Why is Sacramento screwing up a way to keep down electricity prices? | Opinion

The last time the California Legislature changed how our utilities shop for electricity, the state ended up with rolling blackouts and Arnold Schwarzenegger as our governor.

Now, more than 20 years later, the Legislature is back with another sweeping overhaul of the electricity market, and the Democrats are about to screw it up yet again.

Where the Gray Davis administration of the early 2000s was marked by supply shortages and skyrocketing prices before angry voters dumped him, California is now part of a larger conversation with other western states, weighing whether to join forces within a region-wide power market. Maybe such an alliance would make power shopping easier and cheaper?

But California could be excluded from this market because Sacramento legislators are insisting on an extra layer of California-only bureaucracy, which is simply too much government.

For consumers, this is a pocketbook issue. Is California bound and determined to buy more renewable power in the most expensive way possible rather than through an efficient market? It’s the equivalent of buying dozens of eggs at dollar at the corner store or at Costco. The choice should be obvious, but now legislative leaders or the governor must intervene in the coming weeks with some much-needed adult supervision.

What the Legislature is now doing, in the eyes of our neighboring states, is “the politicization of the western (electricity) market,” said Jan Smutny-Jones, who represents independent western energy producers and is a long-time fixture in Sacramento energy debates. “And the other states are not interested in that.”

How the West was run

Before Sacramento started tinkering with the state’s electricity system at the end of the last century, utilities such as Pacific Gas & Electric generated or bought their power. In 1996, the Legislature unanimously directed the utilities to sell most of their power plants and established an in-state market to procure power and operate the grid. Now the question is whether to California should no longer confine within the state, and instead, have our grid operator manage an electricity market for all willing western participants.

A rare and impressive juggernaut of interests backed how to do this in Senate Bill 540, authored by Democrat Josh Becker of Menlo Park. It reflected the work of environmental groups and virtually every sector of the energy community, here and in other states, over nearly two years. Basically, SB 540 authorized the state to enter a new western electricity market if the new regional organization governing it embraced certain attributes, such as honoring California’s more aggressive transition to a zero-carbon grid, engaging with stakeholders and governing openly and transparently.

“Without greater coordination across the West, these decarbonization efforts remain fragmented, leading to inefficiencies and higher costs,” wrote Kelsie Gomanie, a climate and energy advocate with the Natural Resources Defense Council. Once a supporter of the bill, NRDC now opposes the current version, along with Amazon, the Union of Concerned Scientists, Smutny-Jones’ energy producers and the Western Power Trading Forum.

A bill, mangled in a minute

The Legislature managed to bungle this bill in less than a minute, without comment or debate, in an appropriations committee that normally resolves matters of money and as opposed to making huge policy changes.

Reading from a script, committee chairperson Anna Caballero of Fresno on July 23 changed the course of California’s electricity future in a single confusing sentence when SB 540 came up for a vote: “Motion is to pass as amended to modify offramp positions to protect California ratepayers and climate policies.,” she said. Three other senators quickly voted yes in committee.

The committee amended SB 540 to create a new state “oversight council” to second-guess basically any move by California in this market, such as whether to join and who can participate. The new council would include top electricity regulators at the Public Utilities Commission and the California Energy Commission and the California Attorney General.

Creating a new regulatory body is a big deal, but this amendment is shockingly half-baked at best. It, for example, provides no guidance as to what agency or department is to staff and run this oversight council. Even insiders like Smutny-Jones are scratching their heads on how all this oversight would actually work. “It’s not particularly thought through,” he said.

Attempts to reach Caballero, to understand who urged her to change AB 540 and why she did it, were not successful.

Becker is staying positive about his bill and playing the role of a team player.

“We’re going to strike the right balance,” Becker said. “And sometimes that takes time.”

Yet time is not on the Legislature’s side, as lawmakers are now in recess and have less than a month to finish business when they return on August 18. There is an emerging alternative to California leading in this new western energy market if we don’t get our act together.

Before the Legislature screwed up SB 540, California was in no danger of losing control of its own energy future or our climate change goals and can leave a new western market at any time. There is so much potential in western states merging forces for the common good. It’s embarrassing that Sacramento is behaving in such a small-minded way at this crucial moment. The botching of SB 540 stands to cost us billions if we don’t quickly learn how to get along with our neighbors.

This story was originally published August 6, 2025 at 5:00 AM.