California is America’s undisputed clean energy leader, a kind of cultural and economic island, liberal enough to pass bold climate policies and big enough (the world’s sixth-largest economy, were it a nation) for them to matter, economically and environmentally.
The state runs its own energy grid (several grids, actually), so it’s free to decarbonize electricity as it sees fit. And thanks to a waiver under the Clean Air Act, it’s free to set its own carbon and fuel economy standards for vehicles as well. (Though the Trump administration is seeking to revoke the waiver and impose lower standards.)
But the state faces a much more difficult decision when it comes to its electricity system. For years, it has been arguing about whether to connect its grids with nearby states in a larger regional market system, along the lines of several regional markets in the eastern US.
Proponents claim that joining a regional market would bring numerous benefits, principally in lower prices. But a coalition of labor, consumer, and environmental groups warns that it also comes with risks, most notably the loss of California’s ability to control its own energy fate. Just how much control it would surrender is the subject of fierce debate, as we’ll see.
This decision carries enormous stakes. If California joins a regional market, it could create one of the largest energy markets in the country and complete, or come close to completing, the long-stalled march of electricity market deregulation. Most Americans would live in areas where power generators compete on open markets and transmission is regionally coordinated, which could lead to further cooperation and grid linkage.
A larger market could further drive down the price of renewable energy and help California deal with the challenges of integrating renewables. Many proponents see regionalization as the inevitable next step in decarbonizing the US grid.