ORIGINAL REPORTING: PG&E may answer the billion dollar grid modernization question

PG&E may answer the billion dollar grid modernization question; A step-by-step regulatory process in California confronts the technical challenges and "obscene expenses" of distributed resource investments.

Herman K. Trabish, Aug. 26, 2019 (Utility Dive)

Editor’s note: The momentum behind grid modernization is growing and the search for best practices for executing it is accelerating.

California regulators have taken the biggest step forward yet to clarify what grid modernization is, how to prioritize technology deployments and what costs are appropriate…A new framework, prompted by the controversial Southern California Edison (SCE) $1.9 billion grid modernization spending request, gave Pacific Gas and Electric (PG&E) clear direction on its proposed grid modernization expenditures and on what is eligible for cost recovery through rates.

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The outcome could be new clarity for utilities and regulators across the country on the ill-defined grid modernization concept and allow higher penetration of distributed energy resources (DER), stakeholders told Utility Dive. There is a lot of money at stake. Utilities proposed $14.2 billion across 17 grid modernization proceedings pending in Q2 alone, according to the North Carolina Clean Energy Technology Center grid modernization policy quarterly. California's next steps could influence that spending, as well as the many investments likely to follow.

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Two factors made California the national leader, according to stakeholders: California's 2013 Assembly Bill 327 established a public utility code section that required distribution system planning. A subsequent ruling by the California Public Utilities Commission (CPUC) required utilities and stakeholders to develop a framework for IOU grid modernization proposals in their General Rate Cases (GRCs).

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The framework had two objectives: identify investments needed "to integrate the growing number of DERs" and determine how customer-owned DER should be valued.A CPUC Distribution Resource Planning Order followed, establishing guidance on IOU grid modernization expenditures. It was not put in place in time to guide SCE's proposals, but will be used to evaluate PG&E's December 2018 GRC application. Unlike other GRC expenditures, grid modernization spending must, in addition to being "just and reasonable," also make possible "net benefits" for ratepayers, the commission ruled… click here for more

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