CA SB540

Authorizes California's Independent System Operator (ISO) and electrical corporations to participate in voluntary energy markets governed by an independent regional organization starting January 1, 2028, provided 15 specific requirements are met regarding state authority, transparency, and consumer protections

Creates the Regional Energy Market Oversight Council—composed of the PUC President, Energy Commission Chair, legislative committee chairs, and Attorney General—to approve or disapprove electrical corporations' initial participation in regional energy markets and order withdrawal if participation harms California's interests

Requires the independent regional organization to respect each state's authority over procurement, resource adequacy, environmental, and reliability policies, and prohibits it from establishing centralized capacity markets or mandatory resource adequacy requirements

Mandates that California ratepayers cannot be assessed costs for fossil fuel generation not serving California loads, and requires the ISO to maintain technical capability to operate independent markets if withdrawal from the regional organization becomes necessary

Deletes existing provisions for transforming the ISO into a regional organization and repeals outdated Power Exchange provisions, while preserving California's Renewable Portfolio Standard requirements and the ISO's balancing authority responsibilities