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On October 26, 2017, the California Public Utilities Commission (“CPUC”) approved Rulemaking (R.) 13-09-011, adopting steps to implement the Competitive Neutrality Cost Causation Principle, which enables Community Choice Aggregators (“CCA”) or Direct Access providers to create Demand Response programs to compete with those of investor-owned utilities.  In addition, to combat barriers to market integration and develop a framework for new models of Demand Response, this Decision establishes two working groups: the Supply Side Working Group and the Load Shift Working Group.

Under the Competitive Neutrality Cost Causation Principle, a competing utility must cease cost recovery from, and marketing to, a CCA or Demand Response provider’s customers when that provider implements a similar Demand Response program in the utility’s service territory.  The Competitive Neutrality Cost Causation Principle establishes a four-part process to determine whether a CCA or Direct Access provider has a Demand Response program similar to a competing utility’s program.  First, the CCA or Direct Access provider must provide public notice of an intention to launch a Demand Response program in a competing utility’s territory.  Second, the CPUC will assess whether the proposed program meets state policy and the CPUC’s mandates.  If so, the CPUC must then make a formal assessment of whether that program is similar to an existing Demand Response program provided by an investor-owned utility.  Finally, if the CPUC determines that the proposed program is similar to a competing utility’s program, the competing utility shall cease all marketing and cost recovery of the similar program within 30 days of the issuance of the resolution making that determination and shall complete the process within one year of the issuance of that resolution.

In addition, this Decision establishes the Supply Side Working Group and the Load Shift Working Group, and creates a set of tasks for each.  The Supply Side Working Group will develop and refine implementable proposals for the CPUC’s consideration in order to address remaining barriers to integrating Demand Response into the California Independent System Operator markets.  On the other hand, the Load Shift Working Group will develop proposals for specific foundational elements of new models of Demand Response necessary before launching new models.  The investor-owned utilities (Pacific Gas and Electric, San Diego Gas & Electric, and Southern California Edison), on behalf of the Load Shift Working Group, are directed to develop a report on its proposals, which will be considered in a future rulemaking for developing new models of  Demand Response.

The full text of the CPUC Decision can be found here.

For more information please contact Michael Postar, Sean Neal, Bhaveeta Mody, and Andrew Art.