Article 3 - Independent System Operator

California Public Utilities Code — §§ 345-352.7

Sections (13)

Amended by Stats. 2024, Ch. 713, Sec. 2. (AB 2368) Effective January 1, 2025.

(a)The Independent System Operator shall ensure the efficient use and reliable operation of the transmission grid consistent with the achievement of planning and operating reserve criteria that are no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.

(b)In furtherance of subdivision (a), the Independent System Operator may amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission through its rulemaking process, to be consistent with subdivision (a).

§ 345.1

Added by Stats. 2025, Ch. 116, Sec. 2. (AB 825) Effective January 1, 2026.

The chair of the board of governors and the chief executive officer of the Independent System Operator shall appear annually before the appropriate policy committees of the Assembly and Senate to present the report required pursuant to Section 345.2.

§ 345.2

Added by Stats. 2025, Ch. 116, Sec. 3. (AB 825) Effective January 1, 2026.

(a)The Independent System Operator shall develop, publish, and annually update a report that includes all of the following information:

(1)Any changes to its federal tariff sought, and those changes approved, by the Federal Energy Regulatory Commission.

(2)The status of policy initiatives and recurring processes considered by the Independent System Operator during the prior year.

(3)Actions undertaken by the Independent System Operator governing board and, if applicable, the governing board of an independent regional organization whose electricity market California entities participate in.

(4)An assessment of market activity during the prior year by any independent market monitor and, if applicable, independent market analysis maintained by an independent regional organization used by the Independent System Operator.

(5)Actions undertaken within the transmission planning process of the Independent System Operator and the implementation of projects approved in that process.

(b)If the Independent System Operator uses a voluntary energy market governed by an independent regional organization, that organization shall provide the Independent System Operator with the information required for the report required by this section, as applicable.

(c)(1) The Independent System Operator shall submit the report required pursuant

to subdivision (a) to the Governor and the Legislature, in compliance with Section 9795 of the Government Code, no later than February 1 of each year.

(2)The Independent System Operator shall post the report in a conspicuous area of its internet website and shall have a program to disseminate the information in the report using computer mailing lists to provide regular updates on the information to those members of the public and organizations that request that information.

§ 345.5

Amended by Stats. 2021, Ch. 615, Sec. 395. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Section 463 of Stats. 2021, Ch. 615.

(a)The Independent System Operator, as a nonprofit, public benefit corporation, shall conduct its operations consistent with applicable state and federal laws and consistent with the interests of the people of the state.

(b)To ensure the reliability of electric service and the health and safety of the public, the Independent System Operator shall manage the transmission grid and related energy markets in a manner that is consistent with all of the following:

(1)Making the most efficient use of available energy resources. For purposes of this section, “available energy resources” include energy, capacity, ancillary

services, and demand bid into markets administered by the Independent System Operator. “Available energy resources” do not include a schedule submitted to the Independent System Operator by an electrical corporation or a local publicly owned electric utility to meet its own customer load.

(2)Reducing, to the extent possible, overall economic cost to the state’s consumers.

(3)Applicable state law intended to protect the public’s health and the environment.

(4)Maximizing availability of existing electric generation resources necessary to meet the needs of the state’s electricity consumers.

(5)Conducting internal operations in a manner that minimizes cost

impact on ratepayers to the extent practicable and consistent with the provisions of this chapter.

(6)Communicating with all balancing area authorities in California in a manner that supports electrical reliability.

(c)The Independent System Operator shall do all of the following:

(1)Consult and coordinate with appropriate state and local agencies to ensure that the Independent System Operator operates in furtherance of state law regarding consumer and environmental protection.

(2)Ensure that the purposes and functions of the Independent System Operator are consistent with the purposes and functions of nonprofit, public benefit corporations in the

state, including duties of care and conflict-of-interest standards for officers and directors of a corporation.

(3)Maintain open meeting standards and meeting notice requirements consistent with the general policies of the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) and affording the public the greatest possible access, consistent with other duties of the corporation. The Independent System Operator’s Open Meeting Policy, as adopted on April 23, 1998, and in effect as of May 1, 2002, meets the requirements of this paragraph. The Independent System Operator shall maintain a policy that is no less consistent with the Bagley-Keene Open Meeting Act than its policy in effect as of May 1, 2002.

