Analysis of Potential Amendments to the Load Management Standards

The Warren-Alquist Act defines load management as: “any utility program or activity that is intended to reshape deliberately a utility's load duration curve” (Public Resources Code § 25132). Load management strategies, including those established by the California Energy Commission’s (CEC) first load management standards, have been used to help balance the supply and demand of energy in California since the 1970s. Today, existing load management resources are largely met by utility incentive programs that reward customers for reducing peak loads. However, these existing demand response programs are incapable of shifting loads to periods of high renewable generation, and thus are inadequate for supporting the carbon-free grid of the future. The objective of the proposed rulemaking is to increase statewide demand flexibility through amendments to the existing load management regulations (California Code of Regulations, Title 20, §§ 1621-1625).

Throughout 2020, staff worked with the California Public Utilities Commission, the California Independent System Operator, investor-owned utilities and publicly owned utilities, community choice aggregators, automation service providers, equipment manufacturers, and many other stakeholders to identify the steps needed to achieve this goal. Staff and stakeholders agreed on the need for a statewide real-time signaling system that enables automation markets to coalesce around principles and technologies for demand flexibility. In August 2021, the CEC published the pilot Market Informed Demand Automation Server, a statewide database of time-dependent electricity rates, California Independent System Operator Flex Alerts, and marginal greenhouse gas emissions signals, which can be linked to flexible loads, enabling the automation of customer end-uses in real-time.

Building on the CEC’s new Market Informed Demand Automation Server system, staff proposes to adopt through regulation the following four basic requirements for the five largest electric utility service territories in California – Pacific Gas & Electric Company, San Diego Gas & Electric Company, Southern California Edison, Los Angeles Department of Water and Power, and Sacramento Municipal Utility District – and the community choice aggregators operating within these service territories to:

1. Develop retail electricity rates that change at least hourly to reflect locational marginal costs and submit those rates to the utility’s governing body for approval.
2. Update the time-dependent rates in CEC’s Market Informed Demand Automation Server database whenever a rate is approved or modified.
3. Implement a single statewide standard method for providing automation service providers with access to their customers’ rate information.
4. Develop a list of cost-effective automated price response programs for each sector and integrate information about time-dependent rates and automation technologies into existing customer education and outreach programs.

The intent of the proposed amendments is to form the foundation for a statewide system of granular time and location dependent signals that can be used by automation-enabled loads to provide real-time load flexibility on the electric grid. The CEC can then develop flexible demand appliance standards that make use of the proposed demand automation system. With communications and automated control technologies, customers can shift electric use to take advantage of cleaner and less expensive energy. This allows customers to optimize energy use and service quality while minimizing economic and environmental impact. Advanced meters, communications, and automation technologies make this possible today.