Putting the Customer First: How California can Achieve a Distributed Energy Grid

If you have ever worked in the service industry and dealt with a difficult customer (or even seen one in action), you are likely inclined to recall the oft-used adage, “the customer is always right.” Clichéd as that phrase may be, it is not without merit. Here at Environmental Defense Fund (EDF), we believe the same truism applies to how utilities approach providing electricity.

In a recent ruling issued in the Integrated Distributed Energy Resources (IDER) proceeding, California Public Utilities Commission (CPUC) Commissioner Michel Florio found, quite properly, that utility business models need to be evaluated in order to put more customer and third party-owned distributed energy resources, like rooftop solar and energy storage onto the grid. Currently, utilities receive a rate of return if they build infrastructure necessary to support our central power grid (like pipelines for our aging natural gas system). If clean, distributed energy sources make that infrastructure less essential, it could jeopardize the utilities’ revenue stream, thereby discouraging them from including these cost-effective energy resources in our power mix.

Right place, right time

While the ruling is groundbreaking in its consideration of the need to reform the utility business model – a change EDF continually pushes for – the CPUC can do more to ensure California increases its adoption of distributed energy resources. Doing so will help enhance grid reliability, as well as provide important cost and environmental benefits for customers. In order to accomplish this, EDF recommends California Utilities Commission do the following:

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• Think location, location, location. First and foremost, rather than focusing on whether the utilities are receiving an appropriate payment for deploying greater amounts of distributed energy resources, the CPUC should be looking at whether they are located in places that provide the most benefit to customers, the grid, and the environment. For example, if distributed energy resources are placed in communities that have historically been disproportionately impacted by air pollution, the potential of these resources to avoid emissions from fossil fuel resources can have tremendous positive impacts.
• Conduct further analysis before starting a pilot. The CPUC should conduct further analysis to discover how they will determine the locations that would provide the most benefit from distributed energy resources. Without this extra step, the CPUC’s efforts may not provide benefits at a scale necessary to help meet California’s clean energy and environmental goals. The best approach would be research by the Commission or an independent third party, paired with a multi-stakeholder workshop.
• Include access to data. In order to make fully informed decisions, customers and third party providers need better access to data. Currently, most energy data are gathered in ways that are slow or make it hard to use. Alternatively, a utility may possess data without sharing it. This lack of access prevents customers and third party providers from properly siting distributed energy resources and using them at the right times. By making data publicly available in a way that maintains confidentiality, customers and third parties can make truly informed decisions.
• Coordinate with other efforts. The Commission should coordinate with a number of other proceedings currently grappling with the issue of utility business models to derive important lessons. These include utility electric vehicle pilots, San Diego Gas & Electric’s new utility business model demonstration project, as well as demand response, energy storage, and time-of-use rate pilots – all currently pending with the Commission.

More often than not, businesses with outstanding customer service are positioned to be much more successful. Utilities that focus as much on their customers as they do on their profits will see the same trend. An increased focus on the customer side of the meter requires willing participation by customers themselves. People are more likely to participate if their utility demonstrates they are making changes that benefit them. In that spirit, EDF asks Commissioner Florio and the CPUC to take a good idea and make it even better. Commissioner Florio’s ruling has the potential to result in great outcomes for Californians – as well as the health of the grid and environment. However, in order to accomplish this, the CPUC needs to employ broader, more visionary thinking that incorporates more extensive research and solicits opinions from a wider array of stakeholders – whether they are formally involved in the IDER proceeding or not. Chances are, what’s good for the customer is what’s good for the grid.

Photo credit: Wayne National Forest / Flickr