3. Issues before the Commission Pertaining to Use and Content of Deployment Plans

SB 17 charged the Commission with adopting criteria to guide the use, the development and the review of Smart Grid Deployment Plans. This section will address the comments that parties provided on each of these topics, including the detailed discussion of the elements of a Smart Grid Deployment Plan that we adopt to ensure that the deployment plans conform to best practices in engineering planning and provide the information that this Commission needs to determine whether the project comports with the provisions of SB 17.

3.1. How Should the Commission use Smart Grid Deployment Plans?

In the Ruling Amending Scope, the Commission identified three different roles that a deployment plan could play as part of the Smart Grid regulatory program: 1) creating a "baseline" against which the Commission could measure progress; 2) providing utilities with approved deployment plans that guide investment and provide the utility with a rationale that could support a proposed investment during review of the project and help in the determination of whether a specific project is reasonable and consistent with the Commission's overall Smart Gird vision; or 3) provide the utility investing in an approved project with an elimination of after-the-fact reasonableness reviews.26

The Ruling Amending Scope speculated that using the deployment plans to find a Smart Grid investment to be reasonable would not be appropriate because "[c]onferring a finding of reasonableness on investments made pursuant to a deployment plan would place much more importance on the approval of the plan than the uncertainty of current technology and Smart Grid plans warrants at this time."27

The Ruling Amending Scope invited parties to comment on which approach they believed would best permit the Commission to develop and review Smart Grid Deployment Plans within the timeframe set out by SB 17.

3.1.1. Position of Parties

Many parties commented on the role that deployment plans should play in Commission regulation of Smart Grid investments. SCE advocates for the use of Smart Grid Deployment Plans as a useful guide, but not as a document that controls utility investments. SCE argues:

Commission review and acceptance of the Deployment Plans should provide strategic guidance for future utility specific Smart Grid investment proposals.28

More specifically, SCE contends:

... that Deployment Plans should be used to establish a strategic baseline plan for evaluating and deploying technology, and to serve as a reference for future Smart Grid technology evaluation and investment proposals by the IOUs. We further agree that the Commission should not evaluate the Deployment Plans to the extent that approval would convey a presumption of reasonableness for all future investments included in the plans. Finally, we agree that a "utility or other party" could cite to an approved deployment plan as part of the rationale for why specific utility investments are or are not reasonable.29

PG&E argues that "the deployment plans should be a source of policy guidance, information and evidentiary support for Smart Grid projects and investments, but not mandatory or binding in individual proceedings."30 On the other hand, PG&E observes that:

It is important that the Commission clarify that the "baseline for measuring deployment" established in deployment plans is not prescriptive, but a source of information and policy direction that can inform individual Smart Grid proposals without restricting the Commission's ability to consider those proposals on their own individual merits, on an incremental and flexible basis, as standards and structure for the Smart Grid evolve.31

Many of the consumer representatives commenting express similar views to those of the utilities.

UCAN argues that a deployment plan may be a useful guide, but not a document that controls utility investments. UCAN posits:

... that a Smart Grid deployment plan should serve as a blueprint for a utilities' Smart Grid deployment. It need not be a procurement plan, as per Section 454.5, but they can be if the utility so desires. First, and foremost, it should clearly state the objectives that the utility seeks to achieve. Secondly, it must keep an eye squarely focused upon cost-effectiveness of the measures taken to achieve those objectives. Finally, it should be a living, breathing blueprint that is routinely, if not annually, revised based upon emerging technologies, utilities' experiences, changes in cost and customer responses.32

Greenlining reaches a similar conclusion, endorsing the analysis and tentative conclusions of the Ruling Amending Scope:

As the Joint Ruling [Ruling Amending Scope] tentatively proposed regarding deployment plans: (1) the approval or a deployment plan could establish a baseline for the Commission to monitor a utility's deployment of Smart Grid technologies and capabilities, subject to annual status reports to measure progress; and (2) a utility or other party could cite to an approved deployment plan as a rationale for specific investments (although the inclusion of a specific investment in a deployment will not convey a presumption of reasonableness). ... Greenlining agrees that Smart Grid deployment plans should not be treated similar to procurement plans, ... 33

Like Greenlining, DRA also supports the proposed uses of the Smart Grid deployment plans outlined in the Ruling Amending Scope. DRA states that:

DRA agrees that Plans should be used to assess and monitor a utility's deployment of Smart Grid capabilities and technologies. The development of Smart Grid Plan offers an opportunity to thoughtfully create guidelines to steer development of a Smart Grid. As part of the development of the Plan, DRA recommends the Commission order each utility to provide an inventory of all Smart Grid activities made to date. The inventory would provide a snapshot of California's Smart Grid progress, and provide guidance in how each utility will move forward.34

GPI, in a similar vein, argues that:

The smart-grid deployment plans should certainly be used to establish a baseline that will be used in monitoring the development and deployment of these technologies over at least the next couple of decades. ... It is reasonable for the Commission to consider favorably the fact that a proposed project is consistent with a filed and approved smart-grid deployment plant, as long as the favorable consideration is taken in the proper context. We agree with the Joint Ruling [Ruling Amending Scope] that it would not be reasonable to use the deployment plans to confer automatic approval on proposed projects, given the nature of the plans and their inherent uncertainties.35

EDF also supports the analysis of the Ruling Amending Scope, but in addition, it observes that "the consideration of smart grid technologies be part of all utilities' normal infrastructure planning processes."36

CFC takes an opposing viewpoint, arguing, "the better use of the plan is to allow the utility to use the plan to justify specific investments."37 On the other hand, CFC would require that the "costs and benefits associated with a particular investment should be reviewed carefully to assure that the most cost-effective technology was chosen."38

CEERT, like other commenters, agrees with the approach suggested in the Ruling Amending Scope. CEERT, however, suggests like CFC that "the Commission may wish to consider preserving the option of utilizing an approach analogous to an approved procurement plan - pursuant to Pub. Util. Code § 454.5 - if it were to prove practical in later years."39

3.1.2. Discussion: Deployment Plans Can Set Smart Grid Baseline and Guide Investments

The arguments of commenters confirm our tentative conclusion that the best uses of the deployment plans is to set a baseline indicating the current deployment of Smart Grid technologies and as a document for guiding future Smart Grid investments. We also conclude that deployment plans are not a substitute for a Commission review of specific infrastructure investments that will take place just prior to the time of deployment.

PG&E's observation that any baseline for measuring deployment should not be "prescriptive," is a point well taken. A goal of the deployment plans is to initiate project planning that encourages a deployment of Smart Grid technologies needed to meet current policy objectives or to improve the operations of the grid. In this situation, we seek a descriptive, not prescriptive, characterization of the status quo in a deployment plan that enables the Commission to understand where California is today and better understand where California should go.

CFC, the single commenter stating that a deployment plan can serve in lieu of a subsequent reasonableness review, argues for a detailed review of the costs and benefits at the time of the filing of the deployment plan. This argument, however, is unpersuasive because information on Smart Grid technologies is developing rapidly, and undertaking a detailed review of costs and benefits far in advance of an investment could not yield reliable results. Therefore, it would be wiser to view the Smart Grid Deployment Plans as a policy guide for utility investment, not as a determination that certain investments are reasonable.

3.2. What Elements Must a Smart Grid Deployment Plan Have?

SB 17, in requiring the development and filing of deployment plans, specifies that it is the "policy of the state to modernize the state's electrical transmission and distribution system to maintain safe, reliable, efficient, and secure electrical service, with infrastructure that can meet future growth in demand..."40 SB 17 then identifies 10 goals that the Smart Grid should achieve.41 In addition, SB 17 requires the Commission to "evaluate the impact of deployment on major initiatives and policies" and specified seven initiatives against which the Commission, "in consultation with the Energy Commission, the ISO, and electrical corporations"42 should use when evaluating proposed deployments of Smart Grid technologies.

Subsequently, the Ruling Amending Scope then proposed seven policy outcomes that constituted a vision of the Smart Grid and are linked to the SB 17 initiatives.43 The Ruling Amending Scope concluded that:

... the deployment plan should have the following:

· A demonstrable vision consistent with the goals of SB 17;

· Timeline (where are you now, and how long will it take to upgrade system); and

· Projected cost, to the extent possible at this time.44

The ruling then invited parties to comment on a proposed structure for deployment plans that would offer a practical way to proceed.

In addition, the workshops held on March 17 and 18, 2010, addressed the topic of deployment plans.

3.2.1. Position of Parties

Following the workshops, the utilities, filing separate replies, proposed a seven-element format for the filing of deployment plans. These seven elements include (quoting directly):

DRA also proposes a strategy to create deployment plans that is consistent with the approach recommended by the three utilities. DRA argues (quoting directly) that:

· The Commission should formally adopt a set of Smart Grid objectives; and

· Plans should contain a vision and strategy, technology evaluation and deployment roadmap, and conceptual cost estimates and timelines.46

The ISO expresses support for the direction set forth in the Ruling.47 The ISO identifies three goals of special concern, namely, 1) increasing the reliability and use of the grid;48 2) increasing demand-side participation in ISO markets;49 and 3) integrating greater amounts of intermittent renewable resources.50

Greenlining asks that a discussion of General Order (GO) 156 be a required part of each deployment plan, arguing that "the Commission and the utilities should act prospectively to address the negative impact on supplier diversity that is sure to result from the development of the Smart Grid."51

HomeGrid recommends that deployment plan "guidelines call out capabilities, not technologies."52

EDF asks that the utility deployment plans, in addition to the items outlined in the Ruling Amending Scope, also address the following three points (quoting directly):

1. Enable maximum access by third parties to the grid, creating a platform for innovation in technology and services.

2. Have the infrastructure and policies necessary to enable and support the sale of demand response, energy efficiency, distributed generation, and storage into wholesale energy markets as a resource, on equal footing with traditional generation resources; and

3. Significantly reduce the total environmental footprint of the current electric generation and delivery system in California.53

CEERT states that it "agreed with the Commission's recommendation that deployment plans should be used to establish a baseline from which it can monitor a utility's progress in deploying a smart grid."54 CEERT asks for a tight link between the deployment plans and the legislative requirements, the inclusion of a timeline, and projected costs.55 Finally, CEERT asks that deployment plans tie back to California's Energy Action Plan's priorities for meeting the loading order.56

IREC, although expressing broad agreement with the direction proposed in the Ruling Amending Scope, states that "successful implementation of SB 17 requires an ongoing forum through which stakeholders can identify necessary Smart Grid functionality."57

CESA argues that "Smart Grid deployment plans should include integration of advanced storage and peak shaving technologies."58 In addition, CESA recommends that the deployment plans show how they "address each element of the policies embedded in § 8360 and § 8366."59

Wal-Mart also supports a consideration of storage as part of the Smart Grid.60

Cisco argues for flexibility in the consideration of deployment plans, and believes that the planning process produces benefits:

