California has an environmental problem.
Companies have built so many solar farms across the state that on many days — particularly in the spring months when sunshine is abundant but demand for air conditioning isn’t very high — they are producing more solar electricity than the state needs. Sometimes the farms have to be shut down because there isn’t enough demand.
The fix?
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Seeking to more easily sell the surplus solar power to other states, expand competition for electricity in general and reduce prices for California residents who pay some of the highest electricity costs in the nation, Gov. Gavin Newsom signed a far-reaching bill earlier this month with a simple premise: Create a new, streamlined market across the West to make it easier to buy and sell electricity between states.
Supporters say it will help California’s green energy revolution spread across the West and lower utility bills.
“Right now, California buys power when we need extra power,” said Katelyn Roedner Sutter, state director of the Environmental Defense Fund, a nonprofit group. “We’re basically buying it from 7-11. We buy whatever is available. It meets our need and keeps the lights on. It’s probably more expensive. The new market would be more like Costco. We’d plan ahead. We’d buy in bulk. We’d have more options. The price is probably lower.”
The Legislature passed the law two weeks ago with overwhelming bipartisan support: 34-0 in the state Senate and 74-1 in the Assembly, with San Diego Republican Carl DeMaio opposed.
But critics worry it contains too many loopholes, like the disastrous law that former Gov. Pete Wilson signed in 1996 that deregulated electric utilities, led to blackouts, price-gouging by companies like Enron, the bankruptcy of PG&E and the recall of former Gov. Gray Davis in 2003. They say California could give up too much control, allowing other states or the Trump administration to water down California’s environmental and consumer protection rules, and its ratepayers to subsidize more polluting electricity, like coal-fired power plants in Wyoming.
“We don’t dispute there could be some savings and value,” said Matthew Freedman, an attorney with The Utility Reform Network, a consumer group in Oakland. “We’re just concerned that California isn’t adequately protecting itself.”
“The Trump administration has basically declared war on solar and wind,” he added. “They want to restructure markets to devalue renewable energy. There’s all sorts of ways they can create mischief and increase the costs for clean power with new market rules.”
Wind turbines operate at a wind farm near solar panels on March 6, 2024, near Palm Springs, California. (Mario Tama/Getty Images North America/TNS)
Newsom signed the bill, AB 825, by state Sen. Josh Becker, D-Menlo Park, and Assemblywoman Cottie Petrie-Norris, D-Irvine, into law on Sept. 19. It comes at a time when California’s electricity use continues to grow due to expanding data centers, more electric vehicles and other demands.
The new law allows California to enter into agreements with up to 10 other Western states — Arizona, Colorado, Idaho, Montana, New Mexico, Nevada, Oregon, Utah, Washington and Wyoming — to create a new regional organization starting in 2028 to oversee a modernized Western power grid.
A lot has yet to be worked out, such as where the headquarters would be located, which utilities would join the market, and how many board members from which states would run the new market.
Supporters include some of the state’s largest environmental groups, including the Environmental Defense Fund, Sierra Club California, the Nature Conservancy and the Natural Resources Defense Council. Also backing it are big tech companies like Google, Microsoft and Netflix, along with the Silicon Valley Leadership Group, the California Chamber of Commerce, large utilities like PG&E and Southern California Edison, and some labor unions such as the International Brotherhood of Electrical Workers.
Critics include other environmental groups, like the Center for Biological Diversity, the Environmental Working Group and the Sunflower Alliance, along with consumer groups like Public Citizen and Consumer Watchdog.
The law gives the California Public Utilities Commission and the Independent System Operator, which currently operates most of California’s power grid, the authority to decide after Jan. 1, 2028, whether to join the new Western market after more details are worked out.
Becker, the bill’s co-author, said he understands the concerns. He noted that California can decide not to join the market or can pull out.
Electrical power flow and conditions are monitored at the California Independent System Operator grid control center in Folsom, Calif. (AP Photo/Rich Pedroncelli)
The ISO will still oversee most of California’s grid. And California’s other laws, such as its cap-and-trade program to reduce greenhouse gas emissions, remain in place, he said, along with a landmark law requiring 100% carbon-free electricity by 2045 — up from the current total of 67%.
Becker said solar and wind prices have come down so much in recent years that he expects they will be cheaper than coal and natural gas and will win in the marketplace, reducing pollution and greenhouse gases.
“You are forcing fossil fuels to compete against renewables,” he said.
He cited a study done by a consultant for the California Energy Commission earlier this year showing that California ratepayers could save between $294 million and $790 million a year due to increased competition.
In huge summer heatwaves, when power demand skyrockets in California for air conditioning and big wildfires can bring down major transmission lines, having better connections to other states also reduces the risk of future blackouts, he added.
Power lines in Fremont deliver power to other cities. (Nhat V. Meyer/Bay Area News Group)
Jamie Court, president of Consumer Watchdog, a Los Angeles nonprofit group, said Trump has appointed members to the Federal Energy Regulatory Commission who could take California to court if it tried to pull out of a regional market group, or demand huge fines, or change rules to require coal- and natural gas-fired electricity to get precedence over solar and wind.
“Supporters are saying, ‘Let’s get together with all the other states and let the market work,’” he said. “But this is deregulation. Haven’t we learned our lesson?”
A new Western market is likely to expand renewable energy in other states, because they will want to sell it to California, the most populous state in the nation, said Dan Kammen, a professor of energy at UC Berkeley.
California already has laws that limit the carbon intensity of electricity flowing into the state, essentially blocking the import of coal power, he added. As long as the ISO and the PUC, whose board members are appointed by the governor, stand firm against other states as they negotiate, it should be a net benefit, he said.
“California must remain aggressively vigilant,” he said. “We will be able to drive lower-cost, more-reliable clean energy to Californians and across the West — if we don’t abdicate our responsibilities.”