Senate Standing Committee on Energy, Utilities and Communications

The Senate Committee on Energy, Utilities and Communications will come to order. Good afternoon. Welcome to the Committee's second meeting of the 2025-26 legislative session. Really excited for today's discussion. This is a topic that's been discussed extensively over the last 10 years before I got to the legislature.1

I remember reading Op-eds about it, trying to pay a little attention. I know Jerry Brown was a huge advocate of this. There were bills then over in the Assembly, but none have made it over to the Senate in my time here that we've been able to have a discussion.

So I think given the importance and complexity of this topic, we decided that it would be important to have an overview of the Pathways Initiative. In the past, proposals to expand the grid were opposed by a variety of stakeholders, including labor unions, local publicly owned utilities, and environmental groups.

Now, many have coalesced around a targeted approach they believe achieves desired benefits while protecting key California policies. So this is really meant to do, again, a deeper overview of this initiative than we normally get a chance to do. What is it? How would it work? How is it different from past proposals?

And then hear about any benefits and concerns as well. So we've invited regulators, members of the Pathways Working Group, experts, public power utilities, as well as critics of past versions of western grid expansion. During today's hearing, we'll discuss some key issues, including three.

Number one, does this initiative, I think, you know, to me one of the obvious point of reliability is a pretty obvious point of this, of a grid. But really we'll dive into three other questions. I'd say is, does this initiative make serving California's energy needs more affordable? Number one.

Number two, will the initiative help towards our emission reduction goals and other climate policies in California and across the West? And three, in a world where we are already exposed to FERC because our current market rules are subject to and approved by FERC, what is our current exposure and does Pathways affect that?

So what exactly are the protections available to the state in the Pathways Initiative? How would those work? And then of course, we'll have a dialogue where those are sufficient and go through those. I do want to note an important milestone. I know there were been some concerns about coal use in a western grid world.

I mean, first we'll discuss various protections that we already have, including long term contracts that don't allow coal. But it's fitting to note that we're having this overview on a day that the Wall Street Journal just reported today that last year, for the first time ever, solar energy and wind generated more electricity across the whole US than coal.

Coal is about 15% of the total of the US grid now. Solar grew 27% last year alone. Solar and wind accounted for 84% of new generation and 94% of all generation. New generation across the country was clean. So some important milestones marked by the Wall Street Journal today.

The Pathways Initiative does include perspectives from diverse voices energy landscape. Hoping that we can have a real thorough conversation of any of the concerns. We are all cognizant there is legislation pending, but we really organized this overview of the Pathways Initiative not intended as a debate on the specifics of the pending legislation itself.

So we ask the comments be limited to the initiative and not the Bill proposal, which will be heard on a different day. With that, I'd like to call up our first panel. When you're ready, please come up and join us. Great, thank you. We'll join. First, Elliot Mainzer, head of CAISO. Would you like to go first? Chair Reynolds. Okay.

We have a joint presentation, so I'll put this off.

Ok. Excellent.

And then we'll switch between the three of us.

Okay, go ahead. Thank you.

So good afternoon, Chair Becker and Madam Vice Chair, Members of the Committee.

I'm really pleased to be here today along with my colleagues from CAISO and the California Energy Commission to discuss the West-Wide Governance Pathways Initiative process. As you recall, we provided this Committee with a general overview of the Pathways Initiative at a hearing last August.

And today, we'll expand on that overview and provide a status update. For context, I wanted to start by zooming out a little bit for a moment with a depiction of the wholesale electricity markets that exist across the country today.

There are several types of electricity markets in the United States that allow electricity to be sold and purchased across a large footprint under coordinated operation of an independent organization in order to improve efficient dispatch of electricity generation, for reliability and for cost reduction.

So as you can see on the map, there are several wholesale electricity markets that have footprints across multiple states. There's PJM, NYISO in New York, ISO New England markets in the East, MISO in the Midwest, SPP in the Central region, and ERCOT in Texas. Some of these cover multiple states.

And like all interstate commerce, under the Commerce Clause of the Constitution, electricity markets are subject to federal regulation. In the case of electricity, the federal regulator is the Federal Energy Regulatory Commission, FERC.

CAISO's markets and transmission operations, which are shown in the teal across California, are currently subject to FERC jurisdiction. In the current CAISO footprint, or it's also called the balancing authority area, which appears in the teal or blue-green in the map in the California region.

So what the map doesn't show is that the western half of the entire US is a single interconnected electricity grid known as the Western Interconnection.

CAISO oversees one portion of that grid and California trades electricity with other states every day and is generally a net importer, meaning that it imports more electricity from other states than it exports to other states. The left portion of the slide, if you follow the arrow, shows the larger real time market that already exists in the West.

You'll hear more about this from President Mainzer and I wanted to give you an introduction. This Western Energy Imbalance Market, or WEIM, is a real-time market that has been operating for over 10 years. To the map to the left shows the current footprint of the WEIM.

CAISO is also in the process of establishing an expanded day ahead market called EDAM that will allow broader participation in CAISO's current day ahead market. You'll also be hearing a little bit more about that.

The Pathways Initiative aims to establish a collaborative regional governance structure for WEIM and EDAM, and we'll be talking in more detail about that initiative. So again for context, this slide shows the current landscape of energy supply planning and services in California and the primary roles of various actors.

So next to each entity we've listed some of the main functions with respect to overall energy supply planning.

CARB setting the requirements for economy-wide GHG reduction, including the electricity sector. CEC doing load forecasting so we're ready for increases in load and overseeing the renewables portfolio standard. PUC with the responsibility to do supply and reliability planning so we're ready for future conditions and can cost effectively plan to supply California with clean energy, and also role in our RPS oversight.

CAISO next does not just market operation, but also transmission planning and operation.

And then down to the bottom row, the many various entities, over 80 entities including community choice aggregators, publicly owned utilities, and IOUS who are responsible for serving communities up and down the state and they each have the obligation to provide reliable electricity supply to each customer using generation sources that meet increasingly stringent clean energy requirements.

So what I wanted to point out with this slide is that there's a lot on here that we're not going to be talking about today. We're not going to talk about any reduction in planning or oversight functions. We're only talking about the first bullet on the CAISO row.

So if you look at the CAISO, we're talking about market operations, that component of CAISO's responsibilities. With the Pathways proposal, California would retain its autonomy in all aspects of energy policy, regulation, and system planning. So everything else on this chart. And CAISO will also maintain control over transmission use and dispatch of generation within its footprint.

It would retain its role as a market operator. And the CAISO balancing area footprint will remain as it is today. In respect to the balancing authority functions. I will now turn it over to President Mainzer at CAISO.

Thank you, President Reynolds.

Thank you, Mr. Chair, Madam Vice Chair, and Members of the Committee. Absolute pleasure to be here with you today. I'm going to build on President Reynolds' introduction and just provide a little bit more information and detail about the CAISO's functional structure. Sort of our two major responsibilities with balancing authority and market operations.

Talk a little bit about our regulatory oversight and also our existing governance structure. So first and foremost, our principal responsibility going right back to our origins in the 1990s is to operate the balancing authority here within California for about 80% of the state.

And the central responsibility there is really to maintain the real time balance of supply and demand and to ensure the reliability of the transmission system. Before talking about that, that's just an absolutely essential responsibility for us.

We also have the responsibility of managing the interconnection of new resources to the grid, the interconnection queuing process, another key responsibility. And we also oversee the transmission planning process in collaboration with the CPUC and the CEC for the State of California as well.

And just generally we coordinate very closely with the CPUC and the CEC on the implementation of SB 100. We've worked very carefully to onboard all the new clean energy resources that are necessary to keep the state on track with SB 100. And I think we've generally been having some good success in that realm.

Just in the last several years we've brought on board about 25,000 megawatts of new generation, including the nation's largest fleet of four hour lithium ion batteries. So that onboarding of new resources is a key part of the equation for us and generally responsibilities to help support the state achieve reliable and affordable operations.

So those are the central balancing authority functions for California and for the CAISO. In terms of our oversight, our regulatory oversight, first and foremost, as President Reynolds mentioned, we are regulated by the Federal Energy Regulatory Commission and we are regulated by FERC because management of interstate transmission lines does fall under federal jurisdiction.

We also of course, have to comply with the North American Electric Reliability Corporation's reliability rules, like other utilities. And we are part of the broader Western Interconnection, the Western Electricity Coordinating Council. And we are currently managed by a board of five independent governors. I wanted to talk about our existing board structure.

So the CAISO Board of Governors, these five individuals, I'm sure some of them familiar to you, with Chair Borenstein being the current chair. They have critical responsibilities, especially with respect to our balancing authority operations. They review and approve the annual CAISO budget.

They oversee our board meetings and participate with our stakeholders to ensure that the policies that we advance forward to the Federal Energy Regulatory Commission for approval are balanced and reflect all the different stakeholder interests. And they also approve the annual transmission plans that we submit every couple of years.

They are, of course, these governors are appointed by the Governor of California. They are confirmed by the California Senate, and they all are independent of any individual market participant, even here in California, for our CAISO board, that independence is an important concept.

I wanted to then turn to the next slide and I'm going to speak now that we've touched on our core responsibilities as a balancing authority operator, is to talk about the other set of responsibilities that we've had. And this is as an operator of regional electricity markets.

Over the last 10 years, the CAISO has been able to extend our real time market across a significant fraction of the Western United States through what's known as the Western Energy Imbalance Market. This market is a real-time market. It's sort of the next 5, 10, 15 minutes.

It allows the optimization of resources, taking advantage of the big transmission lines that extend from California up into the Pacific Northwest and out into the Intermountain West and the desert Southwest. And the resource diversity that exists across that footprint. And it now contains 21 participating utilities outside of California across 10 very diverse Western States.

And this market over the last 10 years, by taking advantage of that transmission connectivity and resource diversity has generated nearly $7 billion in gross financial benefits for electricity customers. And those financial benefits are very significant.

But I wanted to emphasize that probably even more significantly that WEIM has become a very important tool in managing reliability here within California. As you, I think are all aware, these last several years in particular, we've seen some very, very extreme weather events, very, very, very hot temperatures, loads spiking at unprecedented levels.

And in addition to a very solid resource adequacy foundation, the EIM has also been able to move power around across a wide footprint to where it's most needed and has supported California reliability and other states reliability during some very challenging conditions.

Over the last couple of years, we have begun working to extend and build on the foundation of the WEIM to develop what's known as our Extended Day-Ahead Market.

This is to seek the same basic principles of WEIM, but to extend them into the day ahead time frame where there's even greater opportunities for state awareness and optimization for both reliability and affordability. We spent a couple years working on fine-tuning that tariff with stakeholders from across California and the region.

That tariff was approved fully by the Federal Energy Regulatory Commission last year and we are now in the process of moving towards implementation of EDAM next spring. I wanted to just mention briefly that, you know, a very important principle. Both the WEIM and EDAM are voluntary markets, right?

They're built on that long-standing legal principle that FERC can neither require entities to participate in these markets nor prevent them from withdrawing if they choose to do so. So that voluntary element has been a key part of extending these markets.

And then finally I'll just mention, I wanted to also emphasize, you know, since the beginning of the WEIM, because we were working with entities from across the West, it was important for those other entities, so those other utilities and regulators to have a voice in the governance and the evolution of the Energy Imbalance Market.

So we established what was known as the Western Energy Markets Governing Body. And this is a group of five additional members with delegated authority from the CAISO Board of Governors on those rules that are specific to the market operations. And these members are chosen by regional stakeholders. They are financially independent from market participants.

And then there's been a very healthy collaboration and sort of joint authority and shared decision making between the CAISO Board of Governors and the Western Energy Markets Governing Body as we move into EDAM, however, which is a much more significant commitment of resources and a deeper commitment, it's raised this next chapter of questions about market governance.

So I just want to conclude before I turn it over to Vice Chair Gunda by reiterating those two key pieces of functional design, right? There are the balancing authority responsibilities that we are going to retain under the CAISO Board of Governors' governance into the future through the Pathways, and that's very important so that California can retain its jurisdictional responsibilities and its policy choices.

And those are the functions of real-time reliability, administering the interconnection queue, overseeing the transmission planning process, and coordinating with the CPC and the Energy Commission on SB 100 implementation.

And then there's this other set of functions that we're operating for the broader regional public interest of the Western Energy Imbalance Market and the Extended Day-Ahead Market. So with that context, I'd like to hand it over to Vice Chair Gunda to talk a little bit more about the Pathways Initiative.

Great. Vice Chair Gunda, go ahead.

Thank you Chair, Vice Chair, and the Members of the Committee. Thank you for giving us this opportunity to talk through some of the code aspects of the Pathways Initiative.

