San Francisco Chronicle - (Sunday)
Bill sparks power play over who controls grid
A web of power lines stretching from the Rocky Mountains to the Pacific weaves all the Western states and Canadian provinces into one vast electric grid.
But control of that grid is anything but unified.
Thirty-eight separate organizations, known as balancing authorities, run their own portions, some as big as states, others as small as counties. The California Independent System Operator, a nonprofit corporation, controls the grid throughout most of the Golden State, its experts monitoring the flow of electricity from a darkened room in Folsom (Sacramento County) lit by a wall of data screens.
A bill facing debate Tuesday in a California Senate committee — AB813 — would make a revolutionary change to that decades-old system.
It would authorize transferring control over California’s power lines to a new regional organization, growing out of the nonprofit, that would include other states. Gov. Jerry Brown has pushed the idea for years. The legislation’s author pulled a similar bill out of consideration last year shortly before the end of the legislative session, and its chances of passage this time are unclear.
To supporters, it’s a way to save consumers money while helping California expand its use of renewable power.
Opponents see it as a direct threat to California’s cleanenergy policies.
It could cede at least some control over California’s power lines and electricity market to coal-producing states such as Wyoming and Utah whose energy policies do not align with California’s. The proposed regional grid organization also would operate squarely under the oversight of a federal government that, under President Trump, is searching for ways to keep coal-fired power plants alive.
“You’ve got to look at who we’re partnering with,” said Loretta Lynch, former president of the California Public Utilities Commission. “We’re not partnering with people who want to be clean and green.”
The new system, critics fear, could even open California’s electricity market to the kind of manipulation that plunged the state into rolling blackouts during the 2000-01 electricity crisis.
“It’s just Enron redux,” said Liza Tucker with the advocacy group Consumer Watchdog, which plans to issue a report critical of the bill Monday.
Supporters of creating a regional grid operator consider some of the criticisms overblown, others flat-out wrong.
The California Independent System Operator, for example, already functions under federal oversight. Although the governor appoints its board, the corporation itself operates under the supervision of the Federal Energy Regulatory Commission. With AB813, a committee of representatives from all participating states would hammer out a governance structure for the new regional organization, which would begin operation no earlier than 2021.
“There’s this misconception that California would lose control. California isn’t in control now,” said former FERC Chairman Jon Wellinghoff, an energy policy consultant in Berkeley.
“Once someone sits down in the seat as a CAISO board member, the governor can’t order them to do something,” he said. “The Legislature can’t. But FERC can. I gave a lot of orders to CAISO.” And while FERC oversees the interstate transmission of electricity, Wellinghoff said individual states have authority over the mix of electricity sources their utility companies use. California, for example, requires that by 2030, 50 percent of the electricity its utilities sell to their customers must come from renewable sources. It also bars utilities from signing long-term, power purchase contracts with plants that produce more greenhouse gas emissions than a natural gas plant, effectively blocking coal.
“FERC cannot impose upon a state what their retail customers can and can’t buy,” Wellinghoff said. “California can have a 100 percent renewable requirement, and Wyoming can have a 100 percent coal requirement, if they want.”
There’s also the question of which states and utilities would join.
Washington Gov. Jay Inslee, for example, wrote a letter Wednesday supporting AB813 to the bill’s author, Assemblyman Chris Holden, D-Pasadena. Inslee, a Democrat, argued that creating a regional grid operator would help both California and Washington boost the use of renewable power and fight climate change.
Officials elsewhere in the West may not share Inslee’s enthusiasm, particularly in conservative states that depend on coal mining, places for which California embodies liberalism run amok.
Utah, for example, has threatened to sue California over its cap-and-trade system for reining in greenhouse gas emissions, saying the program unfairly raises the price of electricity from coal-fired plants. Although California and neighboring states already trade electricity on short-term bases, the amount of electricity is limited. It doesn’t raise the same concerns about who runs the system.
“As much as California is worried about other states impacting their energy policy, other states are worried about California impacting their policies,” said Robin Lunt, a Denver attorney focusing on energy regulations and policy. Many of the idea’s supporters see it as a way to advance one of California’s key goals — accelerating the switch to clean energy sources. It would not, however, be a matter of California imposing its policies on neighboring states, they say. Instead, market forces would do the work.
Although prices vary with
“There’s this misconception that California would lose control. California isn’t in control now.” Jon Wellinghoff, energ y consultant and ex-chairman of Federal Energ y Regulatory Commission
the seasons and the time of day, electricity from wind farms and large solar power plants is already as cheap as electricity from fossil fuel plants in some places, and renewable prices are expected to decline further. In a regional market, those sources would start to push out less economical plants burning coal, proponents say. California already generates more solar energy at midday than it needs.
“It squeezes out the coal and gas plants, because they’re not getting chosen as much,” said Carl Zichella, director of Western transmission research at the Natural Resources Defense Council, an environmental group. “It’s an extremely powerful tool, and it’s agnostic to the politics of the Trump administration.”
In addition, California would have access to power generated elsewhere when the state needs it.
While solar generation surges in the middle of the day, demand for electricity in California peaks in the early evening, as people return home and the sun begins to set. Wind energy cranks up at night, but there’s still a gap. Wind power or hydro power generated elsewhere in the West could help fill it, Zichella said.
“That’s the beauty of a big footprint,” he said. “Somewhere in that footprint, some good renewable resource is operating.”
The idea of a regional market, however, has split environmental groups. While the Natural Resources Defense Council and the Environmental Defense Fund back it, the Sierra Club does not.
Opponents argue that actually delivering large new supplies of wind power from Wyoming or Colorado to California would require building new transmission lines, a cost they say would fall largely on Californians.
They also fear that a vast new multistate electricity market would provide a temptation for unscrupulous traders, who would look for ways to manipulate the system. They don’t trust FERC to police the new market.
“I don’t think that FERC, under Trump, is going to build in any consumer protections,” Tucker said. “I don’t think FERC without Trump would build in any protections. They stood by and did nothing during the electricity crisis.”
Wellinghoff, who served as FERC chairman from 2009 to 2013, said that when the crisis hit, the commission had about five people in its enforcement division. Now it has roughly 200, he said. In 2005, Congress gave the commission explicit authority to ferret out fraud and impose stiffer penalties.
“There’s always going to be someone who thinks they’re the smartest person in the room,” he said. “But FERC now has the ability to go in quickly, stop them and fine them heavily.”