Progress Continues on Regional ISO Expansion

Although Governor Brown today announced that legislation critical to transforming California’s statewide electric grid operator into a regional entity will not be taken up by the Legislature this year, supporters have committed to work through the fall to prepare a new proposal for consideration when it reconvenes in January because regionalizing grid operations is a key strategy for enabling the large-scale development of renewable power needed to meet the state’s long-term climate goals.

Today’s announcement delaying  a bill related to expansion of the California Independent System Operator (CAISO) came after months of joint workshops by the California Energy Commission, Public Utilities Commission and CAISO; meetings between the legislature, governor’s office and stakeholders; the release of a suite of studies detailing the benefits of expansion; and outreach to neighboring states.

Support has been steadily growing for the expansion of the California Independent System Operator (CAISO) into a western grid entity, but the current legislative session ends this month and a number of CAISO-related issues are still being resolved—led by how an expanded grid operator that includes other states would be governed.

Some stakeholders have expressed trepidation about California giving up its authority over the CAISO (the only independent grid operator in the country whose directors are appointed by a state’s governor and confirmed by its state senate) before all the issues are decided. The likely governance structure for a new regional system operator will be truly independent, and led by experts with grid management, system operations and public interest experience. This structure, they worry, will reduce California’s direct influence over grid operations, something that should be allowed only when all relevant questions have been addressed.

Still to be resolved is a method of counting greenhouse gas emissions in an expanded footprint, but the CAISO and the California Air Resources Board (CARB) are expected to finalize a proposal by the end of this year.  Other issues include how transmission access charges will be calculated, how adequate resources to meet any load condition are identified, and how management costs are determined to name a few.

Meanwhile, California and others have been providing feedback on a CAISO proposal for transitioning the governance of the expanded entity, and the input is being incorporated into an updated version.

The new proposal will be the jumping off point for stakeholder activities to craft a bill for next year.  Many of the key participants from industry, environmental organizations, consumer organizations, and officials from other states have committed to work together through the fall to prepare a legislative proposal on governance for January.

It’s critical to keep in mind how much Governor Brown’s vision for an enhanced western power grid will increase the capacity to absorb renewable energy, cutting costs and carbon pollution while improving reliability. The current plan to create a bill the legislature can act on in January 2017 is essential to minimize delays in realizing that vision’s widely acknowledged environmental and economic benefits for California and its neighbors.

Studies have shown that the financial benefits for utility customers (and by extension throughout the economy) are staggering (ranging from a low of $55 million a year in 2020 to approximately $1.5 billion a year in 2030). If other entities beyond PacifiCorp—the first utility to propose expanding the footprint over a year ago—join, the benefits go up dramatically: $258 million a year in 2020 for an expanded regional footprint (western interconnection’s 14-state region, excluding the federal power marketing administration's Bonneville Power Administration and the Western Area Power Administration). 

And the environmental results show benefits from reduced land use impacts, air pollution, and water consumption in California, and while some land use impacts would be expected elsewhere in the West, similar benefits in reduced pollution and water use are expected across the region.

Giving California a larger outside market for the renewable energy generated in the state will mean  it will not have to turn off its solar generation when more is being produced than the state's electricity system can handle, saving money for utility customers because more renewable electricity will be produced and sold. It also will increase reliability of the transmission grid, reduce greenhouse gas emissions, and help California achieve Gov. Brown's goal of obtaining half of our electricity from renewable energy sources by 2030.

Our climate goals depend on our ability to better operate a balkanized and inefficient electricity delivery system across the West. It’s great to see progress continue and support grow for the expansion.