I'm going to take the context that was set by President Reynolds and President Mainzer and kind of dig into what kind of was the origins of the Pathways Initiative and some of the proposals that came out of the Pathways Initiative. I think to uplift what President Reynolds just mentioned. There are two primary functions that CAISO does.

There is a whole slew of work that CAISO does under the balancing area function, including transmission planning and balancing the grid. And then you have the second function, which is the West-wide services that CAISO has today, including administering the EIM and potentially the EDAM expansion.

So, as we work through this and look at the last 10 years of work across the West, there is continued recognition across a broad group of consumers and stakeholders in the West that moving the markets from real-time to day-ahead would unlock a lot of opportunities in terms of reliability and affordability.

Again, to just enhance that, today in the EIM, you're looking at the supply-demand balance and trying to optimize that in the real-time, versus what EDAM does is allow you to think about what the supply and demand look like the next day and optimize in the day-ahead time frame, unlocking a lot of opportunities.

So, that has been recognized as one of the core opportunities in the rest of the West.

And then the second point is, as we continue to evolve the markets and recognizing the value that the markets can provide in terms of reliability and affordability. Capturing a large footprint of market space that has diversity of resources, both in terms of their technology attributes, but also geographic diversity, would unlock maximum benefits.

Those are the two value propositions that has been broadly recognized both in California and in the rest of the West.

So, as we started discussing the continued evolution of those markets and really unlocking the value of the markets, what has come up in discussions with the Western regulators, a number of regulators in the West, in discussions that we have under existing forums both President Reynolds and I are a part of another commissioners are part of, is a need to think about a new framework that can maximize the benefits of an Extended Day-Ahead Market that is really rooted in common values of the west.

And California has the opportunity to be at the level playing field in making sure we continue to have autonomy over our balancing area functions, but have a conversation around the opportunity for governance reform around markets to give us the maximum opportunity of market footprint. That's really what the trust of the discussion was across the West.

And that really kind of brought into bay the origins of the Pathways Initiative. So some of the key values which you see on there are really around in affordability and reliability. You know you talk about, you talk to regulators across the West, whether it's regulators from Idaho or Montana, Wyoming. Are you talking to regulators in Oregon?

Every single regulator really cares about the affordability and reliability. And it's a common theme. There's also a common theme across the West on ensuring that there is maximum consumer benefits, that you know, that everybody receives those benefits.

And finally, just as we care, as President Reynolds mentioned, the autonomy of state policies and ensuring that our climate priorities are absolutely grounded in our planning, so do rest of the West in kind of having that autonomy.

And finally, some of the discussions, it's not a part of discussion today, but when we think about integrating market services, different states like different options on the menu. And one of the core things that we discussed about is the need for optionality.

So, you know, any group of states could have opportunities to improve on their market services a different way if they need to.

And finally, something that we so care in California, which is equitable representation, that every state feels like they are a part of the conversation so we can co-design and co-own and co-implement some of the needs of the market design.

So, that real kind of value proposition and impetus and the heart of the conversation then kind of came into being as a letter.

So in July 2023, based on those numerous conversations between the rest of the Western commissioners on how do we maximize the opportunity of EDAM and day ahead markets, there was an open letter that was put out by a number of regulators from five states, California, Washington, Oregon, New Mexico, and Arizona, including both President Reynolds and myself, to put a call out on thinking through how do we put an action minded hat and think about the best ways to realize the potential of the largest footprint.

And that then dealt with kind of formation of what is called a launch Committee.

A number of stakeholders in the west came together and organized themselves on a voluntary basis to say if we are looking at maximizing the benefits with these common values, what are some of the proposals we can come up with that meets the needs of all of us?

And both Commissioner, both President Reynolds, and myself, and a number of commissioners from the West, were closely participating in the launch committee meetings and able to provide kind of guidelines, guidance on what some of the needs we have and also feedback.

So, then the launch committee continued to work over the last year and a half and came up with two proposals. The first proposal is really centered around greater authority to market decisions, and kind of thinking through how best the governance structure around the market function.

And I want to reiterate that there is a balancing area function and a market function. How do we have the market function be co-equal or have upliftment in terms of primary authority? So let me kind of take a minute and walk through what that means. So, as President Mainzer have mentioned, currently there are two boards.

You have the governing body of CAISO and you have the governing body of the markets. And this particular step one is really around having the governance be co-equal between those two entities. And what kind of came together was how do we give the WEIM governing body the primary authority over market functions.

So, I still want to make sure that I kind of re-emphasize that the balancing area functions continue to be under the CAISO board. But as it pertains to the market functions, there is a primary authority for the board to think about how best to represent the Western interests.

And that has been put in front of the CAISO governing body and has been adopted since. And step two is really thinking about creating the next step, which is the independent regional organization with sole authority over market design and decisions. And this is an important step forward, and given the interest of time.

Welcome questions as we move forward in this presentation. This is where we are looking at a new regional entity that is formed that allows for the market design functions to be under the regional organizations. But still CAISO retains both the balancing authority function but also the implementation of the markets. That's an important element of the design.

So, I wanted to close off just with a couple of pieces.

So, as the step one and step two moved forward, one of the things that the state agencies wanted to do, both CPUC and CEC, is look at as the designs are coming together, can we think about what the benefits of those extended regional markets or expanded regional markets could look like?

And as you see here, again in interest of time, I put it at a high level and welcome discussions based on the modeling we've done. And I want to recognize that preliminary modeling, it's phase one.

We are going to continue to improve the modeling and the assumptions we looked at going from where we are in terms of EDAM commitments.

And some of the California balancing authorities have already committed to EDAM all the way to a largest footprint of the West. If you look at that footprint, what is the maximal benefits we can get? And that's about 790 million in the preliminary analysis. And also the renewable curtailments overall reduced by about 10%.

So, maximizing the opportunity of the build rate GHG emissions and local pollution reduces in California. And for reliability, given that we are working with a large amount of resources in a seamless fashion, allows for more cushion of resources available to the market for reliability events.

So, that's the main points of the study, and look forward to answering questions with that. I'll pass it back to President Reynolds.

All right, just to wrap up here, I wanted to emphasize that I'm here with Vice Chair Gunda as state regulators to really make sure, and from the beginning, we have focused on an interest in making sure that consumers and grid reliability are the north stars of the evolution of Pathways.

And when you think about what a market does, what electricity markets do, are they optimize the efficient dispatch of resources, and this reduces costs and it increases reliability. And this is especially true when you think about renewable resources. It's a benefit, there's a value to having a market that is bigger than any one weather event.

And so when we have a large market, we're able to operate reliably even if the wind isn't blowing in certain areas or the sun isn't shining in certain areas. And so you get that efficiency, which helps consumers, it helps control costs, and it helps with reliability.

And so with that in mind, as Pathways has evolved, we've really focused on making sure that there are public interest components.

And two of those I have at the top of this last slide, and one is that the formation documents of the regional organization will just fundamentally have as a purpose to serve customer interests, meaning reducing costs and increasing reliability.

The formation documents of the new entity also through the Pathways Initiative, are planned to clearly have a provision to respect the authority of states to set their own procurement, environmental reliability, and other public interest policies. The Pathways proposal also includes specific proposals to add on additional protections for public interest.

And I have some of those listed in the bottom portion of this slide, including the first one is the corporate documents. And really important to have that public purpose embedded. And the next is expanding the body of state regulators' current role.

So, this is an advisory body that currently acts to advise the WEIM. Using transparent decision making processes. That idea that public meetings have to be held, comments received in public, and then creating a new independent consumer advocate organization as part of the effort as well as a new office of public participation within any new regional organization.

So, I just wanted to close with that and we're happy to take any questions. Really appreciate the time of the Committee.

Excellent. Thank you. Well Members, really. I'll turn it over to you, this very complex topic, give a chance to ask questions. Then we have some excellent stakeholders coming up right after this. So who would like to go first? Senator Archuleta.

Yeah. Thank you panelists for coming before us. Of course, everyone in the audience, everyone watching, we're all concerned about energy. We're concerned about the cost, reliability, and that affordability is probably number one. And we can all work with the grid every once in a while when it's necessary.

But the affordability is what my constituents and all of us up here are obviously concerned about. But I'm also concerned about inclusion and making sure that every agency that you work with is included to give us the best possible you can give us. And of course that brings labor into play.

So my question is the labor community, have you reached out to them with these futuristic things that you're about to do and take us under that next level? How are you working with them?

Labor has been represented on the launch committee, and I believe we have a representative from labor here today to speak with the committee. So, that interest and purpose of representing labor has been embedded in the Pathways Initiative.

And you also had mentioned about we exporting more than we're importing or we're importing more than we're exporting. And I guess that's what it was. Why is that when California is such a viable state?

Well, one thing I'll say is that, we don't just rely on the spot market. So, it's not like our load-serving entities are out there saying, "I don't have enough power, so let me look in the market and see if there's any available."

In California, we have obligations of all of the retail providers to have long-term contracts in place to cover their load.

So, we plan in advance, and we also have a Resource Adequacy Program to ensure that those resources that are procured show up when we need them to show up, and then all of that goes into the market and is dispatched, according to Economic Dispatch.

There are contracts with out-of-state entities, and part of that, just for example, is North Pacific Hydro from the Northwest. It's a supply of electricity that complements our solar very well. And so, there are contracts with hydroelectric generators out of State of California.

There's some geothermal out of California, some wind outside of California. But California entities and the retail providers are contracting with those entities, and then they come into the state through the market. I don't know if anyone wants to add. Okay.

Okay. Thank you, Mr. Chair.

Well, thank you, Chairman. And I thank the witnesses. It's a complicated topic and we're going to need to learn a lot more before we make decisions here. So I appreciate the information. I have some questions. First of all, Mr. Gunda, you mentioned the moving the markets from real time to the day ahead. That's been great.

And then you also mentioned unleashing the value of the market. So those statements together get me a little nervous. Because of Black Swan type events, we went through some pretty bad experience in the Enron crisis. I mean, what are the risks here? I mean, have you laid those risks out so that we can get a clear understanding of what they might look like?

Yeah. Thank you, Senator. I'll kind of start and welcome my colleagues to jump in. I think there's two aspects to making sure market design is very beneficial and I think the part of that is the role of markets.

And the markets are looking at not really building necessarily new investments or new resources, but looking at what resources are existing and how do we optimize them to a level where we're getting the maximum benefit and we're picking the low cost resources.

So from a pure kind of a market structure, it just is about ensuring that we have access to the largest number of resources. Second to your point on the risk, and as we think through any market design, it's essential that we have the necessary guardrails to protect against the market manipulation.

And as you pointed out, we had a bad experience in California with markets being manipulated and consumers really being impacted by that.

And since then, a number of interventions have been made, including development of authorities with dmm, the Department of Market Monitoring at caiso, and also explicitly laying out some of the statutory responsibilities, ensuring that the consumers are protected in terms of public interest.

So I think there are two things, which is the potential of a market to effectively dispatch the resources we have, and rightfully so. To your point, ensuring that there are guardrails in the design that ensures that there is no market manipulation or market power that's exerted. So I would welcome.

Just briefly I'll add on because it's a great question and I think it brings up a number of answers and then a number of protections that need to be place to avoid making ourselves vulnerable for any type of extreme event, including Black Swan events, something like Enron.

Part of that is through the market, the market monitor, which the Pathways Initiative has contemplated building on what CAISO has already put into place for protections.

Part of it's outside of the market and the contracting that we're doing and the work on resource adequacy where we're really trying to figure out how generation assets, especially renewable assets, work and work together and when we can rely on them, how much we can rely on them, and how to make sure we have every hour of the day covered every day of the year.

Well, I think what makes me nervous is that the new tools out there, you know, with AI to really get in there through the market and cause manipulations or distortions of some kind.

Senator, maybe I could just add a little bit more context. This is obviously something that we think about all the time at the CAISO. So vested in a reliable market, in an efficient market, and a market that's not subject to manipulation.

I think when you think about the, you know, 25 years ago in California power crisis, I think there are a number of absolutely critical lessons learned. You know, I think many people, lots of study of this.

I think the original design of having everybody transact everything through a single spot market without the ability to forward procure was just a design flaw from, from game one. And I think that the state over the last 2025 years has brought a very strong resource adequacy, construct binding resource obligations and forward procurement. That's so essential.

And we work very closely with the state agencies to make sure that we have a healthy supply stack. That's absolutely essential. FERC has also recognized continuously the importance of really rigorous market monitoring. So as Vice Chair Gunda mentioned, the Department of Market Monitoring at the CAISO participates actively in our stakeholder processes.

They offer opinions to our board before we send tariff amendments to FERC to make sure that they're solid and resistant to any type of untoward behavior. We also have a market surveillance Committee drawn from experts from around the country to poke holes and make sure that we don't have any vulnerabilities in the market design.

