Hastings Law Journal


Brian Orion


California's experiment with electricity deregulation is the most recent example of the State's willingness to be an energy policy maverick. Rolling blackouts and expensive long-term contracts are some of the constant reminders of this failed experiment. But another dramatic legacy of deregulation, one which is littleknown beyond inside players in regulation and industry, relates to the planning and licensing of California's system of highpower transmission lines. Thousands of miles of copper and steel wires supply families and businesses with the electricity they need to light their homes, water their crops, and manufacture their silicon chips. A well-planned and robust transmission system ensures a reliable power supply to meet these needs while at the same time preserving natural resources and saving consumers billions of dollars. But deregulation created a significant regulatory redundancy in the way in which the state licenses new transmission lines by giving two different state organizations overlapping roles in the process. This redundancy kills important new projects and discourages investment by increasing regulatory uncertainty. To erase this regulatory overlap, decisionmakers are currently debating two proposals which reflect different visions for the future of transmission planning: One proposal would give the power to determine when a new transmission project is needed to the Independent System Operator, the organization charged with ensuring a reliable transmission system; the other would give the responsibility for transmission planning to the California Energy Commission, the agency that currently licenses new power plants. Four factors should be considered in the debate: reliability, rate stability, efficiency, and fairness. This multi-factor approach illustrates the strengths and weaknesses of each proposal while countering the tendency of some regulatory discussions to lapse into one-dimensional standoffs between believers in efficiency and advocates of fairness. Because centralizing transmission planning within the California Energy Commission would further reliability, rate stability, fairness, and to a lesser extent efficiency, this is the plan California should adopt. And if it does, the state will move from maverick to mainstream.

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