State lawmakers are hammering out a bill that would pave the way for California to import more wind energy from Wyoming and export more solar power to other western states, potentially saving homes and businesses billions of dollars on their electric bills.
The last-minute legislation would see California give up sole control of the state’s power grid, which critics say could give conservative officials in Utah and Wyoming influence over the Golden State’s energy mix – a major concern for some environmental groups, labor unions and political leaders, who slammed earlier proposals to expand California’s grid to neighboring states. The plan’s supporters say those concerns are overblown. It’s not clear whether the bill will pass by the end of the legislative session this Friday.
For two years, Gov. Jerry Brown has urged state lawmakers to allow the California Independent System Operator – which runs the grid for 80 percent of the state – to annex PacifiCorp, a Warren Buffett-owned utility with customers in Idaho, Oregon, Utah, Washington, Wyoming and part of northern California. Brown sees greater sharing of renewable energy across state lines as critical to reducing the burning of planet-warming fossil fuels, especially as California eyes a target of 100 percent clean energy by 2045.
The PacifiCorp plan had looked dead in the water amid skepticism from Senate leader Kevin de León and Assembly Speaker Anthony Rendon. But Assemblymember Chris Holden, D-Pasadena, introduced a bill Friday that would allow the state grid operator to transform to a regional entity. The text of the bill stems from negotiations between Brown’s office and various special-interest groups – including politically powerful labor unions, which have previously opposed the grid plan but may now come on board.
The bill, AB 726, calls for the state grid operator to propose a new governance structure involving representatives of other states by Oct. 31, 2018. An eight-member committee would then have until the end of 2018 to decide whether the proposed structure protects California ratepayers and climate policies. The committee would include four state lawmakers or their appointees, three regulators and a representative of the governor.
If the committee approves the new structure, the California grid operator would be allowed to expand to other states, without any additional sign-offs from the Legislature.
In other words, the full Legislature’s only vote on regional expansion would be this week – without knowing any details on what the new governance structure would look like.
The Utility Reform Network, a ratepayer watchdog that has criticized grid expansion, was not involved in the last-minute negotiations, said Matthew Freedman, an attorney at the San Francisco-based group. He called the 11th-hour deal-making “an example of Sacramento dysfunction at its worst.” He said he’s seen a lot of bills rammed through the Legislature in the final days of session, but “this is as bad as I’ve ever seen it.”
“There has been no committee hearings, there has been no bill, there has been no circulation of language. In our view the process is shameful,” Freedman said Friday, a few hours before the bill was released – just a week before the end of the session.
It’s been a big year for climate and energy policy in Sacramento. Lawmakers extended the state’s cap-and-trade program, which forces climate polluters to pay a fee for their planet-warming emissions. They’re also debating a bill that would call for the state to get 100 percent of its electricity from climate-friendly sources by 2045. That bill was passed by the Senate earlier this year and is expected to clear the Assembly this week.
A multi-state power grid would help California hit a 100 percent clean energy target without causing electricity rates to spike, supporters say. California has already reached 29 percent renewable energy without significant impacts to utility rates, and wind and solar farms continue to get cheaper as technology improves. But eventually, relying only on in-state solar and wind could cause problems. Solar power peaks in the afternoon and tapers off in the evening, when electricity demand is highest. Wind power is also intermittent, and California’s best wind hot spots are already mostly developed.
An influx of cheap Wyoming wind could balance out the drop-off in solar power during the evening, helping California avoid more expensive solutions, supporters of Brown’s grid plan say. Right now, California still relies heavily on gas-fired power plants, which accounted for about half of the state’s electricity last year, to complement solar farms.
An expanded grid could also allow California solar plants to sell excess electricity to utilities in other states during the middle of the day, reducing climate pollution and improving the economics of building solar farms here. Already, there are times when California solar farms generate more electricity than in-state consumers can use.
More broadly, supporters say growing the footprint of the California Independent System Operator could reduce energy costs across the West, which is divided into 35 balancing authorities – independent grid operators that are responsible for balancing supply and demand on their own systems, with limited help from the surrounding systems. Some energy experts see the West’s fragmented power grids as inefficient and wasteful.
The California system operator says homes and businesses could save $55 million per year on their electric bills if PacifiCorp joins the California grid, in part because it would be easier for Golden State utilities to buy cheap wind energy from Wyoming and other states. A study commissioned by the system operator found Californians could save as much as $1.5 billion per year if most other western power grids follow PacifiCorp’s lead.
“The elevator pitch is: It’s good for customers and it’s good for the environment,” Stephen Berberich, president of the California system operator, said last year.
Controversy from all corners
Critics are skeptical of those supposed benefits.
In California, the grid expansion plan has divided environmentalists. Groups including the Natural Resources Defense Council and the Environmental Defense Fund support merging California’s power grid with PacifiCorp’s. But the Sierra Club is worried it could have unintended consequences, like giving lawmakers in coal-friendly Utah and Wyoming the power to force dirty electricity into California, undermining the state’s environmental policies and leading to increased climate pollution across the West.
Ratepayer advocates, meanwhile, are concerned Californians would be forced to pay for massive power lines PacifiCorp wants to build, which in theory would carry clean energy to California – while also generating hefty profits for the Buffett-owned utility. Ratepayer advocates say the independent system operator has underestimated the costs to Californians of new power lines and overstated the economic benefits of a regional grid.
Municipal utilities and other public power agencies, which are owned by their customers, are especially concerned about transmission costs. They tend to have lower electricity rates than investor-owned utilities, and they’re more likely to use local resources than out-of-state wind power to meet renewable energy targets. They’re worried their customers will be forced to pay for expensive power lines that don’t benefit them directly.
