As California Gov. Jerry Brown looks to neighboring states for cheap sources of clean energy, a legal settlement could result in coastal cities like Los Angeles and San Diego getting more climate-friendly power from California’s own Imperial Valley.
Three years ago, the Imperial Irrigation District sued the nonprofit corporation that manages most of California’s power grid, accusing the grid operator of stifling clean energy development in one of the state’s poorest counties and plotting to “crush IID out of existence.” The Imperial Valley-based power provider also sued the grid operator under the California Public Records Act, demanding documents that the public utility suspected would undermine Brown’s efforts to start a regional power grid.
Those lawsuits have now been settled — and both sides are pleased with the outcome.
The state grid operator, known as CAISO, has agreed to upgrade a power line that will allow more electricity to flow from the Imperial Valley to the rest of the state. That should make it easier for companies to build solar projects in the region and sell the electricity to coastal population centers. Outside the legal settlement, CAISO says it has done more to promote development of geothermal energy — a top priority for IID, which wants to see new geothermal power plants build by the southern shore of the Salton Sea.
CAISO President Stephen Berberich said the legal settlement is a win for both sides. Imperial County, which has the state’s highest unemployment rate at nearly 18 percent, will get more opportunities for job-creating clean energy projects, which also generate revenue for IID and help keep electricity rates low. The rest of the state will get the clean energy those projects generate, helping cut air pollution and climate change emissions.
Berberich cautioned that while more solar projects could result from the settlement, geothermal development isn’t a guarantee. Utilities like Southern California Edison and San Diego Gas & Electric have been hesitant to invest in new geothermal plants, which produce climate-friendly electricity around the clock but are more expensive to build than solar and wind farms. CAISO doesn’t tell utilities what kind of energy to buy, but it does work closely with agencies that do, like the California Public Utilities Commission.
“We don’t do procurement at the ISO. But to the extent I can use my influence to help Kevin bring (geothermal) to the attention of those that do, we did that,” Berberich said, referring to IID general manager Kevin Kelley.
The settlement follows years of hostility between IID and the California Independent System Operator, or CAISO, which oversees the poles and wires that make up four-fifths of the state’s power grid. IID runs a separate grid covering Imperial County and parts of Riverside and San Diego counties, including the eastern Coachella Valley.
IID officials have long feared a takeover attempt by the state grid operator, even though CAISO has insisted it has no designs on the public power agency. Imperial and Coachella valley residents pay some of the lowest electricity rates in the state, and IID officials say those rates would rise if the agency was forced to join the CAISO system.
Those fears led IID’s board of directors to sue CAISO on antitrust grounds in 2015, saying the state grid operator had abused its monopoly powers by discriminating against the Imperial Valley. By reducing its estimate of how much electricity could be exported from the valley to the rest of the state, IID argued, CAISO had forced developers to build solar farms that bypassed IID’s power grid and connected directly to the CAISO system, depriving IID of revenue. Those actions were “part of an attempt on CAISO’s part to raise the costs of IID’s services to its customers to such an extent that it will ultimately force IID to turn over the operation and control of the transmission network within its territory to CAISO,” the Imperial Valley power agency claimed in its federal lawsuit.
IID sued CAISO again in 2016, this time over a plan being debated by state lawmakers that would expand the grid operator to other western states. Supporters, including Gov. Jerry Brown, have argued a regional power grid would lower the costs of fighting climate change by making it easier to share clean electricity across state lines. But opponents fear it would cede control of California’s energy mix to lawmakers in coal-friendly Utah and Wyoming, who could then force California to accept their dirty electricity exports.
For IID, the concern is that if Southern California Edison and other utilities have access to cheap out-of-state renewable energy sources, such as Wyoming wind power or Pacific Northwest hydropower, they’ll be less likely to buy from the Imperial Valley. The valley has strong year-round sunlight, which has fueled a growing solar industry, and one of the world’s strongest geothermal reservoirs. Both resources could help California reduce the carbon emissions that are responsible for the rise in global temperatures.
In its second lawsuit, IID went after CAISO on public records grounds, demanding all the data it had used to calculate the benefits of grid expansion. (CAISO says those benefits would be $1.5 billion annually by 2030, if most power grids across the West were to unite.) IID officials ostensibly believed that if they could get the rest of it and show it to the public, they’d be able to prove grid expansion is actually bad for Californians.
That lawsuit has been settled along with the antitrust case, although it’s not clear if CAISO ever gave IID the records it demanded. Kelley, the Imperial Valley agency’s general manager, said the important thing is that CAISO has started to treat IID fairly.
“Resolving this dispute gives us a common platform to move forward on issues that both agencies care about,” Kelley said in an interview. He told IID’s board of directors on Tuesday that a settlement would be officially announced this week.
The settlement doesn’t completely eliminate tensions between IID and CAISO. The grid operator still supports Brown’s plan for a regional power grid, which IID’s board of directors opposes. The board’s suspicion of CAISO was on display Tuesday, when it voted down a proposal from staff to explore joining a CAISO program to guarantee electric reliability — essentially, to make sure the lights stay on. IID’s current reliability coordinator may cease operations in the next few years, and IID staff, including Kelley, urged the board to consider CAISO as an alternative. But the board rejected that idea.
Board member Bruce Kuhn said accepting CAISO’s “protection, for lack of a better term,” would leave IID vulnerable to pressure to join a regional power grid.
“To me, doing business with (CAISO) at this time would be like kissing your grandma, and she slips you the tongue. It’s not acceptable,” Kuhn said.
IID’s decision to file an antitrust case against CAISO was informed by analysis done by ZGlobal Inc., an engineering consultant that also served as IID’s expert witness in the lawsuit. Kelley said his agency paid ZGlobal $3 million for its work on the case.
ZGlobal terminated its contract with IID last year, following a Desert Sun investigation into potential conflicts of interest. As a result of the Desert Sun’s reporting, IID canceled a $75-million contract for a solar farm that would have been built on land owned by a company with close ties to ZGlobal founder Ziad Alaywan. IID also backed out of a $7-million deal to expand a battery storage project originally engineered by ZGlobal.
An internal report by an IID attorney found that Alaywan had helped IID make several other energy contracts in which he had a financial interest, possibly violating California’s conflict-of-interest law, Government Code Section 1090. ZGlobal denied any wrongdoing but agreed to divest from four solar farms that sell electricity to IID. That was part of a legal settlement in which IID agreed to pay ZGlobal $2 million, bringing the total amount of money ZGlobal had gotten from the public agency to nearly $26 million since 2005.
CAISO subpoenaed ZGlobal as part of IID’s antitrust case in November, asking, among other things, for documents detailing ZGlobal’s “investment or ownership interest” in energy projects. CAISO also sought documents related to “any financial interest or remuneration that any board member, officer, or employee of IID, or relative of any IID board member, officer, or employee, may have or have received in or from ZGlobal.”
The Desert Sun reported last year that IID board member Bruce Kuhn was hired by former board member Mike Abatti, who has worked with ZGlobal on several energy projects, to level land owned by ZGlobal’s Alaywan. Also, two adult sons of IID board member Jim Hanks were hired to do pre-construction work on a solar farm being built by one of ZGlobal’s private-sector clients, on land that was owned by Alaywan at the time.
ZGlobal still hadn’t responded to CAISO’s subpoena after seven weeks, according to documents submitted to the court by the state grid operator. CAISO asked a judge to compel ZGlobal to produce the documents, but withdrew that request after it reached a tentative settlement agreement with IID in January.