WEM Governing Body governs WEIM and decides regional market questions, leaving the California-appointed CAISO board in a largely ministerial capacity limited to making such tariff filings to the Federal Energy Regulatory Commission that the WEM Governing Body may direct.
“Currently, there is no substantial, functional separation of CAISO staff between the state's CAISO Board of Governors and the regional WEM Governing Body,” Kavulla said.
“This nascent regional governing structure has been understood, since its inception, as inadequate for a more fully evolved regional market,” he wrote in the letter.
“Governing structures matter most, not during normal operations but during crises marked by high prices and tight supply. They also matter because these markets are highly complex and inevitably vulnerable to administrative decision-making that subtly, but with great consequence, puts its thumbs on the scale. In a crisis or scarcity event, a California political actor could direct appointees to override normal market procedures, or the bureaucracy could subtly bias a highly complex market toward local participants. Although California's unique status raises this topic here, these issues are generally pervasive. From coast to coast, we see examples where in the very times when a consistency of the rules and their neutral application are most important, they have been lightly regarded,” wrote Kavulla.
Realizing that in order to grow, governance must change, strides towards regionalism and independence have been made, he noted.
The Regional Organization for Western Energy (ROWE) was incorporated, and the ROWE's formation of a yet-to-be-seated Board of Directors and other bodies, such as the Pathways Launch Committee and the Regional Issues Forum, “are a testament to this promise.”
He noted that the State of California recently passed Assembly Bill 825, which allows CAISO and participating transmission owners to participate in energy markets governed by a regional organization such as ROWE.
Kavulla pointed out that both the ROWE and the legislation were still theoretical when Bonneville published its May 2025 Day-Ahead Markets Policy and Record of Decision, and Bonneville is now in a position to fully consider the latest opportunities presented.
“Healthy skepticism is warranted, as many of Bonneville's stakeholders already have advised me, but these advancements provide an undeniable opportunity,” he wrote.
As Administrator, “I would be neglecting my institution's esteemed heritage and neglectful of my duties, on behalf of Bonneville and our customers, if I did not clearly state the prerequisites within this paradigm that I regard as necessary for realizing a more contiguous Western market.”
He included the following five items, all of which he elaborates on in greater detail in the letter:
• Independent Board Leadership
• Workforce and Location
• Stakeholder-Driven Governance
• Protecting Against Unilateral State Action
• A Platform for Reliable Investment
Kavulla was sworn in on June 30 as the new administrator and CEO of BPA by U.S. Under Secretary of Energy Kyle Haustveit, becoming the 17th administrator in BPA's 89-year history.
