CPUC Seeks Comment on Staff Proposal to Facilitate Commercialization of Microgrids

Kicking off Track 2 of its microgrid/resiliency rulemaking proceeding (R.19-09-009), the California Public Utilities Commission (CPUC) has issued a new Ruling Requesting Comment on the Track 2 Microgrid and Resiliency Strategies Staff Proposal, Facilitating the Commercialization of Microgrids Pursuant to Senate Bill 1339 (July 22, 2020).

Track 1 of the proceeding focused on proposals for the 2020 wildfire season (see CPUC Approves Short-Term Microgrid and Resiliency Actions). Track 2 addresses additional regulatory actions aimed at fulfilling the statutory requirements of SB 1339 and removing obstacles to the deployment of microgrids in California. The new Staff Proposal offers several proposals for discussion, each with alternative approaches to addressing the identified barrier:

• Proposal 1 directs changes to language in the large investor-owned utilities’ (IOU) Tariff Rule 2. Rule 2 governs the IOUs' treatment of additional and special facilities. The Staff Proposal would make it more clear that the rule does not preclude the IOUs from installing and operating microgrid control devices.
• Proposal 2 directs the IOUs to revise their Tariff Rules 18/19 to allow microgrids to serve critical customers on adjacent parcels. Language in these rules limits customers from supplying electricity to a neighboring premise, which could limit the effectiveness of using microgrids to provide resiliency to contiguous customers.
• Proposal 3 directs the IOUs to develop a stand-alone Microgrid Rate Schedule. Current electric rate options are not designed for microgrids, and high up-front and operating costs have been identified as a barrier to microgrid commercialization. The Staff Proposal would address these regulatory and financial obstacles by authorizing a single rate schedule to enable installation of combinations of component technologies that individually and collectively are eligible for interconnection as a single microgrid project. The options discussed for this proposal differ in whether/how to authorize exemptions to otherwise applicable cost responsibility surcharges.
• Proposal 4 directs the IOUs to develop a Microgrid Pilot Program. To mitigate project costs, this proposal would authorize an incentive program offering up to $15 million per project to fund clean energy community microgrids that support the critical needs of vulnerable populations most likely to be impacted by grid outages by islanding critical loads for at least 96 hours.
• Proposal 5 directs IOUs to conduct pilot studies of low-cost, reliable electric isolation methods. Isolation is necessary to safely provide backup power from distributed generation or storage to customer loads during grid outages. This proposal would enable evaluation of various technology options that could provide increased flexibility for customers to develop and configure back-up power or storage systems.

The Staff Proposal also describes a number of Secondary Proposals describing work underway or contemplated to meet statutory requirements established in SB 1339. The Secondary Proposals include additional recommendations and questions, including technical specifications and operational capabilities for microgrid controllers, processes for studying and interconnecting microgrids, and direct current metering standards.

A companion Staff Concept Paper identifies conceptual issues and additional proposals for the longer term. The Staff Concept Paper will:

• Establish a conceptual foundation for the Staff Proposal and ongoing work related to the development of policies related to resiliency and microgrids.
• Propose working definitions for key concepts.
• Describe the essential attributes and value propositions of microgrids.
• Identify potential barriers to the commercialization of microgrids and propose methods for addressing them.

Parties may file formal comments addressing the Staff Proposal and questions on Primary and Secondary proposals presented in the Ruling by August 14, 2020. Reply comments are due August 28, 2020. Parties may comment on the Staff Concept Paper for purposes of informing the information gathering in consideration of Track 3 and beyond, but the comments will not be considered part of the record for Track 2.

Contact: Lynn Haug, Ron Liebert, or Brian Biering for more information.