Bill Text: CA AB538 | 2023-2024 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Multistate regional transmission system organization: membership.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2024-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB538 Detail]
Download: California-2023-AB538-Introduced.html
352. 359.
Bill Title: Multistate regional transmission system organization: membership.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2024-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB538 Detail]
Download: California-2023-AB538-Introduced.html
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 538
| Introduced by Assembly Member Holden (Principal coauthors: Senators Dodd and Stern) |
February 08, 2023 |
An act to add Division 4.2 (commencing with Section 9000) to, to repeal Section 352 of, to repeal Article 5.5 (commencing with Section 359.5) of Chapter 2.3 of Part 1 of Division 1 of, and to repeal and add Section 359 of, the Public Utilities Code, relating to electricity.
LEGISLATIVE COUNSEL'S DIGEST
AB 538, as introduced, Holden.
Multistate regional transmission system organization: membership.
Existing law provides for the establishment of an Independent System Operator (ISO) as a nonprofit public benefit corporation and requires the ISO to ensure efficient use and reliable operation of the electrical transmission grid consistent with achieving planning and operating reserve criteria no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council. The Clean Energy and Pollution Reduction Act of 2015 provides for the transformation of the ISO into a regional organization, with the approval of the Legislature, pursuant to a specified process. That process provides that modifications to the ISO’s governance structure, through changes to its bylaws or other corporate governance documents, will not become effective until the ISO, the Public Utilities Commission (PUC), the State Energy Resources Conservation
and Development Commission (Energy Commission), the State Air Resources Board (state board), the Governor, and the Legislature take specified actions on or before January 1, 2019.
This bill would prohibit a California electrical transmission facility owner, a retail seller of electricity, or a local publicly owned electric utility from joining a multistate regional transmission system organization, as defined, unless the bylaws or other organizational documents that govern the organization, and the organization’s operations, meet Federal Energy Regulatory Commission requirements and other specified requirements. The bill would require a California transmission owner, retail seller, or local publicly owned electric utility, before joining a multistate regional transmission system organization, to submit the bylaws and other organizational documents that govern the multistate regional transmission system organization to the Energy Commission for review. The bill would
require the Energy Commission, in consultation with the PUC and the state board, to review those materials for compliance with the bill’s requirements. The bill would prohibit a California transmission owner, retail seller, or local publicly owned electric utility from joining the multistate regional transmission system organization unless the Energy Commission has determined that the organization’s bylaws and organizational documents meet those requirements. If a California transmission owner, retail seller, or local publicly owned electric utility has joined an independent system operator that becomes a multistate regional transmission system organization and the Energy Commission determines that the organization’s bylaws and organizational documents do not meet those requirements, the bill would require that the California transmission owner, retail seller, or local publicly owned electric utility not remain in the organization. The bill would authorize the ISO to develop and submit to the Energy
Commission a governance proposal that complies with those requirements and to provide notice and a copy of this submission to the Legislature and the Governor at the same time as it is submitted to the Energy Commission. The bill would require the Energy Commission, in consultation with the PUC and state board, to review the proposal for compliance with the bill’s requirements, and, if the Energy Commission determines that the proposal meets those requirements, to submit the governance proposal to the Governor and to the Legislature with a declaration that the Energy Commission has so found. If notice is delivered by the Energy Commission during a regular session of the Legislature, and if a transmission owner from outside California that is not a participating transmission owner as of January 1, 2024, has entered into an agreement with the ISO indicating its intent to become a participating transmission owner, the bill would authorize the ISO, beginning 270 days after receipt of notice by the Legislature,
to proceed to implement the proposal.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
(a) The Legislature finds and declare all of the following:(1) California aims to accelerate progress on its clean energy goals, spur renewable energy development both offshore and on land, make energy use more efficient and flexible, and scale the state’s energy infrastructure and transmission to meet the state economy’s needs.
(2) All of this is only possible if the state works with its neighbors in the west and create a regional system that expands the footprint for clean energy resources and enables better collaboration, transparency, and integration across the western electrical transmission grid system.
