OFFICE OF THE GOVERNOR

August 8, 2016

The Honorable Kevin De Leon The Honorable Anthony Rendon
Senate President Pro Tempore Speaker of the Assembly
California State Senate California State Assembly

State Capitol, Room 205 State Capitol, Room 219
Sacramento, CA 95814 Sacramento, CA 95814

The Honorable Jean Fuller The Honorable Chad Mayes
Senate Minority Leader Assembly Minority Leader
California State Senate California State Assembly

State Capitol, Room 305 State Capitol, Room 3104
Sacramento, CA 95814 Sacramento, CA 95814

Dear Leaders of the California State Legislature:

Last year in SB 350, the Legislature expressed its intent that the California Independent System
Operator (ISO) transition into a regional grid operator provided certain conditions were met.
Implemented correctly, a regional grid will enable greater renewable development, lower costs
and carbon emissions and improved electricity reliability.

Since that time, our of?ces have worked together convening numerous meetings examining a
host of issues relating to regionalization; the California Energy Commission has held several
public workshops to develop principles for governance of a regional entity; energy regulators
and governors? of?ces from Western states have held productive discussions; and the ISO
completed detailed studies examining the economic and environmental impacts of
regionalization.

While very signi?cant progress has been made by the ISO on a transition proposal that meets the
criteria in SB 350, there remain some important unresolved questions that would be difficult to
answer in the remainder of this legislative session.

GOVERNOR EDMUND G. BROWNJR. SACRAMENTO, CALIFORNIA 95814 0 (916) 445?2841
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Accordingly, I have directed my staff, the Energy Commission, the Public Utilities Commission
and the California Air Resources Board to continue working with the Legislature, the ISO,
interested parties and other state and energy regulators. The goal is to develop a strong proposal
that the Legislature can consider in January.

I?m con?dent that by working together we can get the job done.



Edmund G. Brown, Jr.