Regionalization Protects California Consumers and Policies

A Regional Grid Is Cleaner, Safer, More Reliable and Resilient

This week's unwelcome news of the Trump administration’s proposed rollback of the federal Clean Power Plan is yet another reminder of the growing need for Assembly Bill 813 and its transition away from severely fragmented management of our western electricity transmission grid.  

Instead of acknowledging all the ways in which an integrated grid could accelerate clean energy progress in California and the rest of the West, regardless of who is in the White House, opponents of AB 813 have been making outrageous claims to support their case.Two of the worst examples of distortion: that California clean energy progress would be jeopardized or delayed because of federal policies; and regionalization will usher in a new energy crisis like the one California experienced in 2000-2001.

As my colleague Alex Jackson told the San Francisco Chronicle after the Trump administration announced plans to essentially abandon America’s goals to reduce carbon emissions from power plants and give polluters free rein:

“Regionalization can help backstop the loss of the Obama administration’s Clean Power Plan by providing a similar platform for California to exercise leadership and coordinate with its neighbors to enable clean energy to grow and spread.”

And the fact is that the proposal under consideration to fully integrate the western grid repeal no protections and would only change the way the directors are selected for the expanded, fully integrated independent system operator (also sometimes referred to as a regional transmission operator) that will oversee how electricity moves through California, 13 other states, and parts of Mexico and Canada.   

Moreover, AB 813 includes valuable protections that are not in effect now. They would rule out the controversial type of electricity market that has sparked contention between federal and state authorities in the Northeast, ensure an unconditional right of exit from an expanded transmission organization if California so desires later, and prevent California utilities and CCAs (Community Choice Aggregators) from joining or staying in a transmission organization that did not meet high standards for transparency and public participation, among others.

What’s different today than in 2000 that makes a recurrence of the electricity crisis unlikely? Everything.

Opponents arguments presume we have done nothing to address the causes of the 2000-2001 electricity crisis and that regionalization would open California to a repeat, but that is flat wrong. The state and the California Independent System Operator (CAISO) took decisive steps to prevent future market manipulation in the wake of the crisis. All those protections remain in effect today.

Independent Market Monitors and an enhanced federal enforcement capability have been developed to police market transactions and prevent gaming.  Speculators are quickly caught and punished.  More than 200 enforcement staff were added to the Federal Energy Regulatory Commission since the crisis occurred.

Also, state regulators control resource choices and procurement. Regionalization will not change that. What’s more, every western state wants to protect that same authority to decide energy and climate policies for itself. In a regionalized grid, that means more protection for California climate and clean energy policies, not less. California would have many regional allies if their authority were to be attacked.

California has adopted a Resource Adequacy program to ensure our electric system can meet even the highest levels of electricity demand from our homes and businesses. This program will continue unchanged under regionalization. Again, all western states wish to preserve this authority for themselves.

Many experts in grid management (and the California energy crisis) have weighed in to support regionalization and to denounce claims that regionalizing the grid poses a risk to California policies. One, James L. Sweeney, a professor of Management Science and Engineering and the director of Stanford University’s Precourt Energy Efficiency Center, has been especially scathing in his response to this claim.

And, as the author of the definitive book “The California Electricity Crisis,” Professor Sweeney is arguably the state’s leading expert on the causes of the 2000-2001 mess.

“Total Nonsense”

Professor Sweeney recently wrote to Assemblymember Chris Holden, the author of AB 813, the current proposal to regionalize the grid that:

“… the idea that a fully integrated Western grid could make another California electricity crisis possible is total nonsense (emphasis added). The full pricing transparency and operating efficiencies of a West-wide integrated grid would help safeguard against another crisis in an affordable, sustainable way. System operators would be able to dispatch electricity quickly and dependably to wherever it is needed throughout the West. A fully integrated Western electricity grid could not avoid high prices if there were to become another West-wide electricity shortage, as we had in the years 2000/2001. But a fully integrated Western electricity grid would not make such a shortage more likely nor could it make the consequences of such a shortage worse. A fully integrated Western electricity grid would go a long-way toward avoid rolling blackouts by allowing electricity to be quickly and easily dispatched to California if it were needed.”

Progress in the face of federal rollbacks

Professor Sweeney’s letter goes on to enumerate many of the benefits regionalization would confer, especially regarding decarbonizing the electricity sector, something increasingly important in the face of Trump administration efforts to roll back the Clean Power Plan and other Obama administration climate policies.

“With a fully integrated western power system, cheaper emissions-free electricity could be efficiently dispatched from another state where the sun is shining, the wind is blowing, or hydropower resources are available. These renewable resources, whether they generate electricity in California or elsewhere in the West, will be dispatched a greater fraction of the time, increasing their capacity factor. Their dispatch would imply that other electric generating plants having a larger marginal cost—particularly fossil-fueled plants—will be dispatched a smaller fraction of the time throughout the West. A fully integrated grid would therefore aid in further decarbonizing the Western electricity system,” he wrote.

What’s more, regionalization facilitates California’s coordination with other western states to aid the clean energy transition, those that share our views and those that don’t, by providing benefits to all states in the form of lower electricity costs for their homes and businesses and creating jobs in renewable energy development as employment in fossil fuel industries decline.

Finally, regionalization can make the grid more resilient in the event of weather-related crises, including earthquakes, floods, or devastating wildfires. As Professor Sweeney noted in his letter, the instantaneous dispatch of resources over large geographies means that the cleanest energy available can be dispatched to serve parts of the region experiencing service outages, bypassing problems and keeping the lights on.

Regionalizing the western grid does not expose California to additional risks of federal preemption, saves California energy customers money, makes electricity service more reliable, reduces emissions and will create thousands of jobs. We need to expand the California ISO into a regional grid operator to get those benefits. AB 813 is an important first step.

About the Authors

Carl Zichella

Director, Western Transmission

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