... as a vision statement and a planning tool, deployment plans containing information about how a utility will address these topics is a useful means to ensure that there is policy agreement between a regulated utility and the CPUC on what is important in the deployment of the Smart Grid. The regulator needs to specify what is important to it in the deployment of the Smart Grid by stating broad policy outcomes the state wants to achieve, and the utility needs the flexibility to produce those outcomes in a way that makes sense for its operations and customers.61

Tendril, on the other hand, calls for more specificity in the approach set out in the Ruling Amending Scope. Tendril argues that the criteria are not linked closely enough to those set out in SB 17, stating:

While we agree that these are all valuable criteria, we respectfully submit that they are incomplete with regard to the policies established in § 8360 of SB 17 and the evaluation criteria established in § 8366 of SB 17. Specifically, both the policies and the criteria of these sections include provisions that focus on (1) deployment of renewable energy technologies, (2) reduced carbon emissions and (3) technology innovation that "provide the ratepayers with new options in meeting their individual energy needs."62

CLECA asks that the Commission, in reviewing deployment plans, make sure that it remains focused on the effectiveness and the costs and benefits of proposed Smart Grid investments.63

Verizon voices general support for the Commission's efforts to ensure the open review of Smart Grid Deployment Plans to ensure compliance with the goals of SB 17, stating:

Verizon concurs with the Commission's view that defined plans for the design, implementation and management of smart grid projects are needed and will benefit all parties, as it will provide a logical, practical and visible method for the parties to follow.64

Qualcomm argues that:

... a plan should address how the IOU plans to meet the need for communications, especially broadband communications, which is essential for so many Smart Grid applications. ... Smart Grid plans should address the extent to which an IOU plans to rely on such technology. Including these provisions will ensure that the Smart Grid plans are comprehensive and fully describe how the IOUs intend to meet the policy objectives established by state and federal law.65

GPI endorses the use of deployment plans for establishing a baseline against which to measure infrastructure development. GPI states:

The smart-grid deployment plans should certainly be used to establish a baseline that will be used in monitoring the development and deployment of these technologies over at least the next couple of decades.66

3.2.2. Discussion: The Deployment Plan Should Have Eight Elements

The comments of parties on the Smart Grid Deployment Plans make clear both the use and limitations of these planning documents. Indeed, there is substantial agreement concerning the appropriate format of the deployment plans.

Concerning the format of the deployment plans, we find that the elements of a Smart Grid plan recommended by SCE, SDG&E, PG&E, and DRA have so much in common that they are essentially the same. As proposed by SCE, the Smart Grid Deployment Plan elements provide a framework whereby the parties can both discuss the general elements of a Smart Grid Deployment Plan, such as a vision statement, a deployment baseline, a Smart Grid strategy, a Smart Grid roadmap, cost and benefit estimates, and metrics and also address the specific requirements for complying with the provisions of SB 17.

In addition, the framework proposed by these parties has sufficient flexibility to enable the Smart Grid Deployment Plans to address in advance critical interests of concern to the Commission. For example, the section on Smart Grid Strategy should enable the utilities to discuss how the utility can advance the goals of GO 156, as recommended by Greenlining and other parties, even as it makes Smart Grid investments to develop California's infrastructure.

We do, however, adopt one minor change. Although the issues of grid security and cyber security could be addressed as part of the strategic planning section, this decision requires that deployment plans include a separate section on the topic of security. The section on security will require the utility to discuss the security needed to ensure the operation of the grid and the security needed to prevent unauthorized access to consumer data.

We therefore adopt an eight element proposal, based on the seven element proposal of SCE, as the organizing structure for the sections of the Smart Grid Deployment Plans that all utilities must file. The eight elements are:

These eight topic areas will permit the development of Smart Grid Deployment Plans that demonstrate compliance with the policy initiatives of SB 17.

As many parties note, the systematic presentation of a Smart Grid Deployment Plan can enable the Commission to understand and assess the baseline condition of today's grid even as we plan for the grid of the future. A common structure for the Smart Grid Deployment Plans will also facilitate participation by interested parties in Commission proceedings. Moreover, the flexibility of the adopted structure allows for the ready incorporation of a discussion of infrastructure issues, such as using energy storage technologies as part of a Smart Grid and considering the use of public communications networks to serve the communications needs of the Smart Grid.

In the sections that follow, we will discuss in more detail the topics that each of the eight sections should address.

In summary, the eight part outline for the presentation of Smart Grid Deployment Plans offers a practical way for the utilities to organize their Smart Grid Deployment Plans and to demonstrate compliance with the policies adopted in SB 17. The use of a common structure in all deployment plans, when combined with the guidance offered below, should produce deployment plans that permit simple comparisons to the approaches each utility proposes. In addition, the common structure of all utility deployment plans should facilitate participation by interested parties addressing the topics either omitted or included in the deployment plans.

3.3. What Should the Smart Grid Vision Statement Include? How Should the Vision Statement be Structured?

The Ruling Amending Scope stated that a Smart Grid must:

· Be self-healing and resilient - Using real-time information from embedded sensors and automated controls to anticipate, detect, and respond to system problems, a Smart Grid can automatically avoid or mitigate power outages, power quality problems, and service disruptions. (§ 8360 a, b, and d; § 8366 a, e, f, and g.)

· Empower consumers to actively participate in operations of the grid - A Smart Grid should enable consumers to change their behavior around dynamic prices or to pay vastly increased rates for the privilege of reliable electrical service during high-demand conditions. (§ 8360 c, d, e, f, g, and h; § 8366 a, b, c, and d.)

· Resist attack - A Smart Grid system should better identify and respond to man-made or natural disruptions. A Smart Grid system using real-time information should enable grid operators to isolate affected areas and redirect power flows around damaged facilities. (§ 8360 a, b, and d; § 8366 a, e, f, and g.)

· Provide higher quality power that will save money wasted from outages - A Smart Grid system should create and provide more stable and reliable power to reduce down time. (§ 8360 a and b; § 8366 a, e, f, and g.)

· Accommodate all generation and storage options - A Smart Grid system should continue to support traditional power loads, and also seamlessly interconnect with renewable energy, micro-turbines, and other distributed generation technologies at local and regional levels. (§ 8360 b, c, d, e, f, and g; § 8366 a, e, f, and g.)

· Enable electricity markets to flourish - A Smart Grid system should create an open marketplace where alternative energy sources from geographically distant locations can easily be sold to customers wherever they are located. Intelligence in distribution grids should enable small producers to generate and sell electricity at the local level using alternative sources such as rooftop-mounted photo voltaic panels, small-scale wind turbines, and micro hydro generators. (§ 8360 b, c, d, e, f, g, h, i, and j; § 8366 a, b, c, and d.)

· Run more efficiently - A Smart Grid system should optimize capital assets while minimizing operations and maintenance costs (optimized power flows reduce waste and maximize use of lowest-cost generation resources). (§ 8360 a; § 8366 g.)

· Enable penetration of intermittent power generation sources - As climate change and environmental concerns increase, the demand for renewable energy resources will also increase; since these are for the most part intermittent in nature, a Smart Grid system should enable power systems to operate with larger amounts of such energy resources. (§ 8360 c, g, and j; § 8366 a, b, c, and d.)

These characteristics are also policy goals enumerated by SB 17 as noted in the citations that were included in the Ruling Amending Scope and repeated above. The next step in providing guidance on the development of a Smart Grid vision plan is to specify what the statement should include and how it should be structured.

3.3.1. Position of Parties

In general, parties who commented on the Smart Grid vision statement argue that a vision is needed, but did not elaborate on the details or the structure of one.

DRA, for example, argues that the entire deployment plan should serve as a guiding vision statement. DRA also warns:

While an approved Plan may serve as one factor in reasonableness reviews of specific investment requests-depending upon the specificity of the plan-they cannot be both visionary guidelines and carry weight in a determination of reasonableness at the expense of a thorough cost-benefit analysis and technological feasibility.67 SCE argues that the vision statement in each deployment plan "should be consistent with the Commission's Smart Grid objectives as contained in the eight bullet-pointed 'must haves' listed on pages 12 and 13 of the [Ruling Amending Scope]."68

SDG&E69 argues that a vision statement is needed to advance the Smart Grid deployment. SDG&E and PG&E both express support for SCE's argument that the vision statement must be consistent with the eight "must haves" that were included in the Ruling Amending Scope.70

EDF suggests that the list be expanded to include:

· Enable maximum access by third parties to the grid, creating a welcoming platform for deployment of a wide range of clean energy technologies and energy management services;

· Have the infrastructure and policies necessary to enable and support the sale of demand response, energy efficiency, distributed generation, and storage into wholesale energy markets as a resource, on equal footing with traditional generation resources; and

· Significantly reduce the total environmental footprint of the current electric generation and delivery system in California.71

3.3.2. Discussion: Vision Statement Should Present a Vision of Smart Energy Markets, Smart Consumers and a Smart Utility

We agree with the views of commenters that a vision statement is needed.

Based on the nine workshops that we have held as part of this proceeding and the comments we have received, we conclude that a Smart Grid vision statement will help orient a utility's efforts to upgrade its electrical system to meet today's requirements and tomorrow's needs using the latest technologies.

In filing their deployment plans, Investor-Owned Utilities (IOUs) should address how their vision of the Smart Grid will perform in each of the eight areas stated in Section 3.3 above with particular reference to the relevant sections of § 8360 and § 8366.

Additionally, the vision should address the three areas identified by EDF, i.e.:

· Enable maximum access by third parties to the grid, creating a welcoming platform for deployment of a wide range of energy technologies and management services;

· Have the infrastructure and policies necessary to enable and support the sale of demand response, energy efficiency, distributed generation, and storage into energy markets as a resource among other things, on equal footing with traditional generation resources; and

· Significantly reduce the total environmental footprint of the current electric generation and delivery system in California.

The workshops and the record of this proceeding show that a Smart Grid is a system of networked utility and consumer devices that use communications technology to exchange information that enables intelligent consumers, devices, and utility generation, transmission and distribution equipment in order to optimize the secure, reliable and efficient production, delivery and consumption of electricity.

Therefore, the IOUs' vision statements must not only discuss the broad policy objectives that are referenced in SB 17 and in the earlier sections of this decision, but also provide sufficient detail concerning the qualitative benefits and opportunities for each participant in the Smart Grid.

To guide the utility vision statements, below we provide a schematic presentation of the types of benefits that the Smart Grid can provide.

We direct that the IOUs' vision statements divide their discussion of the Smart Grid vision into three sections: 1) Smart Market, 2) Smart Customer, and 3) Smart Utility as depicted below.

The Smart Market that emerges from the Smart Grid should be transparent and provide price, tariff and usage information sufficient to facilitate, among other things, demand response and distributed generation.

In addition, the Smart Grid should have sufficient communications capabilities to enable and support the reflection of the value of, for example, demand response, energy efficiency, distributed generation, and storage in wholesale energy markets.

In addition, because prices play such a critical role in the functioning of the Smart Market, the vision statement should also describe the types of pricing structures needed to ensure cost-effective demand response, distributed generation, and conservation responses needed to benefit customers.

