Power Grid Expansion Plan Withdrawn Amid Political Backlash

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The late-session plan to restructure management of the California power grid skidded to a halt Wednesday in the wake of growing opposition from interest groups and a spate of negative publicity.

While lobbyists and advocacy groups spent much of the week pressing for passage or defeat of the proposal long-backed by Gov. Jerry Brown, the lawmaker who introduced the bill withdrew his dual measures early in the afternoon.

Assemblyman Chris Holden, D-Pasadena, said he was not abandoning the idea of restructuring the California Independent System Operator, or Cal-ISO, the nonprofit in charge of most of the state energy grid.

“But there is still more to discuss, starting with the role of the Legislature in review of any proposed governance structure of a new ISO,” said a statement from Holden, who added the nearly identical language to two different bills. “We will continue our work on the issues over the fall and likely revisit it in the second half of this two-year session.”

The legislation would have created a process to begin transferring authority of the grid from Cal-ISO to a commission of elected officials or appointees that would then develop a governing plan to expand the grid to five Western states.

The bills also were challenged by supporters of what’s known as community choice aggregation, a power-buying program that allows cities and counties to purchase electricity in bulk from specific sources rather than relying on for-profit utilities.

Both Cal-ISO and Gov. Brown said the expansion would benefit consumers and allow utilities to market excess solar power to other states and to import cheaper wind energy into California.

“The goal of regionalizing the grid is to lower consumer costs and greenhouse gas emissions and improve electricity reliability and renewable energy development,” Brown spokesman Evan Westrup said. “This proposal is the product of years of discussion and input from all parties.

The Governor’s Office did not respond to questions about Holden’s decision to withdraw the amendments, saying the assemblyman’s statement speaks for itself.

Critics worried that expanding the grid outside state lines would undermine California’s ability to regulate which sources of electricity are bought and sold within its borders.

Cal-ISO board members are appointed by the governor, who answers to voters. Expanding the network to other states could jeopardize state control of the network and leave oversight to the less environmentally conscious Trump administration, according to critics.

Opponents also complained that, much like last year, lawmakers were asked to approve the expansion without a rigorous debate or even formal hearings. Holden introduced his amendments late last week with almost no public notice.

“This is a real victory for consumers of the state and the environment,” said Jamie Court of the Consumer Watchdog advocacy group. “This deregulation scheme would not hold up in the light of day. We’re happy to have this debate next year, when there is sunshine on the proposal.”

The amendments generated a groundswell of opposition beginning Monday morning, after The San Diego Union-Tribune and other news organizations reported that the grid-expansion effort had quietly resurfaced.

Numerous interest groups organized to fight the proposal, urging members to contact lawmakers and register their disapproval. Meanwhile, newspaper editorial pages up and down the state urged lawmakers not to pursue the changes without a more thorough public discourse.

“Bad policy and bad tactics defeated the plan to surrender California’s electricity grid system to private corporate control,” said former San Diego City Attorney Michael Aguirre. “Control of our grid remains where it should be: in the hands of the people of California.”

Ralph Cavanagh, co-director of the Natural Resources Defense Council’s energy program, said he and other supporters would continue to pursue the regionalized grid concept.

“We need a fully integrated Western grid to avoid throwing away California’s pollution-free solar and wind generation,” he said. “Fortunately, we are only halfway through a two-year legislature session, and we won’t pause in our efforts to make progress.”

The failure of the regionalization effort leaves open the question of what will happen with Senate Bill 100, which calls for California to generate 100 percent of its electricity from renewable sources by 2045.

The bill is among the top legislative priorities for Senate President Kevin De Leon, but has nonetheless stalled in the statehouse.

Matt Freedman of the Utility Reform Network consumer group blamed Holden for the log jam.

“It is deeply disappointing that Assembly Member Holden has decided to hold SB 100 hostage unless and until the governor’s poorly constructed grid regionalization plan receives legislative approval,” he said. “There is no reason to tie these two efforts together other than to create political leverage that is almost certain to result in a bad deal for California consumer and the environment.”

The withdrawal Wednesday represents the second straight year that Brown failed to win legislative approval for the grid expansion plan.

In August 2016, the governor withdrew the measure in the face of rising skepticism by leaders in the Senate and Assembly.

Leaders in both chambers had sent Brown a list of questions early in 2016 but never received a written response to their concerns about the impacts of the plan.

The regionalization effort would have wedded the nonprofit Cal-ISO with PacifiCorp, a for-profit utility based in Oregon that serves millions of customers in multiple states.

PacifiCorp is owned by Berkshire Hathaway, the holding company controlled by billionaire investor Warren Buffett.

The utility generates two-thirds of its electricity from coal and other fossil fuels, raising questions about whether California could require PacifiCorp to limit imports to renewable power.

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