Word Document PDF Document

COM/NER/jt2 Date of Issuance 6/28/2010

Decision 10-06-047 June 24, 2010


Order Instituting Rulemaking to Consider Smart Grid Technologies Pursuant to Federal Legislation and on the Commission's own Motion to Actively Guide Policy in California's Development of a Smart Grid System.

Rulemaking 08-12-009

(Filed December 18, 2008)



Title Page

Attachment A - Senate Bill No. 17, Chapter 327


1. Summary

This decision provides Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company with the guidance needed to file Smart Grid Deployment Plans with this Commission by July 1, 2011.

As the Commission stated in Decision 09-09-029, modernizing the electric grid with additional two-way communications, sensors and control technologies, key components of a Smart Grid, can lead to substantial benefits for consumers. A Smart Grid can enable the integration of higher levels of renewable energy, energy storage, and, eventually, electric vehicles, at a lower cost to consumers. A Smart Grid can also empower consumers by helping them understand and control their energy use, thereby facilitating their participation in demand response programs and helping them to use energy more efficiently. Greater monitoring and automated controls can also reduce the frequency and duration of outages. Many of the advantages of a Smart Grid will contribute to reducing greenhouse gas emissions. It is imperative that Smart Grid investments deliver these benefits to the utilities' customers.

The California legislature and Governor have enshrined the importance of modernizing the state's electric grid through the enactment of Senate Bill (SB) 17 (Padilla), signed into law on October 11, 2009. SB 17 states that "[i]t 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" and achieve purposes specified in the law. SB 17 further requires the Commission "by July 1, 2010, and in consultation with the State Energy Resources Conservation and Development Commission (Energy Commission), the Independent System Operator (ISO), and other key stakeholders, to determine the requirements for a smart grid deployment plan consistent with the policies set forth in the bill and federal law."1

Pursuant to SB 17, this proceeding, in consultation with the Energy Commission and the ISO and other key stakeholders, sets the requirements for Smart Grid Deployment Plans. This decision requires that utilities follow a common outline in preparing their Smart Grid Deployment Plans. The outline consists of eight topics as follows:

In addition, this decision sets requirements for each of these sections concerning the topics that the Smart Grid Deployment Plans must address, the information that the deployment plans must provide, and how the deployment plans must link each section and topic back to the policies set forth in SB 17 and in relevant federal law. Furthermore, we anticipate that workshops hosted by the Energy Commission concerning research on "Defining the Pathway to the Smart Grid of 2020" and workshops hosted by this Commission prior to the filing of the initial Smart Grid Deployment Plans will provide further opportunities for cooperation with the Energy Commission and the ISO.

The decision requires that the Smart Grid Deployment Plans present a vision of the Smart Grid consistent with legislative initiatives. The vision must address how the plans will enable consumers to capture the benefits of a wide range of energy technologies and energy management products and services that may, or may not, be provided by the utility, while protecting consumers' privacy. The vision must also discuss how the Smart Grid will help the utility meet environmental policies already adopted by statute or Commission action, and promote innovation and competition among companies developing new products and services.

The decision requires that the Smart Grid Deployment Plans provide a deployment baseline so that we understand the character of the California grid today and articulate a strategy for achieving the adopted goals.

The decision requires each utility to address grid security and cyber security issues in their Smart Grid Deployment Plans to ensure that these issues are considered explicitly at the planning stage. The decision, consistent with the intent of SB 17, links California concerns for grid security with the security guidelines identified as under development by the National Institute of Standards and Technology. The decision also adopts security strategy requirements and principles to guide the development of Smart Grid Deployment Plans to ensure alignment with national efforts. Further, we note that we anticipate a separate decision before the end of the year adopting privacy rules prior to the Commission ordering third-party access to customer data. A ruling will follow this decision setting a schedule for resolving privacy issues.

The decision provides a discussion of the cost and benefit procedures that the Smart Grid Deployment Plans should use to enumerate, quantify, and -- to the extent feasible -- monetize the costs and benefits of Smart Grid investments. The decision requires the plans to follow cost-effectiveness analysis to meet legislatively mandated goals in a cost effective way and requires the presentation of the "business case" analysis for other components of the Smart Grid.

The decision also finds that the Smart Grid Deployment Plans should include metrics that permit the assessment of progress, but the adoption of specific metrics requires additional work by parties. A subsequent decision later this year will endorse specific metrics for inclusion in Smart Grid Deployment Plans and other reports.

This decision also proposes to review the initial deployment plans in a single proceeding. Subsequent utility requests to make specific Smart Grid-related investments, however, would occur in utility-specific proceedings where the reasonableness of particular Smart Grid investments can be determined.

Finally, this decision requires that the utilities file annual reports on their Smart Grid activities, with the first annual reports due on October 1, 2012.

1 Chapter 327, Statutes of 2009.

Top Of PageNext PageGo To First Page