Concerning the section called Smart Customer, the Smart Grid vision statement should address how a utility will enable customers to become more informed about the Smart Grid and allow customers to use electricity more efficiently and save money. The vision statement should consider the expectations of consumers concerning the Smart Grid and how to meet customer expectations and educate customers so that they can align their expectations with the realities of the technology. In addition, the Smart Grid should be able to support smart consumer devices, such as electric vehicles or appliances that can alter operations in response to system conditions or prices. In general, the Smart Grid Deployment Plans should demonstrate a proactive approach to consumer education and outreach and draw on consumer research and past experiences. The evolution of a utility customer from a recipient of energy and into a participant in the grid must also involve a detailed education and marketing of why Smart Grid is beneficial to the individual consumer.

The Smart Customer section should also address how the Smart Grid will enable consumers to capture the benefits of a wide range of energy technologies and management services that may, or may not, be offered by the utility, while protecting consumers' privacy, and promote innovation and competition among companies developing new products and services.

Concerning the section on Smart Utility, the vision statements should reflect how the Smart Grid will enable a utility to operate its transmission and distribution system in ways that anticipate events, enable responsiveness, and permit automatic or "self-healing" responses by the grid. The Smart Utility section should also discuss how the Smart Grid will help the utility meet environmental policies already adopted by statute or Commission action.

In summary, each IOU's vision statement should consider how the utility plans to promote a Smart Market, a Smart Customer, and a Smart Utility.

3.4. What Should the Deployment Baseline Include?

In presenting a Smart Grid Deployment Plan, the reasonableness of the proposed steps depends on the current state of a utility's deployment of Smart Grid infrastructure. Due to the interconnectedness of Smart Grid technology with the utility's existing distribution, transmission and control infrastructure and the overall interconnectedness of the electric grid, this decision will provide guidance on what the utility should include and exclude in the description of the baseline situation.

3.4.1. Position of Parties

DRA recommends that the IOUs provide an inventory of current Smart Grid investments that would "provide a snapshot of Smart Grid progress." Further, DRA recommends that this inventory, which can be used as a baseline, be filed by October 1, 2010.72

UCAN suggests that a deployment plan baseline should include the "Scorecard and Decision-maker's Checklist"73 in the absence of interoperability standards. UCAN argues that "until official standards are adopted [the Scorecard and Decision-makers Checklist] are the best measurement for ensuring the utilities are adopting technology that is interoperable."74

GPI supports a baseline in the deployment plans that can "be used in monitoring the development and deployment of [Smart Grid] technologies over at least the next couple of decades."75

Tendril and MegaWatt support the use of a deployment plan as a means to establish a baseline to monitor Smart Grid deployments.76

PG&E supports using the deployment plan to gather information and data "that can inform individual Smart Grid proposals," but not be used in a prescriptive manner. Rather, the baselines should provide the Commission with the flexibility to consider proposals individually as the Smart Grid evolves.77 Both PG&E and SDG&E agree that this baseline should list projects and activities, "including status and metrics as appropriate over time."78

CESA states that a baseline should be established to allow the Commission to monitor Smart Grid deployments and "be included as an important factor in the evaluation of the reasonableness" of Smart Grid investments.79

CDT-EFF suggests that a privacy impact assessment should be included as part of the IOUs' deployment baseline. This assessment should be based on privacy standards suggested by CDT-EFF or as adopted by the Commission.80 CDT-EFF further suggests that these baseline privacy standards should also apply to third parties.81

EPIC supports the need for minimal, or "baseline," privacy standards.82 Researchers also offer several privacy standards suggestions that should be part of any initial deployment baseline.83

SCE "agrees that Deployment Plans should be used to establish a strategic baseline plan" that will be useful for evaluating and deploying technology, and be a reference point for future Smart Grid investments.84 Additionally, SCE argues that a baseline "should describe the current state of each IOU's Smart Grid systems, identify the Smart Grid technologies that have been deployed by the IOU in the past 10 years, and describe the basic scope of the deployment of those technologies. According to SCE, this baseline will serve as an initial point in evaluating the IOUs' deployment plans.85

EDF, CEERT, TURN, Greenlining and TIA support the Ruling Amending Scope's tentative decision to use the deployment plans to establish a baseline.86

CFC comments that certain parties have requested that a baseline be established "so that the Commission can determine the extent to which the electric grid needs to be upgraded to accommodate state policy goals." CFC cautions that a Smart Grid may already exist in California, and the establishment of a baseline will help avoid the risk of paying twice for duplicative installations.87 Further, CFC argues that a state-wide baseline should be developed as one of the goals of SB 17 is "to modernize the state's electrical transmission and distribution system."88

3.4.2. Discussion: Elements for Deployment Baseline

Parties are in near total agreement that a baseline, or inventory, of current Smart Grid infrastructure investments is necessary to enable the Commission to understand where the utilities are today and can be used to gauge how much "smarter" the grid is in the future. The Commission agrees that a baseline should be undertaken by the utilities and included in their deployment plan filings, due by July 1, 2011. We decline to adopt the recommendation of DRA to have the inventory of technologies due on October 1, 2010 since such an early date is inconsistent with the statutory intent.

The baseline methodology we adopt follows the proposal made by SCE in its Reply Comments, that is, the baseline should include information on the current state of the grid for each utility, describe smart technologies that have been deployed and the scope of those deployments and investments. We are cognizant of CFC's concerns that ratepayers not pay for the same investment twice, and this will be a central issue in the Commission's review of proposed investments. The Commission will strictly scrutinize and use this baseline report as a comparison against future requests for funding for Smart Grid and other infrastructure investments.

Additionally, we agree with CDT-EFF and Researchers that an assessment of privacy and grid security issues should be included as part of this baseline report. CDT-EFF suggests that this privacy assessment should be responsive to the principles outlined in the Fair Information Practices, which include:

· Smart Grid service providers should limit collection of consumers' personal data; any such data collected should be obtained by lawful means and with the consent of the consumer, where appropriate.

· Data collected by Smart Grid service providers should be relevant to a specific purpose, and be accurate, complete and up-to-date.

· The purpose for collecting Smart Grid data should be settled at the outset.

· The use of Smart Grid personal data ought to be limited to specified purposes, and data acquired for one purpose ought not to be used for others.

· Smart Grid data must be collected and stored in a way reasonably calculated to prevent its loss, theft, or modification.

· There should be a general position of transparency with respect to the practices of handling Smart Grid data.

· Smart Grid consumers should have the right to access, confirm, and demand correction of their personal data.

· Those in charge of handling Smart Grid data should be responsible for complying with the principles of the privacy guidelines.

We agree with CDT-EFF and Researchers that at a minimum this privacy impact assessment should address the following questions that pertain to current privacy practices:

· What data is the utility now collecting?

· For what purpose is the data being collected?

· With whom will the utility currently share the data?

· How long will the utility currently keep the data?

· What confidence does the utility have that the data will is accurate and reliable enough for the purposes for which the data will be used?

· How does the utility protect the data against loss or misuse?

· How do individuals have access to the data about themselves? and

· What audit, oversight and enforcement mechanisms does the utility have in place to ensure that the utility is following their own rules?89

As discussed elsewhere, the Commission will address customer access and specific privacy and cyber security rules in a separate phase; but the IOUs can provide these privacy and cyber security assessments in time for the filing of their deployment plans. Moreover, independent of the specific rules adopted concerning privacy and access to-date in the short-term, long-term security requires an incorporation of these concerns at the project planning stage.

Finally, we note that CDT-EFF requests that the Commission require similar reports from demand response providers and other third parties that plan to access customers' usage data via the customer's meter. At this time, the Commission declines to adopt such a request. The Commission is aware of the concerns of certain parties regarding the need to enforce privacy standards upon these third parties, but at this time the Commission requires more time to assess whether any rule, law or mandate authorizes the Commission to apply this section to third parties.90

3.5. What Should the Smart Grid Strategy Include?

Since each Smart Grid Deployment Plan will include a statement of the utility's strategy towards this key infrastructure investment, it is logical to ask what a strategy statement should include. This section reviews the recommendations made by parties, provides parties with guidance, and describes what the Commission will look for in a strategy statement.

3.5.1. Position of Parties

Concerning the Smart Grid strategy, SCE provides the most comprehensive view of what the strategy should include. SCE recommends that:

Each IOU should describe their strategy for evaluating Smart Grid technologies and deploying those technologies that it deems will create sufficient customer value and are technologically mature and commercially available. This strategy section should demonstrate how an IOU prioritizes its technology evaluation and deployment efforts against the Smart Grid objectives described ... above. The IOU's strategy section should describe a formal decision-making framework.91

SCE agrees with the Ruling Amending Scope that "Deployment Plans should be used to establish a strategic baseline plan for evaluating and deploying technology, and to serve as a reference for future Smart Grid technology evaluation and investment proposals by the IOUs."92

SDG&E provides a more general description of what a Smart Grid strategy should include. SDG&E argues that

... the question for the Commission in considering any utility's Smart Grid application should be limited to whether the utility's proposal for achieving those objectives through Smart Grid investments is the most cost effective alternative available, in light of existing technologies and the specific system requirements and customer needs confronted by that particular utility.93

PG&E states that the Smart Grid Deployment Plans should include a strategy that includes "[t]echnology deployment decision making criteria and strategy that the utility proposes to use to move forward with incremental projects, programs and investments."94 PG&E cautions that "the evolution of the Smart Grid will not follow a neat and prescribed set of goals and criteria."95

DRA supports the proposal of SCE for the inclusion of a strategy as part of a deployment plan.96 DRA also supports the comments of SDG&E and PG&E that the deployment plans should provide guidance and direction.97

Qualcomm argues that "each Smart Grid plan should be required to state the extent to which the IOU plans to use cellular technology for broadband communications and justify construction of a new broadband network by any IOU planning to do so."98 AT&T similarly "recommends the Commission support rules that allow for and encourage the use of existing commercial carrier networks and services."99 Verizon asks "the Commission to consider the extensive and tested information technology capabilities that Verizon and other communications carriers can bring to any smart grid project."100 CCTA similarly argues that "in evaluating IOUs' Smart Grid Deployment Plans, the Commission should encourage the use of existing network providers in smart grid deployments."101

Concerning the issue of what communications protocols the Smart Grid should include, we note that the Commission cannot reach a decision on this matter until national standards become clearer. Nevertheless, two standards are currently emerging and parties have provided comments that warrant consideration now.

Concerning a standard known as "SEP 2.0 [Smart Energy Profile 2.0]," SCE states that it "strongly supports SEP 2.0 as the appropriate standard for the exchange of customer data" and comments that this standard "has the full support of five of the six major smart meter providers."102

Concerning a different standard known as OpenADR, Lawrence Berkeley National Laboratory (LBNL), in response to questions at a workshop, provided information that indicates that OpenADR offers many attractive features and is already in use in many commercial settings. In addition, LBNL comments that OpenADR and SEP can coexist and both can be integrated into the Smart Grid. LBNL states that "OpenADR could be included as a standard infrastructure deployment plan requirement for Smart Grid implementation."103

A number of parties provided comments on how to incorporate or whether to incorporate the Commission's GO 156 requirements into the Smart Grid Deployment Plans. Greenlining recommends that the requirements of GO 156 be included in the utilities' Smart Grid Deployment Plans, with the reporting and diversity requirements of GO 156 specifically applied to the discrete portion of the utilities' plans that consists of the development of the Smart Grid.104

The BEC in its comments urged the Commission to extend its regulatory authority over a number of new participants in the energy industry.

