Regulators in California last week initiated rulemaking to push the state’s three investor-owned utilities to incorporate distributed energy resources (DERs) into the planning and operation of their electric distribution systems.

The California Public Utilities Commission’s (CPUC’s) Aug. 14 Order Instituting Rulemaking establishes rules, policies, and procedures to guide Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric in developing their Distribution Resource Plan Proposals.

The utilities are required by state law to file those plan proposals—essentially roadmaps for the integration of cost-effective DERs—with the CPUC by July 1, 2015. The CPUC is expected to issue final approval of the plans by March 2016.

DERs include distributed renewable generation resources, energy efficiency, energy storage, electric vehicles, and demand response technologies. California wants to deploy 15 GW of DERs by 2020. That target comprises 12 GW of distributed generation, more than 2 GW of demand response, and 1 GW of energy storage.

A draft paper titled “More than Smart: A Framework to Make the Distribution Grid More Open, Efficient, and Resilient,” that is attached to the CPUC’s order (Appendix B) notes that California’s electric system serves the majority of the state adequately. But, changes are needed to scale the system to the level of DERs envisioned in California policy, it says.

The paper outlines four key principles around distribution grid planning, design build, operations, and DER integration. They call for starting with a comprehensive, scenario-driven, multi-stakeholder planning process, and moving design and investments toward an open, flexible, and node-friendly network system (rather than a centralized, linear, closed one.) They also call for an expanded role for distribution service operators in utility distribution operations, and expedited DER participation in wholesale markets and resource adequacy.

One significant challenge, among several others recognized by the paper, in the integration of DERs involves the development and implementation of “appropriate value monetization methods.” It says that valuation will “necessarily need to consider the local value as well as the net system value given the integrated nature of the electric grid.”

In related news, the CPUC on Aug. 19 announced that its ambitious renewables portfolio standard (RPS) program—which requires that 33% of electricity retail sales be served by renewable sources—is progressing well.

California’s three investor-owned utilities reported at the end of the first quarter of 2014 that they collectively served 20.9% of their retail load with RPS-eligible generation.

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)