Grid Bill Adds New Protections for CA’s Clean Energy Future

A coordinated western grid is essential to meet climate goals

istock/miheli

AB 813 by Assembly member Holden would allow the California Independent System Operator (CAISO) that manages much of the state’s large-scale electric transmission grid to reorganize into a west-wide grid operator. Every major study of ways to achieve deep penetrations of renewable energy  asserts that unified grid operation over large geographical areas is necessary. To meet the challenge of climate change, we need to reform the fractured and inefficient operation of the western grid, allowing for faster addition of renewables and a rapid decline of the region’s polluting coal. That means cleaner air and lower electricity bills for Californians.

The last harried days of the California legislative session is a time ripe for spreading misinformation, some of it targeted at AB 813, including the claim that it would make California more vulnerable to politically motivated attacks by the Trump administration.  Saying it doesn’t make it true.

Every day brings a new environmental atrocity from the Trump administration, and NRDC is fighting back, filing a lawsuit against these assaults on average every 10 days since he took office. But AB 813 does not make us more vulnerable to attack; it makes us less so. In fact, AB 813 would add important new protections to preserve California’s ability to advance renewable energy and its climate policies from federal disruption. 

First, it is important to remember, that California’s ISO is already under the jurisdiction of the Federal Energy Regulatory Commission (FERC) like every other regional transmission operator in the country. Fully integrating the Western grid will not worsen this situation, nor does it convey any new authority to FERC. It is also likely, as former FERC Chairman Norman Bay said last week, to better protect California from such attacks than if the state isolated itself from a regional grid operator. Regionalization of CAISO would mobilize more states than just California "if FERC were to do something crazy," Bay said. Prominent California grid experts agree regionalization is needed, including UCLA's Ann Carlson, Stanford's Arun Majumdar, and Cal's Dan Kamman.

The bill also continues four important general safeguards currently in law: It requires that California continue to make its own resource adequacy determinations for investor-owned utilities (the new provisions below include publicly owned utilities); ensures the financial and political independence of ISO directors; ensures a financially conflict-free decision-making process; and maintains an Independent Market Monitor.

AB 813, which is now before the Senate Appropriations Committee and could have a final vote in the legislature in the next two weeks, adds more than a dozen new protections against federal interference. The bill strictly prohibits California utilities from being part of any multi-state transmission organization unless it:

  1. Protects and preserves a state’s authority over matters regulated by the state, including procurement policy, resource planning, and resource or transmission siting within the state.

2. Does not conflict with state rules or public policy requirements to provide reliable electrical service for the safety, health, and welfare of the state’s citizenry and economy, to encourage new or clean generation, reductions in emissions of greenhouse gases, or state-assigned policy attributes of electricity generation, such as requirements for California utilities to purchase electricity products from eligible renewable energy resources and from zero-carbon sources.

3. Does not conflict with state authority over generation preference, transmission siting, resource portfolios, and resource planning, including, but not limited to, a prohibition on a centralized capacity market in California or other forward procurement of electrical generating capacity that requires capacity to clear at a market clearing price to count for resource adequacy purposes.  

4. Establishes and maintains equitable transmission cost allocation rules through an open stakeholder process, ensuring that California participating transmission owners are fairly treated for their past investments.  

5. Complies with state law and regulation over California utilities, including, but not limited to, those that may affect, but do not set, the rate for the same wholesale sale of electricity at a price different and distinct from the Federal Energy Regulatory Commission approved rate.  

6. Provides for and maintains open meeting standards and meeting notice requirements that are consistent with the general policies of the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) and afford the public the greatest possible access to meetings, consistent with other duties of the organization.  

7. Maintains and strengthens stakeholder participation.  

8. Recognizes the right of publicly owned utilities to make their own resource adequacy decisions.

9. Prohibits “forward capacity markets,” which are ill-suited to the western states and have been controversial in the Northeast as a potential source of conflict with state policies.  

10. Ensures that the carbon costs for market resources to comply with California’s climate policies, as implemented by the State Air Resources Board is included.

11. Establishes a clear process, structure, and organizational support to enable a meaningful role for state regulators to collaborate and provide guidance to the ISO on matters of interest to more than one state, including on issues relating to the organization’s independent market monitoring function established by the Federal Energy Regulatory Commission.  

12. Enables participation of demand response, storage, and other distributed energy resources in the organization’s markets.  

13. Ensures the unconditional right of any participating transmission owner to withdraw from the multistate regional transmission system organization, with or without cause, upon giving reasonable notice, not to exceed two years.  

14. Submits the bylaws and other organizational documents that govern the multistate regional transmission system organization to the Energy Commission for review. These documents must be certified by the Commission and include a detailed stakeholder public process through which comments can be received, including at least one public hearing.

15. Finally, AB 813 requires California utilities to leave a regional transmission organization if the California Energy Commission finds a violation of any of these requirements.

The effective implementation date for AB 813 is set for 2021, adding yet another layer of political protection as two national elections will have occurred by then. For all of these reasons, it’s critically important for the California legislature to pass AB 813 to ensure we take every step necessary to protect California’s ability to chart its own energy future. In addition, by 2030, Californians would see their utility bills cut by more than $1 billion every year and the state would stop wasting pollution-free energy when there’s more available on the electric system than we need to power our homes and businesses.

About the Authors

Carl Zichella

Director, Western Transmission

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