Lawmakers must fix and pass grid modernization bill next month or CA will pay more for dirty power

Last month, Governor Newsom announced his commitment to passing a bill this session that would establish a West-wide energy market, saying it's "our best shot at lowering energy costs."

When California legislators come back from summer recess, they must fix and pass Senate Bill 540 to get this done. Here are some things you should know:

‼️ The problem: wasted renewables and a strained grid undermine switch to clean energy

• California committed to build a 100% clean energy economy by 2045, which requires a 400% increase in clean energy supplies to power our homes, vehicles, and businesses. We need a modern energy grid to develop and use this much clean energy quickly.
• California has clean energy that is going to waste. Today’s grid can only handle so much electricity at a time, and the state is producing more clean power than it can use. In 2024, the amount of solar and wind energy that was unable to be used — also called “curtailed” — jumped by 29%.
• Inefficiencies in California’s electricity market add costs, while increasing extreme weather events strain California’s electricity grid.

🔗 The solution: electricity markets

• By connecting California’s electricity market with markets across the West, California can sell its excess clean power with other states that need it, and buy clean, cheap power from those states.
• A larger and more efficient market means that California has access to a greater diversity of electricity resources — making it easier to buy power and at a lower cost when needed. Greater availability of resources also improves power reliability — in case one part of the grid is impacted by a heat wave, for example.
• By expanding western electricity collaboration, ratepayers will get more value for their investment in clean energy, we can provide a more solid financial foundation for clean energy growth, and we can cut pollution by displacing dirty, more expensive energy sources derived from fossil fuels.
• This report projects an expanded electricity market will reduce costs in California more than $1 billion a year, reduce pollution from fossil fuel power plants by 31% and cut climate emissions in California by 58% and 39% across the West.

📃 Senate Bill 540: the first step towards a West-wide electricity market

• The bill will change the governance of Western electricity markets to boost their ability to provide more affordable and reliable energy.
• California, like other states, would maintain the power to choose market participation along with its own climate and energy policies.
• The market oversight from the regional organization will have the strongest consumer protections of any organized electricity market in the country.

🔧 Time is running out to fix and pass SB 540

• Two initiatives are competing to coordinate 38 separate power markets across the West. Getting Senate Bill 540 right will put California at the forefront of this fast-moving revolution instead of being left behind by it.
• Power grid isolation is California’s worst case scenario — putting our ability to import power at risk (25% of total supply in recent years), prolonging our dependence on more expensive dirty energy, and increasing our vulnerability to blackouts.
• When they return in August to conclude their business for the year, lawmakers must ensure they get the policy right. If they fail, more states will move on without California. Some have already made this choice. By getting the policy right in Senate Bill 540, lawmakers can provide a path for more affordable, reliable power and a firm financial foundation for clean energy growth and jobs.

If you’d like to discuss this topic further, I’d be happy to connect you with an EDF expert. We also have a blog and factsheet that dive deeper into why a West-wide electricity market is the best choice for California.