TODAY’S STUDY: SMART GRID PROGRESS IN CALIFORNIA

2011 Smart Grid Report; Report to the Governor & the Legislature
December 2011 (California Public Utilities Commission)

California Smart Grid – 2011 Update

This is the California Public Utilities Commission’s (CPUC) second annual report to the Governor and the Legislature, pursuant to Public Utilities Code Section 8367 (SB 17, Authored by Senator Padilla). Beginning in 2008, the CPUC embarked on a momentous path toward modernizing the state’s electric grid from one grounded in industrial age technology to one running on the technology of the information age. Simply put, this modern, informed and technologically superior electric grid is a Smart Grid.

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California Benefits From Smart Grid

California’s ageing electric grid has been operating in much the same way for over 100 years. The grid must now be modernized to take advantage of innovative technologies, accommodate new supply resources and meet increasing consumer demands. Without modernization, the existing grid is increasingly costly to maintain and is constrained to meet the growing demands that are being placed upon it. In addition, the design of the grid does not always take into practice the technological advances of the past decades. Creating a smarter grid will result in a safer, more reliable, efficient, affordable, and interoperable system.

Among the many benefits consumers will see from a Smart Grid is the availability of more information and tools to manage their energy usage. Even now, consumers are beginning to benefit from a move towards a Smart Grid with access to near-real time information about their usage. These consumers have greater control over their utility bills if they log on to a utility’s website and sign up for alerts, such as those that signal when a customer moves to the next rate tier. The customer can use this information to change behavior and ultimately lower their monthly bills. This is just one example of the first step towards improved information from the point of view of the end user.

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California’s Path Towards a Smart Grid

California has long established itself as a leader in energy issues and Smart Grid is no exception. Pursuant to State legislation, the CPUC established a framework and an overall vision for a Smart Grid in California that requires the state’s investor-owned utilities (IOUs) to begin the transformation of the electric grid into a safer, more reliable, efficient, affordable, and interoperable system. This deliberate and strategic planning for grid modernization will ensure that California’s utility customers realize the tremendous benefits of a Smart Grid. Pursuant to Public Utilities Code Section 8367, this annual report shall provide an overview of the CPUC's recommendations for a Smart Grid, the plans and deployment of Smart Grid technologies by the state's IOUs, and the costs and benefits to ratepayers. As such, the next sections of this report will detail the following:

• Privacy and Security of Electric Usage Data
• Giving Consumers Control
• Utility Smart Grid deployment plans
• National developments
• Federal stimulus funding for Smart Grid projects
• The CPUC’s plan for 2012

Privacy and Security of Electric Usage Data

Customer energy data is extremely valuable, as it is foundational to customer engagement, energy efficiency, demand response, enhanced outage management and grid operation. As such, customer energy data is vital for the realization of benefits from Smart Grid investments and stimulating the market. However, the potential for the data to be misused and legitimate customer privacy concerns makes it critical that the customer energy usage data is adequately protected.

In recognition of the importance of protecting of customer energy data, the CPUC adopted privacy and security rules for customer data generated by Smart Meters that are deployed by California’s investor-owned utilities (IIOUs). The rules adopted implement the protections ordered by Senate Bill (SB) 1476 (Chapter 497, Statutes of 2010).

Notably, the CPUC was the first state regulatory agency in the United States to adopt privacy rules for customer data generated by Smart Meters. Other States are now following California’s lead and implementing similar privacy rules. For example, the Colorado Public Utility Commission recently adopted similar privacy rules, and the Public Utility Commission of Ohio also opened a proceeding to address privacy.

At the core of the privacy rules are the concepts set forth in the Fair Information Practice (FIP) principals which were adopted by the Department of Homeland Security (DHS), and are the basis for many other privacy rules.

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• These rules apply to electrical corporations, electrical corporations’ third-party contractors, and any other third-parties that access customer data directly from the electrical corporation (i.e., via a utility backhaul network).

• The rules require that electrical corporations provide customers with a privacy notice, detailing the purpose for which data is collected and shared, how the data may be used by the utility, how long the data will be retained, how a customer can dispute errors in the data, and how a customer can authorize a third party to access their usage data.

• The rules require that upon a security breach affecting more than 1,000 customers, the electrical corporation notify customers within two weeks of such a breach.

• The rules require that electrical corporations file with the CPUC annually a report on all security breaches of customer information, as well as reports on the number of third-parties accessing customer data and the number of times the utility or third-party was not in compliance with the rules.

