California’s electricity system is undergoing rapid transformation on the pathway to 100% renewable power, with the expected high penetration of renewables, electrification of buildings and transportation, and deployment of behind-the-meter (BTM) distributed energy resources (DERs). Many stakeholders are concerned about potential adverse impacts of these trends on the State’s power grid and agree that going forward it is essential for California to leverage demand response (also referred to as load or demand flexibility management) as a critical resource in integrated resource planning (IRP) to meet the State’s aggressive GHG emissions reduction targets.

If the State is to fully capture the significant demand-side potential enabled by electrification and customer DERs, a key “chicken-and-egg” problem related to demand response and retail rates must be resolved. For large numbers of customers (both residential and commercial) to adopt flexible demand management solutions at the scale necessary to support the future electricity grid, automation technologies for controlling various end-uses and DERs must be inexpensive and ubiquitous. For this to be true, there must exist a robust and stable policy pathway that is standardized, easy to implement, and allows the industry to develop low-cost, flexible demand management capabilities and integrate them into smart end-use devices and DERs by default for use by all customer classes.

Energy Division (ED) Staff have held an exploratory workshop in June 2021 which solicited feedback from the industry and stakeholders. Considering the responses from industry, ED crafted and released a whitepaper charting the six steps to enable demand flexibility called "Advanced Strategies for Demand Flexibility Management and Customer DER Compensation." ED Staff held another workshop on the whitepaper in July 2022 to inform the industry its recommendations to harness demand flexibility. In response to the release of the whitepaper, the Commission opened up Rulemaking 22-07-005 on July 14, 2022, "Order Instituting Rulemaking to Advance Demand Flexibility Through Electric Rates." 

Read our fact sheet on the CPUC's Jan. 25, 2024 decision approving pilot programs for PG&E and SCE.

Procedural Timeline

There are currently 2 tracks in the R.22-07-005 rulemaking with differing timelines.

Workshops and Working Group Materials

Track A Opening Testimony

Track A Reply Testimony

Link to Docket

Rulemaking 22-07-005 found here.