Sacramento, CA – In a bipartisan ramrod, reminiscent of the vote over the first electricity deregulation bill in 1996, the California Senate approved legislation allowing for a regional electricity system that throws out Enron-era state protections against price manipulation and gives the Trump Administration control over California environmental laws.
Republican Senator Tony Strickland called SB 540 (Becker) a “Big Beautiful Bill” and, despite Democratic floor speeches outlining concerns about cost, oversight and loss of control to Trump, the Senate voted 33 – 1 to advance the deregulation bill, a priority of Governor Newsom’s.
Senator Aisha Wahab issued a stunning rebuke of the measure and said she would vote against it. However, after Senator Pro Tem Mike McGuire gave a floor speech for SB 540 she abstained and the other Democrats fell in line behind the party, bowing to the energy utility establishment behind the proposal.
In addition to the energy traders, utilities and arbitragers who will benefit from a regional market, the Silicon Valley also seeks the regional system to power its AI data centers. Other senators – including Umberg, Caballero and Allen – voiced concerns about Trump preemption of CA laws, the lack of legislative oversight, and the ability for price manipulation.
“This is a stunning abdication of the Senate’s duty to protect electricity consumers and the state’s environmental laws when they are under threat from the Trump Administration,” said Jamie Court, president of Consumer Watchdog. “The Senate turned a blind eye to the failure of regional organizations elsewhere, where the same players behind SB 540 are robbing other East Coast states blind. California voters should be deeply disappointed in their leaders at a time when the affordability of electricity is under scrutiny and our climate laws are under attack from Washington. As the Senate Judiciary Committee analysis states, this is the worst time to be giving away Californians’ power over our electricity market to a regional organization subject to Trump’s Federal Energy Regulatory Commission (FERC). Backers of the bill – largely the energy traders, brokers and suppliers who stand to make a killing off the building of new transmission lines and arbitraging of energy – paint a panacea of one big beautiful free market for electricity. Without the post-Enron era protections, however, California consumers will be targets of excessive prices and our environmental laws will be erased.”
Consumer Watchdog, TURN, Center for Biological Diversity, Food & Water Watch, the Environmental Working Group, the District Council of Iron Workers and the International Brotherhood of Boilermakers, as well as 100 other groups, oppose SB 540.
In creating a Western regional electricity market, SB 540 gives Trump’s FERC and market participants the power to invalidate California environmental laws. With respect to the regional market, SB 540 also repeals Enron-era protections against price gouging – Public Utilities Code Section 345 – which requires electricity supplies be maximized and prices be minimized.
Amendments taken by the author in the Judiciary Committee to require regional markets to minimize costs and maximize supply, as well as greater transparency amendments, were subsequently taken out after the Appropriations Committee.
“This power grab reveals the real motives of the backers – wanting to have the power to manipulate markets while shielding their actions from public scrutiny,” said Court.
The Senate Judiciary Committee analysis is on point: “California could see significant harms to its energy goals and its standing in the regional market… These dangers are even greater now that President Trump has put a target on California’s green energy laws and directed the United States Attorney General to find ways to curtail our state’s climate change efforts and to identify opportunities to challenge our state policies through various legal angles, such as federal preemption and discrimination (Dormant Commerce Clause) legal angles…Currently, California is able to exert a certain amount of influence over the direction of the CAISO with regard to interstate energy with a board appointed by the Governor and subject to approval by the California State Senate. Under this bill, California would open the state up to federal challenges.”
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