(3) Engaging with the rest of the region to ensure electric reliability and affordability for California households is critical, as demonstrated in the sustained success of the Western Energy Imbalance Market, which has reduced electricity costs for all participants by more than $3 billion since 2014, and most recently in the inspirational westwide cooperation that sustained the state’s regional electrical grid throughout a historic heat wave in September 2022.
(b) In enacting this act, it is the intent of the Legislature to enable the transition of the Independent System Operator to a regional transmission operator with fully independent governance. To that end, it is the intent of the Legislature to continue work that began with stakeholder groups throughout the region starting in 2014 with the launch of the Western Energy Imbalance Market, and continuing in 2022 with unanimous
bipartisan adoption of Assembly Concurrent Resolution 188 (2022), which identified numerous potential reliability, affordability, and environmental benefits, including significant avoided emissions of carbon dioxide, from further western grid integration.
SEC. 2.
Section 352 of the Public Utilities Code is repealed.(a)The Independent System Operator may not enter into a multistate entity or a regional organization as authorized in Section 359 unless that entry is approved by the Oversight Board.
(b)This section becomes inoperative on the date on which the governance modifications set forth in Section 359.5 become effective and is repealed on January 1
of the following year.
SEC. 3.
Section 359 of the Public Utilities Code is repealed.(a)It is the intent of the Legislature to provide for the evolution of the Independent System Operator into a regional organization to promote the development of regional electricity transmission markets in the western states and to improve the access of consumers served by the Independent System Operator
to those markets.
(b)The preferred means by which the voluntary evolution described in subdivision (a) should occur is through the adoption of a regional compact or other comparable agreement among cooperating party states, the retail customers of which states would reside within the geographic territories served by the Independent System Operator.
(c)The agreement described in subdivision (b) should provide for all of the following:
(1)An equitable process for the appointment or confirmation by party states of members of the governing boards of the Independent System Operator.
(2)A respecification of the size, structure, representation, eligible membership, nominating procedures, and member terms of service of the governing boards of the Independent System Operator.
(3)Mechanisms by which each party state, jointly or separately, can oversee effectively the actions of the Independent System Operator as those actions relate to the assurance of electricity system reliability within the party state and to matters that affect electricity sales to the retail customers of the party state or otherwise affect the general welfare of the electricity consumers and the general public of the party state.
(4)The adherence by publicly owned and investor-owned utilities located in party states to enforceable standards and protocols to protect the reliability of the interconnected regional transmission and distribution systems.
(d)(1)Except for paragraphs (2) and (3), this section becomes inoperative on January 1, 2016.
(2)This section becomes operative on January 1, 2019, if Article 5.5 (commencing with Section 359.5) becomes inoperative on that date.
(3)If the governance modifications set forth in Section 359.5 become effective, this article is repealed on January 1 of the year following the effective date of the governance modifications.
SEC. 4.
Section 359 is added to the Public Utilities Code, to read:359.
(a) The Independent System Operator’s Board of Governors may develop and submit to the Energy Commission a governance proposal that complies with each of the requirements of Section 9002. The Independent System Operator shall provide notice and a copy of this submission to the Legislature and the Governor at the same time as it is submitted to the Energy Commission.(b) The Energy Commission, in consultation with the commission and the State Air Resources Board, shall review the governance proposal for compliance with the requirements of Chapter 1 (commencing with Section 9000) of Division 4.2. This review shall include public review of, and written comment on, the proposal and at least one public workshop
or hearing at which public comment is received.
(c) If the Energy Commission determines that the governance proposal complies with the requirements of Chapter 1 (commencing with Section 9000) of Division 4.2, the Energy Commission shall submit the governance proposal to the Governor and to the Legislature with a declaration that the Energy Commission has so found. Notice to the Legislature may be at any time during a regular session of the Legislature. Not before 270 days after receipt of notice by the Legislature, provided the notice was delivered during a regular session of the Legislature, and if a transmission owner from outside California that is not a participating transmission owner as of January 1, 2024, has entered into an agreement with the Independent System Operator indicating its intent to become a participating transmission owner and the Federal Energy Regulatory Commission has approved
any changes to the Independent System Operator’s tariff necessary for the new participating transmission owner to join, then the Independent System Operator may proceed with implementing a governance structure consistent with the proposal. Upon completing implementation of the governance structure, the Independent System Operator or its successor shall provide notice to the Energy Commission.
