Important New Findings Support Western Grid Integration

Important new research emerged this week in support of enhanced western transmission grid integration, the principal goal of a bill now moving through the California legislature. The widely respected and California-based Next 10 organization commissioned an independent assessment of the arguments for and against it, concluding a fully integrated grid will create more jobs, increase the amount of emissions-free renewable energy like wind and solar, and put more pressure on aging coal plants in other parts of the west.

AB 813, sponsored by Assemblymember Chris Holden from Pasadena, would open the way for voluntary integration of the grid that stretches across 14 states, two Canadian provinces and northern Mexico.

While some opponents of the bill claim California’s nation-leading climate and clean energy policies could be destroyed/hampered/undercut by full integration, A Regional Power Market for the West: Risks and Benefits authored by the independent, nonpartisan Next 10 organization concludes otherwise:

“Because most court challenges to state policies happen under interstate commerce rules, a change to a Western RTO would not substantially change the threats to California’s pioneering climate and clean energy policies. As for FERC, their primary mandate is to provide ‘just and reasonable’ rates through fair competition. As long as California clean energy policies don’t interfere with competition – and they generally haven’t so far – joining a Western RTO would not subject the state to additional risk from FERC,” Next 10 says.

Other studies have said that full integration will save Californians more than a billion dollars a year by 2030 while improving reliability and avoiding millions of tons of carbon pollution annually.

Next 10’s summary of its findings also includes:

Jobs — A Western RTO could result in some renewable energy construction jobs moving from California to other states, but it would likely create a much larger number of California jobs overall. That’s because increasing renewable generation across the region would lower electricity prices for all Californians, lowering costs for businesses and broadly encouraging job growth.

Governance — While opponents worry that a regional transmission organization would force California policymakers to give up control, the state’s existing independent system operator, CAISO, is already independent of state control. All RTOs, including CAISO, are subject to FERC regulations and federal law. RTOs have limited ability to affect state policy decisions, and their actions are subject to FERC oversight. FERC, meanwhile, is subject to oversight by the courts.  

Integrating Renewables — There are many ways to integrate renewables into the grid, including distributed energy resources, whose costs are falling rapidly. But bulk solutions — such as transmission lines and regional markets — remain the lowest cost option.

Coal — Despite concerns about the Trump administration’s support for propping up the coal industry, coal generation is in decline nationwide due in large part to competition from more affordable natural gas power, renewables, and energy efficiency. A Western RTO with truly competitive market rules would likely increase pressure on aging Western coal plants. However, policymakers must be sure to avoid market rules that allow old coal plants to survive, such as capacity payments.

The Next 10 report largely confirms earlier conclusions by Yale University’s Environmental Protection clinic on the legal merits and benefits of enhanced western grid integration, while joining the Yale study in rejecting claims that AB 813 somehow opens the door to more federal regulation of California energy and climate policies.

Legislators will have a chance to respond to these findings when AB 813 comes up for votes in August; the deadline for final action on this critical legislation is August 31.