California rulemaking to pursue demand flexibility through dynamic pricing


The California Public Utilities Commission has voted 4-0 to institute a rulemaking to advance demand flexibility through electric rates.

Demand flexibility would allow consumers to reduce or shift their electricity use at times of peak demand in response to a price signal or other incentive, the Commission (CPUC) said in a news release. Enabling the use of price signals in this way is known as dynamic pricing, or “sending prices to devices.”

The demand flexibility measures to be considered in the rulemaking would reduce curtailment of renewable generation, said the news release, while enhancing electric system reliability, reducing system costs and customer bills, and enabling electrification of buildings and transportation. The measures would allow participation in demand flexibility by customers, community choice aggregators and direct access providers.

A  white paper and staff proposal on opt-in dynamic pricing released last month by the CPUC’s energy division additionally sees the approach as a way to enable fair compensation for the services provided by distributed energy resources.

The white paper “offers a promising approach to scaling demand flexibility,” said CPUC Commissioner Darcie Houck, in an online workshop Thursday that discussed the paper. Houck lauded the “tremendous time, effort and expertise” put into the white paper, and the leadership on demand flexibility from Aloke Gupta, a supervisor in the CPUC’s energy division.

Gupta said in the workshop that the CPUC will consider establishing policies and programs to add a “vast amount of flexibility.” He said the CPUC’s order instituting a rulemaking “calls out the six specific strategies” described in the energy division’s white paper “as a basis for enabling widespread adoption” of demand flexibility solutions.

Noting that California aims to achieve net zero carbon emissions by 2045, Gupta said that alongside three strategies seen as key to achieving that goal—decarbonizing the power supply, electrifying end uses, and reducing demand through energy efficiency—he would like to elevate demand flexibility as another strategy “on an equal footing.”

Houck encouraged “all interested stakeholders” to engage in the rulemaking proceeding, as “we rely on the considerable knowledge and expertise of all of the parties involved, to help achieve the ambitious goals we have collectively set for California.”

The deadline for submitting opening comments will be 30 days from the CPUC’s July 14 vote to institute the rulemaking, said Andrew Magie, a CPUC regulatory analyst. The docket number is R.22-07-005.

recording of the workshop will be made available.

This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: