California Gov. Gavin Newsom has signed into law the bill that will allow CAISO to transition the governance of its markets to an independent “regional organization,” along with five other bills related to energy and emissions.
AB 825 implements the West-Wide Governance Pathways Initiative’s “Step 2” plan to create a regional organization to oversee CAISO’s Western Energy Imbalance Market and soon-to-be-launched Extended Day-Ahead Market — and authorize the ISO and California’s investor-owned utilities to participate in the RO. (See Pathways Bill Passes Calif. Legislature in Lopsided Votes.)
Speaking during a Sept. 19 signing ceremony at the California Academy of Sciences in San Francisco, Newsom said the law will generate almost $1 billion in financial benefits, expand clean energy exports and address reliability.
Referring to previous failed efforts to pass legislation to regionalize CAISO into a Western RTO, the governor said, “We’ve worked on that for over a decade.”
“We’re getting it done here today,” Newsom said. “So, finding a balanced approach, setting forth strategies to achieve audacious goals that simply no other large-scale jurisdiction in the world can lay claim to, and do it in a way that reduces the burden on ratepayers and taxpayers at the same time.”
Supporters of the bill were quick to thank Newsom and the California Legislature after the governor approved the measure.
“Gov. Newsom’s signing of Assembly Bill 825 is a landmark achievement for the future of energy collaboration and innovation across the western United States,” CAISO said in a statement. “He, along with the California Legislature and the broad coalition of supporters, have recognized the importance of making this crucial next step toward independent governance of Western electricity markets. Now that AB 825 is signed into law, the ISO will work closely with partners across California and the rest of the region to ensure a more reliable and affordable bulk electric system for the benefit of consumers throughout the West.”
Advanced Energy United highlighted the many stakeholders involved in drafting the legislation.
“This legislation is the culmination of nearly a decade of work to create a more flexible, reliable and affordable energy future for the West,” said Leah Rubin Shen, managing director at Advanced Energy United. “AB 825 paves the way for an independently governed energy market that will deliver a more reliable grid, broader deployment of clean energy resources and more affordable energy for consumers across the region.”
Speaking during the signing ceremony, Katelyn Roedner Sutter, California state director at the Environmental Defense Fund, said, “By expanding today’s energy markets, we expand access to clean electricity and lay a strong foundation for the growth of clean energy and jobs.”
A broad coalition was responsible for getting AB 825 passed, Sen. Josh Becker, the bill’s chief sponsor, told RTO Insider at New York Climate Week.
“This was an unparalleled coalition that we built this year: Environmental Defense Fund, NRDC, Environmental Voter [Project],” Becker said. “This year the Sierra Club supported it — they always opposed it in the past; labor, who always opposed in the past, came on board because of some of the protections built in, and companies and the Chamber of Commerce. People who usually don’t agree on anything, agreed on this. There was still a lot of opposition, but that coalition helped us get it done.”
Becker said there are three positive outcomes of the bill: lower costs, improved reliability, and an expanded grid.
“The Brattle Group and California Energy Commission has projected it’ll be between $800 million and a billion dollars of savings a year to California directly.” Becker said being able to cite the economic benefits of the Western Energy Imbalance Market for 10 years supported the case for the bill: “That’s delivered over $7 billion of economic benefits, $2.2 billion directly to California.”
Second, he said the changes brought about by the bill should improve everyday reliability and decrease reliance on the most polluting peaker plants. The result: a 53% reduction in greenhouse gas emissions in California. “Right now, we spend billions of dollars keeping natural gas peaker plants available to run a few hours a year; literally, a few hours a year. We’re going to be able to use some of these highly polluting assets a little less frequently in California.”
Finally, the expanded grid provides reliability through major weather events: “Especially in the era of climate change, you need a grid bigger than any one weather event. As [California Energy] Commissioner Siva Gunda always says, if we have a massive heat wave, as we did on Sept. 6, 2022, being able to trade with our neighbors can increase reliability.”
In addition to AB 825, Newsom signed into law a measure aimed at extending California’s cap-and-trade program through 2045. The revenues of the program will go toward funding, among other things, California’s high-speed rail project.
Other measures signed include efforts to stabilize gas prices, funding for air quality monitoring programs and the continuation of studies related to California’s greenhouse gas targets.
The governor also approved SB 254, a law that will create a “transmission accelerator” to develop low-cost public financing programs for certain transmission projects. The legislation also establishes an $18 billion “continuation account” for the state’s wildfire fund to cover investor-owned utilities’ wildfire liabilities. Contributions to the fund will be split between ratepayers and shareholders. (See Calif. Lawmakers Pass Bill to Accelerate Transmission Development.)
Dej Knuckey contributed to this article.