Barry Moline, executive director of the California Municipal Utilities Association, said his group – whose dozens of members include Los Angeles, Riverside and San Jose – wasn’t included in the negotiations that produced Holden’s bill. He criticized the lack of transparency, saying a grid expansion could have enormous impacts on electricity rates.
“We don’t know if we’re getting something that is going to be good for consumers or bad for consumers,” Moline said. “This is not the way to change a multi-billion-dollar energy market.”
The Trump administration’s coal-friendly agenda has generated additional skepticism. Expanding California’s grid operator to encompass other western states would require a series of approvals from the Federal Energy Regulatory Commission, which should be controlled by Trump appointees within a few months. Critics are worried the commission would use that process to undermine California’s climate policies, forcing the state to import dirty power from other parts of the West.
Some legal experts believe those fears are overblown. Researchers at Yale University’s Environmental Protection Clinics said in a report earlier this year that the Trump administration already has the legal tools to meddle with California’s energy policies if it wants to, regardless of whether the western states pursue a unified power grid.
Holden’s legislation may quiet some critics’ concerns.
The bill would speed up the development of solar and wind farms in California, in time to take advantage of federal tax credits that are set to decline over the next few years. The legislation would require large utilities to buy additional renewable energy by the end of 2018, beyond what state law currently mandates, in amounts to be determined by the California Public Utilities Commission. That might mollify labor unions, which are wary of a grid plan that could see jobs building clean energy facilities exported to other states.
Freedman, from the Utility Reform Network, said, “You can assume that every group that signs on to any (grid expansion) deal is getting some kind of a special provision.”
What’s in the bill – and what isn’t
In light of fierce opposition to the PacifiCorp merger, some advocates of a regional power grid floated the idea earlier this year of starting with other states and utilities. Holden’s bill, though, wouldn’t stop the state grid operator from annexing PacifiCorp – and no other western utility has made an effort to merge with the California system.
Right now, California’s governor appoints the members of the system operator’s governing board, subject to confirmation by the state Senate. It’s not clear how the system operator would propose changing that if Holden’s bill is approved. But the grid operator has previously proposed a plan that would give the other five PacifiCorp states the power to reject governing board appointees. Under that plan, nominations would come from an independent committee, rather than from the California governor.
It’s hard to image Utah and Wyoming signing off on a plan in which California continues to exert has sole control of the grid – in part because conservative officials in those states are worried California will force them to shutter their coal-fired power plants.
“There’s not going to be any scenario where I would agree to a situation where the California Legislature is dictating policy to the state of Wyoming,” Matt Mead, Wyoming’s Republican governor, told The Desert Sun last year. “Clearly, Wyoming is the No. 1 coal-producing state. It probably has a different perspective than California does.”
Spokespeople for de León and Rendon didn’t respond to requests for comment, so it’s not clear if they support Holden’s legislation. A spokesperson for Sen. Ben Hueso, who chairs the Senate’s energy, utilities and communications committee, said Friday morning that Hueso’s office hadn’t seen the text of the bill yet.
Hueso, whose district includes parts of San Diego County and all of Imperial County, signed a letter with de León and Rendon last year raising concerns about the grid plan.
The future of Salton Sea geothermal
The Imperial Irrigation District, a publicly owned energy and water utility based in Imperial County, has also opposed Brown’s western grid plan, arguing that if California utilities can access cheap clean energy from other states, they may have less incentive to buy geothermal energy. California is home to one of the world’s most powerful geothermal hot spots, at the southern end of the Salton Sea in Imperial County – but that resource has mostly gone untapped, with just one power plant opening since 2000.
Geothermal plants provide clean electricity around the clock but are more expensive to build than solar and wind farms. Geothermal supporters say the technology can complement intermittent solar and wind while providing an economic boost to Imperial County, where the unemployment rate hovers between 20 and 25 percent.
Unlike Southern California Edison and other investor-owned utilities, the Imperial Irrigation District is not part of the power grid controlled by the California Independent System Operator. Imperial sued the system operator in 2015, spurred in part by its concerns that a regional power grid would threaten its own independence.
But state officials may have found a way to soften those concerns. Imperial asked a federal judge for a 60-day pause in its lawsuit in July, largely due to progress in geothermal talks with the state, according to Kevin Kelley, the utility’s general manager.
“We are collaborating on behalf of the geothermal resource at the Salton Sea that we’ve long advocated for,” Kelley said in a recent interview. “We got the state together.”
Other roads to 100% clean energy
Even if California expands its power grid, the state will still need to do a lot of things differently if it hopes to achieve 100 percent climate-friendly electricity, experts say.
The biggest challenge might be lining up electricity supply with demand. Tools for solving that problem could include funding for more efficient buildings and appliances, incentives for homeowners to install west-facing rooftop solar panels that soak up more sunlight later in the day, and programs that encourage homes and businesses to shift their energy use to different times of day. With the blessing of state regulators, Southern California Edison and other investor-owned utilities are already phasing in time-varying electric rates, which are expected to make energy more expensive in the evening.
Giant batteries that store solar and wind power for later use are also likely to play a role. Lithium-ion batteries are getting cheaper as companies like Tesla, General Electric and Samsung invest in the technology, and some experts expect them to follow a similar cost curve to solar, which could lead to much wider adoption in the next few years.
Southern California Edison and the Imperial Irrigation District brought more battery storage onto the grid than any other U.S. electric utility in 2016, according to data compiled by the Smart Electric Power Alliance. And solar companies are increasingly marketing smaller-scale batteries to homeowners to pair with rooftop panels.
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