The Latino Chamber urged this commission to increase, not decrease, its effectiveness and jurisdiction by including all corporations that could and should benefit from the Smart Grid system, including those likely to supply most of the new technology for the Smart Grid system. Specifically, it urged that every Silicon Valley company with $500 million or more in revenue that could benefit or participate in the Smart Grid system be a part of this proceeding.105

3.5.2. Discussion: Smart Grid Strategy Should Provide Direction and Demonstrate Consistency with SB 17 and GO 156 Goals

The comments of parties demonstrate a general consensus that deployment plans should include a discussion of an IOU's Smart Grid strategy, and that the strategy should offer a sense of direction and guidance, rather than setting rigid requirements. This is clearly a reasonable approach since there are significant uncertainties surrounding future technologies that may be part of a Smart Grid.

As SCE points out, each utility's Smart Grid strategy must explain how the utility will prioritize its technology evaluation and deployment efforts against the goals identified for California by SB 17. We expect each utility to explain how its decision-making framework will specifically address each of the eleven areas listed in Section 3.3.

It is also reasonable to require that a utility's Smart Grid strategy demonstrates how the utility will evaluate whether third party communications networks can provide cost-effective communications that meet the security and performance requirements of the Smart Grid. We expect that before the Commission approves a specific Smart Grid infrastructure investment, the Commission will wish to ascertain whether investments in Smart Grid communications are cost-effective and whether a utility has adequately considered a range of alternatives, especially those concerning the use of existing and future communications infrastructure operated by third parties.

Similarly, concerning interoperability standards, prudence requires that the strategy section of a utility's deployment plan should consider how standards will be used and how the utility will minimize the risk of stranded costs in cases where standards are evolving. In that context, the strategic plans should discuss whether it would be feasible and cost-effective to offer OpenADR via dedicated servers that can communicate with devices in the home even as the advanced meters communicate with customers and customer devices via SEP 2.0. The strategic plans should also describe and discuss the utility's plans for adopting and developing interoperable architecture designed to protect the privacy of customer data. Utilities' plans should explain how they will evaluate the impact of standards on privacy and should explain, in the strategy section of their deployment, the privacy implications of the standard they chose to adopt.

GO 156 was created over two decades ago to ensure that women, minority, and disabled veteran business enterprises are encouraged to become potential suppliers of products and services to the utilities. The purposes of this GO are to:

· Encourage greater economic opportunity for women, minority, and disabled veteran business enterprises;

· Promote competition among regulated public utility suppliers to enhance economic efficiency in the procurement of electrical, gas, and telephone corporations' contracts; and

· Clarify and expand the program for the utilities' procurement of products and services from diverse enterprises.

Smart Grid investments may create new economic opportunities as utilities move away from traditional infrastructure investments toward advanced technologies. The Commission encourages the utilities to be mindful that diverse suppliers may not be as familiar with these new opportunities. Also, the utilities may be unaware of some diverse suppliers of advanced technologies. Consequently, the Commission encourages the utilities to engage with the small business community to educate and inform this community about the emerging business potential that may result from Smart Grid investments.

Currently, the Commission has an open proceeding reviewing the issues surrounding GO 156, Rulemaking (R.) 09-07-027. The existing language in GO 156 includes all goods and services that a utility purchases, which, by definition, includes Smart Grid-related expenditures. Therefore, the issue of whether Smart Grid-related costs will be included is moot since they are already included.

The issue of whether and how GO 156 should be extended to non-utility entities is best addressed in R.09-07-027, and is beyond the scope of this proceeding.

However, we agree with Greenlining that the strategy section of each utility's deployment plan should address the utility's strategies for meeting GO 156 goals and requirements in regards to Smart Grid, including how the utility intends to use its subcontracting program to encourage its prime contractors to utilize women, minority, and disabled veteran business enterprise subcontractors.

3.6. What Should be in the Grid Security and Cyber Security Section of the Deployment Plan?

SB 17 states that it is the "policy of the state to modernize the state's electrical transmission and distribution system to maintain ... secure electrical service."106 SB 17 also seeks to achieve "cost-effective full cyber security."107 Due to the strong legislative and consumer interest in this aspect of the Smart Grid and because of the highly technical and new direction in which this takes state electric policy, we will require that Smart Grid Deployment Plans contain a separate discussion of electric grid security, including cyber security. In this section of the decision, we identify the grid security and cyber security topics the Smart Grid Deployment Plans should address.

3.6.1. Position of Parties

All parties who discussed security agree with the Commission that security of California's electric grid, including cyber security, is critical. Many parties provided extensive comments which we summarize in this section.

SCE states cyber security is "critical to the proper functioning of the Smart Grid"108 and is "a critical policy area for the Commission."109 Nevertheless, after citing actions by NIST and other national agencies, SCE opines that "[t]he Commission does not need to take specific action with respect to cyber security, apart from adopting consensus Smart Grid standards identified by NIST."110

In addition to its own work on cyber security, SCE states that a "need exists for independent product certifications and a national vulnerability and incident response clearinghouse."111 Furthermore, SCE identifies four specific roles for state and federal regulators in the area of cyber security (quoting directly):

1. Define performance criteria in the context of meeting public policy objectives. California's "six criteria" for advanced metering is one example.

2. Provide oversight on utility expenditures and enforce interoperability and cyber security standards adoption.

3. Ensure utility participation in a centralized incident response effort.

4. Refine performance criteria based on continuous improvement.112

Concerning cyber security, PG&E states:

PG&E agrees with the Ruling that maintaining robust and fully compliant cyber security protection for utility systems and customer information is of utmost importance as we move forward with new Smart Grid technologies. To that end, we believe that rules relating to third-party access to customer and utility information need to be evaluated in light of national cyber-security protections and standards. PG&E is and has been continuously monitoring and participating in the national standard-setting forums on cyber-security, and updating and assimilating new "best practices" and security measures to enhance our existing protocols and protections. We do not believe that California-specific cyber-security standards are necessary and in fact could be counter productive, inefficient and costly. However, we do believe that the Commission, utilities and interested parties should directly monitor and keep updated on national cyber-security forums and developments.113

SDG&E also acknowledges the importance of security, stating:

To minimize [security attacks and cyber-threat] risks, a continuing investment in a cyber security program is necessary to prevent current threats from materializing and to anticipate future cyber security threats. Cyber security risks are not a new problem to SDG&E, and existing approaches can address those issues when combined with a continuous and consistent effort to manage risk. To this end, SDG&E advocates a proactive and preventative security approach which programmatically addresses architectural, design, engineering, comprehensive testing, and operational monitoring and maintenance stage of cyber security lifecycle.114

SDG&E argues that "[t]he Commission should consider ensuring that Smart Grid proposals, regardless of their technical differences, adhere to fundamental security principles and concepts."115 Regarding security, SDG&E argues that the Commission should evaluate Smart Grid projects to ensure adherence to basic security principles including: 1) availability, integrity, and confidentiality; 2) defense in depth; and, 3) role based access controls and least privilege.116

The ISO comments on the importance of security and the steps it has taken to increase the security of its own operations. The ISO states:

... the ISO maintains a secure network in accordance with applicable regulations of the North American Electric Reliability Corporation. The ISO's standards are available to all whom wish to participate in the ISO market.117

DRA argues that "[c]yber security is critical to insulating the grid from external, unlawful influences, and protecting the flow of consumer information."118

TURN agrees that cyber security issues are critical and states that such issues arise "both due to the potential to invade the grid through the encrypted `backhaul' communications platform, as well as through the portal associated with the customer's own computer (or other device) when it becomes linked with the meter through the Home Area Network." TURN identifies work conducted for the CEC as "excellent" and asks the Commission to take official notice of a particular report.119

UCAN also comments on the importance of cyber security and argues that "[t]he risk of interrupted energy service has the potential of being much more devastating to a consumer then the dropped calls that occur in the cellular communications network."120

CDT-EFF argues that the Commission should "broadly adopt cyber security and privacy principles to ensure that smart grid proposals will provide sufficient privacy protections."121 As part of their security planning, CDT-EFF argues that the utilities should follow the Fair Information Practice principles. In particular, they argue that as part of a basic security practice, the utility should be required to "articulate the purpose or purposes for which customer information will be used" and collect only "data directly relevant and necessary to accomplish a specific purpose" and retain that data only "for as long as necessary to fulfill the specified purpose."122 CDT-EFF also argue for a variety of "good practices" that should be included at the planning stage, including, for example the "encryption ... for all communications that are sent over open wireless protocols..."123 CDT-EFF also recommend that "[i]f a security or other breach results in the loss or exposure of customer information, the regulable entity should be required to notify affected customers and take all reasonable steps to minimize harm to customers."124

Verizon, in its comments on cyber security, also stresses the importance of integrating "security measures into the initial design, development and provisioning of a smart grid network in California."125

Researchers argues that:

The Commission's decisions about Smart Grid privacy and cybersecurity will have far reaching implications. For the state of California, the Smart Grid infrastructure will function over a long period of time; therefore it is crucial that privacy and cybersecurity are incorporated into the Smart Grid from the beginning. Retrofitting privacy and cybersecurity could incur prohibitive costs while exposing California's citizens to serious privacy and security risks.126

Researchers argues that the Commission should articulate a common set of questions that Smart Grid Deployment Plans should address and propose a series of questions in their Opening Comments.127 Among other things, Researchers argues that the Smart Grid Deployment Plans should ask:

· What measures are employed by the utility to protect the security of customer information?

· Has the utility audited its security and privacy practices, both internally and by independent outside entities? If so, how often are the audits and what are the audit results.128

Researchers also recount a series of security issues that have arisen in the last year on voting systems and relying in inadequate standards for securing critical new technologies. Based on their analysis of these security issues, Researchers recommend (quoting directly):

· Participate in NIST's conformance assessment development effort, to ensure that assessments will subject Smart Grid devices and systems to a full range of cybersecurity tests, and that the details of those assessments-including methodologies and results-will be made public to the fullest possible extent.

· Since the Smart Grid is developing, and attackers are adaptive, recognize that cybersecurity assessments will have to be adaptive, too. For example, we recommend that the Commission develop a process for identifying the steps that are necessary to update hardware, software, and firmware in deployed devices in order to eliminate known vulnerabilities.

