Some states have reacted with resistance to President Obama’s Clean Power Plan and its goal of reducing greenhouse gas emissions. However, what is lost in the debate is that this plan creates momentum for California and other western states to take additional steps to reduce their energy costs and improve grid reliability. If western states work together and expand the California Independent System Operator (CAISO) into a regional grid that serves the region, then they can better coordinate their efforts to meet the president’s Clean Power Plan goals, while also improving efficiency and potentially lowering costs for consumers.
There is strong evidence from around the country that demonstrates regional grids offer many benefits.
Policy makers in several western states, including Governor Jerry Brown, are currently discussing the expansion of the CAISO to other states. However, the idea has been met with two concerns. One is that tighter integration would harm the environment by somehow making the west more hospitable for coal-based power plants. The second is that expanding the CAISO would require some sharing of governance and policy decisions with other states. There is strong evidence from around the country that demonstrates regional grids offer many benefits.
The efficiencies of a regional grid are a good thing, not a bad thing for the environment. A more efficient system makes it easier to fully use varying wind and solar power sources, and lowers the cost of reducing pollution from fossil plants. The way power grids are currently structured in the West makes it difficult to export to other states when it is produced in excess. For example, when the sun is shining abundantly in California or the wind is blowing excessively in Wyoming, that excess energy could go to waste because it has nowhere to be marketed. However, in a regional energy market, that excess energy can be effectively sold throughout the region, even on short notice. The ability to purchase excess renewable energy from other states means all grid participants can get access to low cost renewables throughout the day, supplanting the need to fire up greenhouse gas emitting coal or gas plants.
One observer said that to call the U.S. system balkanized would insult Macedonians.
Second, the concern that CAISO expansion will result in California having to share some decision making with representatives from other states is a feature, not a bug. It is important not to overstate California’s control over the CAISO. While it operates as a state-chartered non-profit corporation, the CAISO, like any other system operator, ultimately answers to the Federal Energy Regulatory Commission (FERC). Dealing with our huge energy and climate challenges requires that California and other western states work together under FERC. Electricity flow doesn’t stop at state borders, and neither do greenhouse gasses. Regional governance will strengthen, not hamper efforts to reduce greenhouse gas emissions.
The U.S., almost alone among developed economies, has operated its power system as a collection of balkanized fiefdoms. In fact, one observer in the New York Times said that to call the U.S. system balkanized would insult Macedonians. An expanded, more efficient CAISO system makes it easier to fully use varying wind and solar power sources, and lowers the cost of reducing pollution from fossil plants.
There are many reasons to believe that expanding power markets will be good for renewable energy and will reduce costs to consumers. Speculation that coal plant pollution might temporarily increase, or that California will lose control over the CAISO, should not stand in the way of achieving these benefits.
Ed’s Note: Dr. James Bushnell, an economics professor at UC Davis, focuses on industrial organization and regulation, energy economics and policy and environmental economics. Dr. Benjamin Hobbs directs the Environment, Energy, Sustainability & Health Institute at The Johns Hopkins University. He has been a member of the CAISO Market Surveillance Committee since 2002.