(d) (1) The Energy Commission shall verify that the Independent System Operator has implemented a governance structure consistent with this section and, upon so verifying, shall promptly provide notice to the Secretary of State. Upon receipt of notice by the Secretary of State, Article 2 (commencing with Section 334) and Sections 345.5 to 349, inclusive, shall become inoperative.
(2) The Energy Commission shall report to the
Legislature its verification and notification to the Secretary of State pursuant to paragraph (1). The report to the Legislature shall be submitted in compliance with Section 9795 of the Government Code.
SEC. 5.
Article 5.5 (commencing with Section 359.5) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code is repealed.SEC. 6.
Division 4.2 (commencing with Section 9000) is added to the Public Utilities Code, to read:DIVISION 4.2. Transmission System
CHAPTER 1. Multistate Regional Transmission System Organizations
9000.
For purposes of this chapter, the following definitions apply:(a) “California participating transmission owner” means a California transmission owner that has become a participating transmission owner by turning over operational control of some or all of its bulk electrical transmission facilities to an independent system operator or a multistate regional transmission system organization.
(b) “California transmission owner” means an electrical corporation, local publicly owned electric utility, or other entity that owns bulk electrical transmission facilities located in California.
(c) Except as provided in Section 9005, “multistate
regional transmission system organization” means an entity that the Federal Energy Regulatory Commission has determined satisfies the requirements for operating as an independent system operator or regional transmission organization and that has participating transmission owners from multiple states.
(d) “Retail seller” has the same meaning as defined in Section 399.12.
9001.
In order to pursue critical California environmental and human health policy goals and to safeguard existing California authority to protect, preserve, and promote the welfare and well-being of its citizens, a California transmission owner, retail seller, or local publicly owned electric utility shall only join or remain in a multistate regional transmission system organization that maintains, to the fullest extent possible consistent with federal law, market rules and policies that do not conflict with, and allow for consideration of, all of the following:(a) State authority over generation preference, transmission siting, resource portfolios, and resource planning, including, but not limited to, a prohibition on a centralized capacity market in California of
electrical generating capacity that requires capacity to clear at a market clearing price in order to count for resource adequacy purposes.
(b) State rules or public policy requirements to provide reliable electrical service for the safety, health, and welfare of the state’s citizenry and economy, to encourage new or clean generation, reductions in emissions of greenhouse gases, or state-assigned policy attributes of electricity generation, such as requirements for California utilities to purchase electricity products from eligible renewable energy resources and from zero-carbon sources.
(c) State law and regulation over California utilities, including, but not limited to, those that may affect, but do not set, the rate for the same wholesale sale of electricity at a price different and distinct from the Federal Energy Regulatory Commission-approved
rate.
9002.
A California transmission owner, retail seller, or local publicly owned electric utility shall not join a multistate regional transmission system organization as a California participating transmission owner unless the bylaws or other organizational documents that govern the organization and its operations meet Federal Energy Regulatory Commission requirements and do all of the following:(a) Prohibit a member of the governing board of the organization from any affiliation with a participant in any market overseen by the organization. A member of the governing board also shall not have been an employee of a market participant within two years before becoming a member of the board.
(b) Limit conflicts
of interest by prohibiting any member of the governing board from directly owning any interest in energy-related assets that are appreciably affected by the actions of the organization and by requiring annual disclosure of significant financial interests.
(c) Provide for and maintain a decisionmaking process that is independent of control by any market participant or class of participants.
(d) Provide for the establishment of a western states’ committee. The committee shall have an equal number of representatives from each state that has a transmission owner participating in the Independent System Operator. The representatives from California shall be appointed by the Governor, subject to confirmation by the Senate. The committee shall provide guidance to the Independent System Operator on all matters of interest to more than one state.
