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A proposal from California that would guarantee individual states' authority over energy policy hasn't assuaged Utah leaders' concerns about the plan to centralize the management of the Western U.S. electrical grid.

According to the document, the grid's managers would be bound by legal provisions that would "preserve state authority over matters currently regulated by the states themselves" and be barred from "adopting any policy that would diminish or impair state or local authority in those areas."

State leaders, including Gov. Gary Herbert, have expressed concern that a regional system — billed as a move that would improve efficiency, save electrical customers millions of dollars and, in the long run, reduce the amount of pollution that comes from electrical generation — could give California undue influence over energy policy in all Western states.

The only entity in the Western U.S. that is situated to assume control of such a regionwide grid is the California Independent System Operator, or CAISO, a nonprofit whose board is appointed by California lawmakers. The new proposal outlines general principles for the management of the proposed 11-state regional system operator and proposes to modify the structure of CAISO's board, expanding the number of seats on the board to include four new members selected by other states participating in the regional system. The five current board members would remain in place.

"We're not satisfied with any of the particulars, which continue to demonstrate an unacceptable retention of control by California entities, and a discounting of the requests and needs of Utah and others states," Laura Nelson, Herbert's energy adviser, said in a news release.

PacifiCorp, which operates as Rocky Mountain Power in Utah, is reviewing the governance proposal, but it is, at first glance, "pleased that the proposal clearly recognizes the need to protect and preserve the authority and interests of all states that would be participants in a regional market," according to a statement from the utility, which is poised to be the first to enter into the regional agreement.

California's new governance proposal also calls for the creation of an independent, nonprofit body of state regulators that would "provide policy direction and input on matters of collective state interest" related to the regional grid. The body would comprise regulatory representatives from the states in the regional grid's footprint, with a nonvoting adviser appointed by the publicly owned utilities in those states, and would be funded by CAISO by means of a tariff that would require approval from the Federal Energy Regulatory Commission.

Although the proposal says the body of state regulators would have "primary authority over regional ... policy initiatives on topics within the general subject areas of transmission cost allocation and aspects of resource adequacy," it's not clear how or even whether the body would interact with the CAISO board. It's also not clear what would happen to the five sitting CAISO board members when their current terms expire. Those details would be left to a transitional committee, which would be appointed by the CAISO board. This transitional committee would be tasked with hammering out the details not included in California's governance proposal.

Though the proposal implies that the distribution of power would be worked out down the road, the initial setup worries Kelly Francone, executive director of the Utah Association of Energy Users.

Starting with a majority of board members representing California could lead to an imbalance of power down the road, she said.

But Jennifer Gardner, a staff attorney for Western Resource Advocates, said her group suggested the proposal's "transition" approach to the California Energy Commission, and that the group has seen the proposal succeed in the past.

"This approach not only has the advantage of diverse stakeholder input, which I believe is critical to any governance process, but very simply, it offers the opportunity of a transition," Gardner said. "In other words, the CAISO is clarifying that this won't just happen overnight — it will take time, and they've made it clear that they want to get things right the first time."

The proposal, which was published online Thursday, will be reviewed at two upcoming stakeholder meetings: one in Sacramento, Calif., on Thursday, and a second in Denver on June 20. The California Energy Commission is collecting public comment on the proposal on its website, http://www.energy.ca.gov, through July 7.

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