California Bill Proposes a Backstop Authority to Secure State’s Power Grid Needs

Amid a flurry of energy, environmental, wildfire and Pacific Gas & Electric bankruptcy-related bills emerging for this year’s legislative session, California lawmakers are also grappling with a complicated yet critical issue — how to secure the energy resources needed to meet the state’s renewable and carbon-free energy goals while also keeping the power grid running.

The issue has been growing in magnitude and significance for years in the country’s largest state economy.

The closure of California’s last nuclear power plants, and the cancellation or delay of new natural-gas-fired power plants, has put the onus on solar, energy efficiency, energy storage, demand response and other clean energy resources to keep the grid stable in their absence.

And the rise of community-choice aggregators (CCAs) has fractured the role of the state’s three big investor-owned utilities as the primary providers of the state’s grid reliability needs.

But it’s the wildfire damages and liabilities that have driven PG&E into bankruptcy reorganization, and could threaten fellow investor-owned utilities Southern California Edison and San Diego Gas & Electric next, which have pushed this effort into overdrive.

Just this week, Gov. Gavin Newsom’s wildfire and utility policy strike force listed the need for a “new state procurement entity that could enter into long-term contracts, provide credit support or otherwise facilitate purchases of electric energy” as a key legislative priority for 2019.

Last week, AB 56 passed the state’s Assembly Utilities and Energy Committee, the first step toward potentially becoming this year’s legislative vehicle for taking on this complex mix of challenges. The bill would give the California Public Utilities Commission (CPUC) the ability to task an existing state agency to serve as a backstop for “procurement of electricity to meet the state’s climate, clean energy, and reliability goals.”

But last week’s vote was accompanied by several statements of opposition, including from key players such as the California Community Choice Association (CalCCA) and utility Southern California Edison, both of which called the bill the wrong solution for the problems it would seek to solve.

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