A Western Regional Grid: Legislative FAQ
If our current grid operator (the California Independent System Operator or CAISO) becomes a regional entity, will the state’s energy policies be regulated by the Federal Energy Regulatory Commission (FERC)?
- The CAISO is already regulated by FERC (and always has been), as are all wholesale energy markets across the country. FERC will have no more authority over a regional grid than it does over the CAISO, and all participating Western grid states will retain control over their own energy policies.
By creating a fully integrated regional grid across the West, will California be forced to accept electricity created elsewhere from coal and other dirty fossil fuels?
- Because all states have oversight and authority over their respective energy policies under the Federal Power Act, California’s clean energy policies would remain in place, including renewable requirements and SB 1368 (Perata, 2006). No state can be “forced” to accept specific types of energy, and fully integrating our regional grid will help clean, affordable energy sources like wind and solar grow as dirtier, uneconomic sources like coal are phased out.
If California was part of a Western regional grid, would taxpayers be forced to support coal and nuclear plants through subsidies implemented by Energy Secretary Rick Perry’s Notice of Proposed Rule Making?
- FERC unanimously rejected Secretary Perry’s proposal as not “just and reasonable” on January 8, 2018. And his proposal never applied to California or any other Western state.
Did the U.S. Supreme Court say that FERC could overrule states’ clean energy policies in Hughes v. Talen?
- The Supreme Court ruling in Hughes v. Talen is extremely limited. It applies only to state programs that explicitly adjust FERC market rates, not programs like California’s that require renewables purchases or create renewable energy credits: “Nothing in this opinion should be read to foreclose… other States from encouraging production of new or clean generation through other measures…”
Under the Western grid proposal, would Community Choice Aggregators (CCAs) still be able to make their own choices about the energy their members receive?
- CCAs’ energy authority would NOT be affected by a Western regional grid, and they would continue to operate as they currently do — under the regulation of the State of California and municipal and county authorities.
In fact, a regional grid would benefit CCAs by:
- Providing access to the lowest cost renewable energy available in the West, not just in California;
- Lowering transmission charges by incorporating more transmission lines into the same system; and
- Speeding up the retirement of expensive aging power plants and lowering the cost of electricity by allowing emergency “reserve” sources of power to be shared.
Can CCAs and other local energy solutions exist in a regional grid system?
- Retail state and local electricity programs, like CCAs, do not conflict with wholesale interstate electricity systems, like the proposed fully integrated Western grid, because they constitute two separate markets. Electricity is produced and sold on the wholesale level and distributed by utility companies and CCAs to consumers on the retail level. A regional grid expands the wholesale market and the amount of electricity available, in no way constraining how CCAs operate within the retail market.
Can the Federal Energy Regulatory Commission eliminate CCAs?
- The FERC has no authority over CCAs and poses no threat to them because the agency does not regulate the retail electricity markets where CCAs operate.
Would the grid operator have to consider California’s climate statutes and clean energy preferences under a fully integrated Western power grid?
- All Western states would retain oversight and authority over their respective energy policies. This was confirmed in a Yale Law School study conducted last year. Grid operators do not set state energy policy.
- AB 813 contains additional safeguards to ensure that the operation of the Western power grid would work seamlessly with California’s policies. For example, it ensures that any Western grid operator must preserve the state’s role in regulating resource adequacy and must not implement a capacity market. Recently, a perceived conflict between state policies and capacity markets has caused Eastern RTOs to put forth proposals that could frustrate state policies in those regions, but such concerns do not apply to RTOs where states continue to control resource adequacy and have not arisen in those regions.