· Review utility-vendor contracts for clauses that govern (1) the identification of applicable cybersecurity standards; (2) the parties' respective obligations in the event that applicable standards change, or any contractual representation with respect to security proves false.129

EPIC takes a different route, recommending that the Commission adopt end-to-end security requirements. Among other things, EPIC recommends that the Commission specifically "establish robust cryptographic standards,"130 as well as that the Commission "eliminate the use of wireless technology" for the Smart Grid.131

CEERT seeks to tie California security efforts closely to national standards. CEERT argues that "to the greatest extent possible, CERRT recommends that the Commission adopt the standards, guidelines, and protocols adopted by NIST"132 and "that the Commission adopt the cyber-security standards adopted by NIST in 2010."133

AT&T also suggests that the Commission defer adopting state specific protocols and rules until NIST adopts national standards and protocols.134 In addition, AT&T encourages the Commission to remain active in coordinating with NIST and FERC particularly regarding cyber security standards.135 Similarly, TIA argues that "[t]he Commission should work with stakeholders to identify cybersecurity best practices and consider seeking the opinion of a qualified neutral third party on technical aspects related to cybersecurity."136

HomeGrid137 and Lantiq138 also support a NIST-based approach.

Cisco points out the complexity of the security issue, noting "[t]here is not one technology or approach that will secure the Smart Grid completely; however, there are industry best practices and approaches to public-private partnership that have proved effective and valuable in addressing security threats to other communications systems."139 Cisco recommends that "[f]or cyber security, the CPUC should encourage best practices sharing with and among utilities, and explore public-private, security event-related information sharing."140

EDF asks that the Commission act "without slowing innovation."141 Wal-Mart responds affirmatively to whether the Commission should undertake reviews of Smart Grid developers to assure that privacy and security issues are addressed appropriately. Greenlining asks that in addressing cyber security "care be taken to not impede the participation of third parties in the Smart Grid as that could impede innovation."142

Tendril argues that "[c]yber security is a critical component of any smart grid deployment."143 EnergyHub argues that "[t]he utility must allow consumers to connect Home Area Network (HAN) equipment to the smart meter in a way that ensures adequate security for the grid without restricting consumers' choice of technology."144

CFC emphasizes cost-effectiveness when considering security145 and also stresses its concern that advanced metering infrastructure security weaknesses could enable penetration of presently secure systems.146 CLECA believes it is premature to adopt detailed standards and protocols for the customer side of the Smart Grid.147

Google comments that it agrees "that the Commission should issue clear guidance and rules on how consumer's privacy and security will be protected by utilities and those authorized third parties with whom utilities share user data."148

3.6.2. Discussion: Deployment Plans Should Address the Security of Smart Grid

With the current and planned deployment of a Smart Grid, there is an urgent need to ensure that the utilities have appropriate security programs in place for physical and cyber threats and/or attacks. Smart Grid technologies will introduce millions of new intelligent components to the electric grid that communicate in much more advanced ways than in the past. The Commission and the public have good cause to be concerned and a right to expect that the electric grid will remain secure with the deployment of Smart Grid technologies. The goal of a security program is to provide security while not impeding operations.

The critical role of security, including cyber security, is a key component in the effective operation of the Smart Grid is cited in both state and federal law.149 Physical and cyber security of the Smart Grid is needed to advance the reliability of the grid and the privacy and confidentiality of the information that is transmitted and to contain and mitigate any cyber-security incidents.

The Smart Grid Deployment Plans can provide the Commission and the public with insight into the security of the Smart Grid. The security strategies should address physical, cyber and human threats for grid operations with implementation of Smart Grid technologies.

Like many commenters, we conclude that the developing NIST framework will address many of the security issues that are arising. For this reason, every Smart Grid Deployment Plan should discuss how it plans to incorporate NIST requirements and guidelines into the security program of the utility.

Still, we note that the February 2010 Draft National Institute of Standards and Technology Smart Grid Cyber Security Strategy and Requirements (February 2010 Draft NISTIR 7628) stated: "The security requirements and the supporting analysis that are included in this report may be used by implementers of the Smart Grid, e.g., utilities, equipment manufacturers, regulators, as input to their risk assessment processes."150 Thus, NIST sees a continuing role for regulators in risk assessment.

Following the work of NIST, we find that "cyber security includes preventing damage to, unauthorized use of, or exploitation of electronic information and communications systems and the information contained therein to ensure confidentiality, integrity, and availability. Cyber security also includes restoring electronic information and communications systems in the event of an attack or natural disaster."151

As SCE points out, the NIST Framework and Roadmap for Smart Grid Interoperability Standards, Release 1.0 identifies smart grid standards, including those for which "there is a strong stakeholder consensus."152 NIST and the Department of Homeland Security (DHS) have prepared and identified several key documents that provide guidance on cyber security issues that are applicable to Smart Grid Deployment Plans. These include:

· Security Profile for Advanced Metering Infrastructure, v 1.0, Advanced Security Acceleration Project - Smart Grid, December 10, 2009 provides guidance and security controls to organizations developing or implementing AMI solutions, including the meter data management system (MDMS) up to and including the HAN interface of the smart meter;153

· Catalog of Control Systems Security: Recommendations for Standards Developers, U.S. DHS, National Cyber Security Division, September 2009 presents a compilation of practices that various industry bodies have recommended to increase the security of control systems from both physical and cyber attacks;154 and

· DHS developed the Cyber Security Procurement Language for Control Systems to provide guidance to procuring cyber security technologies for control systems products and services.155

Although it is premature to adopt specific Smart Grid security standards at this time, we note that the three documents listed above provide guidance on cyber security issues and issues affecting the Smart Grid. Therefore, the Commission will require that each utility's Smart Grid Deployment Plan's security strategy demonstrate that it has used these guidance documents in preparing its security plans.

The security strategy should be based on a systematic risk assessment, including a security audit based on industry best practices, that addresses the prevention of, preparation for, protection against, mitigation of, response to, and recovery from security threats for the utilities' advanced meter and communications infrastructure, distribution grid management, and distribution grid management with implementation of other Smart Grid technologies and infrastructure, including all major subsystems and utility storage of customer information.

Neither the detailed security strategy nor the security assessment and analysis supporting it, however, need be released publicly. If deemed necessary, the utilities should file appropriate portions of this material under seal as long as they identify what remains under seal and provide their reasoning.

At this point, however, we clarify that in contrast to the security strategy and security assessments, security audits should not be filed at the Commission at this time. We plan to consider the issues surrounding security audits in a security workshop to be held later this year. We note, however, that even if security audits are not filed at the Commission, the Commission, under current law, can get access to the audits as needed. We plan to resolve issues concerning audits in the Commission decision that reviews the Smart Grid Deployment Plans that SCE, SDG&E, and PG&E must file in 2011.

Protecting consumers' privacy is a critical dimension of Smart Grid security. Accordingly, SB 17 places special emphasis in SB 17 on security issues relating to customers. We therefore order that the Smart Grid Deployment Plans discuss the following:

· What types of information about customers are or will be collected via the smart meters, and what are the purposes of the information collection? Could the information collection be minimized without failing to meet the specified purposes?

· Does the utility have or expect to have other types of devices, such as programmable communicating thermostats, which can collect information about customers? If so, what types of information is collected, and what are the purposes of the information collection? Could the information collection be minimized without interfering with the specified purposes?

· What types of information, if any, does the utility plan to collect from the smart meter and HAN gateway?

· How frequently will the utility take readings from the smart meter? Is this frequency subject to change? Will customers control this frequency?

· For each type of information identified above, for what purposes will the information be used? The purposes should be articulated with specificity, e.g., "targeted marketing" instead of "promoting energy efficiency."

· For each type of information collected, for how long will the information be retained, and what is the purpose of the retention? Could the retention period be shortened without diminishing the specified purpose?

· What measures are or will be employed by the utility to protect the security of customer information?

· Has the utility audited or will it audit its security and privacy practices, both internally and by independent outside entities? If so, how often will there be audits? What are the audit results to date, if any?

Further requirements or guidelines concerning security and reporting on security matters to this Commission may arise later in this proceeding as we consider reporting metrics and address privacy and security matters in more detail before providing additional access to customer data.

3.7. What Should be in the Smart Grid Roadmap?

Any deployment plan requires a roadmap that indicates where the utility is going and how it proposes to get there. We discuss what the Smart Grid roadmap should contain.

3.7.1. Position of Parties

SCE provides the most thoughtful statement of what a Smart Grid Roadmap should include:

Each Deployment Plan should contain a Roadmap that lists the areas of technology evaluation and deployment under consideration by the IOU. The Roadmap should also provide provisional guidance on the timing of evaluations and deployments in each of these areas between years 2011 and 2020. The Commission should not dictate specific technology areas to be covered in Deployment Plans; instead, the Commission should ensure that the Plans address the Commission's eight Smart Grid objectives. Technology areas included in the Deployment Plans are dynamic and evolving, and are subject to change as public policy, business conditions, and technological capabilities change over time.156

SDG&E endorses a "roadmap of technologies and/or functionality planned over time as SDG&E drives towards meeting its Smart Grid vision."157 PG&E also advocates a similar approach.158 DRA endorses SCE's proposal for a roadmap.159

3.7.2. Discussion: A Roadmap Can Help Identify How Technology Deployment Aligns with Policy and Statutory Deadlines

There is a consensus among those parties providing comments that a roadmap can provide useful information concerning technologies and their deployment, even though they will remain subject to change. The projection of the timing of Smart Grid investments can help the Commission and stakeholders plan to review the projects that are part of a utility's infrastructure plans in a timely fashion and assist the Commission in its own budgeting and planning.

A key part of the roadmap should lay out how the proposed deployment of infrastructure would help to achieve important statutory and other policy requirements. At a minimum, the roadmap should explicitly address how the technology areas that the utility is considering in its deployment plan will facilitate achievement of each of the following policies:

· Global Warming Solutions Act of 2006 (AB 32), which requires California to reduce its greenhouse gas emissions to 1990 levels by 2020;

· The California Long Term Energy Efficiency Strategic Plan;

· Achievement of the energy efficiency and demand response goals as required by Sections 454.5 and 454.55;

· Achievement of the renewable portfolio standard program; and

· Full solar photovoltaic deployment under the California Solar Initiative.

The roadmap should also include the essential infrastructure steps that must be taken to provide customers with the access to consumption and pricing data pursuant to D.09-12-046.

3.8. What Should the Section on Cost Estimates Include?

It is reasonable that parties would seek to have an assessment of both the costs and the benefits that a Smart Grid deployment would produce. Due to the rapidly evolving state of Smart Grid technology, it is likely that costs will change as time goes on. Nevertheless, an early analysis of costs and benefits can help identify which technologies are mature enough to deploy. This section will provide guidance on how, in the face of uncertainty, Smart Grid Deployment Plans can provide useful information on Smart Grid costs.

