A California state Senate committee voted unanimously in favor of the Pathways bill, bringing the Golden State closer to allowing CAISO to cede oversight of its energy markets to an independent regional organization (RO). 

Members of the state Senate Energy, Utilities and Communications Committee on April 21 voted 17-0 in favor of Senate Bill 540, dubbed “Pathways,” sending the proposed legislation to the Senate Judiciary Committee for a hearing April 29. 

The bill is the product of the work of the West-Wide Governance Pathways Initiative, the nearly two-year effort to support the expansion of CAISO’s Western Energy Imbalance Market (WEIM) and soon-to-be-implemented Extended Day-Ahead Market (EDAM) to entities outside California by shifting governance of the markets from the ISO to a proposed independent RO. 

Democratic Sens. Henry Stern and Josh Becker introduced the bill in February. During the April 21 hearing, Becker noted the legislation comes as SPP prepares to launch its own day-ahead market, Markets+, which already has attracted participants. (See Pathways ‘Step 2’ Bill Introduced in Calif. Legislature.) 

“Why do we need to do this now? The urgency is that if we don’t act quickly, we risk having less ability to trade with other regions and impact the clean energy resources available across the West,” Becker said. “Regions are getting tired of waiting for us and are considering joining Southwest Power Pool’s Markets+. If they do, they will stop trading with California and also in this WEIM I mentioned earlier, and have less need to make other bilateral trades with California.” 

Becker said participation in the RO is voluntary, adding that California retains its right to set its own energy policy goals and doesn’t have to join unless “specific, stringent guardrails are met.” 

Reached for comment about Becker’s statement, SPP spokesperson Derek Wingfield told RTO Insider: “Markets+ creates additional opportunities for Western entities and will not inhibit trade among them, including entities in California.” 

Stern, meanwhile, contended Pathways would allow California to tap into a wider market of clean energy resources, saying “if we don’t reach beyond our borders and allow for other cleaner renewables to be able to come in and balance our grid depending on the time of day, we’re gonna have to find that power somewhere. And right now, we are literally paying for it, and we’re not just paying for it with taxpayer dollars, but it’s in our lungs, it’s in environmental injustices everywhere.” 

Representatives from the International Brotherhood of Electrical Workers, Natural Resources Defense Council, Environmental Defense Fund and others supported the bill during the hearing. 

Opposition, Concerns

However, lawmakers also heard from opponents, including the Center for Biological Diversity, the California Solar & Storage Association and Californians for Green Nuclear Power. 

Bill Julian, former legislative director of the California Public Utilities Commission, opposed the bill on behalf of himself and former CPUC President, Loretta Lynch. 

Lynch, in a previous meeting, contended many of the arguments favoring Pathways rely on hypothetical scenarios in which EDAM would consist of participants from all Western states. This is unlikely, Lynch said, noting that several entities already have decided not to join EDAM. (See Pathways Initiative Receives Praise, Skepticism at Calif. Hearing.) 

Though the committee voted unanimously to pass the legislation, some lawmakers voiced concern about the lack of certain provisions in the bill. 

For example, Democratic Sens. Benjamin Allen and Aisha Wahab expressed concern about California’s ability to withdraw from the RO under the legislation. 

Allen pointed to comments by groups like The Utility Reform Network (TURN) that have argued the bill’s language is not strong enough to protect from the risk of penalties against the state or utilities if California withdraws. 

Committee member Susan Rubio urged Becker to explore further consumer protections. 

Becker noted that the groups behind the bill are looking at amendments and plan to move forward with some suggestions, even some from opposing parties like Lynch. 

“Certainly, you have my commitment to work with you and make sure that by the end of this process there’s a bill that we’re all comfortable with,” Becker said. “And then, as just a reminder, we’ll have at least two years with the legislature able to weigh in before we join.” 

The Pathways bill states that CAISO can decide whether to join the RO-governed market on or after Jan. 1, 2027.