I'll just also mention, as I said before, the collaboration that we have with the state, the ability to work together to onboard resources and make sure we have a solid resource adequacy paradigm is essential. And then the transparency that I think has been brought to the market.

We have a vast number of stakeholders who participate in our market alongside dmm, alongside msc. And then we have a very strong Board of Governors who are also have a lot of experience on this topic, who are ever present, looking out for any vulnerabilities in the design. So these are things that we take very careful, very seriously. And I think we've made significant structural and enduring improvements over the last 25 years.

Okay, well, I appreciate that. And it looks like you've thought about it. When you add in players from independent states, different states, I mean, it seems like there's, there's more risk. And so I'd like over time to be, you know, satisfied that the risk is not there or minimal. Understood.

Another question, Commissioner Gupta, what protections do we have in place to avoid California purchasing more energy from coal?

Thank you, Senator. I think that's kind of coming from the Brattle study. So again, want to just contextualize the work that we have done to understand the benefits of kind of an expanded market. As you note, rightfully, some of the work that the Brattle has done today has resulted in potentially a higher amount of coal dispatched.

So I want to kind of make sure that I contextualize the results and what we are trying to do to make sure we get a better clarity on some of these analysis.

Number one, when we started looking at the benefit study, one of the core things we tried to do was look at the most conservative kind of situation. So, meaning what if the gas prices are. Natural gas prices are significantly higher than the coal prices.

So which is not completely true, but we wanted to start with that as a preliminary starting point. So that disparity between the natural gas prices and the coal prices gives that an indication that natural gas gas might not be dispatched as cost effectively as coal. So that's where that particular analysis is coming.

But what we're trying to do now is looking at a variety of sensitivities of both coal prices and natural gas prices as we look into the different footprints. Second, we also did not look at various different footprints of what could happen in the future. We had very little time to done some preliminary analysis.

So we started with some reasonable footprints to consider. And what I would like to offer on that is regardless of what the market footprint might look like, whether it's EDAM or some other market or no market, those coal emissions will happen. And it's about figuring out a market structure and a market footprint that minimizes that.

So I think that's the second and the third one is just to kind of recognize that we didn't, in our benefit study, we did not look at this true status quo as the starting point. We assumed a number of EDEM participants already and looked at the incremental benefit from there.

But if you look at the status quo as being the EIM and then go all the way, those, those impacts will not occur.

I'll just add, as the chair noted in the Introduction. In the past year, renewables outpaced coal. We had more renewable production of energy across the country. And why is that happening? Partly because California is building clean energy resources at a very fast rate.

We had record build last 7,000 megawatts of clean energy resources, and those are working to displace coal assets and natural gas assets. So the more we do that and we have more build planned, the less coal will be on the system

As a follow up.Yeah, I want to get Senator Limon Chance, but just on that question, we had Chair Hochscheld here, and my understanding for what he said is, number one, we're curtailing a lot of renewables during the day. Right.

And that part of the idea is, is basically you force those other fossil assets to compete with zero marginal cost renewables in this scenario. Is that accurate or not accurate or.

Yeah, that's. That's absolutely true. And I think just to kind of take this opportunity to expand. The Brattle study is also static in the sense that we are taking the existing plants that are available. But as we know, over the last several years, the, the rapid deployment of renewables has only grown higher and higher.

So as those deployment goes up, those benefits will continue to aggregate higher and higher.

Yeah, because my understanding is we built 7,27 gigawatts renewable energy since Governor Newsom started in 2019. But. But Texas has built more solar and more wind and I think has a higher portion of renewables on the grid or something. I was just read the other day too. Right. Just because it's cheaper, it's the cheaper thing to build.

Okay. Would you. Zero, no, go ahead, Ben. Would you want to follow up? Senator Limon had texted me with a question and then.

Thank you. So thank you. And I appreciate. And I want to follow up with what my colleague asked. And you know, I was also going to ask about the concern for market manipulation, and you mentioned guardrails.

And so I think when the time is appropriate, certainly I would love to hear in more detail what those guardrails can be. I appreciate guardrails, but as someone who's been following a conversation over the last eight years about regionalization, you know, we can look back to different Committee analysis that express deep concern about this.

And so I will speak for myself, but I'm coming in, you know, slightly more skeptical of where, you know, I will land on this particular issue, in part because what I'm looking for is, are what those guardrails would be like Details. Right. Of what those guardrails would be.

I appreciate that we will put some in place, but I think as those develop and when the time is appropriate, I think it would be helpful for me at least to hear more about what exactly are those guardrails that we're going to have in place and how do those guardrails also evolve over time to keep up with the, I mean, everyday new technology that is out there, you know, that poses a risk to a lot of our systems, not just this.

So I just want to add that also, you know, on the point related to some of the energy sources that are least favorable to our. Are not as favorable to where we would like to go in our state, I think it's important that, you know, we recognize that certainly that what we are doing is getting us to more of what we like, but that's.

That also comes with more of what we like also equates to we're still getting some of what we don't like.

And I think that there are folks that are looking for that balance of how do we ensure that it's always more of what we like as opposed to say, hey, we went in knowing we were still going to get some of the other ones and that there were these other ways that we would potentially, you know, potentially get more of the good stuff.

But. But the bad stuff is also a concern to us. And I appreciate we're going to get less of it, but that also means we are getting some of it. And so, you know, I throw that out there just as a response to what has been said.

And then the other piece is for me, just generally, you know, speaking as a Member who's kind of gone through different policy conversations on this particular issue, this is a slightly different approach than what we saw in 2018, but, you know, help us understand how we've solved for some of the concerns, you know, 2018 in particular, if I recall correctly, and you may all remember a Committee analysis in Judish about some of the concerns that had come up.

And I'm just curious if you can just speak to what are the key differences for those of us that were around with the 2018 conversation? That was a pretty significant conversation.

Go ahead. Certainly go ahead and answer that. And then.

Well, yeah, okay, thank you and appreciate your following this through many years. And I did want to emphasize one thing conceptually as you think about this, and I think we didn't emphasize it in the opening presentation, but that's that previous proposals had envisioned the caiso expanding, so the balancing Area would expand.

We would give up control of our transmission to this new caiso that would be operating throughout the West. This proposal is very different because CAISO would remain as a balancing area. The board would remain in place. We would have a California balancing authority, that is CAISO similar to bank, ladwp.

And so the CAISO would be able to participate in this new market. And so all of California, through bank, through ladwp, through caiso, would make a decision about whether to join this new regional market. And we, of course, would participate in the design.

And, you know, we have been tracking the launch Committee's proposal, but we would have the ability to say, is this a market that we want to participate in? In the same way that other balancing areas throughout the Western interconnection would make that decision. And then we would also be able to exit if we need to.

And so it's a voluntary particip, the market. So just kind of conceptually, that's a big difference. We would keep the control of our operation of our transmission in the caiso, and we would just be making a decision about whether the CAISO should join a market, a regional market, and then CAISO itself would operate it.

So it would be the caiso market. And all the expertise and all the investments we've made in developing the market would be used by the new entity with a new governing board.

And so through the. Through the chair. So on that note, if you were, if you were in a position to assess X number of years in what would be the role of CalISO like, once we are in, how do we exit if we ever need to exit?

I'm not saying that that's what should be planned for, but contingency plans are always important for a number of reasons, including that I think we can't completely control what happens certainly in other states, let alone the country. Right. In terms of where things go, at what point and under what conditions is that reassessed?

Yeah, I think. And there are a number of ways that could go. One thing also to think about on this is this process has been iterative and so that we're able to see what we're getting. Right. EIM is designed a number of years ago. We get to see how that works.

EDAM is being designed, and then this would be further evolution. But in falling back, it could look like we do bilateral contracting. There might be a different market that we participate in. CAISO could run a small market for California. So there are different options that if we think that something is not working or things are going badly. Did you want to add?

No, I think President Alice, you covered it really well and I think just Senator, just to your thought process, I think absolutely welcome that conversation to think about how best to protect the interests of California. And I think much of our work through the pathways as state regulators has been to ensure that public interest and those guardrails and how to how to put them.

And the second I think as long as there are markets as just an observation, whether we do just for California or we have an expanded market that California is a part of, the risks to that marketplace will exist as you mentioned with new technology coming up and AI and I think that's a continual conversation with the Legislature and the powers to just think through how do we continue to iterate and make sure the markets that we are going to be a part of are absolutely geared towards consumer benefit and mitigates the risks that are there.

Well and I certainly welcome further conversation because even in hearing that. So I appreciate the welcome conversations with the Legislature.

I'm just not clear if that means that the Legislature is then going to make that final decision or if that's going to be a decision of you know, the Energy Commission, Caiso like who is other because I just think it's generally important to know at the end of the day if something goes in a different direction who is going to be able to say this is a moment to pause and reflect and keep going in this direction or not and if that's going to be a state agency, if the Legislature is going to have any role. So I look forward to those conversations. Thank you Chair.

Great. Thank you. I do want to I do want to move on because we will have a lot of the stakeholders who will want to weigh in on the guardrails and strength of the guardrails or not strength of the guardrails. But I would say that just number one this wouldn't happen for a few years. Right.

So the Legislature is going to have even this whole notion of pathways is permissive. So Legislature would have a chance to weigh in before anything is formally finalized. I was going to turn to Archlow for one quick follow up. I was going to one last thing.

I know the Senator Limon has a lot of has some once through cooling plants in there. You were talking about fossils. So I believe this projection is that for reduction of air pollution in California is the requirement the retirement of some of those ones through cooling plants. Is that the case?

Yeah, I think both the assumption is those are going to retire in our in our planning of the Brattle study. But two, we have unit by unit, which we're still kind of working through. But the Brattle study shows that the overall emissions with other plants will also reduce.

Yeah. And that shows All right, Senator Archuletta, a quick follow up and then Senator Allen.

Thank you, Mr. Chair. My concern is the growth. Your regional plan, how far east does it go? That's number one. Are we going to be able to maintain our renewable portfolio here in California? And again, are we using hydrogen in this plan of yours? Those are my.

I mean, I think the plan as far as geographic reach is essentially any balancing area, any utility that wants to join as part of the western interconnection. So if it makes sense for them, could be the entire west. And as far as. Well, go ahead.

Yeah. And just kind of expanding on that. So the current western interconnect today has 11 states and provinces. And the utilities from that, if they would want to join, some of them would have to go to their own Public Utilities Commission to get permission to join the market. Some of them do not. And so that really is a participation that is available for the entire 11 states and provinces.

In terms of RPS, one of the core tenants of the design is to ensure that the state policies are respected so the RPS goals that the state has will not be touched by the market design Market is only operating what's available once the states build what they want to build.

Finally, on the question of hydrogen, hydrogen, I think again that's part of the integrated resource planning of every state. So that again falls outside the part of the market, but market optimizes if there is hydrogen.

And much of our IRPs today, some of the integrated resource plants, for example, from the public power today have hydrogen power as a significant part of the work and those resources, if built, will be a part of the market.

Okay, thank you, Mr. Chair.

Thank you, Senator Allen.

Well, the first, I just want to first express concern and turn this to the author too about the answer to my colleague's question about there's a current lack of clarity as to, you know, the role what we're hearing a lot about the increased flexibility and power that we keep in our hands under this proposal versus as the one from several years ago.

And yet, you know, the Legislature's going to want to be part of that conversation and to hand it all over. And you know, I don't know. I'm not, I guess I'm. We're having further discussions. I don't know what that's going to entail, but I certainly know that there's a number of us that are going to want to be part of those further discussions.

I guess that's a question. I mean, will the Is there a role for the Legislature, you know, before this is ultimately in 2016, you know, whenever 27 or 20 whenever it would actually is there a role for Legislature and pathways before that decision is ultimately made or.

I mean President Mainzer can talk about EDAM. There's a Bill that we're going to be talking about, I understand, at a further hearing. So we look forward to participating in that discussion

At a high level. You're comfortable with a legal legislative role? I mean, in the next few years as this goes forward?

You know, is that I mean, certainly. There are a lot of different I mean, this is a proposal that the launch Committee has put out for consideration. And so I think it is for having conversations with the Legislature and any, you know, thoughts on it.

And I think that as we go forward, we'll see the development of EDAM2 and there's really transparent about what's happening there and what's happening with the markets.

Maybe if I could just offer just a couple being sort of the subject of the conversation at the CAISO, maybe I could just offer a couple of conversations. And again, I really I think the work that President Reynolds and Vice Chair Gunda have done with their colleagues across the west has really reset this conversation.

So I'd like just to take a moment, having observed this. I mean, this is a fundamentally different proposal than what we was before the Legislature in the past. In the past, where you had a proposal to basically convert the California ISO into an RTO on day one under completely independent governance, with a lot of questions unresolved about how California would retain its jurisdictional authorities and autonomies and decision making.