(4)Provide public access to corporate records consistent with the general policies of the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code) and affording the public the greatest possible access, consistent with the other duties of the corporation. The Independent System Operator’s Information Availability Policy,

as adopted on October 22, 1998, and in effect as of May 1, 2002, meets the requirements of this paragraph. The Independent System Operator shall maintain a policy that is no less consistent with the California Public Records Act than its policy in effect as of May 1, 2002.

§ 345.6

Added by Stats. 2025, Ch. 116, Sec. 4. (AB 825) Effective January 1, 2026.

(a)Notwithstanding the requirements related to energy markets in subdivision (b) of Section 345.5, the Independent System Operator and the electrical corporations that are participating transmission owners whose transmission systems are operated by the Independent System Operator may use voluntary energy markets governed by an independent regional organization only if all of the following requirements are satisfied:

(1)The independent regional organization is a nonprofit corporation whose governance documents, and the tariff approved by the Federal Energy Regulatory Commission, include a requirement to respect the authority of each state that has a load-serving entity or balancing authority participating in the market to set its own

procurement, resource adequacy, environmental, reliability, and other public interest policies and exercise oversight over its regulated entities.

(2)The governing board of the independent regional organization maintains a public policy committee consisting of members of the governing board of the independent regional organization that engages with states, local power authorities, and federal power marketing administrations about potential impacts to state, local, or federal policies before it approves a tariff change for filing at the Federal Energy Regulatory Commission.

(3)The governing board of the independent regional organization maintains a relationship with and seeks input from a body of state regulators or similar body to receive the views of state regulators.

(4)The independent regional organization

makes funding available for a consumer advocate organization that represents the interests of one or more consumer advocate offices authorized in state law, including the Public Advocate’s Office of the Public Utilities Commission, and facilitates engagement by those offices with the independent regional organization.

(5)The independent regional organization maintains an office of public participation to provide information and education to members of the public about issues and initiatives at the independent regional organization, including facilitating engagement in those processes.

(6)In addition to any independent market monitoring activity required by a Federal Energy Regulatory Commission order, the independent regional organization maintains access to independent market analysis for the governing board of the independent regional organization on the impacts of market

dynamics or rule changes to minimize overall costs to end-use consumers.

(7)Subject to reasonable confidentiality provisions, market data is available to the commission and the Public Advocate’s Office of the Public Utilities Commission, and other states’ commissions and public advocate offices, to the same or greater extent as existed on December 31, 2024, for the markets governed by the Independent System Operator.

(8)There is a stakeholder process designed to provide nonbinding advice to the governing board of the independent regional organization.

(9)The independent regional organization is obligated to conduct meetings and make decisions in an open process with transparent, documented rationales, and all meetings of the governing board of the independent regional organization are publicly noticed and,

excluding executive sessions, are available to remote participants, recorded and posted on the independent regional organization’s internet website, open to the public, and subject to open record requirements. The obligations in this paragraph shall be substantially similar to those that apply to the Independent System Operator at the time a resolution is adopted pursuant to subdivision (b).

(10)The Independent System Operator continues to operate the energy markets, subject to the market rules determined by the independent regional organization as accepted by the Federal Energy Regulatory Commission.

(11)The market rules of the independent regional organization provide greenhouse gas emissions information and protocols sufficient to enable compliance with the requirements of any state agency.

(12)All independent

regional organization services are offered on a voluntary basis with each participant retaining its decisionmaking autonomy regarding the extent of its participation.

(13)The tariff approved by the Federal Energy Regulatory Commission for the independent regional organization provides a procedure for unilateral withdrawal from the independent regional organization’s energy markets by any participant on their own accord, or as required by an applicable regulatory authority or state statute, with reasonable prior notice and without any penalties, unreasonable costs, or further discretionary approvals.