3.8.1. Position of Parties

SDG&E argues that cost estimates "can only be of a very general nature" due to the early state of Smart Grid technology and that actual deployment will be based on lessons and pilots that have not been implemented.160 Additionally, SDG&E warns that public estimates could create a technology backlash based on estimates that include a large amount of unknowns, including costs and technology viability. SDG&E suggests that any cost benefit analysis be specifically identified with the benefits outlined in Pub. Util. Code §§ 8360(a)-(g), as well as the Energy Action Plan adopted by the California Public Utilities Commission and California Energy Commission. SDG&E advises that any review of the deployment plans' cost effectiveness "should be limited to whether the utility's proposal for achieving those objectives through smart grid investments is the most cost-effective alternative available in light of the specific system requirements and customer needs confronted by that particular utility."161

SCE states that it "will provide filed costs or conceptual cost ranges for technologies" that are being evaluated or considered for deployment during the period covered by the deployment plans,162 but that the estimates should be regarded as provisional and subject to change, and should be used for informational purposes only. SCE argues that its estimates can also include future technologies but "costs, benefits and ensuing rate impacts associated with these emerging technologies ... may prove impossible to accurately estimate" within the timeframe set by SB 17.163

PG&E states that there should be an estimate of costs necessary to build a Smart Grid. However, "the assessment of costs and benefits needs to continually be updated as new technologies develop" since some technologies may work and some may fail; as such, it will be difficult to provide specific costs to specific technologies and functions.164

Greenlining requests that a preliminary cost-benefit analysis take place during the consideration of the deployment plans. Greenlining suggests that utilities prepare "information on various alternatives in each phase of the Smart Grid" with an associated cost-benefit analysis for each alternative. Greenlining states that it is important for the Commission to consider costs and benefits at an early stage as it will allow the Commission and the utility "to make a fully considered decision regarding the best means to implement the Smart Grid."165

CLECA states that the Commission should ensure that "all associated utility investments are cost-effective."166 CLECA also argues that due to a large amount of uncertainty regarding future investments, "there is likely to be insufficient information on the costs and benefits of most smart grid applications."167 Furthermore, "smart grid technology should be deployed in a manner to maximize benefit and minimize cost to ratepayers."168 Finally, CLECA recommends that a deployment plan should include an explanation of how a cost-effectiveness analysis will be performed, using which data, how reliability and other benefits will be determined and how those will be linked. Additionally, costs per customer for each project should also be estimated in the plans.169

CFC suggests that the IOUs prepare a joint implementation plan on upgrades needed to meet national and state design standards and find efficiencies through consolidation of systems. This joint implementation plan would include a business case analysis with detailed cost estimates for bringing their systems into compliance with national and state standards and would be subject to public review.170 In addition, CFC suggests that any deployment plan should include "an estimate of the financial investment necessary to build" a Smart Grid and demonstrate that the investment is cost-effective.171

DRA supports a requirement for cost estimates in the deployment plans. DRA cautions that "any provision of cost estimates does not eradicate the need for a full reasonableness review."172 Further, DRA suggests that the Energy Division develop a standard business plan outline for use by the IOUs to allow a side-by-side comparison of the deployment plans.173

3.8.2. Discussion: Smart Grid Deployment Plans Should Include Cost Estimates

No party disagrees on the need for the inclusion of cost estimates in an IOU's deployment plan. In addition, there is near universal agreement that it is difficult to provide a reliable cost estimate based on future and unknown technologies and infrastructure investments. Nevertheless, as DRA comments, that does not dismiss the need for a cost estimate. As SCE states in its comments, it is already beginning preparation of projected costs for Smart Grid investments as part of the 2012-2014 General Rate Case (GRC) cycle.174,175 The Commission understands the concerns raised by Greenlining and CFC regarding the need for detailed cost estimates as part of the deployment plans, but the Commission does not find that it would be possible to require detailed, projected cost estimates for technology that is undergoing dramatic changes in costs and technology today, or has yet to be invented.

The Commission understands that cost estimates provided as part of a deployment plan will be preliminary and conceptual. Commission approval of costs for specific investment projects will still require either a GRC or special application process, as explained in Section 4.2 below. IOUs in their deployment plans shall provide high level (or aggregated), conceptual cost estimates of Smart Grid technologies and infrastructure investments that they expect to undertake in the next five years, and provisional cost ranges for potential Smart Grid technologies and investments for the following five years. IOUs shall also explain how their cost-effectiveness projection was made. The analysis of costs should also indicate any specific legislated or Commission ordered goal that requires a particular investment. Further, the analysis should identify which cost and performance data offer the best approach, and the reliability of both cost and performance estimates. Additionally, to facilitate Commission review, the cost per customer (or participating customer) for each project should also be estimated in the plans. If an IOU cannot provide this information, it should explain why this information cannot be provided. Such information will help the Commission in our planning and make the deployment plans more useful.

3.9. What Should the Section on Benefits Include?

Logically, the benefits that arise from the deployment of the Smart Grid fall into several categories: 1) monetary benefits that result in lower electric bills and better use of the electric infrastructure; 2) non-monetary benefits, such as increased reliability of electric power and the safety of grid operations that may be difficult to quantify; and 3) benefits that arise from the fact that the deployment of the Smart Grid facilitates compliance with California energy policies.

This section will address how the deployment plans should structure the discussion of the benefits that will result from a Smart Grid. This discussion, when combined with the discussion on costs directly above, seeks to facilitate a comparison of a utility's Smart Grid costs and benefits and to enable comparison with the Smart Grid Deployment Plans of other utilities.

3.9.1. Positions of Parties

SCE provides the most extensive statement of what this section of the deployment plan should include, arguing that:

IOUs should identify the types of benefits that they expect will be generated by each technology included in a Deployment Plan. SCE proposes that three overall categories of benefits should be used for this section of the Deployment Plans:

(1) Policy Requirements - the technology is beneficial because, after evaluation and study, the utility believes the technology serves as a "best fit" for achieving compliance with regulatory or statutory mandates.

(2) Reliability and Safety - the technology is beneficial because the utility deems it a "best fit" technology for improving system reliability, or maintaining or improving safety for our customers, employees, and members of the public.

(3) Business Case - the technology is beneficial based on traditional net present value revenue requirement cost-benefit analysis.176

On the other hand, SCE cautions that:

Costs, benefits and ensuing rate impacts associated with these emerging technologies may not yet be fully understood, and it may prove impossible to accurately estimate such items in the timeframe set by statute for Deployment Plans.177

PG&E similarly cautions that "... the assessment of costs and benefits needs to continually be updated as new technologies develop, are proven and then scaled up."178 PG&E argues that "a `Smart Grid' is not an end in itself, but is a process leading to a series of technology choices made in light of accepted and focused objectives and cost-benefit analyses."179 In its Reply Comments, PG&E asks that deployment plans include "[e]stimates of the potential benefits of deployment plans in quantitative or qualitative terms where available and current."180

SDG&E also advises caution in assessing a program, stating that:

Smart Grid Deployment Plans should follow two paths for decision criteria: one path necessary to comply with state policy goals and the second path designed to pilot new technologies, learn, and on the basis of this experience, to build business cases based on existing technology and agreed-upon methods and procedures for evaluating costs and benefits.181

DRA provides broad support for the explicit consideration of the benefits that arrive from a Smart Grid plan, arguing:

Plans should include descriptions of how Smart Grid technology can be "deployed in a manner to maximize the benefit and minimize the cost to ratepayers and to achieve the benefits of smart grid technology" as stated in Pub. Util. Code § 8366.182

EDF sees environmental benefits as a key element of the Smart Grid and wants to ensure that such benefits are considered so that they become "a clear objective of smart grid deployment in California."183

CEERT argues that "[b]enefits from Smart Grid deployment may also be measured in terms of reduced growth in annual consumption or peak load or reductions in the average cost of capacity or energy."184

HomeGrid argues that "the Commission should evaluate utility proposals based on benefits to the ratepayer; attempting to mandate specific technologies, standards, or protocols at the current time in no way translates into ratepayer benefit, and could in fact be detrimental to the short-term and long-term health of California's Smart Grid."185

Concerning the Smart Grid and the provision of data to customers, TURN states:

... the Commission should focus on providing `actionable' data to residential customers. Moreover, irrespective of any quantitative cost/benefit analysis, any significant spending to provide wholesale prices to residential customers must at a minimum show that there are at least some qualitative `benefits' resulting from these data.186

CESA asks that the Commission track "all storage-related benefit streams including those related to cost, demand reduction, energy usage, and overall system efficiency enhancement."187

CCTA comments that § 8360 itself:

... highlights several benefits of smart grid technologies including increased use of cost-effective digital information and control technology to improve reliability, security, and efficiency of the electric grid; dynamic optimization of grid operations and resources; deployment and integration of cost-effective distributed resources and generation; development and incorporation of cost-effective demand response, demand-side resources, and energy-efficient resources; and deployment of cost-effective smart technologies.188

CFC endorses the use of a comprehensive cost-benefit analysis, stating "the utilities should sponsor a cost-benefit analysis supporting their planned development of the smart grid, in which the benefits and costs have been quantified, then allow others to critique the utilities work and develop alternative analyses."189

CLECA asks for a stringent use of cost-benefit analyses, arguing that "SB 17 makes it clear that Smart Grid technology should be deployed in a manner to maximize benefit and minimize cost to ratepayers and to achieve the benefits of smart grid technology, including meeting stringent cost vs. benefit assessments."190 More specifically, CLECA recommends (quoting directly):

· Each deployment plan should also include an explanation of how the cost-effectiveness analysis of elements of the plans will be performed, using which data, how the reliability and other benefits will be determined, and how the two will be linked. Costs per customer for individual projects should also at least be estimated in the plans.

· Each deployment plan should demonstrate how the technology would be targeted in order to maximize customer benefits. Certain technologies for analyzing the state of the transmission grid, for example, may be best located only on certain parts of the grid rather than the entire grid.191

MegaWatt argues that in evaluating the planned deployment of storage as part of a Smart Grid, care should be taken to evaluate all the benefits, including, "transmission or distribution deferral benefits, reliability benefits, VAR management benefits, blackstart benefits, power quality benefits, ancillary service benefits, and other benefits. Moreover, since many forms of storage have zero emissions, zero water usage and are quiet, permitting is easier, increasing the probability of successful deployment."192

3.9.2. Discussion: Smart Grid Deployment Plans Should Assess All Benefits

There is significant agreement that the deployment plans should include a discussion of the benefits of proposed Smart Grid projects.

The parties see three general types of benefits. Parties view achievement of policy requirements as one of the benefits that we would expect from a Smart Grid. In those cases, where the investment in a Smart Grid is necessary to achieve a policy requirement, then a least-cost analysis may be appropriate. However, in cases where the Smart Grid investment will produce benefits beyond simple compliance with a regulatory requirement, we believe a cost-benefit analysis is appropriate.

In addition to facilitating the achievement of other policy goals, Smart Grid investments could produce other benefits that are difficult to quantify, but potentially significant, such as achievement of environmental goals. Smart Grid investments could both improve the overall reliability of the electric grid and enable the development of work procedures that improve worker safety. In particular, knowing quickly whether a section of the grid is energized could enable the development of additional procedures to protect workers. The benefit section of the Smart Grid Deployment Plan should attempt to quantify these benefits. Furthermore, Smart Grid investment could also produce quantifiable environmental and economic benefits. The benefits estimates in the deployment plans should identify and estimate such benefits.

