Economic Assessment for SB350

California’s Senate Bill No. 350—the Clean Energy and Pollution Reduction Act of 2015— (SB 350) requires the California Independent System Operator (CAISO, Existing ISO, or ISO) to conduct one or more studies of the impacts of a regional market enabled by governance modifications that would transform the ISO into a multistate or regional entity (Regional ISO). SB 350, in part, specifically requires an evaluation of how regionalization would impact the creation or retention of jobs and other benefits to the California economy. Understanding these economic impacts is an integral part of the policy making process, and as a result we were engaged to model these impacts.

The BEAR dynamic economic forecasting model was used to evaluate California’s long-term growth prospects from developing a Regional ISO. Results were generated for 3 primary scenarios and 1 sensitivity scenario across 3 time periods. Two regionalization scenarios were compared to Current Practice. As an initial baseline we provided evidence-based support that California’s higher Renewable Portfolio Standard (“RPS”) (50% by 2030) will provide a wide range of benefits to California households and enterprises. Across all scenarios, including the Current Practice scenario, we projected higher statewide gross product, real output, state revenue, and employment. By 2030, we estimated there will be an additional 90,000 – 110,000 statewide jobs created from the 50% RPS policy goal depending on scenario analyzed. Furthermore, we found that reduced energy rates will lead to increase household income across every scenario, ensuring that an increased RPS will provide a stream of benefits to all Californians.

For the project, BEAR performed the economic analysis and contributed to the analysis of impacts on disadvantaged communities. We presented results and participated in discussion at public meetings and interagency workshops and ultimately our results were presented to Governor Brown to inform his decision of whether to pursue regionalization for California ISO.