And by moving to a construct where the Caiso Board of Governors stays intact, California ISO retains its balancing authority responsibilities. The PUC, the Energy Commission, the state agency retain all of their choices around California's policy choices. Retail rate making, transmission planning. Those things stay in track and we just take the market rules and put them under a new regional organization with independent governance. Right.

And that I think what they've done by resetting that conversation, they've said we're all these different states who've been working together under EAM recognize now that there is a shared interest in reliability and affordability across the footprint. But we're now moving into edam. There's a desire for more Independence over those market rules. So that is just a game changing perspective.

And I get there's now more California authority. I think there's kind of a balance of powers issue that my colleagues questions raised because there's been and if I.

Could I want to just while we have the moment because I think it's really, really important question you're asking and I want to make sure you know that as the CEO of the CAISO, I'm extremely vested in answering your question. I just want to give you one example of, you know, guardrails.

Not only do you know, as I mentioned in my segment, it is very important. The whole principle of voluntary participation in markets has been the key principle guiding market development for years. And FERC can neither compel entities to join these markets nor prevent them from withdrawing.

So over the course of the coming years, if there are untoward elements of this market, the CPC and the participating transmission owners in our market already have withdrawal rights from the market that will persist going forward.

And as the regional organization has stood up and its articles and potentially its own tariff are developed, there will be withdrawal rights negotiated part of that as well. And presumably nobody's going to sign up for it if those are unduly burdensome. So the off ramps are there.

The other thing I wanted to make sure, and I'm going to give you one example because I think it's really important that we get to the bottom of this right now. As we, you know, the last four years we've put 11,000 megawatts of batteries on the grid, right?

That's a totally new technology that we didn't have on our system even four or five years ago. Those batteries are really fast, right. They're very flexible. And the Department of Market Monitoring has come forward and said hey, these are fabulous resources and they're game changers for net peak and they're helping us with reliability.

But we need to be really careful that they're bidding rules that they don't, they can't be manipulated. And so literally just in last year we ran a stakeholder process around the bid cost recovery rules stimulated by the Department of Market Monitoring.

And we made some adjustments to those rules and we sent them to the Federal Energy Regulatory Commission. They were approved. So I want to just make sure that I provide you with that assurance because that is not only do we have the ability to withdraw if this construct goes sideways, right? And that's important, it's voluntary.

But also the day to day monitoring and transparency of the market rules is essential and nobody has more vested interest in that than us at the Caiso. On behalf of the customers that we serve and represent with the state agency. So I hope that's okay.

I just want to make sure you understood that because that's a real live example with new technology and with the implementation and the focus of the Department of Market Monitoring, that's absolutely essential.

And then the last thing I'll say is, you know, as President Reynolds said, I think that, you know, our Board of Governors is going to stay intact. Right.

You have five Gubernatorial appointees of the State of California who are ratified by the Senate, and they are going to be in a position to stage gate and make decisions about whether or not this new regional organization meets the criteria and the features and the public interest standard that is embedded in the Pathways proposal.

So if that is delegated and if that is met, and they can look and say it meets the transparency, meets the public interest standards, it's equitable, California has a seat at the table. We'd like the governance. Then I think our Board of Governors will be in a position at the time to say thumbs up and we go.

So I think we're bringing this in front of you now to start making sure that all those good, hard questions are answered up front, because I think the stakes in terms of affordability and reliability are obviously very high for California consumers.

All right. So, you know, getting, I mean, really digging in on this kind of question of control. I think one of the issues that's been raised is that Pathways is proposed using a Delaware corporation for the new regional markets operator. And, you know, so let me ask about that. Why not. Why not require a California corporation instead?

That might be a really good question for the next panel. Yeah.

Okay. All right. Yeah. Because, I mean, in the end. Yeah, we'll cover that. I mean, well, yeah, there's a lot of stakeholders on the next panel who can. All right, I'll ask that next. Okay. And then, I mean, this whole question, it's like two section 205 filing authority. Should I.

Should I ask that next in the next panel that's been. That's been floating around. Take a question. It's a fair one. Do you want to take that one? Absolutely. Yeah.

I mean, well, I mean, basically, once again, it's about this question of our levels of control, you know, so under the Bill, Caiso, you know, remains the transmission grid operator, but it will transfer the right to propose tariffs, you know, over again to a Delaware corporation, at least, you know, according to the plan that I've seen.

So I just want to make sure we're not kind of claiming control and then creating mechanisms where we're losing control. And if those are justified, let's have that conversation openly.

Maybe you don't want to overcorrect for the problems that we had last time, but the flip side is I don't want this to be presented to us with an idea that we've got all this control when we're actually outsourcing the control.

Yeah, great question. And to be clear, it's only the market part of the tariff. So Caiso operates transmission, will continue to do that, will continue to control those portions of the tariff. The independent entity would be responsible for the market portion of the tariff.

And this would only be done with the understanding that fundamentally that public interest or that public benefit corporation has to act on, has to run the market in a way that benefits consumers. And so that's the. That would be the obligation of the corporation, and then the market rules would come from that.

And so I'll leave it at that and go to you.

Yeah, I think, Senator, first of all, I just want to recognize, I think these are really, really important questions that you're raising, and I kind of want to just take a step back and contextualize where we are.

So in terms of what the Pathways Initiative has done is it's an independent group across the west that came up and said we are going to collectively think about recognizing the value Proposition of expanding the EDEM to the largest footprint. I think that's the value Proposition that people sat with.

And when you think about that, the important part of it is every single entity that's participating in that should have the autonomy to controlling their balancing area functions. And that should not be touched. Including Caiso. What the conversation was was about is really around as it pertains to the governance of the market rules and design.

Can we have collective ownership of that of the thinking. And so that really is what the proposal is being put forward and says, okay, if we are all wanting to do this, can we collectively own the market design?

And that's important to note going back to what President Mainzer said is at the end of the day, as, as we are at the table participating in designing those rules, if something does not work for us, we have the opportunity to both push to the design that we need to land on and in the worst case scenario say that market does not work for us.

And in terms of. And I'm sure next panel will talk about why the recommendation was to put in Delaware. But my understanding was most of the markets today are registered there. And there's other conversations around where should be the primary business location be.

So there's a corporation that's incorporated, but really we're talking about having a business place and then two really talking about continuing to use Caisos assets that we've invested in and the rest has invested in to use to be used as a part of the market implementation.

And as we go forward, you know, if the Legislature again, Senator Chair Becker said at the top that that's a different conversation to think about the legisl at end.

But if that were to move, this is really looking at over the next several years what is the best market design to be to have all of us be a part of that. And the immediate steps would be somebody like Caiso Corporation has to sit with the regional organization and look through the terms and agreements.

And I think that will take many years, two or three years. And we'll have plenty of opportunity to both come in front of you to explain what's going on and get your guidance as a part of that.

Good. Yeah. And we also have the chair of the launch Committee Pathways coming up on the next panel too that can speak to some of this.

Yeah, could I do. I mean maybe we can have a side conversation, Mr. Vice Chair, but there's some. I think there again, this is a complicated structure and you know, there's a real. I mean among many concerns is that we've got all. You know, I think you're.

And I think you're hearing some of the concern about all this, all this law that we put in place and the ways that the little aspects of the law potentially Undermine a lot of our goals, including the rps. You know, there's a line in there about not allowing for, you know, basically allowing for language that would.

Language that would. That would potentially allow for a rescission of our RPS buckets, you know, on the guise of flexibility, you know, but that I think we need to be aware of as we contemplate this legislation.

Yes, Senator, I know there's going to be further discussion in the next panel, but I think the fundamentalist spirit of the conversation and the Pathways proposal is to absolutely honor the RPS and the state policy goals, but through the language that you're seeing today, if you see there is vulnerability, and I think that's a different discussion, but that's not a spirit of what is being tried to accomplish here.

Yeah. Okay. Probably move forward and. Sure. Okay. All right, quick questions. Yes, Senator Wahab, thank you.

So I had a previous commitment, so dual info hearings, if you will. More specifically, I was a former operating engineer. They right now do not support this, and I have not heard back from their support or integration with this effort. Can anybody talk about that?

I think at this point we're really trying to talk about the Pathways Initiative generally, the structure, the market, what is it, what is it not, rather than like supporting a particular.

So it is a question. And I think that when we're talking about jobs and so forth and expanding, I will say CAISO is legally required to have California's best interest in mind, whereas regionalization, number one, we would lose autonomy and control over our own energy sources, number one.

And number two, we don't even know which states are going to join this regional effort. So can you guys elaborate as to why would we do this and what's going on and who's really committed to this project?

I can get started. Thank you, Senator. Just kind of making sure. Just kind of stepping through your questions. I think we've had a few different kind of questions around having the autonomy.

And I think just kind of reappping that conversation, the way the Pathways model is contemplated is, you know, when we think about CAISO, between its balancing area functions and the market functions, they're two separate functions that CAISO does today.

The idea and the spirit of the conversation on that was the balancing area function of CAISO will not be under anybody else's governance. The autonomy of the balancing area function will be completely maintained within CAISO's jurisdiction and California's jurisdiction. And when we talk about balancing area functions, that's where you're talking about.

How are we operationalizing the policies of the state in terms of resource build, the RPS, the transmission build.

And I think that has to be in the discussion on ensuring that the balancing area function autonomy continues to rest with California and it's really around making sure the market function, the market development of the market rules is under a governance that's co owned by the rest of the West.

So that's the kind of the spirit of the Pathways Initiative.

So is it true that coal plants in the west are going to provide more jobs through this effort? No. No extra jobs in this sense?

No. As of. So I think the Prattle study and I want to make sure at least the context of it is stated, which is we are looking at a footprint in the future. So we're looking at existing IRP plans across the west, including Caiso and the latest transmission plan.

And we're saying if this particular set of resources were to exist, what would the market do in dispatching them in the most cost effective way and reliable way. And that's what we're talking about. But the market does not have influence on which specific generators are being developed and that completely falls within the auspices of each state.

Okay. And then we have the former head of the CPUC, the former chair lynch opposed to this. And I just want to highlight some of the opposition that we've heard of. Is one, which states are potentially going to be a part of this, which is. It's very unclear. Right. How does this look like for ratepayers? Right.

How does the outlook for our climate goals? Because California is the leader. But I can't say every other state that may join this is going to be part of that. And you know, when we're talking about electric rates, you know, will they change? How will the ratepayers, how will this affect their bottom line?

Yeah. I will just get started and welcome the fellow panelists to add enormous respect for former President.

And I think we haven't had opportunity yet to talk through some of the concerns that were raised but I think to just think through the specific aspects of the Brattle study and thinking through the design today, I think it's important to note that we are talking about every state again continuing to retain its own policy goals.

So our IRPS will continue to build the resources we need to build moving forward. 2 and I want to just make sure, you know, I'm sorry for repeating this from earlier conversation.

Whether the California market, that the Edam market expands or not, and it's kind of just a part of California, there will be other markets in the west and those other markets will continue to optimize the resources that are available.

And it doesn't, you know, whether it's, it's a market that's through caiso, whether it's a market through the rest of the west, those, those emissions will continue to be there and the opportunity for us through the EDEM expansion is to help navigate that.

Okay, so the question, the concern I have this and this is my one of them. Right. What is the plan for ensuring we still meet our greenhouse gas goals and reconciling SB100 and the RRTO rules?

And the reason why I bring this up is SB100 says by 2045 all California electricity has to be from renewable energy and zero carbon resources without increasing carbon emissions elsewhere in western grid or resource shuffling. Federal law however says RTOs have to operate in a non discriminatory manner.

So GHGs have to be treated the same in all states and RTO serves other states don't have the same GHG rules or goals as California.

So we covered some of this when you were not here. But I'll let you know first just on the rates. The Brattle group study estimates $800 million savings a year from this initiative. So that's where the that that came out on the rate perspective. But you know we'll go ahead and again some of this, we already covered.

Some of the greenhouse gases. Yeah.

So and for possible participants, I think one place to look is the existing regional market that we have today, the energy imbalance market. It has participants from throughout the west and those are the likely participants in any new market that would be created.

That market, the regional market we have today also has produced region wide greenhouse gas emission reductions. We'll achieve our goals through contracting that we put into place through our load serving entities. We have requirements for contracts and new build and those will continue.

Do finally thought on the goals?

Yes please. Yeah, I think it's just as President Reynolds mentioned. I think as we continue to move forward I just want to offer the discussion we had earlier. The Brattle study did not start with a status quo. We looked at what you know, an EDAM market is the baseline, not where we are today as eim.