Finally, we note that several parties commenting on the role of storage commonly view storage as not just a simple substitute for fossil generation, but a technology that fulfills a complex role. As these parties point out, storage benefits can include reduced emissions, a reduced need for transmission, and a technology that both shaves peaks and increases the reliability of the grid. These benefits should be part of the assessment of the storage component of any Smart Grid project.

Those filing deployment plans should make every effort to assess all the benefits associated with the implementation of this new technology.

3.10. What Metrics Should Be Included in the Deployment Plans?

The Ruling Amending Scope proposed a series of metrics that could be used to measure progress towards the implementation of a Smart Grid. The metrics were structured according to the characteristics as stated in SB 17. The Ruling Amending Scope's preliminary proposal was to adopt metrics, require the utilities' deployment plans to measure their performance against the adopted metrics, and submit updates to the metrics as part of their annual report to the Commission.193

3.10.1. Positions of Parties

PG&E cautions that it may be a challenge to choose the right metrics that will provide useful and objective information on achieving Smart Grid goals, "because the Smart Grid itself is still a `concept,'" and that choosing the wrong metrics may negatively impact incentives for development of new Smart Grid technologies and projects.194 PG&E comments that until there are specific programs and projects, it may be difficult for parties to settle on the right types of metrics "that would apply for purposes of regulating or monitoring various Smart Grid activities and projects."195 PG&E further comments that the lack of national consensus on standards also makes it difficult to create a set of useful metrics. However, PG&E does provide an initial list of ten metrics based on the proposed list of metrics in the Ruling Amending Scope. The ten proposed metrics (quoting directly from the PG&E filing) are:

· Reliability Metrics - System Average Interruption Duration Index (SAIDI);

· Reliability Metrics - System Average Interruption Frequency Index (SAIFI);

· Renewable Resources Integrated - MWh of delivered renewables (prior year);

· AMI Meters Installed - Total Number and as a % of Total Customers;

· Home Area Network Coverage - Number and % of Customers registered to use 1 or more HAN devices;

· Demand Response - Total MW of Dispatchable Demand Response;

· Energy Efficiency - GWh of EE Savings;

· Dynamic Pricing - Number and % of Customers enrolled in time differentiated rate programs; and

· Customer Information Access - Number and % of Customers enrolled with utility to access customer usage and pricing data.196

PG&E argues that there is a need for a workshop on metrics "so that all parties and Commission staff can arrive at a final precise set of metrics that meet the needs of the Commission while at the same time not overburdening or stifling the development of Smart Grid technologies in the marketplace."197

SCE endorses similar metrics as PG&E. SCE also cautions against creating "costly, potentially ambiguous or onerous metrics that may not be correlated with the achievement" of the Smart Grid.198 SCE submits that more metrics may be needed in the future, and SCE may propose additional metrics as part of their initial deployment plan filing in 2011.199 SCE argues that the utilities' proposed list of metrics should be adopted by the Commission for the "near term" so as not to "impose substantial incremental costs on IOU ratepayers for the IOU to collect and store the information."200 SCE cautions that the adoption of metrics for today's technologies or future technologies that have not been evaluated "risks creating incorrect incentives for IOUs' Smart Grid investments."201 SCE opposes the inclusion of cost-effectiveness metrics commenting that development of such metrics is more appropriate for a GRC or other application instead of in the deployment plans. Finally, SCE does not support a separate workshop on metrics at this time.202

SDG&E also endorses the same metrics as SCE. SDG&E cautions that a "fixed set of metrics may be counter-productive as a means to achieve the ten characteristics of a smart grid as defined" by SB 17.203

Tendril supports the use of qualitative metrics as "important and valuable tools to inform smart grid deployment strategies." Tendril also proposes eight additional metrics related to distributed generation, carbon emissions, demand response and energy efficiency.204

EDF supports the initial list of metrics as found in the Ruling Amending Scope, as metrics will allow the Commission and the public "to monitor the implementation of the smart grid, without being overly burdensome to utilities."205 EDF proposes that new metrics be added that address greenhouse gas reduction and energy efficiency and that such metrics should better reflect SB 17. EDF suggests that these new metrics should set environmental targets for Smart Grid and measure that performance. EDF also provides comments on the proposed metrics and how to make the metrics more in line with current state energy policy goals.206 EDF, on the other hand, does not support the short list of metrics proposed by the utilities. EDF states that those proposed metrics do not "reflect the nuances required to determine if the investments are working towards California's policies." Rather, EDF argues that the metrics proposed by EDF will allow parties "to have the level of detail ... to monitor the progress of the system on the mandated environmental policies listed in SB 17."207

DRA supports the adoption of metrics "to measure progress in implementing a Smart Grid in California," and supports requiring the IOUs to file them annually.208 DRA argues that the Commission's Energy Division should be required to "evaluate and report on the metrics after their submission." DRA comments that the proposed metrics "are a good starting point," but a workshop is necessary to develop the metrics even further.209 Additionally, DRA states that new metrics may be necessary in the future as new technology is developed. DRA provides comments on several of the proposed metrics including those addressing cost-effectiveness and grid asset management, and questions the need for metrics on specific technologies on which the Commission has yet to take a position.210 DRA does not support the ten metrics proposed by the utilities as they do not "go far enough to assure consumer protections, nor do they include any measurements of cost-effectiveness."211 DRA supports a workshop on metrics with the Commission's Energy Division proposing a new list of metrics based on comments received in this phase.212

CFC comments that using metrics to measure progress "means achieving predicted efficiencies and lowering the cost of electricity," and suggests that cost-effectiveness is a necessity "to measure the success of smart grid installations."213 CFC argues that any adopted metrics should not simply encourage the installation of Smart Grid technologies where new technology may not be needed as new technology may be installed prematurely.214

UCAN supports the use of metrics as an important way to measure "the achievement of deployment plan objectives."215 UCAN states that the Commission "should focus on results and net benefits more than build metrics."216 UCAN is concerned that the proposed metrics may not yield valuable information regarding Smart Grid investments and Commission review of those investments.217 UCAN argues that if the metrics are too specific, the utility may attempt to build out to those metrics and miss potentially other, more cost-effective technologies that when combined with other technologies may provide more benefits to ratepayers.218 Additionally, UCAN cautions that any metrics adopted up front "may be premature until more is known about technology change and commercial viability."219 UCAN also provides specific edits to the proposed metrics.

CLECA is concerned that the proposed metrics presume that more is better, which may not be true. CLECA also states that the metrics do not address cost-effectiveness and should include "an assessment of the costs and benefits of deployment." CLECA also provides specific comments on the proposed metrics.220

CEERT states that the proposed metrics are a good starting point, but should also address how existing infrastructure is being used more efficiently, how toxic and greenhouse gas emissions are reduced or avoided, and how the deployment plan helps meet renewable portfolio standard goals for distributed and non-distributed resources.221 Additionally, CEERT comments that the proposed metrics do not address § 8366(g) of SB 17 that relates to worker safety, protection and productivity, nor do the metrics address utility employment and contributions to clean technology.222 CEERT also states that any adopted metrics should be uniform and apply uniformly to all utilities.223 CEERT does not support the proposed ten metrics offered by the utilities as the proposed metrics are not in keeping with SB 17 and do not acknowledge how the Smart Grid is helping the State's ability to meet its policy goals.224

Greenlining supports the use of the proposed metrics as a practicable way of measuring the deployment of Smart Grid against the goals of EISA and SB 17. Greenlining supports a yearly update by utilities to show how their Smart Grid deployment is measuring up against the adopted metrics. Additionally, Greenlining proposes several additional metrics that "would measure whether certain regions and/or communities" are able to "achieve the individual customer benefits of the Smart Grid."225 Greenlining also agrees that metrics on cost-effectiveness should be included in the final list of adopted metrics.226

IREC states that metrics will "provide an important means of measuring progress toward desired Smart Grid outcomes."227 However, IREC comments that progress toward achieving "outcome-related" metrics "will not only be a function of whether utilities have installed necessary infrastructure, but will also depend on the extent to which the Commission has adopted necessary policies to facilitate the outcomes identified in the metrics"228; as such, "progress toward achieving identified metrics will not solely be the sole responsibility of the utilities."229 IREC states that the best use of adopted metrics "will be to identify the need for new policies or changes to existing policies" that will allow the Commission to measure progress towards a Smart Grid.230

CDT-EFF supports the use of metrics "as a measure of Smart Grid deployment" and argues for the addition of several additional metrics focused on cyber security and privacy.231 CDT-EFF argues that the metrics should be "required components of all Smart Grid deployment plans and should be updated" regularly in subsequent proceedings on Smart Grid.232 Additionally, CDT-EFF opposes a proposed metric that would provide specific information about appliances within a consumer's home. CDT-EFF argues that any metrics associated with in-home deployment of Smart Grid technology may not be visible to the utility, and the Commission "should respect customers' desire for privacy."233

CESA supports the use of metrics as a useful way to track Smart Grid deployment success, and to provide "feedback on an ongoing basis so that program/policy adjustments may be made over time."234 CESA suggests several metrics that address the integration of storage resources, and that these storage related metrics "need to measure both the energy storage systems themselves and their grid-wide impacts."235

Wal-Mart supports adopted quantitative metrics as a way to "assure accuracy and transparency in measurement of utility smart grid deployment."236

3.10.2. Discussion: Quantitative Metrics Should be Part of Deployment Plan, but Workshops Are Needed to Develop Metrics

The Commission agrees with parties that metrics should be adopted for inclusion in the Smart Grid Deployment Plans and subsequent utility reports because they will provide the Commission with a means to assess the state of the electric grid.

As the review of the comments of parties makes clear, the Commission received many comments from parties that recommended revisions to the proposed metrics, made arguments for numerous additions to that list, and called for workshops addressing these issues.

However, we find that the ten metrics proposed by the utilities are inadequate to meet the goals of SB 17 and do not address other important Commission goals. Therefore, the Commission declines to adopt the limited set of metrics proposed by the utilities.

We conclude that the limited record developed on this point is insufficient to adopt a full set of useful and informative metrics that are not unduly burdensome. Therefore, we decline to adopt an initial set of metrics at this time. Instead, we find merit in DRA's suggestion that a workshop is needed in order to create successful metrics that allow the Commission and stakeholders to measure the state of the grid. The Commission staff should review the revisions and additions proposed by parties so far in this proceeding, create a new list of proposed metrics, serve that new list to parties on the service list, and convene a workshop for the purposes of creating a final list of metrics to present to the Commission for adoption. To the extent practicable, this new list of metrics should make use of existing metrics, including those related to energy efficiency and demand response, in an effort to reduce the burden upon staff and participants.237 We are aware of the time-sensitive nature of this process in order to be useful for the utilities' July 1, 2011 deployment plan filing. Therefore, we direct Commission staff to issue a list of proposed metrics within 60 days of this decision, and to hold a workshop within 30 days of that issuance. Upon the completion of the workshops, the Commission will invite further comments and subsequently issue a decision on this new set of metrics.

