“We’ve shot the starting gun” is how my colleague Brian Turner put it when describing the momentous occasion of California’s Assembly Bill (AB) 825 being signed into law. Colloquially known as the “Pathways bill,” AB 825 paves the way for California to take part in an independently governed regional electricity market, unlocking an unprecedented opportunity for more efficiency, reliability, and clean energy growth in the West. This legislation isn’t just a win for the Golden State, but a transformative moment for the entire Western grid. 

Why the Pathways Bill Matters 

The Pathways bill clears a long-standing barrier to regional energy market development in the West: the fact that the board of the California Independent System Operator (CAISO) is appointed by the Governor of California. This means that the markets operated by CAISO, even those that have participants outside of California, have still been subject to oversight from a California-appointed board. AB 825 resolves this issue by enabling CAISO to participate in a regional market with independent governance as long as it meets certain conditions, creating a framework for deeper collaboration among Western states. For too long, a fragmented grid has limited the West’s potential to capture the benefits of shared resources and coordinated operations, but we now have the potential for a truly independent market, designed by the West and for the West. 

The concept enabled by AB 825 was formally proposed by the West-Wide Governance Pathways Initiative in order to facilitate the largest Western power market possible. Advanced Energy United serves on the Launch Committee of the Pathways Initiative, a diverse group of stakeholders that came together to forge a path for a Western market that can include California to maximize benefits and minimize costs.  

The potential for the region is immense. An analysis we commissioned in 2022 studied the potential benefits of a unified 11-state regional energy market, finding it could generate up to $2 billion in annual energy savings, support up to 4.4 gigawatts of additional clean power, and create hundreds of thousands of permanent jobs.  

With the signing of AB 825, the Pathways Initiative can move forward with setting up a new independent organization to govern the markets. It’s the beginning of a new era, but just getting to this point is a testament to the perseverance and persistence of key industry leaders, and Advanced Energy United’s commitment to the vision. 

United’s Role in Making Regional Collaboration A Reality 

The efforts to build and stand up a Western energy market span over two decades. At United, we began our direct engagement on this issue back in 2016 when we worked with the California Legislature and Governor Brown’s Administration to make the case for CAISO regionalization. We learned the hard way that the California legislature was reluctant to turn CAISO into a regional organization, skeptical that other states could be partners in this endeavor. 

So, at United, we sought to change that. Since 2018, we’ve been engaging decisionmakers in multiple states, on both sides of the aisle, to build an understanding of the potential benefits of an independent Western energy market. We worked side by side with our members and allies to convene stakeholders and build public support. As part of this work, we also commissioned state-by-state economic analysis that was endorsed by sitting Governors and utilized by decisionmakers. We even produced a podcast series! Collectively, our efforts helped to connect the concept of a Western market to enhanced reliability and affordability, which resonated with both decision-makers and the media. 

We faced doubts and skepticism along the way, but we were committed, knowing the challenges were worth overcoming. United was able to build coalitions and, alongside our legislative champions, we passed groundbreaking legislation: In 2021, bills were signed by both Nevada Governor Sisolak and Colorado Governor Polis to require utilities in those states to join a regional transmission organization (RTO) by 2030. 

Finally, we had the momentum we needed. 

In 2022, we brought the conversation back to California, where we led an effort to gain support for a legislative resolution. The resolution called on the CAISO to summarize existing studies on regional markets and to update the CA legislature on efforts in other Western states to establish an RTO. United used ACR 188 to create a broad California coalition of support and to build understanding of what was happening in the West around market formation. What followed was another California effort to get the state to initiate and support a collaborative West-wide effort around regional markets. 

It worked. The Pathways Initiative was borne out of these efforts and helped bring decisionmakers across the West, utilities, industry stakeholders, labor interests, public power, environmental NGOs, large consumers and others to the table to develop a construct that could work for the entire region. It took a very broad and West-wide effort with many, many stakeholders to make this happen. The buy-in on this approach led to a renewed legislative effort to move the Pathways Initiative into the next phase by addressing parts of California statute that have stood in the way of greater collaboration. The legislation was ultimately endorsed by a wide coalition – joining United were businesses and business groups, other clean energy industry groups, labor, environmental NGOs, both investor-owned and public utilities, community choice aggregators (CCAs), and consumer advocates. 

Earlier this month, that bill, AB 825, passed the California Legislature with near-unanimous support and was signed into law by the Governor. 

What’s Next 

The work now shifts to implementation: incorporating the new organization, seating an initial board, further developing the stakeholder engagement process, and modifying market rules to ensure a truly independent, fair, and consumer-focused market for the entire West.  

We are ready to roll up our sleeves and see the Pathways Initiative deliver a successful outcome. United will remain deeply engaged in this process, helping shape a market that is created by, and serves, the entire West. Our organization will continue to lead by bringing diverse stakeholders to the table, offering expertise in market design and regulatory engagement, and ultimately keeping the focus on consumer savings, reliability, and clean energy growth. 

A Collective Achievement 

The success of the Pathways Initiative, including the legislative victory, is a testament to what’s possible when states, utilities, industries, and advocates work together. We celebrate this milestone alongside our members, partners, and stakeholders across the West who contributed to this effort. We are so proud of the work up to this point and are thrilled to see this issue get so much engagement across our membership and technology segments. 

This accomplishment reinforces our commitment to continuing collaborative leadership. Together, we’re laying the groundwork for a stronger, cleaner, and more affordable Western grid.