CPUC Adopts Avoided Cost Deferral Values for Optimal Deployment of Distributed Energy Resources

Section 769 of the California Public Utilities Code instructs the investor-owned electric utilities to prepare Distribution Resource Plans that identify and evaluate optimal locations for the deployment of distributed generation resources, energy efficiency, storage, electric vehicles, and demand response technologies. The California Public Utilities Commission (CPUC) is then tasked with evaluating the plans based on how they affect local capacity needs, infrastructure investment requirements, safety, reliability, and otherwise save costs of benefit ratepayers.

Decision 20-03-005 adopts a methodology to calculate avoided costs of transmission and distribution for distributed energy resources (DER) procured through CPUC-mandated programs. The methodology was developed by the CPUC’s Energy Division staff, summarized in a Staff Whitepaper, discussed in a workshop with comments provided by stakeholders. In response to issues raised by parties, the CPUC found that:

• The existing Distribution Investment Deferral Framework and Transmission Planning Process adequately estimates the value of distribution/transmission value resulting from targeted DER procurement.
• The staff proposal provides a more empirically based approach to estimating the avoided cost of distribution than the current method, which assumes that the marginal cost of distribution is equivalent to the avoided cost of distribution. The methodology will be further developed and updated.
• The CPUC declines to draw a conclusion regarding the appropriate value to use for the avoided cost of transmission at this time.The current method of unspecified avoided transmission value calculated in the Avoided Cost Calculator will remain in place, subject to further modification in the Integrated Distributed Energy Resource proceeding.

ESHD attorneys are following this CPUC proceeding addressing policies for enabling and supporting the development and siting of distributed energy resources.

For more information, contact Andy Brown or Lynn Haug.