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California Realities and Federal Plans

A tale of two energy worlds.

Fortnightly Magazine - August 2009

market. First, the federal smart-grid plans fall into areas of both federal and state jurisdiction. Adding to this complexity, centralized markets operated by independent system operators (ISO) or regional transmission organizations (RTO), satisfy the electricity demand in their regions by using a coordinated dispatch of all generators, and wholesale electricity is bought and sold at prices based on that dispatch. In such markets, ISOs and RTOs also operate and assist in planning of, but do not own, transmission assets and also coordinate interconnection and transmission requests and services—all of which would be implicated by the federal plans.

Evolving Realities

On the GHG and renewable-energy front, it must be noted that although California’s GHG program and RPS efforts are farther along than the federal government’s plans, they are still very much in the embryonic stage. The first emissions credit trade is still several years away. However, California has been a leader on such initiatives and offers the federal government some real world examples to consider before a full-scale implementation. On the other hand, California hasn’t been a thought leader with respect to wholesale market design structure. Although it has implemented some demand response and energy-efficiency programs covered by the ARRA, California’s wholesale market design is 20th century—not 21st century. To implement its smart-grid proposal, including the necessary investment into thousands of miles of new transmission lines, the federal government cannot look to California as an example, and has much work yet to do.