I think the reasonable case to make is because of the benefits we currently accrue through eim. Is it possible to at least capture that market to begin with and hopefully expand it further?

And I think the conversations of having that expansion is really around making sure there is that trust across the west on making sure there is equal Representation for all states to be able to be a part of that market design. And that's really what we're trying to do in this effort.

Okay, so I know for example, we are largely looking at trying to make sure that our grids are a little bit more regional in the sense of in our state. Right. So for example, the Bay Area, if a disaster hits, you know, we want, you know, electricity to still be available to different cities.

We want to have parallel structures. Right. So that we have some redundancy. And you know, I bring up transit often in the Bay Area because I talked about consolidation because with so many chefs in the kitchen, it's hard to actually move forward because everyone thinks that their opinion is right.

How is the structure any different than making government bigger and more complicated to be nimble and actually meet these goals when the state Legislature of California may have a different perspective and a viewpoint that they're trying to serve for the people versus any of our neighboring states.

Thank you Senator Gain on that one. Just to make sure. And I think so sorry for repeating this, but I think the part of the government and one of the earlier slides kind of communicated this.

That existing paradigm of how the state agencies work all the way from the scoping plan being our blueprint to the IRPs at CPUC and CEC playing a role in the middle and the LSC, you know, asked to procure certain types of resources and contract, that would not change because that is all a part of the balancing area function.

And that is something that we'll continue to have control over. This is really talking about what we do today. For example, the Caiso in its development of the market design today welcomes all the stakeholders across the west and it's collectively developed today.

But in expanding those market designs into from real time to day ahead markets, there is a need from the rest of the west and ask from the rest of the west to make sure they have true equitable representation in ensuring that the design, they have a voice at the design.

And this entire efforts of pathways really trying to make sure that just the market rules, conversation happens in an independent space. And we just like every other balancing area is present there in equal footing. And if we don't like the design, we get to push it.

And worst case scenario, as we discussed before, we don't join that market.

So the concern is this though, if we have equity tied to this, as you stated, right. California being the big dog in the room, let's be very clear about that. In western markets, are we subsidizing Other states and putting. So where's the money coming from? Where is the effort? Where is the collaboration?

I just want to understand where the money is going to end up going from California.

Yeah, it's a great question. And I think the reason why within the Pathways kind of proposal there is a clear call out for leaning on CAISO to implement that is because there's a lot of money that's currently being put into Caiso, putting up caiso, the whole, the whole infrastructure.

And that has been put in by a lot of EIM participants. And our hope is to leverage that rather than recreating that. Absolutely.

So this is a utopia of how we're doing this, right? There's no anything concerns. Any red flags, any.

No, there's a lot of concerns. You missed a lot of that conversation. So I think if you want to walk through the presentation, maybe with folks afterwards, we can go through, because we've been talking about many of those concerns.

I think the, the 1.0 that Chair Hoek shows, remember from the last meeting and I raised this earlier, is part of thesis here, is we're producing zero marginal cost renewables, right. We're curtailing many of that. And so the opportunity is here to export those zero marginal cost renewables across the West.

As one of the pieces, would you want to close? Chair Reynolds, do you have something you want to say?

I think that's a good point to close on. Just that our renewable resources perform very well in the market once you build them, they do have zero marginal costs and they've been dispatched effectively in the current regional market, the EIM market. And we've seen the benefits.

And I do think this needs to be iterative and go step by step and be very careful. It is complicated, as the Members have recognized today. So really appreciate the time to be here.

Yeah, I want to. Do you want to. We do have seven panelists coming up who are some of whom were critics last time, some of whom joined together, some who are still critics who will have lots of chance to raise concerns. I guess I just, I'll have one final question myself if you have any closing questions.

Comment? Sure. Closing comment on this one. I'll be very brief. I don't want to belabor it, but we didn't talk about the rest of the Western context here and the rest of the national context. And I guess that's, that's the one thing I'm missing.

I appreciate the scrutiny and the concern about our state's autonomy, our rps, our emissions goals, but I did, and maybe the Next panel can get into this, but you know, what's happening with the tariff wars with Canada going on right now, risks to not just northeastern imports. Right. But BC Hydropower.

BPA just had 200 people leave their organization or fired or took the payout from Trump and who knows how many more could be cut. There's a lot of politicization in the energy arena, too. And you said the words trust across the West.

I mean, the reason, I guess I'm a part of this initiative is that I think we still have to be on that mission and try to make. To build that trust in an incredibly difficult environment, and that somehow the economics of this are going to.

And the reliability benefits are going to work for a state like us that's as green as it gets or for a state that doesn't want to make that their banner. And it's a very tricky balancing act.

And I just, I think that, you know, we need to update our math and update our planning with those kind of, I think someone might have said, Mr. McNerney, might say black swan events, but I don't even know if you call it black swan anyway, because the swans. Swans are all black swan every day.

And, you know, so how to build stability in a moment of instability. So I don't know if you all want to touch on that. And you're close, but that was my.

Only, you know, Senator, I think I couldn't have said, you know, any differently. I think you've really captured the essence of it. I think the, the mission here is we are more robust in being a collective trust and working together.

And the spirit of Pathways is really centered around how do we as the west work with each other on principles that we value together, which is reliability and affordability, but also have the opportunity to deviate and work on our own goals as a state. Right.

And as you said, it's a very delicate balance and it's a complex balance. And I think the work over the last 18 months really represents that effort of how to structure a conversation that meets all those goals that we collectively have. So I think you said it really well and I really appreciate your comments.

The question I wanted to ask was especially for you, Elliot Co Chair, Main chair. I'm sorry. We've heard the CAISO vs. FERC 2004 case as being relevant to the Pathways Initiative, and I myself dove deep into this. I've spoken to many FERC commissioners, including FERC commissioners under Trump.

So my understanding is that this case concerned the makeup of the CAISO board. And you said the Pathways Initiative doesn't touch sort of the CAISO board. But so can you comment on this case? Because it's sort of been raised as a concern regarding any kind of Western grid initiative.

Well, Senator, today I'm not equipped to speak to the very, very specific details of that case. If President Reynolds is. I mean, I can talk generally to how it's been resolved and how it's played out in the last couple of years.

Maybe I'll see if there's anything you want to offer and then I can offer my General comments.

Sure. You probably know that that case had to do with the Independence of the CAISO Board. And the challenge was that the board Members that FERC requires Independence from market participants for running a market.

And there was a challenge to the board based on the structure appointed by the Governor versus an independent selection, a board that kind of picks itself as it goes forward. This was a Governor appointed board which is unusual, doesn't exist for other markets.

But the challenge, CAISO was successful in defending the challenge and made the case that actually the board is independent of market participants. This is a board that cares about running a market for a market. And FERC upheld the structure.

I think that's right. And I mean certainly familiar with the General case, not the very, very nano specifics, but the bottom line, I think that principle of Independence and being able to attract very capable board Members here in California has been, has really built confidence of the different entities that participate in our energy market here in California.

I think also generally, if you look back over the last 10 years in particular, as we have expanded the WEIM, I think the Federal Energy Regulatory Commission has generally taken a very constructive approach to working with Western entities. They recognize the diversity across the West. They recognize the different state principles.

And as Vice Chair Gunda said, I think that something that I think is very encouraging about the Pathways proposal is there really is strength in numbers. You know, I think being able to work across such different jurisdictional divides, very different states, Idaho, California, Wyoming, Utah, Washington, New Mexico, Arizona, that really builds strength in numbers. It builds alignment.

And I guess I just want to comment that my last because having worked with many of these stakeholders across the west for many, many years, I do think what we're hearing from our partners across the west is a strong desire to work with us.

They've liked the experience of partnering with California and with the ISO and they've seen real intangible benefits for their customers spread quite evenly across the West. Nobody's subsidizing anybody, quite frankly. I think it's equitable and it's fair.

And I think we're now and I really again appreciate the leadership of President Reynolds and Vice Chair Chair Gunda and the other regulators across the state saying we're ready to take another move together to further advance our collaboration.

And each state can retain its jurisdiction and its control and its off ramps in its guardrails, which are very important. But there's an opportunity here in front of us to continue growing, continue strengthening reliability, strengthening affordability.

And obviously, as the entity that's operating this market, we take some pride in seeing that happen and are encouraged by the next steps. And I wanted just to say I think that this is a healthy conversation. These are very meaningful issues. It is changed.

We want to make sure that all the due diligence is done and looking forward to further iterations of the conversation so we can hopefully seize this opportunity that's before us.

Yeah. Thank you. Yeah, I know when I this first topic even came up because I had not delved in this again, it hadn't come up for the Energy Committee. But I called the leading climate Legislature in Colorado and he was incredibly excited to hear that California was considering this.

And, you know, because there's a lot of movement away, you know, basically if people feel like California's not going to do this, you know, they're going to join other markets. And he was very, very excited. And that probably speaks to some of what you just discussed. So, anyway, I appreciate it. These are very complex topics.

I appreciate it. Thank you for all of you for your time. I'd like to bring up the next panel. Thank you. We're going to go in the order that I have listed here in the agenda. So we'll start with Kathleen Stacks. Kathleen is the Executive Director of Western Freedom and co chair of the Pathways Initiative Launch Committee.

Thank you. Go ahead and ready.

Thank you Chair Becker. Thank you Members of the Committee as I'm going to try working on slides. Hold on, sorry. Here we go.

I think we each have five minutes. We really want to leave time for questions from the Members.

Fantastic. Thank you all for inviting me here today. Again, my name is Kathleen Stacks.

I'm the Executive Director of Western Freedom, which is a coalition of large commercial industrial customers, including customers like Google and Microsoft in the tech sector, Walmart and Target in the retail sector, as well as some large clean energy developers like Pattern Energy and AES who have large assets in the West.

I was also the co chair of the Pathways Initiative and had the opportunity to work with 26 other amazing people across the west to implement the recommendations. From the letter that Vice Chair Gunda and President Reynolds outlined previously.

I'm not going to repeat what they had said, but there's a few things that I wanted to highlight and what I've put on this slide here is the mission that the launch Committee adopted at the get go that really took all of these principles together and drove the work that we did.

So obviously the independent governance structure, largest footprint possible. These two foundational principles under the umbrella of public interest participation, including protecting each state's ability to set and enforce its own energy policies and consumer protections. Those were critical components of every aspect of the work that we did together.

A couple of other things that I wanted to just mention about the process that we undertook and that was that we had again 26 Members on the launch Committee representing 12 different sectors. You can see on this slide the California Members are highlighted in yellow. So there was a lot of representation from California.

We also had a really transparent process. We came together, we met weekly and then we did monthly stakeholder meetings where we had over 200 people attend these meetings, provide comments in those meetings, provide written comments on every aspect of the proposal that we put forward.

We had active engagement from state regulators, from consumer advocates across the west and really had opportunities at every step of the way to have input into how this proposal was getting developed. We took that input from the public and we incorporated it into our recommendation and continued to evolve and iterate as we went through.

As I mentioned, the public interest was a core component to everything that we did. I did want to mention a couple of things and address a couple of issues that came up in the last panel. We did a lot of research, we did a lot of.

We had engagement with, we had legal counsel on a lot of the aspects of our proposal, including the different kinds of corporate structures, the kind of Corporate law, the relationship with the caiso, how best we can protect customers and state authority, how do we create a structure with easy access for stakeholders, transparency and independent market oversight.

So really hearing all of the concerns that have actually already been mentioned, some of those were concerns from the past and we really incorporated those into the work that we did to try to make sure that we had a proposal that addressed those concerns moving forward.

As was also mentioned, this new regional organization is a nonprofit that would be incorporated in Delaware, which is a neutral choice for the West. This Independence from any one state in the west was an important component and something that we had support from stakeholders on.

It is very common for organizations that operate across multiple states to incorporate in Delaware and that Delaware law really only governs corporate law, but not the market law.

And so we had support from stakeholders and from across the launch Committee for using Delaware as a neutral place with a very robust set of corporate legal structure and a highly trained judiciary.

It's helpful because that was a question earlier, but we do have to have you wrap up 30 seconds.

And I think the last thing I wanted to highlight real quickly was the kind of stakeholder groups that we have incorporated into our new recommendation. And these stakeholders will be participating in the evolution of market changes as well as the identification of our independent board Members.

And you will see that we have a very comprehensive set of stakeholders here, including some of the market participants and the utilities, as well as public interest organizations, consumer advocates, large customers, developers, and even distributed energy resources has their own sector to engage in this very transparent process.

So with that I'm happy to pass it on to the next person.

Thank you. Next up we'll have Linda Serizawa, Director, Public Advocates Office.

Good afternoon, Chair Becker, Members of the Committee. Just so you know, I don't have slides, so I'm Linda Serizawa, Director of the Public Advocates Office. We have been a non voting participant in the Pathways Launch Committee.

