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Climate change and energy

California’s plan to integrate the West Coast grid is a great idea—that could easily backfire

The state leading the clean-energy charge could wind up importing coal power from Wyoming.
July 11, 2018
Chris Hunkeler | Flickr

An ideal electricity grid would stretch high-speed lines across vast territories, forming huge interconnected networks that could immediately meet shifting consumer demand with wind, hydro, and solar energy generated hundreds of miles away (see “How to get Wyoming wind to California, and cut 80% of US carbon emissions”).

A bill gaining momentum in the California legislature would set the stage for the integration of the electricity grid across the West Coast, aiming to achieve these very ends. But some legal experts fear it would have precisely the opposite effect: loosening the state’s grip over its own grid, and with it the ability to enforce some of the nation’s strictest clean-energy policies.

That danger is especially acute under the Trump administration. The Federal Energy Regulatory Commission, which oversees grid operators, is working to “actively distort energy markets to punish states taking steps to prioritize clean energy,” says Danny Cullenward, an energy economist, lawyer, and researcher at the Carnegie Institution for Science.

(On Thursday he and a coauthor posted a new paper, set for publication in the Yale Journal on Regulation Bulletin this fall, highlighting the risks of such recent actions by FERC and several regional market operators.)

These political forces could undermine efforts to create, expand, or even maintain regional grids throughout the nation, limiting the ability of such systems to make it cheaper and easier to cut carbon emissions.

An interconnected grid already spans the western edge of the United States, but it’s operated by an assortment of state and regional entities. The proposal—pushed for years by Governor Jerry Brown and working its way through the California senate—would create a regional organization overseeing energy markets across several states. The initial hope is to reach agreements establishing links with Berkshire Hathaway–owned utilities operating across parts of Nevada, Oregon, Utah, Washington, and Wyoming. But such a system could eventually incorporate other neighboring operators and states as well.

California already swaps renewable energy with other states. But some worry that if it enters into contractual agreements with them, it could expose its clean-energy policies to serious challenges. Specifically, if the state tries to limit the “type or amount of energy being produced,” energy operators in other states could claim that those laws conflict with FERC’s authority or run afoul of federal powers over interstate commerce, according to a fairly critical analysis by the Senate Judiciary Committee published last month.

Another serious concern is that as other states join the governing board of the newly regional grid operator, they will push a very different set of energy priorities. Notably, while renewables supply much of California’s energy, Wyoming still runs primarily on coal—and utilities there will presumably want it to compete on a level playing field with other sources in a multistate marketplace.

All of this could hinder California’s aggressive clean-energy policies, including its renewable standards and cap-and-trade program (the legislature is currently weighing a bill that would require the power sector to generate all of its electricity from carbon-free sources by 2045). That, in turn, could also undermine the economic competiveness of California’s own energy producers.

As written, the bill will increase “the likelihood that California, as the largest statewide market in the western region, would be required to purchase coal and natural gas, in contravention of state climate policies and renewable energy goals,” the committee report says.

Proponents, including the California Chamber of Commerce and the Natural Resources Defense Council, argue that these risks are overblown, that the bill contains various safety provisions, and that regional grids have worked elsewhere. An analysis published last year by Yale Law School argued that moving to a multistate system wouldn’t increase federal authority over California’s system or “open the door” to legal challenges, because the market already lies under FERC’s jurisdiction and carries out some interstate commerce.

Cullenward acknowledges that energy operators in other states could have raised challenges before, but he says that misses the point. The shift to a formal regional marketplace significantly increases the likelihood that they will do so, he says, and substantially raises the stakes if they succeed. 

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