USA – CALIFORNIA Trends and Developments Contributed by: Nora Sheriff, Gwenneth O’Hara and Samir Hafez, Buchalter LLP
The report also explains that the utilities’ tens of bil- lions of dollars in significant investments in wildfire mitigation do not suffice to adequately address Cali- fornia’s wildfire risk. The low-hanging, cost-effective utility-level mitigations have been undertaken, and additional investment has diminishing returns. Moreo- ver, utility efforts focus only on a portion of wildfire risk; the biggest causes of catastrophic loss are associated with community vulnerability, buildings and structures, and community development. At the same time, exist- ing financial mechanisms such as the Wildfire Fund are under strain and were not designed to function as permanent solutions. The January 2025 Eaton Fire threatens to deplete the Wildfire Fund and necessi- tates additional ratepayer contributions. Accordingly, the report lays out an array of policy pathways with three strategic directions: • reducing underlying wildfire risk through large- scale community mitigation; • restructuring how financial burdens are allocated among stakeholders; and • expanding the State’s role in managing catastroph- ic risk. Legislation will be required to reform wildfire liability, develop more durable financing for wildfire losses, and establish state-backed mechanisms to stabilise the system and distribute risk more broadly. The legis- lature is under pressure to create a more predictable, equitable, and sustainable framework to maintain via- ble utilities, reduce ratepayer costs, and ameliorate long-term resilience to catastrophic wildfire events. Regional Markets: The Launch of EDAM and Formation of Two Markets for Western Regionalisation On 1 May 2026, the California Independent System Operator launched the Extended Day Ahead Market, (EDAM), extending day-ahead market participation to eligible Western entities without requiring them to join the CAISO balancing authority. EDAM builds on the existing Western Energy Imbalance Market and is intended to improve day-ahead scheduling across a broader regional footprint.
This larger day-ahead market is intended to low- er production costs by optimising a broader set of resources across the West, improve reliability through geographic diversity, and make renewable generation easier to integrate into system operations. California officials have framed EDAM as a lower-cost, reliability- enhancing market expansion, and analyses associ- ated with California’s regionalisation efforts estimate that broader regional co-ordination could produce more than USD1 billion per year in ratepayer benefits. California has simultaneously advanced a legislative framework to facilitate regionalisation while preserv- ing the State’s policy authority. Assembly Bill 825, enacted in September 2025, establishes a pathway for CAISO and California utilities to participate in a regional market governed by an independent organi- sation, subject to safeguards that preserve state con- trol over procurement, emissions policy, transmission planning, and reliability standards. California’s regionalisation strategy is unfolding along- side a competing market path led by the Southwest Power Pool (SPP). SPP’s Markets+ initiative continues to advance toward an October 2027 launch and has entered implementation following FERC approval of its tariff and funding mechanism. SPP has also contin- ued to secure Western participants, including Pacific Northwest utilities such as Grant County PUD and Tacoma Power for later entry phases. In parallel, SPP completed a major expansion of its regional transmission organisation into the Western Interconnection in April 2026, extending organised market operations into parts of Colorado and Wyo- ming, and becoming the first US RTO to operate across both the Eastern and Western interconnec- tions. The result is a bifurcated Western market landscape. EDAM represents California’s preferred model of incremental regionalisation built outward from existing CAISO structures. Markets+ offers a separate, volun- tary platform with its own governance and participant base. Utilities and balancing authorities across the West are increasingly aligning with one or the other. Two structured western markets will produce more
430 CHAMBERS.COM
Powered by FlippingBook