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California Regulators Issue Resolution on Smart Grid

26 Jul 2011

California’s state utility regulators have adopted a new resolution on smart grid principles. The National Association of Regulatory Utility Commissioners’ (NARUC) Board of Directors approved the resolutions at the conclusion of the Association’s Summer Committee Meetings, which took place in Los Angeles.
In the resolution , NARUC reiterated its support for the adoption and implementation of smart grid technology “because smart upgrades to, and modernization of, the transmission and distribution system can make the electric grid more efficient and offer benefits to consumers and society, especially when combined with advanced metering, efficient pricing, and consumer-focused technologies.”

To advance the development and collective understanding of smart grid technologies and policy,
NARUC members resolved to endorse several foundational principles relating to advanced metering and smart grid deployments for the purpose of identifying issues of concern and interest to State regulators and the federal government.

First, the Commission urges state commissions to recognize the potential for smart grid investments “to improve reliability, provide for a more resilient power system, reduce peak demand, provide consumers with more detailed information regarding their energy usage, integrate renewable resources, reduce consumption of electricity, increase operational efficiencies to potentially offset or reduce the rate of increasing electricity costs, and enable economic growth and innovation.”

State commissions should also identify the risks and rewards of smart grid investment projects and allocate those risks and rewards appropriately to utility shareholders and consumers. Similarly, NARUC urges cost recovery for smart grid investment “should be predicated primarily on the cost of such investments and any economic, reliability, environmental, or other benefits and should consider aligning payments by consumers with benefits to consumers to the extent reasonably possible. State commissions should consider, to the extent possible, anticipated costs of future investments that would reasonably or necessarily follow from proposed investments.”

The Commission concluded that consumer education and engagement are integral to a successful smart grid deployment. “State commissions should require smart grid implementation plans to include comprehensive consumer education programs, appropriate funding for consumer education in the cost of the program, and involve utilities, consumer advocates, the commission, and third parties in the process of designing and implementing consumer education.”

NARUC is also preparing a best practice guide to help State commissions craft policies for consumer privacy, which the Commission calls essential. “When considering or implementing smart grid investments, State commissions should review existing privacy policies, and, if necessary, adopt or update their policies to ensure that they properly address the privacy concerns created by smart meter data collection and transmission and track national privacy best practices. Commissions should require utilities and any relevant third parties to comply with those policies.”