As such, we have been providing input on the development of the Pathways proposal by participating in meetings and in providing written comments to the Committee.

Specifically, we seek to ensure that whatever proposal is put forward is clear on the benefits to be achieved and that interests of the ratepayers, of the investor owned utilities will be protected and advanced through strong oversight and representation.

I would like to speak to three key factors we have supported or pushed for throughout the development of the Pathways proposal, which are cost savings, reduced reliability risk and ratepayer representation. I'm going to delve a little bit into each of these three factors. The first factor we look for is cost savings.

A larger footprint for the current extended day ahead market could provide significant ratepayer benefits in the form of increased production cost savings resulting from more available, diverse and lower cost resources.

And I also should add that production cost savings also includes lower renewables curtailment which currently happens when there is excess renewable energy generated that isn't needed and must be ramped down. Lower renewables curtailment will reduce California ratepayers long term costs for meeting the state's renewables and zero carbon energy goals.

A larger market footprint will also provide higher transmission availability which will produce savings and will also provide more resilience against transmission outages. Going to the second factor, that's the need to reduce reliability risk. A larger, more diverse resource footprint can provide greater reliability for California repairs. It provides insurance by lowering the probability of scarcity events.

And what I mean by scarcity events is essentially situations where demand is high and resources are limited that creates reliability challenges. And while a majority of California's energy needs are met through procurement contracts, there is still a need to address the fact that demand and supply are dynamic.

And there can be situations that cannot necessarily be planned for, such as weather events creating a need for additional and or different resources. These marginal resource needs can be met by accessing a large regional market which can result in lower costs and greater reliability.

The third factor we're looking for is ratepayer advocates participation and representation before the RO. What we're seeing in the Pathways proposal is that the regional organization, if I say RO, I mean regional organization by the way, will be required to facilitate the participation of the state appointed consumer advocates such as the public advocate's office.

This includes the requirement that the regional organization's market data be made available to the CPUC and the Public Advocates office at the same level as currently provided by the CAISO today. It also creates a consumer advocates organization that would support the ratepayer advocates of each state participating in the extended day ahead market.

This organization would be established for the purpose of ensuring that consumer issues are heard by the regional organization's board. This organization would have a steady source of funding to support a small number of staff consultants and travel for Members.

It will be governed by its Members, that is the state appointed consumer advocates and it would not replace or limit our participation as an independent consumer advocate before the regional organization. The Public Advocates office will have a lot of work to do in terms of establishing this consumer advocates organization.

We'll have to work closely with peer state appointed consumer advocates to develop bylaws and Formally establish the organization to ensure that it is structured to effectively represent rate payer interests from the start. In closing, the pathways proposal presents an opportunity to reduce costs, enhance reliability and ensure ratepayer representation in a regional day ahead market.

However, success depends on strong oversight, meaningful consumer advocacy and clear ratepayer benefits. Thank you for the opportunity for inviting me to participate in today's discussion and I do look forward to working with the Legislature, PUC, CAISO, CEC, etc.

Thank you, thank you. Thank you very much. Next up, we had Jennifer Tanner, who's a leader of the Invisible Green Team. She's on Zoom. Make sure this can work. There she is. I see her here. I don't know if she's on.

I'm here.

Yes. Oh, there you are. Yes, I saw you here, but now she has a big screen too. Thank you.

Thank you.

Go ahead.

Thank you Chair Becker for inviting me and thank you Committee Members. I so appreciate the opportunity to speak with all of you and thank you for the excellent questions. I'm Jennifer Tanner, the leader of Indivisible California Green Team, the environmental arm of the 70 indivisible groups. We are in strong opposition to SB540.

I have a letter signed by 125.

Just to be clear. Sorry it's not a bill hearing. As we discussed, this is about the Pathways Initiative itself. So feel free to raise any and all concerns about Pathways Initiative. But it's not a bill hearing itself. But please go ahead with any and all concerns about the initiative.

I'm taking things off of your fact sheet. So pathway proponents tell us they will give us clean affordable energy and we can exit if we change our mind. None of that is true. They say it's going to be clean and we can keep our RPS.

But let's look at what happened to Maryland when they joined the PJM RTO Maryland was given a memo of understanding that their energy would be bought first from their power plants. Then the RTO changed its mind and reneged. Maryland sued and the Supreme Court said yes, the RTO and FERC can change their mind.

So just how secure do you now feel if we leave the safety of our California control and turn it over to fossil dependent states to control our destiny. They tell us it's going to be affordable, we're going to save money. In the last six months PGAM had 1000% increase in capacity cost costing great payers 12 billion DOL.

When the states complained, FERC did nothing to help them and that's where we would be powerless. This could be Enron all over again. Enron, where we lost $40 billion. They tell us we are already under FERC.

Yes, but uniquely our PUC section 345.5 we fought to get after the Enron crisis gives California unique protections that our energy has to be good for our health and our pocketbook. And this precious 345.5 is replaced instantly by SB 540. In addition, California doesn't have coal, but the current Trump Administration wants to subsidize coal.

And if we are foolish enough to join the RO with Berkshire Hathaway's 22 coal plant states, we will be powerless to stop this subsidy. They tell us we can get out, there's an exit, there are guardrails.

But since ROS can change their mind, under the SB540 requirement, the RO can set up any procedure and whatever price it wants. They could ask for 10 or more years prior notice and payment of billions. The promised guardrails are illusory and will not stand up in court. Please don't be fooled.

They say that we're going to keep control. Also illusory. Yes, we keep CAISO. But it would be only a balancing authority to turn the gas plants on at night. The real control is the right to file with FERC under Section 205, the rules and costs under which the market is run. And that goes to the RO.

And that is what is harming the PJM states. They have no control over the market because they gave it away and are powerless. Losing 205 is not in the fact sheet but I assure you it's in the 170 page pathway plan. They say we're going to save so much money. Well, the Brattle study. I don't have time.

I only have four minutes. Those numbers leave out crucial facts and costs. But it is in our opposed letter at best 0.16% saving of all the ratepayer costs in the split market scenario.

And I'd like to say that if all of you vote to pass this bill because you're so confident that our RPS will be safe, which is so important to all of us, then I'm asking you in good conscience to sign the consumer watchdog pledge that I just saw that if somehow.

Again not bill hearing specifically, but I appreciate you raising all the concerns you raise any last concerns you want to raise.

4 Seconds and I'll be finished. If somehow you're wrong and California energy laws that we fought so hard are killed by.

You're happy to raise any concerns. Again, not a bill hearing. Appreciate you raising. So you're concerned about the RPS, Concerned about the RPS standard. Correct. You're concerned about the maintenance of the RPS. That's a legitimate thing to be concerned about. That's certainly topic here. But we're not talking about bills or pledges or anything.

But you're concerned about the RPS standard?

The watchdog pledge says that if somehow you're wrong.

Okay, thank you very much. We grateful to give you the time for the. Your question is about the RPS standard. Thank you. Okay, thank you. Next we have, and these will all be much fuel for discussion. Next will be Michael Colvin, the Director of Regulatory and Legislative affairs at the Environmental Defense Fund.

Can you do it from there?

Yeah.

Okay, go ahead. Good afternoon, Chair Becker and Members of the Committee. My name is Michael Colden and I'm the Director of the California Energy Program and Environmental Defense Fund. It's a pleasure to be here.

My primary message to you is that in order to ensure that we have a fully clean electric grid funded by affordable bills, and that we make the necessary clean infrastructure investments to keep the lights on, we must leverage the geographic diversity of the West.

EDF was on the Pathways Launch Committee representing public interest organizations from around the West. As we look at the current California electric grid, it's dominated by solar, short duration batteries, distributed generation. We have a lot to be proud of. But we're also going to need new technology types to come onto our grid.

Things like offshore wind, enhanced geothermal, multi-day energy storage, just to name a few. We're going to need these technologies some of the time, but not all of the time. And so rather than spending a ton of money and letting them mostly sit idle, it's imperative we figure out how to lower costs and run them more often.

And that's where our market can come into play. I think of the Pathways market as a tool for California to better serve its electric customers. To help buy, sell and share new clean energy resources across geographies. There's a lot of environmental benefits that are going to come from this arrangement, but I'd like to highlight two.

First, we plan our electric grid around extreme weather events. Now, mercifully, those are not yet a daily occurrence, but we still have to build in case they were to occur. And so we have to think to ourselves, what happens if there is an extreme weather event hitting San Jose? It might not also hit Albuquerque.

Can we do a resource share to figure out how we do that? We also have a second example, predictable weather. The sun doesn't always set at the same time as it does in one part of the west as it does in the other.

And so we can make investments to recognize that the sun or other seasonal variation events are going to occur and we can do resource sharing accordingly. So both of these are examples of what I call the theme of building larger than the weather and can we do that in a smarter, better way?

During the development of the Pathways proposal, it was critical to me and to EDF that state energy policy goals were incorporated all throughout the public interest organization strongly pushed for in the guiding charter that Chair Reynolds and the others spoke to in the beginning.

Part of the panel that the public interest was baked in from the very beginning, including affordability and environmental policy, and that those must be prioritized. And all in the Pathways proposal contains the strongest suite of public protections of any organized electricity market in the country.

It's important to note that California still maintains full control of its day to day operations of the grid, its planning authority, how we determine the need for new clean energy resources and overall reasonableness review. The Legislature's authority to update state energy goals remains intact. Your authority remains intact. I also note FERC's authority goes unchanged in this proposal.

So I just said all these things that aren't going to change. What is going to change under the proposal? The CAISO Board of Governors is no longer the body that's going to oversee the staff and the western energy market is going to be transferred over to the regional organization.

But it's important to note that the existing CAISO hardware, the software, the people power, all that we've paid for, all remain in place and now they're just implementing new market rules. Excellent.

I've got about 30 seconds to wrap up.

I've got less than that.

Okay.

So I understand that some of you have heard, and we just heard a little bit more, that this market could expose California to more dirty coal and gas fired power plants. It's an important concern, but I'm here to tell you it's just not true.

I'm going to skip a little bit of this because I think we've actually gone over it. State energy laws, including the renewable portfolio standard, the emissions performance standard, AB32, the greenhouse gas laws, all remain in place. None of that changes because of this.

Our ability to control what does and does not get signed, what ratepayers do and do not pay for, none of that changes. At its core.

I think of Pathways as a critical ingredient to help us fight climate change to ensure that our electric bills remain affordable and that we have the reliability that we need to keep the lights on. I've been pleased to be a part of this process and I look forward to your questions.

Okay, thank you. Yeah, we do have to wrap up any pledges. You have any pledges for us? No. Pledge pledges? No. I thought it was pledge day. Okay, we're going to go next to Loretta Lynch. Loretta is the former President of the California Public Utilities Commission.

I want to thank you, Chair Becker, for inviting me to speak today. And I want to thank everyone on this Committee for your efforts to protect your ratepayers from these punishing electricity bills. So I'd like to get right into the Brattle study.

What you'll see here on Brattle page six is that in fact, in the most likely split market scenario, emissions rise throughout the West. It shows that Pathways will increase pollution across the west by 2 million metric tons of CO2. We'll drop 1 million. The rest of the west will increase 3 million. That's what their chart shows.

In the most likely regional scenario, Brattle also shows, and I, I applaud Chair Becker's and the rest of yours commitment to stop the curtailment of solar. But the Brattle group's charts show that in the most likely scenario, baseline plus or split market curtailment does not drop whatsoever.

The only time curtailment drops or emissions even just zero out is in the expanded edam, which I'd like to talk to you about in just a minute. Brattle also finds minuscule cost savings not projected to start until 2032, with no guarantee that those savings are going to be passed on to your ratepayers.

You've heard a lot about potential hopes and the future benefits if all 10 Western states plus British Columbia Hydro join this new RO. That's the expanded EDAM scenario here in the Brattle Group study. That hypothetical will not happen.

The British Columbia BC Hydro is a Canadian company and they are not going to join a US corporation at this moment of trade wars. Moreover, many of the states have already indicated they're going somewhere else or they're staying with their own state control. So that hypothetical will not come true.

So what we really need to do is examine what this new market operator will actually do, how it's going to work on the ground, not in some theoretical market construct, because California consumers can't wait seven years for a 1% possible savings. So let's do that.

Pathways fails to include any analysis of the jobs impact to California, but studies of prior versions of this proposal found significant California job losses. We need to know how many good jobs California will lose to the other Western states that are going to join us in this regional market.

Operator, before we change our California law, we should be building all that renewable energy in California first and not throughout the West. It'd be great if we could afford to build everywhere, but we need to take care of California first.

Changing our law the way the Pathways wants will also decimate the protections that California won in ISO v. FERC in 2004. And I'm happy to discuss that in the Q and A because I lived it.

