Regional Western electricity market closer to reality following California vote

• California lawmakers on Saturday approved a bill paving the way for a new, independent organization to oversee the existing Western Energy Imbalance Market and the pending Extended Day-Ahead Market (EDAM), marking an important step toward the regionalization of energy markets among Western states.
• An analysis by the Brattle Group on behalf of the California Energy Commission concluded that the EDAM could save Californians more than $1 billion a year and reduce greenhouse gas emissions by 58% in the state.
• The bill was part of a package of energy proposals that passed at the last minute and now heads to Gov. Gavin Newsom, who is expected to sign the bills. The package also included a measures related to the state’s wildfire fund, virtual power plants and reauthorizing the state’s cap and trade program for greenhouse gas emissions.

The passage of AB 825 caps a years-long push by many clean energy advocates to regionalize the Western energy markets and sets the stage for the creation of a regional transmission organization. It builds on the West-Wide Governance Pathways Initiative started in 2023.

The California Independent System Operator issued a statement commending the legislature, Newsom and the “diverse coalition of stakeholders” for advancing “this important legislation.”

“This marks a crucial next step toward independent governance of Western electricity markets — a milestone shaped by years of successful and evolving regional collaboration,” CAISO said. “As the Pathways Committee develops the framework for the new regional organization, the ISO will coordinate closely to ensure alignment with legislative requirements. The ISO remains fully committed to the successful launch of the Extended Day‑Ahead Market and will offer technical support throughout the transition.”

The bill was also welcomed by clean energy advocates and environmental groups, who said it will support the development of renewable energy.

"This is a pivotal moment for the West, demonstrating California's commitment to regional collaboration and ensuring all states' voices will be represented," Leah Rubin Shen, managing director at Advanced Energy United, said in a statement. "The broad geographic footprint enabled by this legislation will provide the greatest economic benefits, improve affordability for consumers, and support a more resilient future for the whole region."

The Environmental Defense Fund called the passage of AB 825 a “huge win” for families on a budget and climate action by “expanding access to clean electricity that currently goes to waste.”

“Today’s vote sends a message to the West,” said Katelyn Roedner Sutter, EDF’s California state director. “California will be part of a fast-moving revolution in how electricity will be bought and sold across the region.”