California Expands Electricity Demand Flexibility Amid Grid Reliability Threats

Dive Brief

  • To improve the state’s grid’s stability, the California Public Utilities Commission on Thursday established a new proceeding that would focus on altering electric tariffs to increase demand flexibility.
  • By updating rate design principles and creating guiding principles for demand flexibility as part of the rulemaking process, regulators will be looking to streamline California’s current patchwork of rates and demand response programs.
  • It has been tough for the CPUC, but it has given us the experience we need to go further and be more strategic in our approach, according to CPUC President Alice Reynolds, who spoke at the agency meeting.

Dive Insight

As California moves to more renewable energy supplies and experiences more extreme weather events, experts believe demand response can play a vital role in ensuring the resilience of the state’s electric grid. Electric vehicles and buildings are also being installed in the state, which officials say will allow for tighter coordination of electricity consumption to meet system needs.

In the past, California has relied on demand-side resources to improve grid stability. During a record-breaking heatwave in 2020, the state faced rolling blackouts and regulators approved a range of demand-side solutions. Included was a directive from California’s investor-owned utilities to implement an emergency load reduction program to reward customers for conserving energy when it was required.

“Piecemeal” load management strategies in California will be updated as part of the rulemaking approved by commissioners on Thursday, according to the CPUC. This includes “how to streamline the patchwork of niche rates and programs to expand the use of demand flexibility beyond early adopters,” among other things.

As Reynolds stated at the meeting, regulators want to look at expanding consumer demand management by updating rate design principles, reforming demand charges, and implementing new policies and initiatives to promote voluntary demand flexibility.

Demand flexibility regulation is “perhaps one of the most important rulemakings we’ll accomplish during my term here as a commissioner,” CPUC Commissioner Darcie Houck said.

Assuming power demand is inflexible, California’s electric system was built and has been so for the majority of the last 140 years, Houck added.

When it comes to the energy situation, “we need to make modifications,” she said.

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