Regional Electric Plan Could Undo California Climate Laws

Helen Christophi

OAKLAND, Calif. (CN) — A giant irrigation district sued the University of California for records on a plan for California to help create a regional electricity market of 14 Western states — a plan the district believes could endanger California’s climate-change laws.

The Imperial Irrigation District believes the California Independent System Operator, or CalISO, the quasi-state agency that operates the state’s electric grid, encouraged university-affiliated attorneys to write a friendly legal opinion about the proposed grid expansion.

Should such a regional grid be created, the irrigation district says, California could be forced to accept “dirty” electricity generated in other states, and federal lawsuits that could destroy years of clean-energy legislation in California, due to preemption by the Interstate Commerce Clause and the Federal Energy Regulatory Commission.

The Imperial Irrigation District supplies water to half a million acres in the bone-dry but heavily agricultural Great California Desert. It also is the state’s third-largest electricity supplier, with 150,000 customers in Imperial, San Diego and Riverside counties.

A report prepared for CalISO and released in July estimated that customers would save $55 million a year in 2020 and as much as $1.5 billion a year by 2030 in a regional market.

The report: “Senate Bill 350 Study: The Impacts of a Regional ISO-Operated Power Market on California,” was prepared for the CalISO by The Brattle Group, Energy and Environmental Economics, Berkeley Economic Advising & Research, and Aspen Environmental Group.

But the irrigation district believes the legal opinion written by the university-affiliated attorneys may have been “flawed” and “self-directed” by CalISO, and that the opinion “truly wasn’t independent.”

The irrigation district sued the Regents of the University of California on Dec. 15 in Alameda County Court.

CalISO has turned over its records on the opinion the attorneys wrote for it, involving the legal risks of creating a regional energy market of 14 Western states, but the UC Regents have not, according to the 12-page lawsuit, with 64 pages of attached exhibits.

“If CalISO is supporting the basis for regionalization by a report that is flawed or was self-directed by CalISO and truly wasn’t independent, then decision makers need to know that, [and] the public needs to know that,” irrigation district attorney Mary Severson said in an interview.

The opinion at issue was written by Ethan Elkind, Dan Farber and Ann Carlson, whom CalISO hired as consultants. Elkind is director of the Climate Program at the Center for Law, Energy, and the Environment at UC Berkeley and UCLA; Farber is co-director at the center. Carlson is the co-director of UCLA Law School’s Emmett Institute on Climate Change and the Environment.

CalISO delivered the opinion letter to the Legislature in August.

The UC Regents did not respond to a request for comment.

Under the proposal, CalISO, a nonprofit whose board is appointed by the governor, would merge California’s electricity grid with PacifiCorp’s, a profit-seeking utility that operates in Utah, Wyoming, Idaho, Oregon, Washington and parts of Northern California.

The goal is to increase the market for renewable energy sources such as wind and solar, and save costumers money.

In an August letter to legislative leaders, Gov. Jerry Brown said there was not enough time to push through the proposal this year. “The goal is to develop a strong proposal that the Legislature can consider in January,” the governor wrote.

Should the regional market be created, the irrigation district fears, it could bring lawsuits that could destroy California’s years of legislative efforts to lead the fight against global warming.

Properly done, the irrigation district says, CalISO would demand that energy operators in all 14 states apply California’s tougher climate change laws, including that the states’ utilities buy 33 percent of their electricity from renewable sources by 2020 and 50 percent by 2030.

That could bring lawsuits challenging California’s laws as violating the Interstate Commerce Clause and the Dormant Commerce Clause of the U.S. Constitution, attorney Severson said.

It also could bring California’s climate change laws into conflict with the Federal Energy Regulatory Commission, which has exclusive jurisdiction over wholesale energy rates: any state regulation that affects those rates would be preempted.

Such preemption could bring “dirty,” out-of-state energy into California and limit the state’s ability to achieve its 2020 and 2030 clean-energy goals, Severson said.

“Why would we want to give that up and be subject to judicial attack?” Severson asked. “It’s too risky for the public.”

The irrigation district believes the university’s attorneys downplayed the risk to the state’s climate change laws to help CalISO executives win approval of the expansion. And, the irrigation district says in the complaint, the backers of the expansion plan are “under the control of corporations with carbon-based assets.”

Severson said PacifiCorp produces electricity from coal-fired power plants.

Gov. Brown’s office and the California Energy Commission, which are working on the proposal Brown plans to reintroduce next month, directed requests for comment to CalISO, which declined to comment.

“Is California going to give away its control to private industry and lose control of its ability to achieve renewable standards?” Severson asked. “That is a risk posed by regionalization, and the risk appears to have been sidestepped by the authors of what was touted as an independent report. The report seems to depend upon what the requestors wanted.”

The irrigation district’s lawsuit cites a May 3 memo written by “one of the university lawyers,” who “expressed deep concern about CAISO’s legal positions.”

That memo, as cited in the lawsuit, said, inter alia: “(C)ouldn’t someone argue that the nature of the potential interference in wholesale markets, with its attendant and largely unprecedented conditions related to clean energy, will end up creating an impermissible effect on the wholesale market?”

The attorney’s memo cited the U.S. Supreme Court ruling in April this year in Hughes v Talen, in which the court found that FERC regulations pre-empt Maryland law on the interstate electricity market.

“One thing that seemed clear to me from the Hughes decision,” the university’s attorney wrote, “even though it was limited in scope to get the 8-0 vote, was that the Court is very protective of the wholesale market from state action that could affect prices. … (C)ould geographic expansion lead to enough of an impact on wholesale prices with these clean energy policies that the court might feel that CAISO (and California) is overstepping?”

The irrigation district asks the court to order the UC Regents to release the documents it requested.

Attorney Severson is with Aguirre & Severson in San Diego.

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