What happens in California does not always stay in California: The effect of California's cap-and-trade program on wholesale electricity prices in the Western Interconnection

An examination of the effect of California's cap-and-trade program on wholesale electricity prices in the Western Interconnection finds that the CO2 price is fully captured by California electricity prices, but also by prices at the Mid-Columbia hub in the Pacific Northwest. This occurs because, under California rules, Northwest generators can export carbon-free hydroelectricity to California at premium prices.