Pro-Con: Does a Western regional electric grid make sense?

By Mark Toney, Special to CALmatters

The momentum that a risky and ill-timed regional energy grid proposal has gathered in the legislature is disconcerting. As consumer advocates we have not forgotten how spectacularly deregulation, the Enron-sponsored energy law approved in 1996, failed.

Nor will we forget how the Federal Energy Regulatory Commission ignored Gov. Gray Davis’ pleas for relief and let greedy energy companies gouge California. Legislators who don’t remember should read up, as they appear poised to go down the same road again.

At issue is Assembly Bill 813, a misguided bill sponsored by Assemblyman Chris Holden of Pasadena intended to set the stage for expanding California’s electricity grid and integrate it with surrounding states.

Proponents of AB 813 say it will lower the cost of power and broaden the use of renewable energy. But it also could backfire, badly, lessening California’s control over our energy choices, costing the state thousands of clean energy jobs and potentially increasing consumers’ monthly bills.

Even supporters of the regional grid acknowledge it will be an in-state job killer. The California ISO, which backs regionalization, has predicted the state will forfeit 110,000 construction jobs expected to be generated under the current system because regional expansion will end incentives that encourage the in-state development of renewable energy.

A regional system also could open consumers to higher rates because of revised rules for cost allocation. Californians could be forced, for example, to pay billions for out-of-state projects at a time when customers here are already struggling to pay the full costs of the existing grid, plus new fire safety programs. And under AB 813, the Legislature would have no authority to stop unnecessary or overpriced proposals, since the bill would eliminate state review of such rate hikes.

If AB 813 passes, the expanded regional ISO would need no approval from the California Legislature to jettison its current governing board (appointed by the governor and subject to Senate confirmation) and to proceed with changes to entice other western utilities to join. In fact, many details of regional governance have yet to be worked out and would occur only after the Legislature gives its final approval. Such changes, incidentally, must be approved by FERC, which at the moment is dominated by Trump administration appointees.

The Trump majority has already devalued renewable resources and refused to consider emissions impacts in the approval of new gas pipelines. The next rumored appointee was previously in charge of an administration proposal to use wholesale markets to bail out coal plants. A regional grid could make California vulnerable to Trump administration efforts to subsidize coal-fired generation through wholesale markets, and undermine protections for state environmental policies.

While enhanced coordination across the western states may be desirable, it can be achieved without giving away the store. The form of regional expansion anticipated in AB 813 would likely result in less new renewable energy development, greater reliance on out-of-state resources and fewer environmental and public health benefits for California. And if things so south, there’s no off-ramp.

Consumers picked up the tab for the deregulation disaster. FERC allowed Enron and other corporations to gouge consumers as utilities and the state passed on additional costs to beleaguered customers.

It’s taken us years to recover from the last big legislative blunder, and we can’t afford another one.


Mark Toney is executive director of The Utility Reform Network, a California consumer advocacy group, [email protected] He wrote this commentary for CALmatters.

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