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Studies: Western electric market good for Calif. ratepayers, environment

Pointingto final study results on the effects of forming a regional electric market formuch of the western U.S., CaliforniaISO CEO Steve Berberich said such a move is good for jobs,electricity customers and the environment.

CAISOand utilities in the West are considering the creation of a regional market.The grid operator on July 12 released the final results of examining the economic andenvironmental impacts of a regional energy market. As seen inpreliminary assessments,the final results said California will see environmental and economic benefitsif a multistate, regional electric market were to proceed.

Duringa July 12 call with reporters, Berberich said a regional market provides anopportunity for renewables to flourish in and outside California. Maintainingthe status quo with no regional expansion would mean a limited ability toexport renewable energy and lead to the curtailment of more than 10,000 MW overlarge periods of the year. "I don't think it makes societal or economicsense to turn off zero carbon, zero marginal cost power so frequently," hesaid.

Berberichalso noted that like other multistate ISOs, California and other states wouldbe able to maintain discretion over their portfolios in a Western market.

CAISO,in a news release, said a Western-state interconnected system is expected tolower purchasing costs, leverage market and operation efficiencies over alarger geographical area as well as optimize transmission project planning.

Onthe economic side, the findings estimate that annual net benefits to Californiaratepayers from a regional market in 2030 will range from $1 billion to $1.5billion annually. An expanded regional market could also benefit California bycreating 9,900 to 19,400 new jobs in the state by 2030, mostly from lowerenergy rates.

Onthe environmental end, a regional market would reduce California's carbondioxide emissions in 2030 by 4 million to 5 million metric tons and reduce CO2emissions across the West by 10 million to 11 million metric tons. Emissions ofnitrous oxide, sulfur dioxide and hazardous particulate matter would alsodecline for California and the West in 2030.

Thestudies were called for under S.B. 350, a bill widely known for mandatingCalifornia's new 50%-by-2030 renewable portfolio standard. That bill also saidit is the intent of the Legislature to provide for the evolution of CAISO intoa regional organization, provided it is determined that such a transformationis in the best interests of California.

CAISOkicked off the study in February prepared by a team of four consulting firms —The Brattle Group, Energy and Environmental Economics Inc., Berkeley EconomicAdvising and Research LLC and Aspen Environmental Group. The project assessedthe effects of a regional market in areas such as the creation and retention ofjobs and other benefits to California's economy, the environmental impacts inCalifornia and elsewhere, the effects in disadvantaged communities, theemissions of greenhouse gases and other air pollutants, and the reliability andintegration of renewable energy resources.

WhileCAISO touted the benefits of market expansion, Consumer Watchdog said it wouldhurt ratepayers to benefit investors. Jamie Court, president of the SantaMonica, Calif.-based nonprofit Consumer Watchdog, said the consultants whoworked on the report have worked for utilities.

"Californiahas more electricity than it needs, and this snow job report is making the casefor ratepayers to keep bankrolling new power plants and transmission lines thatthey don't need so that utilities can get rich exporting energy someplace else,"Court said in a news release. "California ratepayers shouldn't besubsidizing utilities to find new markets."

Whilethe studies were being developed, work also went into a possible for aregional market. CAISO will soon release a proposed governance structure. Thisproposal, along with the final study results, will be discussed at a July 26workshop in Sacramento, Calif.