(b)On or after January 1, 2028, the Independent System Operator may implement tariff modifications accepted by the Federal Energy Regulatory Commission to operate the energy markets whose rules are governed by an independent regional organization, as provided in subdivision (a), if

the governing board of the Independent System Operator has adopted a resolution finding that each of the requirements of paragraphs (1) to (13), inclusive, of subdivision (a) have been or will be adopted by the independent regional organization. The governing board of the Independent System Operator may adopt the resolution if the Independent System Operator satisfies all of the following requirements before adopting the resolution:

(1)The meeting is open to the public, available to remote participants, recorded, and posted on the Independent System Operator’s internet website.

(2)The Independent System Operator issues a notice of the meeting and proposed findings not less than 90 days before the meeting.

(3)The notice explains the basis for finding that each requirement of paragraphs (1) to (13), inclusive, of

subdivision (a) will be met.

(4)The notice provides an opportunity for written comments on the proposed findings.

(5)The Independent System Operator issues written responses to any comments not less than 20 days before the meeting.

(6)After issuing the written responses described in paragraph (5), but before adopting the resolution, the Independent System Operator shall offer to provide testimony to the legislative committee in each house of the Legislature with primary jurisdiction over electrical corporations on its proposed findings and responses and shall provide testimony to hearings of those committees if those committees request testimony.

(7)The Independent System Operator receives and accepts written comments from the commission, Public

Advocate’s Office, and Energy Commission provided pursuant to paragraph (4) regarding the proposed findings.

(c)The commission shall make a determination through a formal decision in an existing or new proceeding that the requirements in subdivisions (a) and (b) have been satisfied before electrical corporations participate in an energy market governed by an independent regional organization.

(d)This section does not diminish the commission’s authority to direct an electrical corporation to withdraw from an energy market governed by an independent regional organization. The commission may direct an electrical corporation to withdraw from an energy market governed by an independent regional organization on its own volition through a proceeding or any other commission process, including if the commission identifies any activities of the independent regional organization that would

undermine or jeopardize the commission’s authority regarding resource adequacy, integrated resource planning, or procuring resources under Section 380, 454.51, or 454.52.

(e)(1) The Independent System Operator shall maintain the necessary technical capability to operate energy markets in a manner that enables California electrical corporations, local publicly owned electric utilities, and other applicable market participants to withdraw from the markets governed by the independent regional organization and instead the Independent System Operator would provide separate market services for those entities.

(2)Beginning one year after the implementation of the independent regional organization’s markets, and annually thereafter, the Independent System Operator, in consultation with the independent regional organization, shall report to the commission, Energy

Commission, and the legislative committees with primary jurisdiction over electrical corporations, in compliance with Section 9795 of the Government Code, on the status of the development and compliance with this section.

(3)The commission and Energy Commission shall review each report required pursuant to paragraph (2) and shall publicly post an acknowledgment to their internet websites that they have reviewed the contents of each report.

(f)(1) The Independent System Operator shall conduct a study of the impacts of implementing subdivision (a) on the creation or retention of jobs in California. The study shall specifically include the impact on jobs constructing and maintaining powerplants in California.

(2)The Independent System Operator shall host public workshops on the study methodology

and the results of the study.

(3)The Independent System Operator shall complete the study on or before December 31, 2026. Upon completion, the Independent System Operator shall provide the study to the legislative committee in each house of the Legislature with primary jurisdiction over electrical corporations.

(4)The results of the study shall be included in the Independent System Operator’s findings and resolution described in subdivision (b).

(5)The study submitted pursuant to paragraph (3) shall be in compliance with Section 9795 of the Government Code.

(g)(1) The Independent System Operator shall continue its functions and responsibilities as a balancing authority as they existed before enactment of this section, and

maintain compliance with applicable reliability standards as developed, adopted, and enforced by the North American Electric Reliability Corporation, the Western Electricity Coordinating Council, or the Federal Energy Regulatory Commission.

(2)The Independent System Operator shall not change its balancing authority area from that which existed on December 31, 2024, except as follows:

(A)Standard addition or removal of transmission lines, substations, and other equipment by participating transmission owners or other asset owners.

(B)The Independent System Operator may combine its balancing authority area with another California balancing authority if the combination is mutually agreed upon.

(C)The Independent System Operator may use its subscriber

participating transmission owner tariff.

(3)Except as provided in subdivision (a) with respect to managing energy markets as provided in this section, this section does not change the responsibilities of the Independent System Operator under Section 345.5, including managing the transmission grid, planning for transmission expansion, reliability, resource adequacy, and complying with Section 25308 of the Public Resources Code.

(h)(1) (A) This section does not change any requirement related to the California Renewables Portfolio Standard Program as provided in Article 16 (commencing with Section 399.11).

(B) The independent regional organization is not a California balancing authority.

footprint of the independent regional organization is not a balancing authority area.

(2)This section does not change the policy of the state to reach specified targets by specified dates for supplying eligible renewable energy resources and zero-carbon resources as provided in subdivision (a) of Section 454.53.

(3)This section does not change the authority of the commission regarding resource adequacy, integrated resource planning, or procuring resources under Section 380, 454.51, 454.52, or any other law.

(4)This section does not change the authority of the commission over an electrical corporation’s participation in any additional products or services offered by the independent regional organization and the electrical corporations shall not participate in any additional products and services offered by the

independent regional organization unless authorized by the commission.

(i)The Independent System Operator may act as a vendor, through a contract with the independent regional organization, of market operation services, generation dispatch services, transmission operation services, transmission planning services, reliability coordination, balancing authority compliance or operation services, or other electrical system services.

(j)This section does not prohibit the independent regional organization from offering additional products or services on a voluntary basis, including, but not limited to, cooptimization of ancillary services, administration of a resource adequacy program, or transmission planning or service.

(k)For purposes of this section, both of the following definitions apply:

(1)“Balancing authority,” “balancing authority area,” and “California balancing authority” have the same meanings as provided in Section 399.12.

(2)“Load-serving entity” has the same meaning as provided in Section 380.

§ 346

Amended by Stats. 2003, Ch. 62, Sec. 258. Effective January 1, 2004.

The Independent System Operator shall immediately participate in all relevant Federal Energy Regulatory Commission proceedings. The Independent System Operator shall ensure that additional filings at the Federal Energy Regulatory Commission request confirmation of the relevant provisions of this chapter and seek the authority needed to give the Independent System Operator the ability to secure generating and transmission resources necessary to guarantee achievement of planning and operating reserve criteria no less stringent than those established by the Western

Electricity Coordinating Council and the North American Electric Reliability Council.

§ 347

Added by Stats. 1996, Ch. 854, Sec. 10. Effective September 24, 1996.

The Independent System Operator governing board may form appropriate technical advisory committees composed of market and nonmarket participants to advise the Independent System Operator governing board on issues including, but not limited to, rules and protocols and operating procedures.

§ 348

Amended by Stats. 1997, Ch. 261, Sec. 8. Effective January 1, 1998.

The Independent System Operator shall adopt inspection, maintenance, repair, and replacement standards for the transmission facilities under its control no later than September 30, 1997. The standards, which shall be performance or prescriptive standards, or both, as appropriate, for each substantial type of transmission equipment or facility, shall provide for high quality, safe, and reliable service. In adopting its standards, the Independent System Operator shall consider: cost, local geography and weather, applicable codes, national electric industry practices,

sound engineering judgment, and experience. The Independent System Operator shall also adopt standards for reliability, and safety during periods of emergency and disaster. The Independent System Operator shall report to the Oversight Board, at such times as the Oversight Board may specify, on the development and implementation of the standards in relation to facilities under the operational control of the Independent System Operator. The Independent System Operator shall require each transmission facility owner or operator to report annually on its compliance with the standards. That report shall be made available to the public.

§ 349

Amended by Stats. 2024, Ch. 713, Sec. 3. (AB 2368) Effective January 1, 2025.

(a)The Independent System Operator shall perform a review following a major outage that affects at least 10 percent of the customers of the entity providing the local distribution service. The review shall address the cause of the major outage, the response time and effectiveness, and whether the transmission facility owner or operator’s operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner.

(b)(1) If the Independent System Operator finds pursuant to subdivision (a) that the operation and maintenance practices of the transmission facility owner or operator prolonged the response time or was responsible for the outage, the Independent

System Operator may order appropriate sanctions, subject to the Federal Energy Regulatory Commission approving that authority.

