California lawmakers advance Golden State-led regional grid plan

Source: Debra Kahn, E&E News reporter • Posted: Thursday, June 21, 2018

A panel of California lawmakers was convinced yesterday that a regional electricity market that extends outside the state could spread the Golden State’s progressive energy policies without exposing the state to too much risk.

The California Senate Energy, Utilities and Communications Committee approved by a 6-1 vote A.B. 813, a bill to begin the process of turning the state’s electricity grid operator into a regional transmission organization (RTO). The prospect has long tantalized Western utilities and regulators for its potential to encourage wind and solar development in California’s neighboring coal-heavy states. But a deal has so far eluded California and the other states due to those same political differences.

It’s the second year state lawmakers have considered regionalization. A bill last year faltered at the end of the session due to disputes between environmental groups and labor unions over distributed energy and large-scale renewable projects (Energywire, Sept. 21, 2017).

The topic is similarly divisive this year. Labor unions are opposed to the bill for its potential to send renewable energy construction jobs out of state, while some environmental groups —- the Natural Resources Defense Council, Environmental Defense Fund and Union of Concerned Scientists among them — argue an integrated grid will facilitate the expansion of wind and solar in the West’s coal-centric power sector. The bill is now headed to the state Senate Judiciary Committee.

The bill’s main sponsor, Assemblyman Chris Holden (D), amended it last week to preserve in-state requirements for renewable power purchases, in an attempt to appease labor. The move alienated the American Wind Energy Association, which took an oppose position.

“No good deed goes unpunished,” Holden said.

Other California greens, including the Sierra Club and California Environmental Justice Alliance, worry that creating a regional market could open the state’s carbon policies to federal scrutiny under the Trump administration, which would have to sign off on a Western RTO. They’re also concerned about the possibility of having to ramp up natural-gas-fired power plants to deal with transmission constraints on renewable energy.

“The risks simply aren’t worth it, and there are many other options for moving forward to ensure that California is able to realize its low-carbon grid objectives,” said Matt Freedman, an attorney for ratepayer advocacy group the Utility Reform Network.

‘There is a cloud over this’

Indeed, the California Independent System Operator has been running a voluntarily energy imbalance market since 2014 that has been steadily expanding. PacifiCorp, a Portland, Ore.-based utility that serves Utah and Wyoming, is an original member of the energy imbalance market, and the market’s membership has swelled in recent years. The market now encompasses about 55 percent of the electricity load in the Western Interconnection. CAISO reckons the market has saved consumers some $330 million since its inception in late 2014.

CAISO is also considering the addition of some day-ahead services to the imbalance market, allowing utilities to trade electricity in advance and offering reliability coordination services to other utilities in the West (Climatewire, May 10).

Red-state regulators in Utah and Wyoming, meanwhile, abhor California’s renewable policies and aversion to coal. That reality, coupled with a Federal Energy Regulatory Commission populated by Trump nominees, vexed state lawmakers yesterday who want to inoculate California’s clean energy policies from contamination.

“There is a cloud over this, not because of you, but because of what could potentially be coming down from the federal level longer term, forcing California into commitments we do not want,” said state Sen. Mike McGuire (D).

Former FERC Chairman Jon Wellinghoff, now CEO of the distributed energy consulting firm GridPolicy Inc., assured lawmakers that opening their electricity market wouldn’t expose them to more federal risk, despite the Energy Department’s push to have FERC subsidize failing coal and nuclear plants.

“People need to understand that the Trump administration is 0 for 2 with FERC,” Wellinghoff said, citing last week’s Senate Energy and Natural Resources Committee hearing where FERC members gave DOE’s plan a frosty reception (Energywire, June 13).

Conversely, he said, if the federal government decided to throw fossil fuel plants a lifeline, it wouldn’t matter whether California was part of a regional transmission organization. “If FERC does this and subsidizes coal plants across the United States, you will get that power in California whether you like it or not,” Wellinghoff said.