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Calif. PUC Adopts Decision Allowing Direct Access, CCA Customers To Bypass Costs Of Utility-Offered Demand Response Programs, If Their Competitive LSE Offers Similar Program

October 27, 2017

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Copyright 2010-17
Reporting by Paul Ring •

The California PUC adopted a decision which allows customers of direct access providers and community choice aggregators to avoid paying the tariffed rates used to recover the costs of discrete utility-offered demand response (DR) programs, if the customer's competitive LSE offers a DR program deemed by the PUC to be similar to the utility's offering

The PUC's adopted decision finds that a Community Choice Aggregator or Direct Access Provider’s (Competing Provider) demand response program is considered similar to a demand response program provided by an investor-owned utility if the Competing Provider’s program meets all of the following requirements:

• is offered to the same type of customer (e.g., residential customer) and approximate number of Competing Provider’s customers to which the Competing Utility offers its demand response program;

• is classified as and can be demonstrated to be the same resource as the Competing Utility’s demand response program, either a load modifying or supply resource, as defined by the Commission;

• can validate that its demand response program customers are not receiving load shedding incentives for the use of prohibited resources during demand response events; and

• allows the participation of third-party demand response providers or aggregators, if the Competing Utility’s demand response program also allows such third-party participation.

If the Commission determines through the Tier Three Advice Letter process that a Competing Provider’s demand response program is similar to a Competing Utility’s program, the Competing Utility shall begin the process of ceasing all targeted marketing and cost recovery of the similar program within 30 days of the issuance of the Resolution making the determination and shall complete the process within 365 days of the issuance of that Resolution.

"In order to end cost recovery from the Competing Provider’s customers for the Competing Utility’s similar demand response programs, the Competing Utility shall employ the use of a credit on the Competing Provider’s customers’ bill," the PUC's decision provides

Drilling down further on what constitutes a "similar" program from a competitive LSE, the PUC said in its order, "The Commission does not expect a Competing Provider to provide an exact replica of a Competing Utility’s program in order to be deemed similar. In fact, the Commission encourages new and innovative services that could be different from those offered by the Utilities. That being said, Marin Clean Energy’s broad definition of similar could result in a Utility losing the ability to market any supply side resource to all the Competing Provider’s residential customers in a particular Community Choice Aggregator or Direct Access provider’s territory. For example, if the Commission adopted this broad definition of similar and the Competing Provider’s program is only offering a single supply-side program to a small subset of its residential customers, the other residential customers served by the Competing Provider would have no access to demand response incentives. Furthermore, the Competing Utility could lose the load impact it currently attains from the Competing Provider’s residential customers during demand response events and, most importantly, the State may not attain the same load impact through the similar smaller program."

"This Decision finds that a similar program requires that the customer type and approximate number marketed to are 'alike in substance or essentials.' Therefore, in order to be deemed similar, the type of customer and approximate number of customers marketed to in the Competing Provider’s program should be similar to the Competing Utility program’s customer type and approximate number of Competing Provider’s customers to which the utility currently markets the similar program(s)," the PUC said

The PUC also held that, as utilities must do, the DR programs of competitive LSEs, for purposes of bypassing the costs of utility programs, must adhere to the,"prohibited resource policy," which does not allow DR programs to rely on back-up generation using certain fuels, such as diesel, natural gas, gasoline, propane, or liquefied gas.

"[I]f the Utilities must comply with the prohibited resource policy, it is fair to require a Competing Provider to comply with the policy," the PUC said

Additionally, the PUC said that the competitive LSE's program, in order to be deemed similar and qualify for making utility costs bypassable, must be open to third-party demand response providers, if the utility program being replaced is open to such third parties.

"[I]n order to be deemed similar, a Competing Provider’s program should also allow for third-party providers’ participation if the Competing Utility’s program also allows for third party provider’s participation. This requirement comports with the Commission’s demand response principle regarding customer choice," the PUC said

Rulemaking 13-09-011

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