SB 540, sponsored by Senator Josh Becker (D-Menlo Park), Chair of the Senate Committee on Energy, Utilities, and Communications, and Senator Henry Stern (D-Los Angeles), is an outgrowth of the Pathways Initiative and would allow for the creation of an expanded western electricity market overseen by a regional organization (RO), an independent entity with specific protections for individual state policies and the public interest. The bill authorizes the California Independent System Operator (CAISO) and California utilities to participate in energy markets governed by the RO once CAISO demonstrates that several statutory requirements are met.