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Utah lawmakers began the process of drafting legislation that could allow them to block the state's participation in California's proposed regional electrical grid.

After nearly two hours of testimony Wednesday, members of the Public Utilities, Energy and Technology Interim Committee said they will begin work on a bill to give the Utah Legislature the ability to weigh in on the California proposal to unify and oversee the power grid serving 11 Western states in order to cut electrical costs, improve efficiency and promote renewable energy.

A unified grid, according to the latest studies, would be a big boon for the environment and for California's economy. But Utah could see increased carbon emissions in the early years of the agreement — and may have to agree to a uniform fee to access it.

California ratepayers stand to save as much as $1.5 billion a year under the proposal — enough to cut the state's retail power rates by as much as 3 percent, while at the same time meeting or exceeding its goal of obtaining 50 percent of its energy from renewable resources, said Keith Casey, vice president of market and infrastructure development for the California Independent System Operator (CAISO), a nonprofit organization that oversees power distribution in California.

It's not clear, however, whether Utah will see those same benefits. Studies released earlier this week were specifically requested by the same California legislation that tasked the CAISO with exploring grid regionalization and focused almost exclusively on the impact a regional grid would have on California.

Details regarding the benefits for other participating states remain sketchy. A preliminary study commissioned by the CAISO and PacifiCorp — which operates as Rocky Mountain Power in Utah — determined that the utility could save up to $272 million by 2030 as a participant in the grid. But that study didn't look at the possible costs of participation.

The lack of detailed information caused some ruffled feathers in Wednesday's discussion.

"I agree that there are theoretical benefits to grid regionalization," said Michele Beck, director of the Utah Office of Consumer Services. "Major questions remain as to whether those are net benefits. We have not even begun to complete an assessment of all the costs."

California's risks are perhaps more certain. In the event the state fails to convince its neighbors that grid regionalization is a good idea, California could end up with a surplus of 13,000 megawatts of renewable energy by 2025 that would have to be shut down when peak generation exceeds demand, according to the CAISO studies.

"I don't think it makes societal or economic sense to turn off zero carbon, zero marginal cost power so frequently," Casey said. Selling that power out of state "allows renewables to flourish in California and out."

But the best outcome hinges on participation from all 11 western states — California, Utah, Washington, Idaho, Montana, Oregon, Wyoming, Nevada, Colorado, Arizona and New Mexico — and assumes those states develop additional renewable resources on their own. It also assumes the states and their utilities agree to a uniform fee for transmission access.

That has been a sticking point in Utah.

"Utah currently enjoys some of the lowest utility rates in the country," said Laura Nelson, director of the Governor's Office of Energy Development "We could see some leveling of energy rates across the region, and some participants have significantly higher rates than we do."

Nelson said her office was also concerned that participating in the regional grid, as currently proposed, would force Utah to help fund the construction of transmission projects related to other states' energy policies, and that Utah's own energy policies could be constrained by the policies of other states.

In a telephone news conference Tuesday, Casey said participating states would not be asked to develop more renewable resources and would maintain their authority over energy policy. But a higher level of cooperation between states would encourage the development of more renewable resources outside of California by increasing demand for those resources and, potentially, making them cheaper to access.

Currently, Casey said, there are 38 separate grid operators across the Western U.S., all charging tolls when one entity wants to move power across transmission lines owned by another. If, for example, California wants to access wind power generated in Wyoming, it is necessary to cross the territory of several grid operators, accruing fees all along the way. These charges build on one another, making energy increasingly more expensive the farther away it's generated.

The regional grid could level the playing field by removing this barrier, Casey said. Though California has yet to work out how transmission tolls would be governed, he said the CAISO study assumed participating utilities would pay a single, uniform fee to move power within the region, and would share the cost of maintaining and constructing transmission lines.

Such an arrangement would make it just as cheap if not cheaper to buy wind power from Wyoming, or hydropower from the Pacific Northwest, as it is to fire up a natural-gas plant in California, Casey said. This would incentivize private industry to build more renewable energy throughout the west and lessen the reliance on existing fossil fuel resources.

Casey said this scenario would lead to a 3 or 3.5 percent reduction in carbon emissions across the western U.S. by the year 2030. But there would be, he said, a 0.2 percent increase in carbon emissions in the grid's early years if PacifiCorp were the first utility to enter into the agreement.

Jennifer Gardener, a staff attorney for Western Resource Advocates, said she believes this greater coordination would benefit all engaged on the grid. She likened the current situation — a system that is physically interconnected but run by independent entities — to "38 people all trying to drive the same bus."

"Things have been working," she said, "but they could be working a lot better, and that's why we're having this conversation."

Doug Hunter, CEO of Utah Associated Municipal Power Systems, disagreed.

"This is 38 entities driving down the road. They're all doing a good job. They're not hitting anything," he said. "This proposal is asking some of them to carpool."

States shouldn't worry about their authority, Gardener said. Those who elect to participate would still have authority over pricing and policy, and would in fact gain more say in regional matters as well. Additionally, she said, PacifiCorp has promised it will not go forward unless all six states the utility serves — Utah, Wyoming, Idaho, Oregon, Washington and California — are satisfied with the grid's governance.

Rocky Mountain Power CEO Cindy Crane testified during Wednesday's hearing that PacifiCorp has made no final decisions regarding its participation in the regional grid, and will not join unless two conditions are met: providing proof that there will be net benefits for customers outside California, and guaranteeing state sovereignty. If the CAISO — run by a board appointed by California lawmakers — remains the state-mandated overseer of California power distribution and therefore the entire regional grid, PacifiCorp will not go through with the deal, she said.

"That's just a deal-breaker, because that's not true independence," she said. "They need to be pulled out of California statute. We need to be sure those tentacles are gone."

Crane said PacifiCorp plans to wait until the California legislative session ends in August to decide how to proceed. California lawmakers are expected to revise state statute to transition the CAISO into a regional body.

If PacifiCorp does decide to participate in the regional grid, it will have to ask permission from the group in each of six states that oversees utilities.

In Utah, that's the Public Service Commission, whose chairman, Thad LeVar, said Wednesday that the group doesn't necessarily want sole responsibility for that decision, and requested legislative intervention.

"Because of the long-term significance of this — it's one that in my opinion shouldn't fall sole to the regulatory arena," LeVar Said. "I'm hoping for some legislative direction."

Members of the committee discussed beginning to draft such a bill, but as of Wednesday evening, it was not clear whether a file had been formally opened.

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