To: VCEA Board Members and Alternates
From: Bill Julian
I would like to request a discussion of Item 6, Legislative Report, and specifically SB 540 (Becker and Stern), the so-called Pathways proposal to eliminate consumer and public protections put in place in the early 2000’s to require accountability from the California grid operator, the CAISO, to quell the Energy Crisis. Specifically, the bill permits the CAISO to “use markets” created through a third-party entity “in lieu of” specific statutory obligations to the people of California to minimize costs, protect the public health and well-being, and maintain reliable aXordable electric service. Further, the bill removes from the CAISO crucial powers it now has to interact with the Federal Energy Regulatory Commission (FERC) to eXectuate regulatory reforms and protections if needed. The legal protections which Pathways seeks to abrogate were sustained in the courts against challenges by FERC and the Pathways proponents twenty years ago; the Pathways bill undermines these hard-won legal protections.
The VCEA Board has not taken a position on this bill but CalCCA is a prominent supporter, an unfortunate mistake that misrepresents VCEA and our community that you VCEA Board Members represent. After the discussion I am asking the VCEA Board to take an opposed position. This is not the time to be moving into uncharted legal and policy waters. I have spoken with several Board members and Mr. Sears previously about having a debate at the CalCCA annual meeting on this subject, to no avail.
A recent study of a new and untested approach to grid management by the CAISO, the Extended Day Ahead Market (EDAM) -- prepared for the Energy Commission before the Trump Executive Orders on promoting coal and attacking California cap-and-trade were issued -- shows that if the new market is implemented next year as proposed, there will likely be a net increase in emissions in the West and that hoped-for reliability resource increments will be almost entirely coal- and gas-fired generation. The Pathways bill, if enacted this year before the EDAM goes live, will make it virtually impossible to course correct if the dire CEC forecast proves correct, because it will enable the current CAISO board to give away its powers under the Federal Power Act. With the added uncertainty of the Trump policies, this is not the time to give up hard-won state powers and protections.
This is an extremely complex legal and policy discussion. A detailed examination of SB 540 will demonstrate that it undermines California’s renewable portfolio standard (RPS); it undermines our commitment to carbon reduction programs, including VCEA’s commitment to clean energy; it renders much more diXicult our eXorts to get control of retail electric rates driven in part by the CAISO’s (and FERC’s) approach to price formation in wholesale energy markets (the single price auction and scarcity pricing). The risks are great; the promised reward – increased access to wholesale energy elsewhere in the West – is illusory because we already have access (both physical and commercial) to regional energy supplies and have had for sixty years. We gain nothing and lose a lot if Pathways moves forward.
Valley Clean Energy is facing many challenges, mostly stemming from the current CPUC’s policies on “resource adequacy” and its war on distributed energy resources (DERs) and rooftop solar. The Pathways proposal and its underlying assumption that CA should go big – that we should get in bed with the hedge funds and Enron oXspring – is not the answer to these challenges.
Let’s have the discussion and move forward. SB 540 has not been set for hearing in the first policy committee; it is doubled-referred in the Senate (Energy and Judiciary) so there is time to have a robust discussion and take a reasoned decision.
VCEA should stand up.
April 9, 2025