To Market, To Market: Evolution of Wholesale Electricity Markets in Oregon

Western Energy Imbalance Market active and planned participants.

The electricity sector is changing – coal plants are closing, more variable renewable resources like wind and solar are coming online, grid-connected battery storage is becoming more cost-effective, natural gas prices remain low by historic standards, and there’s a growing focus on equity in the sector.

In our 2020 Biennial Energy Report, we discussed how the idea of participating in and developing new wholesale electricity markets in Oregon and across the West is picking up steam. Utilities are exploring whether broader regional markets could help integrate more renewables at lower cost, better manage the closure of coal plants and other constraints on the transmission system, and support long-term capacity procurement.

In the northwest, most wholesale electricity transactions happen from utility to utility on an ad hoc basis – an entity with surplus electricity will sell to another who needs it. In other areas of the U.S., organized energy markets centrally manage the least-cost dispatch of electricity resources to utilities on day-ahead or real-time intervals to meet need. This allows for a centrally optimized system of matching buyers and sellers of wholesale electricity, in contrast to the one-off transactions that occur in the northwest today. The markets are administered by Independent System Operators (known as ISOs) or Regional Transmission Markets (known as RTOs). In the western U.S., the only ISO is the California Independent System Operator, or CAISO, which operates both day-ahead and real-time markets.

PacifiCorp joined with CAISO in 2014 to launch the Western Energy Imbalance Market, a real-time energy market. The EIM has grown quickly and now has 15 participating entities, including the three investor-owned utilities serving Oregon: PacifiCorp, Portland General Electric, and Idaho Power. Bonneville Power Administration recently issued a draft proposal to join the EIM in March 2022 and is currently seeking public feedback before it finalizes that decision. The EIM’s approach allows these non-CAISO entities to benefit from the real-time dispatch of CAISO markets without having to join CAISO. In our 2020 policy brief, we reported that cumulative savings (lower costs) to all EIM participants since 2014 had exceeded $1 Billion – as of August 2021 those savings now stand at over $1.4 Billion.

We expect electricity markets in Oregon to continue evolving in the years ahead. The Oregon Department of Energy will be taking a closer look at a potential Regional Transmission Organization in Oregon following a directive from the 2021 Oregon Legislative Session. SB 589 directed our agency to conduct a study to identify the opportunities, challenges, and barriers for Oregon entities participating in a potential RTO. Our study will be completed and submitted to the Legislature by December 31, 2021 – you can follow the process on our website and sign up for email updates.