California, long considered a pioneer of renewable-energy technologies, has lagged in one area.


By various accounts, the Golden State has not done much to advance the role of demand-response programs in meeting its overall energy needs. That trend may be coming to an end with a rule recently adopted by the California Public Utilities Commission (CPUC).


In March, the CPUC approved Decision 1503042, which allows the state’s three major utilities to recover costs associated with implementing new demand-response programs. Specifically, the rule allows Pacific Gas & Electric (PG&E), San Diego Gas & Electric (SDG&E), and Southern California Edison (SCE) to recover the costs of implementing an initial step that will enable third-party demand-response vendors to directly participate in the California independent system operator energy markets.


The ruling is significant because it will steer the state away from utility-led demand-­response programs and open the market for direct participation by third parties and consumers. This, in turn, could enable the state to more effectively tap the potential of demand-response programs.


Utilities in California have demand-­response programs in place and budget millions of dollars for their implementation, but, by most accounts, they are not effectively used. For several years, California has missed a target of having demand-response programs meet 5 percent of its peak demand.


Recognizing the importance of demand-­response programs, Gov. Jerry Brown signed legislation in October, implementing various measures to increase the use of such programs.


The ruling adopted by the CPUC is not an aggressive move. In their decision, the commissioners stated they “understand the uncertainty” surrounding demand-­response programs and directed the utilities to provide additional information and “obtain commission authorization prior to moving on to a subsequent step of direct participation.”