Demand Response:
Phase 3 - Program Design


In 2013, the CPUC opened a Proceeding to undertake a major effort to enhance the role of Demand Response programs in meeting the state’s resource planning needs and operational requirements and long-term clean energy goals. 

In June 2014, the CPUC held Demand Response stakeholder workshops as well as limited evidentiary hearings. 

Parties’ Joint Proposal

Guided by workshop discussions, in August 2014 ORA joined multiple parties, including the utilities and industry, consumer, and environmental groups, in submitting a Settlement agreement to the CPUC, which would address key issues of program design, including:  

Demand Response Goals:  Interim statewide goals and a process, criteria, and timetable for establishing firm goals based upon a DR Potential Study.  

Valuation/Program Categorization: Further analysis is required to determine how Load-Modifying programs will receive Resource Adequacy value.  Workshops should be established working groups to resolve issues and provide recommendations to the CPUC. In the interim, methods for existing DR program valuation should be retained through 2019, with redesigned bifurcated programs beginning in 2017. 

Demand Response Auction Mechanism:  A Demand Response Auction Mechanism (DRAM) pilot for 2015-2016 to test the procurement of Supply Demand Response. 

CAISO Integration:  Establish a working group to address solutions for faster and easier integration of Supply Demand Response in the CAISO market. 

Budget Cycles:  One more 3-year cycle for 2017-2019 with mid-cycle reviews, while the CPUC considers establishing a longer budget cycle.   

CPUC Decision

In December 2014, the CPUC issued a Decision adopting most of the recommendations in Joint Parties’ Settlement agreement, but with these modifications.  

  • The designation of 2016 and 2017 as a transition period with steps towards fully implemented bifurcation by January 1, 2018.  
  • Guidance on the development of the Demand Response Auction Mechanism (DRAM) pilot, including the use of set asides to strike a balance between providing a reasonably-sized market for the pilot and enabling current procurement mechanisms to continue.

ORA’s Policy Position

ORA advocates to ensure that ratepayers receive benefits from the Demand Response programs they fund through their utility bills. 

ORA supports the CPUC’s December 2014 Decision as it promotes the protections and policy guidance that ORA sought in the Joint Proposal to ensure that Demand Response programs would obtain sufficient value for the customers who fund these programs. The Decision’s modifications also address the gaps in the Joint Proposal. In particular, ORA supports the adoption of set-asides for the Demand Response Auction Mechanism (DRAM) pilot to motivate participation which will allow it the greatest chance of success.  

Parties provided independent briefs in Demand Response Phase 2 on Cost Allocation and Recovery and the use of fossil-fueled Back-up Generation, as well as whether set-asides are needed for the DRAM pilot to motivate participation. 

See ORA’s May 6, 2014 Testimony on the Future Demand Response Program Design. 

See ORA’s August 25, 2014 Opening Brief. 

See ORA’s September 8, 2014 Reply Brief. 

See Joint Opening Comments of the parties to the Settlement on the Proposed Decision and Alternate Proposed Decision on the Settlement Agreement. 

See Joint Parities’ December 22, 2014 Compliance Letter to the CPUC’s December 2014 Decision. 


Proceeding Record 

See the Proceeding docket.

Other Resources

ORA Demand Response Portal