Electricity Markets

Calif. bill to expand grid to the West fails in state Senate

A bill failed to reach the floor of the California Senate, scuttling once again efforts to transform the California Independent System Operator into a multi-state regional transmission organization.

Senate President pro Tempore Toni Atkins (D) on Friday said the bill, AB 813, would not come to the Senate floor for a vote and told media outlets, “We will continue this important discussion next year.”

Supporters have been trying on and off for years to pass legislation that would enable “regionalization.” The current bill passed the Assembly in a 78-2 vote last June. The bill was also strongly supported by Democratic Gov. Jerry Brown, who said expanding the scope of CAISO is essential in order for California to meet its greenhouse gas reduction targets.

Last week the state’s legislature passed SB 100, which calls for the state to source 100% of its electric supplies from clean sources by 2045.

Advocates of AB 813 argue that a multi-state grid would enable California to make better use of the abundance of renewable power that it often has during the middle of the day from solar power resources. Being part of a regional grid would allow California to export that renewable power to other states. It might also add distant renewable resources, such as wind power from Wyoming, to the grid for use in California.

Advocates also argue that increased competition and economies of scale from a regional grid would save California consumers about $1.5 billion a year by 2030. As it is, the western grid is a quilt of 38 separate regions that each operate their own balancing authorities.

Opponents of the bill argue that regionalization would cause California to lose its autonomy over its power sector or that the state’s renewable energy efforts would be imperiled by the introduction of coal-fired power from other states into California’s grid.

The Environmental Defense Fund and the Natural Resources Defense Council supported AB 813, but the Sierra Club opposed it, arguing that it would have it would allow federal regulators to challenge California’s renewable goals.

Currently, the CAISO’s five-member board is appointed by the governor and approved by the Senate. AB 813 would have established criteria for giving other states a role in overseeing a regional grid operator.

As a wholesale power entity that engages in intrastate transactions, CAISO is already under federal jurisdiction. Bringing those concerns to the debate over regionalization was just a “convenient way of using Donald Trump as a scare tactic” to mobilize people who are concerned that the president is rolling back efforts to curb greenhouse gas emissions, Donald Furman, director of the advocacy group Fix the Grid Coalition said. He also said that the fear that regionalization would water down California’s renewable energy efforts is “ridiculous.”

“An organized market allows much wider penetration of renewables and greater transparency” on the dispatch of coal-fired plants, Furman said.

Furman does not think the bill failed because backers feared there were not enough votes to secure passage though he admits, “we’ll never know.” The failure “was more about leadership” and a deal reached between Senate leadership and the governor. Nevertheless, “this conversation is not over,” he said.

Public Power utilities in the Northwest were generally supportive of the bill, Furman said.

“We thought it didn’t have all the right ingredients to do it properly,” Barry Moline, executive director of the California Municipal Utilities Association, said in reference to AB 813. “We thought it was anti-consumer.”

Many of the issues could have been addressed easily, but they were not addressed, Moline said. For instance, CMUA wanted a market advisory committee included in the RTO’s governance structure that would have included consumer groups.

The public power association also wanted assurances that the CAISO’s Energy Imbalance Market would continue. The Sacramento Municipal Utility District and the Los Angeles Department of Water and Power recently agreed to join the EIM, which handles very short energy transactions needed to balance load and supply. When those utilities become members, slated for 2019 and 2020, respectively, about two-thirds of the state’s public power load will be participating in the EIM.

The public power utilities are concerned that the EIM, which Moline says has brought more than $400 million in consumer savings since 2014, would be rolled into the RTO and no longer be available to public power utilities that stayed out of the CAISO.

“We were happy to see the bill stall and at the same time we have to keep fighting, if there is going to an evolution toward a regional grid, to protect consumers,” Moline said.

CAISO itself supported AB 813. It would have enabled “an efficient and economical way for the state to meet its renewable energy mandates, while lowering electricity costs and reducing pollution,” CAISO spokesman Steven Greenlee said in a statement.

The ISO will continue to pursue strategies to manage higher amounts of renewables into the system and reduce curtailment of those valuable resources and looks forward to working with stakeholders from around the West on solutions to create a modernized, cost-effective, green grid,” he said.