California Gov. Gavin Newsom renewed his call for state lawmakers to pass a bill to authorize CAISO to relinquish governance of its electricity markets and allow it and the state’s utilities to participate in a new “regional organization” designed to oversee a West-wide market. 

The bill would implement the plans of the West-Wide Governance Pathways Initiative, a multistate effort to create an independent “regional organization” (RO) to govern CAISO’s Western Energy Imbalance Market and Extended Day-Ahead Market (EDAM), the latter set to launch in 2026.  

“I’m calling on the Legislature to pass a viable proposal to expand regional power markets — it’s our best shot at affordability this year,” Newsom said in press release Aug. 27. “Over $1 billion in economic benefits to our state is on the line, and failure to get this done will mean higher electric bills, more pollution and a less reliable power grid. Californians deserve action now to make their electric bills more affordable.” 

The statement was the first from the governor on the issue since the Legislature resumed the 2025 session Aug. 19 after a monthlong summer recess.   

Newsom’s reference to a “viable proposal” suggests it’s still an open question whether the legislation will be Senate Bill 540 — known as the “Pathways” bill — or another bill. With the legislative session set to wrap up Sept. 12, the clock is ticking on any effort to get a bill passed. 

SB 540 passed the state Senate in June on a 36-0 vote, but the bill’s first hearing in the Assembly’s Utilities and Energy Committee, scheduled for July 16, was delayed until after the summer break at the request of the bill’s author, Sen. Josh Becker (D). (See Calif. Pathways Bill Delayed After Orgs Withdraw Support, While Newsom Signals Backing for Effort.) 

Becker sought the delay after 21 organizations pulled their backing for the bill in response to an amendment that would establish a new Regional Energy Market Oversight Council charged with ensuring CAISO’s participation in the RO “serves the interests of the state.” The new council would be authorized to mandate withdrawal by the ISO and utilities if those interests are compromised.  

The organizations — which include Environmental Defense Fund, PacifiCorp, Advanced Energy United, Amazon and Portland General Electric — called the amendment “unacceptable” and asked lawmakers to remove it. 

Responding to a reporter’s question during a July 31 press conference, Newsom reiterated his previous support for the Pathways effort and praised the coalition behind SB 540, saying, “I’m not aware of a more diverse and large coalition I’ve seen on an issue of energy in some time.” The group includes labor unions and publicly owned utilities that strongly opposed past efforts to “regionalize” CAISO. 

Newsom’s Aug. 27 press release contained a link to an Aug. 13 post on the governor’s X account showing him meeting with a coalition of Pathways supporters.  

“I’m calling on the Legislature to enable the expansion of regional energy markets to lower energy costs, reduce air pollution and avoid power outages,” Newsom said in the post. 

Pathways Leader ‘Optimistic’

But the language coming out of the offices of Newsom and Assembly Speaker Robert Rivas has left open the possibility that the provisions in the original Pathways bill could be tacked on to another bill. With fewer than three weeks left in the session, SB 540 hasn’t been scheduled for an initial Assembly committee hearing. 

Still, when  RTO Insider  previously asked the two offices about the potential for other strategies that don’t include SB 540, both declined to comment, while a source in the governor’s office said Newsom would let lawmakers take the lead on the effort. 

In an Aug. 26 email to RTO Insider, Kathleen Staks, co-chair of the West-Wide Governance Pathways Initiative’s Launch Committee, noted that Newsom and Rivas have come out in “very public support” of the Pathways bill.  

“In addition, there continues to be an enormous diverse coalition in support of getting this policy done this year (entirely separate from the Launch Committee, which is not engaging in legislative efforts),” said Staks, who is executive director of Western Freedom. While the committee is not involved in lobbying, some of its California members are working to advance the bill in their other organizational capacities. 

“The bill has not yet been scheduled for a policy committee hearing in the Assembly because it has been in negotiations between the Gov’s office, Senate and Assembly, along with some other big energy issues,” Staks wrote. “The coalition continues to advocate for passing a version of SB 540 that works for the West, and we are optimistic that it will get done this year.” 

The offices of Sen. Becker and Speaker Rivas did not respond to requests for comment in time for publication of this article.