In conclusion, Smart Grid Deployment Plans will include metrics, but the specific metrics require further development.

26 Ruling Amending Scope at 5-6.

27 Id. at 7.

28 SCE Opening Comments at 4.

29 Id. at 7.

30 PG&E Opening Comments at 6.

31 Id.

32 UCAN Opening Comments at 3-4.

33 Greenlining Opening Comments at 11.

34 DRA Opening Comments at 3.

35 GPI Opening Comments at 2, emphasis in original.

36 EDF Opening Comments at 8.

37 CFC Opening Comments at 4.

38 Id.

39 CEERT Opening Comments at 4.

40 § 8360.

41 § 8360(a) - § 8360(j).

42 § 8366.

43 Ruling Amending Scope at 12-13.

44 Id. at 13-14.

45 See SCE Reply Comments at 3-4; SDG&E Reply Comments at 5 include the first six elements, but SCE's Reply Comments include metrics as part of its "Deployment Baseline;" and PG&E Reply Comments at 3 support the same six elements as SDG&E.

46 DRA Reply Comments at 2.

47 ISO Opening Comments at 2.

48 Id. at 3.

49 Id.

50 Id. at 4.

51 Greenlining Reply Comments at 3.

52 HomeGrid Reply Comments at 3.

53 EDF Reply Comments at 12-13.

54 CEERT Reply Comments at 3.

55 CEERT Opening Comments at 6.

56 Id.

57 IREC Opening Comments at 4.

58 CESA Opening Comments at 5.

59 Id. at 6.

60 Wal-Mart Opening Comments at 2.

61 Cisco Opening Comments at 7.

62 Tendril Opening Comments at 2.

63 CLECA Opening Comments at 3-4.

64 Verizon Opening Comments at 5-6.

65 Qualcomm Opening Comments at 3-4.

66 GPI Opening Comments at 2.

67 DRA Reply Comments at 3.

68 SCE Reply Comments at 2.

69 SDG&E Reply Comments at 2.

70 SDG&E Reply Comments at 5; PG&E Reply Comments at 3.

71 EDF Opening Comments at 12-13; EDF Opening Comments on Proposed Decision at 6.

72 DRA Opening Comments at 3; DRA Reply Comments at 9.

73 The "Decision-Maker's Interoperability Checklist" is a document created by the Gridwise Architecture Council and "is a tool to help regulatory and utility decision-makers evaluate options ... to determine whether they have the characteristics and attributes that contribute to interoperability." The "Smart Grid Scorecard" is a document developed by EnerNex for the Gridwise Architecture Council and Smart Grid News that is to assist decision-makers in evaluating products developed for the Smart Grid. See UCAN Opening Comments at Attachments C and D.

74 UCAN Opening Comments at 19.

75 GPI Opening Comments at 2.

76 Tendril Opening Comments at 1; MegaWatt Opening Comments at 9.

77 PG&E Opening Comments at 6.

78 PG&E Reply Comments at 3; SDG&E Reply Comments at 5.

79 CESA Opening Comments at 6.

80 CDT-EFF Opening Comments at 24.

81 CDT-EFF Reply Comments at 6.

82 EPIC Reply Comments at 4.

83 Researchers Opening Comments at 7-9.

84 SCE Opening Comments at 7.

85 SCE Reply Comments at 2.

86 EDF Opening Comments at 8; CEERT Opening Comments at 4; TURN Opening Comments at 2; Greenlining Opening Comments at 11; TIA Reply Comments at 2.

87 CFC Reply Comments at 2-3.

88 Id. at 5 (emphasis in original).

89 Note that we ask a variant of these questions in the cyber security section below. In that setting, the emphasis is on utility plans, whereas in this section of the plan we solicit information on current practices.

90 The Commission is aware that privacy protections and the reach of Commission jurisdiction are under review by legislation pending before the State Legislature. Legislative action may provide greater legal clarity in this matter. If there is no action on this matter by the Legislature, then the Commission will consider inviting legal briefs to clarify the extent of the Commission's jurisdiction and to recommend the best procedure for protecting consumer interests.

91 SCE Reply Comments at 3.

92 SCE Opening Comments at 7.

93 SDG&E Reply Comments at 6-7.

94 PG&E Reply Comments at 3.

95 PG&E Opening Comments at 7.

96 DRA Reply Comments at 2.

97 Id.

98 Qualcomm Comments at 3.

99 AT&T Opening Comments at 5.

100 Verizon Opening Comments at 1.

101 CCTA Opening Comments at 2.

102 SCE Opening Comments at 27.

103 Administrative Law Judge (ALJ) Ruling, March 20, 2010, Attachment A at 7.

104 Greenlining Opening Comments at 4.

105 Latino Business Chamber of Greater Los Angeles Opening Comments at 4.

106 § 8360.

107 Id.

108 SCE Opening Comments at 24.

109 SCE Reply Comments at 23.

110 SCE Opening Comments at 33.

111 SCE Reply Comments at 23.

112 Id.

113 PG&E Opening Comments at 18-19.

114 SDG&E Opening Comments at 16-17.

115 Id. at 31.

116 Id.

117 ISO Opening Comments at 8.

118 DRA Reply Comments at 19.

119 We hereby take official notice of the report, listed as P.A. Subrahmanyam, et al., "Network Security Architecture for Demand Response/Sensor Networks," October 2005 (revised June 2006), CyberKnowledge and University of California at Berkeley, Draft Consultant Report for CEC, PIER Contract No. 500-01-043, which is available at http://www.law.berkeley.edu/files/demand_response_CEC.pdf

120 UCAN Opening Comments at 36.

121 CDT-EFF Opening Comments at 10.

122 Id. at 17.

123 Id. at 21.

124 Id. at 21.

125 Verizon Opening Comments at 8.

126 Researchers Opening Comments at 2-3.

127 Id. at 7-9.

128 Id. at 8-9.

129 Id. at 17.

130 EPIC Opening Comments at 27.

131 EPIC Reply Comments at 3.

132 CEERT Opening Comments at 9-10.

133 CEERT Reply Comments at 14.

134 AT&T Opening Comments at 11.

135 Id.; AT&T Reply Comments at 7.

136 TIA Reply Comments at 5.

137 HomeGrid Reply Comments at 7.

138 Lantiq Reply Comments at 6-7.

139 CISCO Opening Comments at 15.

140 Id. at 4.

141 EDF Reply Comments at 22.

142 Greenlining Opening Comments at 23.

143 Tendril Opening Comments at 11.

144 EnergyHub Opening Comments at 2.

145 CFC Opening Comments at 2.

146 CFC Reply Comments at 15.

147 CLECA Opening Comments at 5.

148 Google Reply Comments at 5.

149 In state law, references to cyber security include sections 8360 and 8362 of the Pub. Util. Code and in federal law, references include the provisions of Title XIII (commencing with Section 1301) of the EISA (Public Law 110-140).

150 February 2010 Draft NISTIR at 1-2, emphasis added.

151 Section 1.2 of the February 2010 Draft NISTIR.

152 SCE Opening Comments at 32.

153 Available at: http://osgug.ucaiug.org/utilisec/amisec/Shared%20Documents/AMI%20Security%20Profile%20(ASAP-SG)/AMI%20Security%20Profile%20-%20v1_0.pdf

154 Commission staff notes that there has been a recent new release of the Catalog of Control Systems Security in March 2010 available at: http://www.us-cert.gov/control_systems/pdf/Catalog%20of%20Recommendations%20March%202010.pdf.

155 Available at: http://www.us-cert.gov/control_systems/pdf/FINAL-Procurement_Language_Rev4_100809.pdf

156 SCE Reply Comments at 3.

157 SDG&E Reply Comments at 5.

158 PG&E Reply Comments at 3.

159 DRA Reply Comments at 2.

160 SDG&E Opening Comments at 6.

161 SDG&E Opening Comments at 6-7.

162 SCE Reply Comments at 3.

163 SCE Opening Comments at 6-7.

164 PG&E Opening Comments at 7-8.

165 Greenlining Opening Comments at 12-13.

166 CLECA Opening Comments at 2.

167 Id. at 3.

168 Id.

169 Id. at 4.

170 CFC Opening Comments at 3.

171 Id. at 6.

172 DRA Reply Comments at 4.

173 Id. at 5.

174 SCE Opening Comments at 3.

175 PG&E, on the other hand, comments that it will provide "detailed and specific Smart Grid related investment proposals" in its next GRC filing for 2011-2013. See, PG&E Opening Comments at 9.

176 SCE Reply Comments at 4.

177 SCE Opening Comments at 7.

178 PG&E Opening Comments at 7-8.

179 Id. at 4.

180 PG&E Reply Comments at 3.

181 SDG&E Opening Comments at 4.

182 DRA Opening Comments at 7.

183 EDF Reply Comments at 2.

184 CEERT Reply Comments at 16.

185 HomeGrid Reply Comments at 4.

186 TURN Reply Comments at 5.

187 CESA Opening Comments at 6.

188 CCTA Opening Comments at 3, emphasis in original, footnotes omitted.

189 CFC Opening Comments at 4.

190 CLECA Opening Comments at 3.

191 Id. at 4.

192 MegaWatt Opening Comments at 5.

193 Ruling Amending Scope at 24-25.

194 PG&E Opening Comments at 12.

195 Id.

196 Id. at 12-13.

197 PG&E Reply Comments at 4.

198 SCE Opening Comments at 21.

199 Id. at 21-22.

200 SCE Reply Comments at 8.

201 Id.

202 Id. at 9.

203 SDG&E Opening Comments at 19-20.

204 Tendril Opening Comments at 9-10.

205 EDF Opening Comments at 17.

206 Id. at 17-20.

207 EDF Reply Comments at 23.

208 DRA Opening Comments at 18.

209 Id.

210 Id. at 18-19.

211 DRA Reply Comments at 15.

212 Id.

213 CFC Opening Comments at 8.

214 Id. at 9.

215 UCAN Opening Comments at 12.

216 Id.

217 Id. at 15-16.

218 Id. at 16.

219 Id.

220 CLECA Opening Comments at 8-11.

221 CEERT Opening Comments at 18-19.

222 Id. at 19.

223 Id.

224 CEERT Reply Comments at 15.

225 Greenlining Opening Comments at 15-17.

226 Greenlining Reply Comments at 10.

227 IREC Opening Comments at 8.

228 Id.

229 Id. at 9.

230 Id.

231 CDT-EFF Opening Comments at 35.

232 Id.

233 Id. at 37.

234 CESA Opening Comments at 7.

235 Id.

236 Wal-Mart Opening Comments at 2.

237 For example, D.09-09-047 lists Market Assessments as a primary objective of the Commission's energy efficiency evaluation efforts and D.10-04-029 orders ED staff to develop metrics to measure the impact of the Commission's energy efficiency efforts on electric appliance and energy service markets. Once developed these metrics may also benefit the Commission's evaluation of Smart Grid impact and should be considered through the Smart Grid metrics workshop.

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