I was one of the California energy agencies that defended that lawsuit against the FERC when they attacked California for changing its law to control the board.

In fact, changing California's law now, when the ISO won't hand over control to the new markets, to the new regional markets until 2027, will tie the hands of the next Governor to protect California's ratepayers legally. It will be a done deal if this Bill passes in 2025. So here's the key question. Does Pathways make California more vulnerable?

Proponents are going to tell you that nothing's going to change legally because, you know, the ISO already has to report to FERC. Or Mr. Joseph is about to tell you about all the organizational boxes on the ISO that are going to stay within the ISO.

And really only one box is going to move to that new regional operator. What they failed to tell you is that California will be giving up the most important box, the one that sets the rules, the one that pilots the plane, so to speak. And that pilot metaphor explains all these complex issues.

Right now, California is the one that flies that plane. That is our electricity markets. With the FERC as the control tower, Pathways gives up California's control of the pilot seat and also whether that new pilot files flight plans that comply with California law. I don't really know how to. There we go.

And this is the California law that we're giving up with Pathways today. California law requires that our pilot only file flight plans and destinations with the tower.

The FERC that comply with this law and this law both requires that the flight plan we file at FERC and how the pilot flies a plane minimizes cost to California consumers and maximizes resources available to California consumers and complies with California's environmental laws. That is what California is giving up right now.

California controls the whole plane, the pilot, the flight crew, and how the ticket prices are set. Sure. Right now, we still have to file our flight plan at FERC, and they still have to approve it.

But FERC rules generally let the pilot decide where to go, how to fly, how to price the seats on the plane, so to speak, much like the control tower. But Pathways throws all that out.

California gets a yet to be prized seat in the back of the plane where we don't know the destination, how the plane has flown, or even our ticket price until. Unless you give up control of the pilot seat.

Pathways fact sheet on page three says they are going to wait to file all the flight plans, the tariffs and the rules, or even create the regional market operator until this. Until Pathways passes. So Pathways eliminates California's control over the pilot seat and over the contents of the flight plan. That's this law.

And if we're in the back seat and not flying that plane, that cockpit's locked tight. So if something goes wrong with these new energy markets and California won't be able to protect our consumers not from supply constraints, not from higher prices, and not from coal. The pathway's new regional structure is untried. It's experimental.

There's no other structure like this in the United States. And so that means that FERC doesn't have rules for this particular kind of corporate structure. They haven't started writing the rules for a regional market operator that will not operate the grid. Absolutely. CAISO will stay as they split the baby operating the grid.

But this new regional market operator, there are no FERC rules for it. So California doesn't know the flight plan, the new pricing structures are even how FERC is going to write those rules. So this has never been done. It's experimental. There's a lot of theory. But let's look at the facts on the ground.

Let's look at the Brattle report. I'm happy to also talk about the reliability report and the limits and the theory in this report. I'm also happy to talk, given my time, about my concerns about the withdrawal that's anticipated with Pathways in the Q and A. And I really thank you for being here today.

Thank you. Great. And we'll see if there are questions on that afterwards. We have two more and then we'll go to questions. Mark Joseph, he's with the attorney for the Coalition of California Utility Employees and the State Association of Electrical Workers. Go ahead.

Thank you. Mr. Chair. Madam Chair, Senators, my name is Mark Joseph. I represent the Coalition of California Utility Employees, State Association of Electrical Workers, and I was on the Pathways launch Committee for the past year and a half. I appreciate President lynch raising the concern about jobs. Let me give you the actual perspective of Labor.

In 2015, 2018 and 2023, we opposed bills that would have regionalized all of the CAISO functions. It was a bad idea then and it's a bad idea now. We have not changed. What has changed is the proposal. The Pathways proposal is fundamentally different than three prior regionalization proposals. You can take a look at the slide.

You should all have it in front of you. There are three sections. On the top, you've got the section for the CAISO. On the bottom, you've got all of the functions of the PUC. In the middle, you have what would become the new regional organization and the thing that would change.

Now, all of the boxes across the top, all of the parts of the California ISO are currently FERC regulated. They are today. They will be tomorrow. They will always be FERC regulated. The one thing that will change with the Pathways proposal is who sets, who has control over the energy market rules.

And that would change to the regional organization. The things that would not change include the important things on the bottom row. Just mentioned a few of them from the left. Procurement and Integrated Resource planning, RPS Standard GHD targets, resource adequacy planning, Reserve margins.

All of those things remain untouched and continue to be under the control of the PUC. By doing the structure this way, this version, not the old regionalization version, but the Pathways version, we get the benefits, which you heard in the first panel, which you heard from Mr. Colvin. We get the benefits of reduced costs for consumers.

I don't know about you, but I don't think any of your constituents want to leave $800 million on the table in this time of affordability crisis. We get increased reliability.

We heard President Maenzer talk about the importance of reliability and the increased value of having a broad footprint to be able to keep the lights on in the stress times. And we do it without losing the RPS. This is critically important to us. Losing the RPS function.

Losing the RPS value was one of the primary reasons we opposed prior regionalization. This version keeps the RPS intact. I'll say it again. This version keeps the RPS intact. That orange box on the top row, the balancing authority functions. All of the RPS product content categories or buckets are tied to the balancing authority function.

That would not change. We will not lose jobs. We will not lose the RPS.

In fact, we will gain jobs because California solar will have a bigger market into which to sell and it will become more economic to build more solar and reduce costs for California ratepayers by expanding the market and keeping it within the California balancing authority.

Now, I'm not going to try to respond to all of the things raised by President Lynch and by Jennifer Tanner. What I will say is most of those criticisms are about the old form of regionalization. That's not what we're doing here.

The question I get most is, frankly, what about Trump and the Executive order asserting control over independent regulatory agencies? It's a really important question. Here's the answer. Pathways or no pathways, our energy markets are already subject to FERC. If FERC does something crazy, we already have a problem.

Our best defense against FERC doing something crazy is to have allies, allies spread all across the West. Utilities and states heavily invested in a market structure in which they invested time and money in which their ratepayers depend on. That's the best way we can prevent FERC from doing something crazy is to have a whole bunch of allies.

And finally, a core principle of the pathways proposal from the beginning is that these markets are voluntary. It's voluntary where the utility goes in. It's voluntary where the utility goes out. Out. Every utility has to be able to decide when to join and when to leave. And that will be in the tariff that's sent to FERC.

And if FERC does not accept that and accept it on reasonable terms that we're happy with, we just won't do this thing. Thank you for that. We've got to wrap up in 20 seconds. Senator Allen asked a question about RPS. If he comes back, I hope he'll ask it again.

Okay, thank you. Okay, last but certainly not least, Randy Howard, General manager of the Northern California Power Agency. Thank you.

Good afternoon, Mr. Chair and Senate Committee Members. Thank you for convening this important hearing. Sometimes it's good to be the sweeper at the very end because I can do some cleanup. Let's just try to do it fast. I am the General manager of Northern California Power Agency. NCPA is a joint power agency with 16 Members.

We support about 2000 meter, I mean 2 million meters in Northern California through a number of services. We currently operate and schedule in about 86 generating facilities into the Cal ISO. I'm also in addition a launch Committee Member for the Pathways Initiative.

Public power utilities across California have previously opposed efforts to transition the Cal ISO resources and the balancing authority to be a foundational element for the Western energy market. We instead promoted a restrained and a phased transition that built trust and demonstrated clear economic and reliability progress across the West.

Those economic and reliability benefits have been demonstrated in the energy imbalance market that's existing today and are expected to continue and expand in the day ahead market. These are two markets. They're not our entire portfolio. The real time market, the current energy imbalanced market. It's a five minute market. We use less than.

Probably 5% of our energy is transacted in that Our utilities currently schedule and have resources to meet probably 85 to 90% of their needs at all time. We have more than that, but that's. We schedule those resources. We're talking about a market that is on the margins. That's how we utilize the market today.

The day ahead market is what we're going to schedule for the next day in coordination with the rest of the West. It's not the bulk of our activities. This is on the margins.

The Pathways Initiative really is that next phase that brings together and brought together this very diverse group of experienced and talented stakeholders with a common goal of progressing the Western energy market. The outcome is this current proposal that brings a fragile balance. We don't all agree. There's no way. We're all very diverse. We have different interests.

But we came together with this common goal on the outcome and so we balanced that and it is fragile. There's a lot of give and take that was in it. There's also a recognition there was a lot of risk of doing nothing. You've heard that throughout.

But if we don't do anything, if we don't move forward on this, there's a lot of risk to utilities. We're already addressing some significant financial risk to our customers. This slide really has been talked about before. I'm just seeing there's already A market. This is not new. What we're talking about is a new governance structure.

And it's not a regional transmission organization. It's a regional organization for an energy market. And we're talking about transferring two of the programs that we currently have over what's important to public power. I'm a civil servant and so are all my communities that we serve. So for public power, we're supportive because it's voluntary. You've heard that.

That's the structure that's been established. We can choose what we want to put in it and what we want to take out of this market. It's Low cost. We're talking about utilizing an existing framework of the CALISO operating it. And that's existing today. The resources, the staff, the IT systems. It's existing today. We're talking about utilizing it.

They're going to operate it. We're talking about a governance structure on the top. Daily resource efficiency evaluation that's going to continue to evaluate reliable operations of the grid. Reliability is critical to us. We are seeing more extreme events. It was discussed briefly. We need to be able to respond to those.

Having the broader resources throughout the west is important to that. It will also. We do have to wrap up. It will optimize the value of transmission. I'm going to just touch on. We've heard it. This is a typical day of our fuel mix. The yellow component in the middle solar. That's what we see in the solar mix.

On our typical day of our fuel mix in the Cal Aso. This is what we're seeing on a more frequent basis of excess renewables that we can't utilize ourselves. We're shutting them off. This is the curtailment. You can go every day on the Cal ISO website. You can see what's curtailed. These are big numbers.

My ratepayers are paying for the cost. We sign ppas. It says you pay whether we produce it or not. So our ratepayers. This impacts our affordability. Today the Brattle study says this is going to go down. This is what you can see on the CALISO website every single month.

We are curtailing renewable energy and it's getting bigger and bigger the more we add. Okay, we get that point. Important point, but we should move on. So final thought. We're building a lot of more resources, a lot more solar.

But there is an urgency to move this proposal forward with a phased approach and a broader energy market vision for California and all the stakeholders that voluntarily choose to participate. Again, nobody's forcing anybody. So I thank you for holding the hearing.

Thank you. Well, I'm really grateful to my colleagues who've stuck around and heard all those presentations. You know, the whole point of doing this is we can go much more detail than obviously we could if it was a Bill of hearing, which it's not.

But really talking all the issues around this. And I think our goal, all of us, is, you know, to get it right, not be right. You know, that's really my goal. Right. We want to get it right, not be right. So with that first turn to my Vice Chair. Do you have any questions?

No, I'm just grateful for the information that was shared today. And, you know, coming in from a brand spanking new perspective to this Committee, I'm just. And it might sound very, very simplistic, but I understand what we're trying to do as far as the Pathways Initiative and not. I'm still trying to understand the concerns with regards to giving up our autonomy. I don't see that as far as what I've heard today and seen.

And I'm grateful that there's an attempt to literally be able to use that energy that we're not able to utilize here and hopefully in a way that will benefit Californians and, and the cost of energy in California. But as of right now, I'm still trying to see the concerns. I don't see that.

I'm really happy with what I'm seeing right now and I look forward to learning more and having more dialogue with regards to this effort.

Good. Well, we have plenty more time to raise all those concerns. I will go to Senator Archuleta briefly.

Okay, thank you. I'm going to zero in on you, Loretta. I think your presentation was outstanding. And you know, of course we're concerned about the things that you said. Regional organization, can it happen with this pathway? Giving up too much, grabbing too much. I asked if you, if you. I don't know if you're in the audience.

I asked about labor. I asked about the. How far do you go in eastbound. Right. I asked about, of course, our renewable energy program that we already have. I asked about the cost for the consumers, you know, bringing that energy cost down and so on.

So I guess what I'm getting from you, Loretta, is that what you're telling us. What we heard before just doesn't fit the Bill. Can you comment?

Senator, I do not doubt the intentions of everyone on this panel and everyone who spoke before you today. Everyone is coming at this with good intentions. The problem here is we need to see how it's actually going to work. And not just theory.

The Brattle study, which is the only study cited, shows that under the most likely scenario, where not all 10 states plus BC Hydro join us, there will be no reduction of solar curtailment, but there will be an increase in GHG emissions across the west, which violates SB100 because we're trading our pollution and putting it out there in the West.

