Dive Brief:

• Gov. Jerry Brown (D) and Democrats in the California legislature last week introduced amendments that would restart the process of western market regionalization at the California ISO.

• The amendments to AB 726 and AB 813 would authorize the CAISO board to begin efforts to form a regional ISO in the western U.S., forming a Commission on Regional Grid Transformation comprised of state energy leaders and establishing protections for transmission planning and greenhouse gas tracking. 

• Critics of the proposal say moving to a regional market would allow out-of-state coal generators to export their power to the state and could cause California to lose control of its transmission assets to federal jurisdiction, jeopardizing state energy policies that are at odds with the Trump administration.

Dive Insight:

CAISO President Steve Berberich and other regionalization advocates have long touted the potential benefits of a West-wide ISO, arguing it would save power customers money and allow the integration of higher levels of renewable resources. 

Such a market could, for instance, allow California to export excess solar power during the day and import wind power from far off states like Wyoming at night. A consultancy report released last year put the potential customer benefit for California at $1.5 billion. 

Governance questions have stalled the initiative, however, with neither California nor its neighbors wanting to cede control of state energy policies to other jurisdictions. 

Last August, Brown put regionalization efforts on hold, halting work to integrate PacifiCorp’s network into California’s grid and informing governors of other states. A CAISO Energy Imbalance Market, which allows power trading between states without the authority of a full ISO, has continued to expand, however, with Portland General Electric slated to join this year. 

Now, days before California’s legislative session ends, lawmakers have inserted new ISO regionalization language into two identical bills with the backing of Gov. Brown. 

Before the end of Oct. 2018, the proposal directs the creation of a new energy commission to monitor regionalization efforts, including the president of the California Public Utilities Commission, the chair of the California Energy Commission, leading legislators and a representative from the governor.

The commission would develop a regionalization plan that would continue the "right of all states to determine and control resource procurement policy" and electric utility planning, as well as provide "a transparent mechanism for tracking emissions of greenhouse gases and other air pollutants."

The plan would also have to ensure that California utilities and residents  are "not hindered or inhibited from challenging a transmission project or allocation of costs before the Federal Energy Regulatory Commission." 

Preserving state control over resource policy and emissions has been a persistent sticking point in regionalization discussions, and some critics in California doubt it can be done. Consumer Watchdog is protesting the new bill, saying it would allow Trump appointees to invalidate California's environmental laws and could open the state up to another regional energy crisis as it experienced in the early 2000s. 

“I am gravely concerned that California is careening down a path to throw away all of the protections that we fought so hard for in the aftermath of the energy crisis,” Loretta Lynch, a San Francisco attorney and former president of the California Public Utilities Commission, told the San Diego Union-Tribune.

Lawmakers would have to pass one of the CAISO regionalization bills by the end of the week. Sept. 15 is the last day of the legislative session.