Grid Regionalization Bill May Upend CA Renewables

New amendments to legislation that would allow the California Independent System Operator to become a multi-state grid operator set off a behind-the-scenes uproar in the state capitol.

AB 813 by Assembly Utilities & Commerce Committee Chair Chris Holden (D-Pasadena) was revised June 12, generating considerable confusion and drawing immediate opposition from some.

The revised measure, the most significant energy legislation in years, is set for a June 19 hearing in the Senate Energy Utilities & Commerce Committee. It passed the Assembly last year, but failed to get through the Senate.

At the heart of the controversy over Holden’s measure is an apparent relaxation of the state's Renewable Portfolio Standard that’s intended to spur development of California's clean energy sector. The current RPS policy does that by requiring that the renewable energy needed to meet the standard be largely produced at generation plants in California or be directly connected to transmission lines controlled by the California Independent System Operator.

These so-called “Bucket 1” resources are to make up 75 percent of the RPS’s mandate, which currently aims for 33 percent renewables by 2020 and rises to 50 percent by 2030.

Bucket 2 resources are those where renewable power is delivered indirectly to California, while Bucket 3 resources are those that sell strictly the renewable energy credit associated with their operations and power is not actually delivered to the state.

Until the end of this year, according to the latest AB 813 amendments, generating facilities in balancing areas that join a regional grid would qualify as “Bucket 1” resources under the state’s renewable energy law. That would open the gateway to more out-of-state renewable power.

“The June 12 th amendments,” wrote former California Public Utilities Commission President Loretta Lynch in a June 13 e-mail obtained by Curren t, “are an admission that AB 813 puts the RPS bucket system at risk.”

Lynch said that while the amendments seek to “prevent the collapse of the buckets system under the renewable portfolio standard,” they will do that “only for purposes of renewable portfolio standard calculations” by freezing the geographic size of CAISO at the end of this year.

The amendments, Lynch noted, “put California’s renewable portfolio standard law squarely in the gun-sites of the [Federal Energy Regulatory Commission] and the Trump Administration.”

She predicted the amendments will be overturned by FERC and then be potentially bogged down in subsequent court battles for years.

FERC has exclusive authority over transmission and energy trades in interstate commerce. The only avenue to alter its final decisions is the federal court system.

But the amendment expanding California’s renewable mandate eligibility is music to the ears of some.

“A grid that draws on a large and diverse range of both centrally-dispatched and distributed generation resources such as wind, solar, geothermal and hydro power can better respond to shifts in electricity demand,” wrote Greg Wetstone, American Council on Renewable Energy executive director, to Holden earlier this spring.

“The additional flexibility created by an expanded grid will increase reliability, promote a decarbonized and affordable energy mix for consumers and businesses throughout the West, and drive continued infrastructure investment and economic development in California.”

Others decried Holden’s latest move, rumored to be at the request of Gov. Jerry Brown and CAISO.

“Turning over the California electricity grid to a multi-state grid authority hurts Californians by increasing pollution, increasing electricity costs, sending well-paying middle class jobs out of state, and removing California’s control over its electricity grid,” claims San Diego 350. “A regional grid as allowed by AB 813 attempts to tear down the basic renewable energy policies California has spent decades building.”

Some environmentalists say it would open the way for more coal power to flow to California from other states.

The latest version of Holden’s measure appears to favor Warren Buffett, whose Berkshire Hathaway empire owns PacifiCorp, which operates utilities and transmission lines in the West. Those lines could easily deliver to California power from Wyoming wind facilities that Berkshire is busy building.

If PacifiCorp and other Buffet entities joined any new regional grid operator under the bill before the end of 2018, or by whatever date ultimately is set by the legislation, renewable power produced by Buffet’s companies appears to qualify as Bucket 1 resources under California’s renewable mandate. This would give his companies a leg up on the competition for selling power to the West’s largest energy market, namely California.

Not surprisingly, Berkshire Hathaway and PacifiCorp have long pushed for regionalizing the western grid, for instance, supporting legislation in 2015 that called on CAISO to study what would be involved.

The specific AB 813 revision generating the controversy states:

If the Independent System Operator becomes a multistate regional transmission system organization pursuant to the process set forth in Section 359 and thereafter operates a balancing area that expands beyond the Independent System Operator’s balancing authority area as for December 31, 2018, to include one or more new participating transmission owners located outside of California, the balancing authority area boundary used for determining compliance with the requirements of Section 399.16, except as provided in subdivision (b), shall continue to be the boundary of the Independent System Operator’s balancing authority area as of December 31, 2018.

(b) If another balancing authority in California elects to join the Independent System Operator’s balancing authority area, the balancing authority used for determining compliance with the requirements of Section 399.16 shall include facilities of that other balancing authority that are added to the Independent System Operator’s balancing authority area.

These provisions of the amended AB 813 are expected to play prominently in next week’s hearing on the measure. — Current Editors

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Grid Regionalization Bill May Upend CA Renewables

William J. Kelly

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