SACRAMENTO, CA — Today, the Senate Committee on Energy, Utilities and Communications voted unanimously with a 17-0 vote to approve SB 540, moving California forward towards optimizing its energy markets, increasing grid reliability, reducing costs for ratepayers, and accelerating the transition to a clean energy future.
The bill, called Pathways, will establish an innovative framework for regional energy cooperation throughout the Pacific Northwest while preserving California’s authority over key aspects of its electricity system and climate goals. The legislation is critical for boosting grid reliability to reduce the risk of blackouts and keep the lights on in California homes and businesses.
“As we move toward achieving California’s 100% clean energy goals, we must look at all possible solutions to reduce costs, improve reliability, and cut emissions,” said Senator Josh Becker (D-Menlo Park), one of the authors of the bill. “Pathways strikes that balance by unlocking the benefits of a regional energy market while safeguarding California’s critical public policy priorities. It offers a win-win scenario for California—achieving cleaner energy, more reliable power, and real savings for ratepayers.”
Senator Henry Stern (D-Los Angeles), Vice Chair of the Joint Legislative Committee on Climate Change Policy, believes the future of California’s energy hinges on innovation and collaboration. "This bill will enhance the reliability of our grid during extreme weather while securing cleaner, more affordable energy for Californians. With storm clouds on the horizon, now is not the time to hunker down—we must reach beyond our borders to ensure that clean energy markets aren’t stifled by politics," said Senator Henry Stern.
“With better access to shared resources across the West, grid operators will be better equipped to address peak demand periods, reduce the likelihood of blackouts, and support the resilience of the grid in the face of growing challenges such as extreme weather events and climate-driven disruptions,” said Hunter Stern, President of the Coalition of California Utility Employees.
“Passing SB 540 is a critical step to realize California's clean electricity potential. It unlocks the fastest, cheapest options for clean power growth while providing new tools to prevent blackouts,” said Katelyn Roedner Sutter, California State Director at Environmental Defense Fund. “The bill will make more clean electricity available to more parts of the west, taking full advantage of the affordable clean electricity, especially solar, that absent this bill could go to waste. By innovating Western electricity markets, we will accelerate our transition away from dirty power plants that pollute our air and can't compete with the price of clean power."
"Enhanced coordination among western states will bring benefits to Californians and increase the amount of clean, affordable electricity for the region," said Victoria Rome, California Government Affairs Director for NRDC (Natural Resources Defense Council. "SB 540 takes the next important step toward a more resilient and reliable clean energy future for all westerners."
“California has an opportunity to lead the way in building a cleaner, more affordable, and more reliable energy future,” said Mary Creasman, CEO of EnviroVoters. “By continuing to coordinate with our partners in the West, we can reduce emissions, improve grid reliability, and prevent blackouts. A modernized, regional energy market is a critical step toward a sustainable and resilient grid that benefits all Californians.”
The bill contains key safeguards that will ensure the California Independent System Operator (CAISO) will continue operating these markets and ensure California retains its control over critical functions such as transmission planning, procurement, and other public policies.
Additionally, the measure provides sufficient time, until after January 1, 2027, for CAISO to assess the national political environment and analyze the benefits of joining a regional market before they have authority to join it.
By enabling a least-cost dispatch across a broader pool of Western resources, the bill is expected to save California ratepayers up to nearly $800 million annually, according to analysis by the Brattle Group. California would be able to reduce expenses for maintaining a state-specific strategic reliability reserve by pooling resources with other participating areas.
A regional market would automatically leverage diverse energy resources across the Western grid, improving resilience during system peaks. For instance, excess solar energy in sunny California could be consumed in another state like Oregon if solar is needed because of cloudy weather. With expanded visibility and coordination, CAISO will have better tools to ensure grid stability and reliability.
California will be better positioned to export excess renewable energy and import clean energy from other states, reducing dependence on backup diesel generators and inefficient gas plants.
Pathways includes robust safeguards to protect California’s policy goals, including maintaining CAISO’s role as a peer balancing authority by:
- Ensuring the new regional organization respects state procurement, environmental, reliability and other public policies,
- Providing the CPUC and other stakeholders with access to critical market data, and
- Establishing a mechanism providing California that ability to withdraw from the regional market if it ceases to benefit the state.
Pathways is sponsored by the Coalition of California Utility Employees, the State Association of Electrical Workers, the Environmental Defense Fund and the Natural Resources Defense Council, and is supported by a diverse coalition of dozens of organizations including public utilities, CCAs, clean energy developers, environmental groups, labor groups, large consumers, and more. Attached is a complete list of quotes from organizational support.