 Greetings. It's a pleasure to come speak with you about the work we're doing at the Public Utilities Commission. One of the aspects of the energy seminar that I really appreciate is that, as John noted, you get to hear from different experts in the field who are approaching the same issues, but just from a different position. And happy to provide the perspective of the regulator today. I want to acknowledge another former regulator, Jeff Byron, who is my predecessor at the Energy Commission. And much of what I'll speak about today has been long in the making and started with colleagues as himself. I know we've got a diverse group here, a lot of students, and so feel free, especially in the questions, to ask any question that you have. I will at times be too wonky for some of you and not wonky enough, as is the challenge in talking about a technical policy issue. So, as was mentioned, I'm a commissioner with the California Public Utilities Commission. And those who may not be familiar with our work, we are the agency that regulates investor-owned utilities. And so that's electric, gas, water, communications. We also started and still have authority regulating railroads. We're responsible. Every time you see a railroad crossing you like or don't like, that comes to us for approval. People mostly know us because we set the rates for the electric utilities, and so that's the key role that we have. But more germane, our general role is to ensure safe, reliable, affordable utility services for customers. And that role has changed and evolved as more unique resources come on the grid, and particularly on the distribution system. So I'm going to speak to that today. I serve with four other commissioners. We meet about every two weeks to a month, and we vote on different items. We have a lot of matters we're considering. We each have about 80 proceedings assigned to us. The majority of those are energy proceedings. And as was mentioned, I've had the pleasure of working on energy efficiency, renewable portfolio standard, electric vehicles, energy storage, and a host of issues. So when I spoke here, I spoke here six years ago, which I was reminded of, including that there was a video which I have yet to watch. And I was at the Energy Commission, and so I talked about the role of the Energy Commission and particularly my career trajectory. And I looked back at what I said back in 2012, and I highlighted with excitement all the trends that were evolving and that I had the opportunity to test drive at Tesla Roadster, because that was the one pure electric model that I was on the road at that time. Indeed, we've seen a significant growth in that distributed resource where there's, I can't even count, but 30 plus models of electric vehicles available to us now. At that time, I also lauded our aggressive clean energy environmental goals. We just recently adopted a 33% renewable portfolio standard by 2020 and a distributed solar target of 3,000 megawatts as a part of the California Solar Initiative. A lot has changed in the last six years, and primarily what has changed is we've seen an explosion and interest in distributed energy resources in particular. And that has put different challenges and opportunities for the grid. So with our goals, we went from having a 33% RPS during that time to now just passing statute, a target of 100% zero carbon resources on the grid by 2045. Our RPS target is 50% by 2030, and we will surpass that. We have a goal to double our energy efficiency by 2030, and we have utility energy storage targets of 1,325 megawatts, which again we'll meet early. In the distributed energy space, we now have nearly 6,500 megawatts of distributed solar PV on the grid. And to put that number in perspective, we have more distributed PV capacity on the grid than we have nuclear power capacity on the California grid. When I started at the Public Utilities Commission, our regulated utilities oversaw about 4,000 megawatts of nuclear generation, and we have seen half of that closed, and the other half is scheduled to close in the next few years. As I was noting, we've seen a real growth in electric vehicles. We now have over 474,000 electric vehicles in California, and as a nation, we're in target to get to 1 million electric vehicles by November. So again, every time I give the statistic, literally I have to check it because in a week's time we've seen tremendous growth. And there's more to come, and this is all a setup for why we should actually care about what's happening in the distribution grid. We have aggressive state laws to grow our electric vehicle population. We have a target of 5 million zero emission vehicles to be on the road by 2030. We just had legislation passed that expands our incentive program for customer side generation, the self-generation incentive program. And we also have direction in the EV space to have public charging available, 250,000 units of public charging on the grid by 2025. The California Public Utilities Commission has roles to play in all these resources, and I'll speak to more of that in a minute. Really what we're trying to accomplish, though, is with all these resources coming on the grid, making sure that we're extracting as much value from these resources as we can. When I started working on this, they were add-ons. Okay, you want to have rooftop solar PV, that's fine, but we're going to manage the grid over here. Now there's an intentional legislative direction to include these resources in our grid management. And this has taken a while to get to. I recall at the Energy Commission in 2012, we were looking at a renewable strategic plan. Like, what does the state need to get due to get to 33% renewables? And we put forward about 30 recommendations, some really seemingly controversial ones, ones on rate design, on expanding the regional markets. The most controversial recommendation that I put in that report was to have a conversation about the distribution system. At the time, the only people talking about the distribution system were utility engineers who were kept in some corner way off from the main building. And we actually had the utility to say, well, we don't want you digging into our utility planning. That's actually something we've always had control of. We've never had to share that information. And so we went from an initial recommendation to, you know, start a proceeding to look at the distribution grid to simply changing the language to starting a conversation. Fast forward, we've come a long way. We have legislative direction to actually have the utilities do intensive distribution grid planning that specifically is about facilitating the use of distributed energy resources. And that includes energy efficiency, rooftop solar PV, electric vehicles, self-generation and customer-side storage. So at a high level, what we want is a modern grid. And we adopted the following definition of a modern grid earlier this year. A modern grid allows for the integration of distributed energy resources while minimizing the impact and risk to safety and reliability. A modern grid facilitates the efficient integration of distributed resources into all stages of distribution system planning and operations. A modern grid fully realizes the value of these resources. I'm cutting it down. It's a very long