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Former FERC chair: Federal fears misplaced in western regional grid debate

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Former FERC chair: Federal fears misplaced in western regional grid debate

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Powerlines on the California-Nevada border could help the West share resources under a proposed regional grid.

Source: Associated Press

As California state lawmakers continue their debate over legislation that would enable the California ISO to transition into a regional transmission organization for the western U.S., they can rest assured that doing so would not bring on additional scrutiny from the Federal Energy Regulatory Commission, former FERC Chairman Norman Bay said.

"Regionalization doesn't give FERC authority over wholesale markets that it doesn't already have," Bay said in an interview on the sidelines of an Aug. 8 conference in Sacramento, Calif. He said that if FERC "wanted to somehow interfere with the [California] ISO, it could already do so" given that the federal regulator has jurisdiction over the state's grid operator under the Federal Power Act.

Bay led FERC from April 2015 to January 2017 and is now a partner at law firm Willkie Farr & Gallagher.

Speaking during a panel discussion at Advanced Energy Economy's Pathway to 2050 conference, Bay urged lawmakers to allow CAISO to fully integrate with other western transmission system operators to promote decarbonization and unlock greater volumes of renewable energy across the region. He said those and other economic, reliability and public policy benefits or full integration would go well beyond the more than $400 million provided by the more limited real-time western energy imbalance market and expand the region's ability to soak up California's excess solar power.

Bay's comments come as lawmakers consider a bill, AB 813, in the final three weeks of the legislative session amid ongoing concerns over a "partisan" FERC and its perceived threat to the state's renewable energy policies, potential costs related to integration, and the loss of local control over the grid operator. CAISO's board members are appointed by California's governor and confirmed by the state Senate.

"I don't see an upside to waiting. I see a downside," Bay said. "I would argue, actually, that you are better off with a broader western market because you have more states there."

In addition, Bay said a regional market in the West would favor low-cost renewables over the region's legacy coal-fired power plants, contradicting concerns voiced by some opponents that coal could thrive in a western grid. "If you create this market, if you expose resources to competition, if least-cost resources prevail as they will in a market ... it actually sends a signal to those coal plants to retire."

Fear of the unknown

In Aug. 13 comments before the Senate Appropriations Committee, California municipal utilities and public power agencies reiterated their opposition to AB 813 on cost and policy grounds. The committee added the bill to its "suspense file" to further consider its potential financial impacts before voting on the measure.

Some backers of a western regional grid acknowledged the challenges. "There is a lot of fear of the unknown with the Trump administration, but I don't think that should completely chill the conversation," Laura Wisland of the Union of Concerned Scientists said in an interview. "We are supportive of the concept of regionalization," she said, pointing to "significant ratepayer benefits" and "increased risk of solar curtailment." The bill, however, remains "a work in progress."

Other proponents highlighted the opportunity for California to access out-of-state wind resources. "The wind peaks in Wyoming when there's power demand in Los Angeles. You'd think this would be a perfect match," former Colorado Gov. Bill Ritter said at the event. "This probably should have been done a while back."

The Los Angeles Department of Water and Power, however, is among the public utilities opposed to the bill. California labor groups also remain opposed over the possible loss of jobs to out-of-state projects.

Travis Kavulla, vice chairman of the Montana Public Services Commission and a member of the governing body for the western energy imbalance market, cautioned against the status quo and said a fully integrated regional grid in the West was a natural evolution.

"We need to stress to some degree how regionally interdependent the western interconnection already is," Kavulla said at the event. "A conversation about regionalization simply formalizes and makes more efficient that relationship ... It's not as if California is hermetically sealed off from the rest of the West as it is."

California lawmakers have three weeks to decide whether they agree.