The California IOUs have filed Advice Letters with the CPUC, detailing their plans to comply with the decision and these Advice Letters are currently being reviewed. As the next step, the CPUC is considering the expansion of the privacy rules to address gas companies, electric service providers (ESPs), and community choice aggregators (CCAs).

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Giving Consumers Control

While ensuring customer energy data security and privacy is foundational to customer enablement, in order to realize the benefits of Smart Grid technologies being deployed it is important to ensure that the customers have timely access to information and a choice of tools to exercise their control over energy consumption.

To enable customer control, as part of the 2011 privacy decision, the CPUC also offered direction on providing additional information to customers, including bill-to-date, bill forecast data, projected month-end tiered rate, and notifications as the customers cross rate tiers. The decision also directed the utilities to work with the California Independent System Operator (ISO) to provide wholesale pricing information to customers in real-time to facilitate automated demand response. Furthermore, the decision directed the utilities to file with the CPUC a plan to allow authorized third parties to access customer data directly through the utility backhaul network. This access is expected to enhance the ability of third parties to provide additional services to customers to help them use electricity more efficiently and manage costs. As part of this effort, the utilities are working with the United States Chief Technology Officer, Aneesh Chopra, to implement a “Green Button.” The Green Button will be a means by which a customer can download their usage information in one step, and be able to share it with a third-party, if the customer so chooses. The utilities expect to offer this functionality by January 2012.

The CPUC in 2011 also directed the filing of a utility plan to advance the activation of Home Area Network (HAN) capabilities. The HAN will allow customers, with the appropriate enabling technology, to get real-time usage information from their Smart Meters1 and engage in demand response activities. The activation of HAN capabilities will provide customers with a tangible benefit from the installation of Smart Meters throughout the state. The availability of real-time information from the meter will give customers and any authorized third-parties additional opportunities to respond to prices or event signals in real-time, participate in other demand response products, and allow customers to set preferences around their usage patterns. While HAN enabling technology is built into Smart Meters, the initial roll-out is likely to be limited due to lack of final national standards and other challenges. However, the CPUC believes that there are initial benefits that can already be realized and expects a wide-spread roll-out of HAN technology to begin in the next several years.

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Smart Grid Deployment Plans… Smart Grid National Developments… Federal Stimulus Funding for Smart Grid Projects in California…

Looking Ahead to 2012 and Beyond

In many ways, while the progress towards grid modernization has been substantial, the most significant steps towards Smart Grid are yet to be made. There are significant challenges that lie ahead, including achieving widespread adoption of HAN, supporting a growing number of electric vehicles and rooftop solar systems, interconnecting significant amounts of renewable generation, all while ensuring that reliability meets today’s requirements and growing cyber-security challenges are addressed. The CPUC will continue its leadership in Smart Grid topics and focus on ensuring that California benefits from grid modernization. The CPUC has several activities planned for 2012.

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By the middle of next year, the CPUC expects to adopt Smart Grid deployment plans for SDG&E, Edison, and PG&E. The CPUC staff is reviewing the IOUs’ Smart Grid deployment plans in detail and has provided initial comments on the strength and weaknesses of the plans to the parties in the proceeding. As the next step, the CPUC will hold a set of workshops in the first quarter of 2012 focused on Smart Customer, Smart Market, and Smart Utility topic areas and ultimately making a decision on the plans by July 1, 2012.

The CPUC expects to adopt an additional decision that will outline the information that utilities will need to report on the progress of Smart Grid deployment and on the benefits that are being realized from the investments. The CPUC is considering whether to create a set of goals or metrics to measure progress towards grid modernization and to assess how Smart Grid investments are being utilized. Additionally, the CPUC may create additional working groups that will develop goals or metrics on specific topics, such as cyber-security and environment. For example, a cyber-security working group may develop a set of goals or metrics that can be used by the CPUC to monitor the effectiveness of utility cyber-security practices, and potentially form the basis for any future CPUC action on developing cyber-security requirements. An environmental working group may develop goals or metrics that will be able to measure the environmental benefits associated with Smart Grid investments. If adopted, these working groups will provide input into the yearly review process.

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Also in 2012, the CPUC will focus on potentially developing cyber-security requirements applicable to the distribution grid and providing greater direction on cyber-security policies to the utilities. The CPUC will also continue working with NIST, DOE, and DHS on their national cybersecurity initiatives to ensure that California and Federal efforts are coordinated.

Smart Grid is evolving nationally and internationally. Through California legislation (i.e., SB 17, SB 1476, etc.) the CPUC is implementing policies on multiple fronts to ensure that our State remains a leader in moving forward and transforming our grid into one that brings more reliability, more efficiency, more choice, and more cost effectiveness to all Californians.