(2)(A) If the Independent System Operator finds pursuant to subdivision (a) that the primary cause of the outage was the insufficiency of the electricity supply available to serve the electrical load within its balancing area authority, the Independent System Operator shall post on its internet website the finding and recommendations to prevent future shortfalls and share the finding and recommendations with the commission, the Energy Commission, and the Legislature.

(B)Findings and recommendations submitted to the Legislature shall be provided in accordance with Section 9795 of the Government Code.

§ 349.5

Amended by Stats. 2021, Ch. 615, Sec. 396. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Section 463 of Stats. 2021, Ch. 615.

(a)Beginning January 15, 2002, and at least once monthly thereafter, the Independent System Operator shall notify each air pollution control district and air quality management district of the name and address of each entity within the district’s boundaries within the Independent System Operator’s control area with whom the Independent System Operator enters into an interruptible service contract or similar arrangement.

(b)For the purposes of this section, “interruptible service contract or similar arrangement” means any arrangement in which a nonresidential entity agrees to reduce or consider reducing its electrical consumption during

periods of peak demand or at the request of the Independent System Operator in exchange for compensation, or for assurances not to be blacked out or other similar nonmonetary assurances.

(c)The local air pollution control district or air quality management district shall maintain in a confidential manner the information received pursuant to this section. However, nothing in this subdivision shall affect the applicability of Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code, or of any other similar open records statute or ordinance, to information provided pursuant to this section.

§ 350

Added by Stats. 2024, Ch. 741, Sec. 1. (AB 2779) Effective January 1, 2025.

(a)Notwithstanding Section 10231.5 of the Government Code, upon approval by the Independent System Operator of each transmission plan produced through the transmission planning process, or a successor process, the Independent System Operator shall report to the commission and the relevant policy committees of both houses of the Legislature any new use of any grid enhancing technology that is deemed reasonable by the Independent System Operator in that plan and the costs and efficiency savings of the deployment of that grid enhancing technology.

(b)The report submitted to the relevant policy committees of the Legislature pursuant to subdivision (a) shall be submitted in accordance with Section 9795 of the Government

Code.

§ 352.5

Added by Stats. 2001, 1st Ex. Sess., Ch. 1, Sec. 6. Effective January 18, 2001.

(a)The Independent System Operator shall make publicly available a list of all power plants located in the state that are not operational due to a planned or unplanned outage.

(b)For the purposes of complying with subdivision (a), the Independent System Operator shall make the list available over the Internet.

(c)The Independent System Operator shall update the list established pursuant to subdivision (a) on a

daily basis.

§ 352.7

Added by Stats. 2002, Ch. 1097, Sec. 2. Effective January 1, 2003.

(a)It shall be unlawful for a person to intentionally disclose proprietary information obtained in the negotiation, execution, or performance of a consulting services contract, as defined in Section 10335.5 of the Public Contract Code, or an information technology contract, as defined in Section 11702 of the Government Code, with the Independent System Operator when the contracting party knew or should have known that the disclosure was likely to cause harm.

(b)A violation of

this section shall be punishable as a misdemeanor and may be prosecuted by the Attorney General or by a local district attorney in the district in which the disclosure took place.

(c)(1) For the purposes of this section “proprietary information” shall include any information agreed by the contracting parties to be proprietary, or any information that is designated by the Independent System Operator to be proprietary. The Independent System Operator shall provide written notification to a contracting party of any information that, subsequent to the execution of the contract, is identified to be proprietary. The Independent System Operator shall make this designation only in cases where the Independent System Operator has reason to believe that the release of this information poses an immediate threat to the health, safety, or welfare of the public or the Independent System Operator has reason to believe that the

contracting party intends to sell the information. If the Independent System Operator makes a designation of proprietary information subsequent to the execution of the contract, the Independent System Operator shall make a good faith effort to amend the contract to incorporate the subsequent designation of proprietary information. The Independent System Operator shall specifically identify in the contract any information that is considered to be proprietary. A contracting party is not in violation of this section if that party discloses information prior to the receipt of the written notification.

(2)Any information that is required to be released or disclosed by a contracting party pursuant to a legal requirement, including an order of a court or regulatory agency, shall not be considered a violation of this section.