Grid Regionalization Bill Passes Panel

The most significant energy legislation of the session, which would give the California grid operator the green light to become a regional power market and transmission operator, barely passed out of the Senate Energy Utilities & Communications Committee.

AB 813 by Chris Holden (D-Pasadena), chair of the Assembly Energy & Utilities Committee, needed at least six votes to advance June 19. His measure squeaked through the Senate panel on a 6-1 vote after significant changes last week.

Approving AB 813 is the “single most important thing this body can do to allow California to achieve its clean energy goals,” Arnie Olsen, E3 partner, told the senators.

Holden added that his measure would allow excess solar power in California to be sold in a bigger market. It also would lower ratepayers’ energy bills by eliminating the transmission costs added each time resources pass through one of the West’s 37 other balancing authorities. The pancaking of costs, according to Holden, impedes the trading of clean renewable energy.

Olsen said regionalization would save ratepayers $1.5 billion a year and cut greenhouse gas emissions by 10 million metric tons beginning in 2030.

Under AB 813, expansion of the California Independent System Operator's territory would launch in 2021.

The CAISO Board would be replaced with a new five-member governing committee. Members would have to be confirmed by the state Senate. The bill also would establish a Western States Committee. It would include three representatives from each state participating in a regional market to address interstate matters.

Two skeptical Democrats, Sen. Bob Hertzberg (D-Los Angeles) and Sen. Nancy Skinner (D-Berkeley) supported passing the bill, but only on the condition that it is amended to protect against California coming under thumb of a Trump-friendly Federal Energy Regulatory Commission and to safeguard in-state renewable developers and workers.

Labor union representatives and some consumer advocacy and environmental groups are fighting AB 813, saying it would upend state authority over energy trades and increase dirty power imports. They also warn it would lead to significant job losses.

Labor representatives claimed the regionalization bill in its current form would cause the loss of 10,000 jobs a year. Those job estimates are based on California reaching a 50 percent renewable energy mandate.

California, they added, would get “FERC’ed” as it was during the 2000-01 energy crisis when FERC refused to intervene to protect Californians against spiraling wholesale energy rates.

Environmental groups and others supporting the bill insisted regionalization would reduce coal-fired power flowing into California by making it transparent. Today, they said, it comes in as “unspecified resources” and can’t be well accounted for when it comes to greenhouse gas emissions.

“With unspecified resources, you get coal power in California whether you like it or not,” said Jon Wellinghoff, head of GridPolicy and former Federal Energy Regulatory Commission chair.

Unspecified resources are assigned a greenhouse gas adder-emission estimates-by the California Air Resources Board, which is lower than actual emission levels produced by coal-fired generation.

Wellinghoff also pointed out that FERC, with four Trump-appointed commissioners, voted 5-0 to reject the president's proposal to subsidize coal resources.

Carl Zichella, with the Natural Resources Defense Council, pointed out that the bill also forbids creating a capacity market. That would prevent such a market from becoming an avenue for more coal-fired electricity imports.

Others claimed that exposing coal power to the competitive market forces a regionalized grid would unleash would assure its demise, regardless of the Trump Administration’s effort to prop it up.

Other supporters of AB 813 include the Chamber of Commerce and some community aggregators.

Matt Friedman, The Utility Reform Network senior attorney, countered that the choice at hand was not one between isolation and engagement. There are many options for expanding California’s grid, he said, but the issue at hand is “whether California wants to give up control of CAISO” and partner with other states that “want to take down California’s clean energy objectives.”

Holden said that Washington State, which has clean energy policies similar to California, already has expressed an interest in joining regional grid.

The Senate Judiciary Committee is to hear the bill next. Hertzberg, who sits on the committee, said he would kill the bill if it was not revised to include provisions that protect California’s sovereignty. — Elizabeth McCarthy

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Grid Regionalization Bill Passes Panel

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