Will a unified grid elude the West again?

Source: Debra Kahn, E&E News reporter • Posted: Friday, August 10, 2018

SACRAMENTO, Calif. — Momentum to unify the Western power grid appears to be flagging.

As California’s legislative session enters its final stretch, lawmakers made amendments earlier this week to A.B. 813, which would begin the process of turning the state’s electricity grid operator into a regional transmission organization, a long-standing goal of Gov. Jerry Brown (D), who has only a few months left in office. Environmental groups are split on the bill’s potential to open up California’s grid to dirtier energy from neighboring states, as well as possible interference from President Trump’s Federal Energy Regulatory Commission (Energywire, June 27).

Those differences remain despite amendments aimed at preserving California’s autonomy to choose its preferred forms of electricity. The bill also faces politically potent opposition from labor unions that object to its stance on in-state requirements for renewable power purchases, known as “buckets.” They worry that wind and solar projects — and construction jobs — will find better economics outside California.

“Till they get that language about the buckets out of it, which they probably will, it’s lost a lot of its luster,” said Mike Florio, a former member of the California Public Utilities Commission who now serves as a consultant to distributed energy companies, which are also lukewarm on the bill. “I think it’s still a heavy lift politically.”

The bill has passed the Assembly and two state Senate committees; the Senate Appropriations Committee still remains. “It’s still going through the process,” one lawmaker, Sen. Nancy Skinner (D), said in an interview yesterday on the sidelines of a conference put on by the group Advanced Energy Economy in Sacramento. “We’re still in the middle of it and engaged.

“We need to explore whether the structure we’re looking at is appropriate and do we need to move now,” she said. “That’s the type of conversations that have been going on.”

The California-led effort got some indirect momentum earlier this year when Xcel Energy Inc. announced it was withdrawing from a coalition of utilities that had been pondering linking up with the Southwest Power Pool (SPP), a wholesale power market encompassing 14 Great Plains states (Climatewire, May 10). And New Mexico’s largest utility, Public Service Company of New Mexico, also decided against SPP membership earlier this year, opting instead to explore joining the California Independent System Operator’s energy imbalance market — a voluntary, real-time trading platform that allows California to export its excess midday solar generation and has proved increasingly popular across the West.

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.

California’s internal deliberations are again frustrating Western neighbors hoping for more efficient ties.

“For the life of me, I can’t quite understand objections to a piece of legislation that simply allows this conversation to happen,” said Montana Public Service Commissioner Travis Kavulla, who sits on the governing body of the energy imbalance market.

Speculation has abounded that there will be an end-of-session agreement that brings together reform of utilities’ liability for wildfire damages, grid regionalization and perhaps Democratic state Sen. Kevin de León’s bill to raise the renewable portfolio standard.

But the wildfire issue alone may be a daunting enough task for lawmakers to figure out by the end of the session Aug. 31. A Pacific Gas & Electric Co. executive at yesterday’s conference did not draw a link among the various legislative efforts, instead identifying “major hurdles” in the regionalization bill’s way. “The devil’s in the details, and there are a lot of details,” said Steve Malnight, PG&E’s senior vice president of strategy and policy.

“The fires have kind of taken all the oxygen out of the room,” Florio said. In the meantime, he said, “The [energy imbalance market] expansion, both geographically and the service they offer, is probably the way it grows in the near term. Maybe if we get a different administration in Washington one of these years, it’ll make it a little bit easier.”

Still, observers are watching closely as Brown’s last dealmaking opportunity draws to a close. “Nothing’s dead until it’s dead,” said Kathryn Phillips, director of Sierra Club California.