The deadline to submit bills for California’s 2025 session is looming, and backers of the West-Wide Governance Pathways Initiative expect legislation without unnecessary fluff that will change CAISO’s governance structure and allow a new regional organization (RO) to oversee the ISO’s Western energy markets.

California backers of the Pathways Initiative’s Step 2 plan have until Feb. 21 to submit a bill for the state legislature’s 2025 session. Under Step 2, which requires statutory changes, Pathways would create a new independent RO to govern rules for CAISO’s Western Energy Imbalance Market and Extended Day-Ahead Market (EDAM).

The Western Energy Markets (WEM) Governing Body and ISO Board of Governors approved Step 1 in August, elevating the Governing Body’s authority over CAISO energy markets. (See CAISO, WEM Boards Approve Pathways ‘Step 1’ Plan.)

The anticipated Step 2 legislation comes as entities weigh whether to join SPP’s Markets+ or EDAM. The two markets have yet to go online, but both are competing for participants.

EDAM’s governance structure has been a concern for stakeholders uncomfortable with markets led by CAISO, whose Board of Governors members are appointed by the California governor. (See Pathways Step 2 Not Good Enough, Markets+ Backers Say.)

Pathways Launch Committee member Brian Turner, director of Advanced Energy United’s regulatory engagement in the West, expects the Step 2 legislation to address those concerns by preserving states’ policy authority. (See Pathways ‘Step 2’ Plan Elicits Praise, Concerns — and Advice.)

“California’s clean energy policies, greenhouse gas goals, etc., are preserved and not imposed on other states,” Turner told RTO Insider. “Other states can make their own decisions and have them be respected under the governance framework that we outlined.”

Turner added that states participating in EDAM are “not being asked to give up any of its authority or autonomy on its resource and clean energy policy and other public policy goals.”

Ben Otto, energy consultant with NW Energy Coalition, shared Turner’s sentiment, saying that a key innovation of the Pathways proposal “is that moving forward with regional governance for EDAM does not depend on California legislation. Rather, the legislation will enable California entities to participate in the regional market and CAISO to contract as an operator.”

Otto said he expects the bill to be short and enable CAISO to participate in a regional day-ahead market under certain conditions.

“The conditions match the governance structures, public interest protections, and other elements of the Pathways Initiative proposal,” Otto said.

Jan Smutny-Jones, CEO of the Independent Energy Producers Association (IEP) and former board chair at CAISO, similarly said he expects “the legislation to be short and to the point.”

“I expect some language on protecting the public interests and respect for the energy polices of the various states. Hard stop,” Smutny-Jones said. “This is not a new energy policy, but a bill authorizing how the Western transmission system can be more efficiently operated to the benefit of California and Western ratepayers.”

A potential hurdle in the process could be if stakeholders add unrelated energy policies to the bill, said Sara Fitzsimon, policy director at IEP.

“This bill needs to only focus on authorizing the CAISO’s participation in an independent RO. Any other language outside achieving that goal should not be included, as it could cause delays in getting this critical language through the legislature,” Fitzsimon said.

The anticipated bill also comes as California grapples with wildfires and affordability issues, which could potentially cause delays, according to Leah Rubin Shen, managing director of Advanced Energy United’s legislative, political and regulatory engagement in the West.

Though the bill should only enable Step 2, Rubin Shen hopes the conversation around markets doesn’t end with the bill but rather spurs parties in the West to continue to discuss how to “evolve beyond a day-ahead market” by, for example, building an RTO.

“So, to the extent that this is a step forward, we are hopeful that it is a step that is good in its own right, and also a step that maybe has further steps down the road,” Rubin Shen said.