Not my study. I think this is worse than their study, but that's their study. So let's talk about. Exactly. You're asking the exact right question. Who's going to join us because it's voluntary. So we can't make all those 10 states join.

And several of them have said they're joining SPP and several of them are just going to stick with their own current situation where their state controls everything. They're not even in a market. Well, they're in the WEC where we all trade as sovereigns. That's really different than giving up a significant portion of your authority to the Ferc.

Well, they always say it's their strength in numbers, but I think we're the biggest kid on the block, big time. We're the biggest kid. If we don't have their backing, then what are we doing for. Why are we standing there alone sharing our energy wealth?

Well, and what I heard today was that the Pathways documents assume that we're. That all the money.

It is probably a billion dollars, but it's several 100 million dollars that California ratepayers have paid for intellectual property, for digital security, for all those computer systems in Folsom, plus the whole campus, plus all the staff, plus all the lawyers to do all the work, all that we're going to share for no rent.

I mean, how much are we going to charge these folks? So the background documents say that when this is fully functional, they'll cost 15 million a year. You can't even buy a guy with a computer and a couple lawyers for $15 million a year. We've spent almost billion dollars.

The ISO's annual budget is well over $150 million. California ratepayers pay all of it. We have sunk tons of cost into what was a startup and now is a huge organization. We're going to give that away for free to the rest of the west in the spirit of sharing.

And we're going to give up our laws, which require the pilot of the plane, meaning the ISO board and the ISO to follow very specific laws to maximize availability of electric resources to California consumers and to minimize cost to California consumers.

For some vague sharing because we're all going to be better if we share and dump California's very specific legal requirements. That's my concern. Why don't we just keep California's legal requirements and share like we do today in the WECC? Because the Brattle Group study shows more pollution and no less curtailment. But I'd like to talk about cost because you've been zeroing in on cost, which is really okay.

We should probably give some folks a chance to reply and then because other folks with questions too. I think Anna's got. Sorry, you want to pick somebody?

I would be glad to reply. So again, I think there's clear recognition that there's substantial savings. We see the savings already in the market conditions. What we're really talking about moving in this day ahead is it expands.

It provides us a lot more tools in our toolbox as utilities to keep the lights on and keep them on in an optimized fashion. It allows us to utilize transmission systems that are impacted today without building more transmission. We know we need to build a lot more.

We can't do a whole lot more renewables until we build more transmission. But the market will allow us the tools to better optimize those transmission systems we have and all of that. When you optimize a transmission system, you reduce the cost of the utilization of that transmission system. I mean, you're just increasing the denominator.

You're putting more energy across it during more parts of the time. So no, there are real savings, very valuable savings. There are benefits to our current reliability that are critical that come out of a market and expand it. And again, as I pointed out, the do nothing here is going to cost our ratepayers more. It's not less.

It's going to cost our ratepayers more. And so we have to make a determination as a state, are we going to move into an expanded market that has a little bit more independent. We already have these markets running. We're talking about a change in governance structure, how we do it today.

And I have been on the nominating Committee since the beginning of the Western energy imbalance market, nominating the board Members for that. We have one Californian out of five Members on that board fairly independent. We're talking about expanding that structure into one where again, stakeholders all have a voice.

It's not that they're all going to make decisions of other states are going to tell us what to do. That's not going to be. That can't be. That's not the way it's being set up, we all have a voice in a stakeholder process. It's laid out within the framework of pathways.

Okay. We should probably. This is super important, super quick.

Yes. A couple of things that I just wanted to address really quickly. I think it is, as Randy said, the market's already in place. The plane that we're talking about already, the market design is already done. It's already approved by FERC.

We're talking about future changes that, as Randy said, would be influenced and driven by stakeholders that include California. And so I think that's really. I think it's a really important part of this.

We are talking about having oversight by people who are chosen, by people with consumer interests, people with public interest organization experience, regulators, those types of people. And so this is not. We're not making something new.

We're taking what is already working and we're making it so that the rest of the west is going to want to continue to join us. This is. The status quo will not continue. Something is going to change. We're going to lose partners if we don't actually. If California doesn't act.

Okay, let's keep going on questions. I know we lost a lot of people waiting patiently for public comment and for Jennifer Tanners on the line. If you want to reply to anything, please let us know. Let's go to Senator Caballero.

Thank you very much. I appreciate all of the comments here today on a complicated subject. I'm glad we're not talking about a Bill because otherwise that makes it difficult. But I really appreciate regional solutions. I just think they're better and in many instances create synergies that you don't see when you start out, but that become real.

And maybe the other states will see the benefit of doing some of the things that we've done. But the issues I've been very, very concerned about is the cost of energy. My district is the Central Valley, Merced to Fresno. We have some of the hottest summers and the coldest winters.

And it is typical for people to pay $5-600 a month in energy costs. And we're talking about farmworkers that don't make very much money. The area is desperately interested in good jobs in the energy sector because we're likely to lose a million acres of AG land out of production.

And so there is a move to bring in just solar. And while I like solar and it's great, it is an extractive industry that doesn't create good jobs, doesn't sustain a local economy, and that is used elsewhere.

And quite frankly, some of the irrigation districts in the region have been kept, have been required to comply with the RPS obligation despite the fact that all of the energy that they produce is hydroelectric energy. They provide energy to the farms and also the people live in that region.

But because of the idiosyncrasy of our system, they are not able to count it as part of the RPS system. So we have a system that has some real faults and weaknesses.

And if we're going to count someone else's big hydro as part of a system, we should be counting theirs as well because they are part of the curtailment. We call it curtailment.

It's excess energy that's produced that is sold on the out of state for next to nothing, which then causes people living in the valley to have to pay for it. They're paying for the solar and then seeing no benefit.

So we have a system that is imperfect at best and you know, hopefully there are things that we can look at and make sense. But I really appreciate all the information. I've learned a lot and there's no question that something this big is going to be controversial. I look forward to continuing this discussion and seeing the Bill. So thank you very much. Just a statement actually.

Great, thank you. Senator Stern. Oh, McNerney. Senator Stern or the McNerney. Senator McNerney.

I think youth deferring to age beauty before. Well, I think the Chairman and I think the witnesses. This is a complicated subject. You know, it's our duty to be skeptical and to look at this with all the angles and we've heard a number of angles. Reliability, it's going to be less reliable, it's going to be more reliable.

It's going to create jobs, it's going to lose jobs. I mean, there's a lot of information out here that needs to be sorted through. Is it voluntary? I'm not sure what that means exactly because once we've signed up for it, we're locked into it. I mean there's a lot of.

There's a lot of unknowns in my mind and it's going to take a while to convince me that this is the right path. And I'm open minded. I want to do what's right for my district and for the State of California.

There's obviously an advantage to an expanded set of suppliers and transmission and all that, but then there's risk as well. I mean, as I mentioned to the PUC chair, I mean there's events that could take place. The market is risky, especially with all the technology that's out there now. So I'm not going to ask questions. I just want to say that I intend to be thoughtful on this one and listen to both sides and make the best decision I possibly can. Thank you.

Well, thank you. It makes me even more glad that we had this overview sort of session because I think it's obviously planted a lot of, you know, a lot of thoughts in people's minds, raised a lot of concerns, and, you know, we do have a good amount of time, you know, before any anything does come forward. And I have a lot to think about as well. So, Senator Stern, ready to go again?

I mean, I guess I'll make one parting comment. Appreciate all the testimony. It'd be good to start talking about legislation soon. I think we've got a proposal that will hopefully start to provide some stability in this very volatile moment.

I think we've referred already to the Trump Executive order and questions about how FERC's going to operate and the existing risk we're facing that our current open access transmission tariff, which is rooted in some of our climate laws and our interconnection requirements, that has a lot of that in it.

There's nothing to say that they couldn't just come for us right now. But I do agree that there's strength in numbers.

And I'm hopeful that some of the signals or saber rattling that we've seen out of the Northwest specifically from BPA is just that it's a tricky moment and we get that people have to, you know, posture and leverage and do those kinds of things.

But as the administrator of the BPA himself acknowledged, this would save them money too. And that the quantitative requirement that we all pursue reliability at just and reasonable costs is hopefully going to carry everybody through this. I will acknowledge that there's certainly a risk beyond our borders that emissions increase.

And I don't think there's anything we can do here to change the behavior beyond our borders. I also think that there's a likelihood, a strong likelihood, that if there is a robust market that there will be a place for renewables in the west that might not otherwise find a user.

And that as the Ira comes under pressure and tax credit structures start to become less dependable, that we'll need market based mechanisms to pursue this because we can't simply just rely on ourselves. And I think the hardest thing is we want to be perfect sometimes here in California.

And I was a co author of SB 100 and have been pushing our renewables and climate goals for many years. But there's a risk that if we put everything on ourselves and that we think we can do this work and tackle climate in isolation, I think it's a fool's errand.

I think the costs are already real and we cannot lose our ratepayers. The rates we are paying right now are too high and they're deterring people from wanting to electrify. So if we're going to truly see an electrified future, I think we're going to have to undertake endeavors like this.

And you know, I said it earlier, I do think we will benefit from some updated math and perhaps like a Brattle 2.0 here that takes some of the new dynamics into play and we really kicked the tires on, you know, what we could see from a ratepayer benefit.

Even if, say Canadian Hydro weren't flowing or if there were continued reticence from BPA, I think those are valid sensitivities to work through. And I really do appreciate the skepticism and the, the scrutiny that we've sort of undergone today, both for Ms. Tanner, Ms. Lynch and some of the others out there.

I would just say to those who are concerned that not only that our emissions would rise or the autonomy question, but somehow that we'd squeeze out a bunch of other types of resources that could otherwise meet our goals.

I know there's concerns that this would somehow any kind of regional power imported would displace, say distributed resources, demand flexibility, new ways to meet the 7,000 megawatts. I don't think any of us up here are under the illusion that those markets are somehow going to vanish or go away.

In fact, I think we need to do more to stabilize and strengthen them, to meet more of our 7 gigawatt targets. And I think we can do that. I think we can do that in conjunction with this regional approach.

And that to me is what gets exciting, is that if we do more for in state labor, do more for in state projects, build more, accelerate our SB 100 goals and at the same time we can find a framework where we save money and we can find a framework where we don't just waste solar at those peak times and bring that duck belly up, we going to be better off.

So it'll be, you know, this will be a long process and I really appreciate the chair's leadership here and seeing us through, but I believe in our strength here in California and especially of our policy making process. So with that, thank you.

Well, thank you. I do want to thank and we'll need your expertise throughout all this. I, too, want to thank our panelists. And, you know, I've enjoyed all the conversations. I've learned a lot, a lot of acronyms that I did in this, I know, a few months, a few months ago, but including my conversations with

Ms. Lynch, I really appreciate all the information you've brought forward. And you know, as Senator McNerney said, there's a lot of areas here where there's, you know, just, you know, people feel, have, feel very differently about potential outcomes. And I think that's what all of us need to sort of sort through here going forward.

So with that, I know there's a lot of folks for public comment. I thank you all for being here and we'll look forward to continuing the conversation. Thank you. We'll go ahead with public comment. People are already lining up. We appreciate, thank you for your patience, all of you. We are going to limit it to one minute in the spirit of getting us out of here, but go ahead.

Thank you. Thank you. Mr. Chairman.

Are we on, guys? Hold on one second.

Yeah. Mr. Chairman, Scott Wetch, former Chairman of the Coalition Against Regionalization, here proudly in support on behalf of the California State Pipe Trades Council, the State Association of Electrical Workers, the Western States Council of Sheet Metal Workers, Elevator Constructors Union and the California Coalition of of Utility Employees, look forward to the continued discussion with all of you. And thank you.

Thank you. Afternoon, Mr. Chair. Alex Jackson with the American Clean Power Association supported the Pathways Initiative and the action the Legislature needs to take to implement the next phase of the proposal. It delivers on reliability affordability, helping our clean energy economy. There's not going to be another Bill before you that can do all those things.

I want to just emphasize two points that came up. First, this is not an experimental. This is not a theoretical construct. This builds on the proven record that you heard today of the Western energy imbalance market. 10 years, over $7 billion in benefits. It has independent governance. California didn't cede its control.

It's partnering with utilities like Pacific Core that still have coal in their fleet. Emissions went down. If you expose fossil assets to zero renewable, zero marginal cost renewables, good things happen. Okay, so this is a proven iterative evolution. It's not a leap of faith. Second, regional market formation is happening, I think can't stress that enough.

The choice is not whether California is going to join a regional organization or not. It's whether we're going to be left isolated as a regional market forms around California. There's a competing market from the Southwest power pool that has a lot of interest already.

If we can't access the geographic diversity we're going to need going forward, everything they're trying to do gets more difficult. So support moving forward. Thanks for having the hearing.