Nearly 30 years ago California legislators faced a test of their integrity in voting for an electricity deregulation scheme that ratepayers are still paying for. They voted unanimously to throw Californians to the wolves of Enron. Later this month a new generation of California legislators will face a similar test.
The bill in question fundamentally changes our electricity market from a California-only market to a Western regional market. To do so, legislators are throwing out protections put in place after the Enron crisis that require that California’s electricity market and grid be consistent with Californians’ interests and run to minimize price and maximize supply. In other words, the bill allows whatever the market will bear, and that doesn’t usually turn out good for consumers.
Making the market regional also puts our environmental laws, including our Renewable Portfolio Standards, which sets the goals for decarbonization, in the sights of Trump’s Federal Energy Regulation Commission (FERC). The minute California becomes a regional market, FERC has jurisdiction to invalidate our laws and any player in the regional market, including coal plant owners, can challenge our environmental laws.
Following the electricity crisis, California won the right to control its own market with its own rules in a case called ISO v. FERC. The current bill, SB 540 authored by Senator Josh Becker, will undo all these protections right at the time Trump will want to require regional market participants to buy coal powered energy, like he did in 2018.
Given California Democrats’ commitment to stopping global warming, it should be unthinkable that they would get behind such a proposal. In fact, the last two times the proposal came up, they voted it down for these very reasons.
This time SB 540, backed by Governor Newsom and groups that supported deregulation like NRDC, is priced to move in what will be a test of the integrity and careers of every legislator who votes on it.
What force could be great enough for California to cede its right to dictate its energy policy to Trump and coal plant owners? Google, Amazon, Microsoft and the rest of the “Magnificent Seven” companies that need more and more electricity for their data centers to power their AI. Along with PacifiCorp, the Warren Buffet-owned utility with Western regional coal plants, these Silicon Valley companies are powering this move.
Becker claims to have put in “guardrails,” but they are meaningless. For example, the California Independent System Operator (CAISO) will run the grid, but the power over market rules will still be set by a regional organization subject to Trump’s FERC. CAISO will need to vote in 2027 to pull the trigger, but CAISO is SB 540’s biggest booster.
California already buys and sells electricity throughout the West without ceding power to a regional operator, just not in enough quantity for the inexhaustible hunger of AI data centers.
In addition to being an environmentalist, Becker is also an investor in AI technology. His disclosure forms, which only provide ranges for his investments, show between $250,000 and $3.5 million invested in an AI-driven stock portfolio. His bet shouldn’t be California’s bet.
How will legislators do on the Becker Test? Governor Newsom will be out of office in a year and half but every legislator who votes on SB 540 will have to deal with the day that Trump’s FERC undoes our renewable portfolio standard and forces us to pay for coal. It’s inevitable if we give FERC that power, and the soot will be on the hands of every legislator who makes this change.
Jamie Court is the president of the nonprofit advocacy group Consumer Watchdog.