(e) Provide for and maintain open meeting standards and meeting notice requirements that are consistent with the general policies of the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) and afford the public the greatest possible access to meetings, consistent with other duties of the organization and consistent with the open meeting policy and records availability policy of the Independent System Operator in effect as of January 31, 2023.
(f) Subject to reasonable measures to limit the length of meetings or disruptions to meetings, authorize interested members of the public and representatives of customers to participate in person or through remote electronic means in meetings of the governing board and in the meetings of any advisory group to the governing board.
(g) Provide public access to the records of the organization consistent with the general policies of the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), consistent with the other duties of the organization.
(h) Require that the governing documents of the organization be posted and maintained on the organization’s public internet website.
(i) Protect and preserve a state’s authority over matters regulated by the state, including procurement policy, resource planning, and resource or transmission siting within the state.
(j) (1) Require retail sellers in each state to meet minimum resource adequacy standards and permit each state to establish resource adequacy standards
for its retail sellers that exceed those required by federal law, in the state’s discretion.
(2) Require a participating local publicly owned electric utility in each state to meet minimum resource adequacy standards and permit the governing board of a participating local publicly owned electric utility to establish resource adequacy standards that exceed those required by federal law, in the discretion of the governing body.
(k) Prohibit the multistate regional transmission system organization from operating a centralized capacity market in California for electrical generating capacity that requires capacity to clear at a market clearing price in order to count for resource adequacy purposes.
(l) Ensure that the dispatch of resources by the multistate regional transmission system organization to serve load in
California appropriately reflects the costs for resources to comply with California’s climate policies, as implemented by the State Air Resources Board. The multistate regional transmission system organization shall maintain a transparent system for tracking emissions of greenhouse gases resulting from resources dispatched to serve California load.
(m) Establish and maintain equitable transmission cost allocation rules through an open stakeholder process approved by the Federal Energy Regulatory Commission. The rules shall ensure that California participating transmission owners receive equitable use of, and just and reasonable compensation for, their past investments in the transmission system assets for which operational control is transferred to a multistate regional transmission system organization.
(n) Enhance the competitive structure of the organization by providing for and
maintaining an independent market monitor.
(o) Establish a clear process, structure, and organizational support for state regulators within the region served by the multistate regional transmission system organization to collaborate and provide guidance to the organization on matters of interest to more than one state, including on issues relating to the organization’s independent market monitoring function established by the Federal Energy Regulatory Commission.
(p) Enable participation of demand response, storage, and other distributed energy resources in the organization’s markets.
(q) Provide for and maintain a process for obtaining stakeholder input on policy initiatives requiring approval of the Federal Energy Regulatory Commission that is open to all members of the public and that does not require payment of a
membership fee or other charge to participate.
(r) Ensure the right of any participating transmission owner to unilaterally withdraw from the multistate regional transmission system organization, with or without cause, upon giving reasonable notice, not to exceed two years.
9003.
This chapter does not require any California transmission owner, retail seller, or local publicly owned electric utility to join or remain in a multistate regional transmission system organization.9004.
(a) A California transmission owner, retail seller, or local publicly owned electric utility shall, before joining a multistate regional transmission system organization, submit the bylaws and other organizational documents that govern the multistate regional transmission system organization to the Energy Commission for review.(b) Unless specified otherwise in Section 9002, the Energy Commission, in consultation with the commission and the State Air Resources Board, shall review the bylaws and organizational documents that govern the multistate regional transmission system organization for compliance with the requirements of Sections 9001 and 9002. This review shall include public review of, and written comment on, the materials and at least
one public workshop or hearing at which public comment is received.
(c) A California transmission owner, retail seller, or local publicly owned electric utility shall not join a multistate regional transmission system organization unless the Energy Commission has determined that the organization’s bylaws and organizational documents meet the requirements of Sections 9001 and 9002. If a California transmission owner, retail seller, or local publicly owned electric utility has joined an independent system operator that becomes a multistate regional transmission system organization and the Energy Commission determines that the organization’s bylaws and organizational documents do not meet the requirements of Sections 9001 and 9002, the California transmission owner, retail seller, or local publicly owned electric utility shall not remain in the organization.
