SB 540: Powering a Better Energy Future

What Is SB 540?

Senate Bill 540, introduced by climate champions Josh Becker and Henry Stern, helps California save money, keep the lights on, and cut pollution by connecting our electric grid to a broader regional market across the West.

Right now, California’s main grid (run by California Independent System Operator (CAISO)) mostly operates on its own. SB 540 allows California to participate in a larger Western energy market—but only if protections for state policies and clean energy remain firmly in place.

What SB 540 Would Mean for Local Clean Energy

DERs—like rooftop solar, battery storage, EVs, and smart home devices—are more valuable when they can interact with a broader market.

SB 540 helps Californians:

Sell excess local power to more buyers across the West.

Access cleaner, cheaper energy when their own systems aren't generating.

Cut electricity bills by increasing the value of local, flexible clean energy.

A connected market means DERs play a bigger role—not just for individual homes, but for the grid as a whole.

Why This Matters

LOWER COSTS

California could save up to $800 million every year by sharing energy more efficiently with other Western states.

CLEANER ENERGY

SB 540 would cut gas use by 31% and let California export more clean energy instead of wasting it.

MORE RELIABLE POWER

A bigger grid helps us handle extreme weather and reduce blackout risks—especially during heatwaves.

STATE CONTROL STAYS

California keeps full control over its clean energy targets, resource planning, and climate goals.

What SB540 Actually Does

Lets CAISO join a multi-state market if strong conditions are met.

Keeps California’s existing clean energy laws and decision-making power intact.

Protects against federal interference or being forced to buy coal or subsidize fossil fuels.

Maintains California’s ability to leave the market at any time.

This isn’t the same as past proposals that would have given up state control. SB 540 is incremental and optional, with strong safeguards built in.

Fact vs. Fiction

FICTION:

California will lose control over its energy policy.

FICTION:

This opens the door to coal.

FICTION:

FERC could override California’s climate rules under SB 540.

FICTION:

California won’t be able to pull out of the new market.

FICTION:

This is just like what happened with PJM and Pennsylvania.

FICTION:

The Pathways Proposal will increase costs.

FICTION:

The Pathways Proposal will endanger our clean energy future

RESOURCES

Local Power Prospers with a Larger Grid (Advanced Energy United)
Grid Realization in the West (Stanford Woods Institute for the Environment)
Preliminary Day-Ahead Market Impacts Study (Brattle Group)
Webinar: Demystifying Senate Bill 540 (Co-hosted by CALCCA and California Environmental Voters)