Jessica Guadalupe Tovar
339 15th St Suite 208
Oakland, CA 94612
[email protected]
Dear Ava Community Energy Board of Directors, Community Advisory Committee, and Staff, People’s Clean Power Alliance encourages the Ava Board to vote no on Action Item 13 on the April 16 Board meeting agenda. There are numerous reasons to see the Pathways proposal, now SB540, as a Trojan horse. Below we enumerate the outcomes of the Pathways Proposal.
We also call attention to the fact that California will lose control over its own energy resources and be subject to the authority of the Federal Energy Regulatory Commission (FERC), currently under the Trump administration.
SB540 seeks to transform the California Independent System Operator (CAISO) into a new entity, an “independent” regional organization with broad power to control the member states’ energy resources. However, we know that this organization will be subject to oversight by the Federal Energy Regulatory Commission under Donald Trump, the same president who in 2018 tried to make all grid operators take coal. More recently, Trump has made it clear that he has not abandoned his promise to “bring back coal” and there are eight coal producing Western states that could be part of the proposed regional organization. FERC could have the authority to mandate that California, as part of the regional system, must take coal.
California stands to lose some very important safeguards for the state’s energy consumers if SB540 passes. When California established CAISO, it did so as a “public benefit corporation,” serving only California. Public Benefit Corporations are for-profit entities that are legally required to consider society and the environment in addition to profit. They provide transparency by disclosing boards, commissions, and groups.
Because CAISO formed as a “public benefit corporation” it was possible for there to be several protections added to the CA public utilities code, section 345.5. These provisions were to reduce energy costs for consumers; safeguard CA's health, environment and consumers; and maximize use of existing energy resources to meet consumers energy needs. SB540 essentially replaces this section with 12 different requirements of the “independent regional organization,” none of which guarantee any material benefits to California consumers. California would not be able to guarantee any of those requirements in the future.
SB540’s ”independent” regional organization would be a Delaware Corporation, in contrast to CAISO. That difference is important in considering FERC’s power over energy markets and decisions. Delaware corporations are for profit corporations beholden to investors that are not required to publicly disclose directors and officers. In 2004, California won a decision in the case ISO vs. FERC because it is a California benefit corporation. The court found that CAISO was subject to California oversight and California’s corporate laws. Becoming part of a Delaware corporation would eliminate that protection. In spite of Ava’s dismissal of Trump’s ability to mess with California’s energy system at the last Board meeting, SB540 would enable Trump to access powers that would have serious consequences on California's drive for clean energy.
Last, but certainly not least, the savings being touted by Pathways proponents are all only estimates and would not be realized until 7 years after the organization begins operating. Even the best case scenarios, where all possible states join the regional organization, estimate no more than $800 million in savings for California, which is only 1.1% of California utility bills. In the more likely scenario where not all states join, there might be $112 MM, or only .2% of CA utility bills.
The main point of SB540 is to increase California’s access to renewable energy and energy reliability during times of need, though the state already has that ability. However, there is a much faster, cheaper, and assured way to reduce energy costs and increase reliability, by supporting and increasing California’s local renewable energy resources. Growth in local solar would put California back on track to become the nation’s leader in renewable resources and improve the state’s ability to meet climate goals.
SB 540 carries too many risks, and too much uncertainty. Ava Community Energy was created to serve local communities, cities and counties. There is no reason why Ava needs to support this bill and many reasons why it should not.
Thank you,
Jessica Guadalupe Tovar, People’s Clean Power Alliance