POWER May 2016 - 22

States Must Ensure DERs Are
Not Caught in a Regulatory
Web of Their Own Making
Vidhya Prabhakaran
S
tates across the U.S. have begun to commit themselves to
expanding the reach of distributed energy resources (DERs),
primarily rooftop solar photovoltaics (PV), throughout their
communities. In particular, New York, Hawaii, Massachusetts, and
Minnesota have all taken highly visible steps aimed at changing
the traditional energy utility landscape to specifically include
and encourage DERs.
California, as the leading state in solar PV, plug-in electric vehicles,
behind-the-meter storage options, and behind-the-meter
demand response technologies, also has grand plans for a distributed-energy
future. In fact, California has already implemented
various initiatives focused on each of these market sectors, and
various proceedings at the California Public Utilities Commission
(CPUC) are aimed at ensuring ongoing growth in all of these
areas.
However, California has realized that development of these
various DER technologies can and should no longer be accomplished
on separate tracks. Technologies now overlap and are
being combined in new and innovative ways that can jointly
provide significantly greater benefits to the public than in their
previous individual incarnations.
California Aims to Meet Its Distributed Energy Goals
With the initial success of developing and deploying these DERs,
California has also begun to recognize that it must study and
evaluate the effects that such technologies will have on the
broader grid even while continuing to ensure their continued and
increased deployment. To that end, the CPUC has spent a great
deal of time and effort to reach the very broad, generic, and longterm
goal for the state to " deploy distributed energy resources
that provide optimal customer and grid benefits, while enabling
California to reach its climate objectives. "
In fact, it took the CPUC nearly a full year to just come up with
that very nebulous goal in a decision in September 2015.
Two different, but interconnected, proceedings at the CPUC are
clearly focused on this goal. The first (Rulemaking 14-08-013) is
focused on more fully integrating DERs into the utilities' distribution
system planning, operations, and investment decisions.
The second (Rulemaking 14-10-003) is focused on establishing a
framework to enable the offering of a wide portfolio of demandmodifying
technologies best tailored to customers. A host of
other proceedings will also impact the ability of California to
meet its goals for DERs.
The CPUC's theory is that R.14-08-013 will focus on top-down
changes (starting with the utilities) and R.14-10-003 will focus
on bottom-up changes (starting with the customer/end user).
More specifically, R.14-08-013 will focus on determining what
characteristics of DERs are needed and what value should be assigned
to those characteristics. R.14-10-003 will focus on how to
22
source the resources that will provide those characteristics and
create that value.
So what has happened so far?
The Results of the California Experiment
Unfortunately, the CPUC appears to be caught in its own regulatory
web.
CPUC staff have held multiple cross-cutting workshops focused
on issues-like locational pricing analysis-that are relevant to
multiple proceedings. These workshops require significant investments
of time and resources by stakeholders, administrative law
judges, and CPUC Energy Division staff.
California has realized that
development of these various
DER technologies can and should
no longer be accomplished on
separate tracks.
Yet, the CPUC has not yet taken concrete steps to implement
its goals with respect to DERs. Meanwhile, stakeholders are afraid
that by failing to participate in this regulatory morass, that they
will miss out on the opportunity to give meaningful comment in
order to help create a workable framework/marketplace for DERs
and ensure that the characteristics of DERs are appropriately defined
and valued.
At this point, it appears that CPUC staff and stakeholders are
stretched too thinly to take the kind of incremental steps necessary
to ensure that the hugely expensive and critically important
infrastructure investments that will be made in the next few
years (such as distribution grid improvements and electric vehicle
charging stations) are done in such a manner that customers are
ensured reliable power at the lowest possible cost. CPUC leadership
needs to assert itself to steer the ship towards incremental,
but meaningful progress, so that the huge efforts that have been
under way at the CPUC for some time now are not lost.
Other states and state commissions that are embarking on
their own path to a distributed-energy future should take the
lesson provided by the California experiment so that they too do
not become entangled in a web of their own making. ■
-Vidhya Prabhakaran (vidhyaprabhakaran@dwt.com) is a partner
in Davis Wright Tremaine LLP's energy practice in the firm's
San Francisco office.
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POWER | May 2016
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POWER May 2016

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