definition. A modern grid also, to the extent cost-effective, is meant to provide equitable access to all ratepayers. So in essence, we want all these technologies to work well together and better than what we have and to collectively result in a more efficient, cheaper, more reliable grid. So I just wanted to provide an example of what is a antiquated grid versus the modern grid to kind of put it in perspective. So when you have a rooftop solar PV, there's an inverter. And historically, that inverter's primary function has been to convert the direct sunlight into usable electricity. And that's it. That's what it did. Now, in a modern grid, the inverter can do so much more. Smart inverters can do more advanced functions, such as monitoring the solar PV output, the solar PV effect on voltage, the effect on frequency. A smart inverter can now allow the device to communicate with the utility. And we put all these requirements now in our requirements for interconnecting to the grid, that when you put a PV system on your roof, that system now should be able to provide voltage support, something that we used to have to rely on other devices to do. So in this smart grid, we're building in capacities to these technologies that allow them to provide grid services and also help to manage their output to the grid. As I was mentioning, we have various roles to support the modern grid. We manage the interconnection process, which is what the process that any distributed device must go through to connect to the grid. We set procurement targets for storage for electric vehicles. And we also set rules for participation in demand response programs and other programs. So as I was mentioning, we received legislative direction in 2013 to have the IOUs, which are the utilities, engage in distribution planning, and to identify optimal locations for distributed energy resources. We had the utilities file plans in 2014, and that has now been an iterative process and a mutual learning process, as we and other stakeholders are finally beginning to understand what issues and conditions exist at a circuit-by-circuit level. As I was mentioning, I just have a note here that typically this planning was done in-house by the utilities, but this is the first time where we've actually had an open proceeding where all stakeholders can get the information. We have a lot of initiatives related to distributed energy resources, and so we put them all together in a distributed energy resources action plan in 2016, so we can keep track of our different initiatives as well as progress. We are coordinating across no less than 15 proceedings at the PUC. We have 35 action elements related to the distribution grid across these three tracks. I'm going to highlight these three tracks. Again, you can see what are some of the issues that we think are most prominent in order to deal with successful integration of DERs. The first track is grid planning. We talked a bit about that. The second is rate design. Rate design, we're really saying what is the economic signal that we're sending to customers who have DERs regarding how they should use their device. And then the third category we focused on is integration of distributed energy resources into the wholesale market, because most of the power that we're transacting or utilities are selling is going through the bigger wholesale market connected to the transmission system, and there's a question about how can these localized resources participate in those markets. So I wanted to speak to the first two topics in particular, what we're doing around grid planning and what we're doing around rate design. On grid planning, we've been hearing for years from developers that if they understood the grid needs and capacity, if they understood where it would help to cite DERs because when it put constraints on the wires and distribution system or it could actually help, then they could target their investments to those areas. And so this led to the development of a locational benefit analysis, as well as the integrated capacity analysis. I'm going to start with the integrated capacity analysis, but the big takeaway is that these two types of analysis are helping us to finally understand where we can locate electric vehicle storage and solar PV and actually have it be grid beneficial. So the integrated capacity analysis calculates available circuit hosting capacity to accommodate additional DERs without grid upgrades. It can be expensive, it can be time consuming to update the grid. So let's figure out where we can put these resources with just the capacity that we have. What's resulted from this analysis are online heat maps and databases that are published and updated on a monthly basis. So if you are a developer or a community looking at investing in distributed energy resources, you can use these public tools to identify some of the challenges and opportunities in your region. There are three use cases for this analysis, to inform the developers, to streamline our interconnection process, because when we talk about interconnecting a device, you again are saying, can I put this on the grid in a way that's safe? And that partly depends on what the capacity of the grid is. And then the third is to inform our distribution planning. How much do we have to build out the typical wire system? The second type of analysis, locational benefit analysis, is what you think it would be. It quantifies the avoided cost of candidate distribution deferral opportunities. So specifically, can you put a storage device, for example, on the grid? And that helps to manage load in a way where you don't have to build more distribution system capacity. This is helping us to identify where some of those opportunities might take place, where we might want to compensate these resources for doing investments that utility otherwise might. So we've got these two new tools, and that was mostly the engineers, and that took a long time. And then the question became for us, well, what do we do with these tools? How do we integrate it back into the work that we do? Because the bread and butter role of public utilities commission is to manage rate cases for utilities, where we're evaluating whether the investments they're making are prudent, are they most cost effective, are they most aligned with state goals. So we needed to better connect this analysis that was being done in one silo with our general rate case process. And so building upon this work, early this year we adopted a distribution deferral framework. And that better directs utility spending, including on pilots to better utilize distributed energy resources to decrease grid investments. We now require distribution reports on current grid needs and opportunities for distribution investment deferral using distributed energy resources. This data is accumulated into two annual reports that then feed into our general rate case process. We also created a distribution planning advisory group designed to review the utility reports, select candidate deferral projects, and specifically identify where the utility should hold a solicitation to allow distributed energy resources to compete head to head with distribution investments. And then finally, when a utility files a rate case, which is a big document, a big record, the rate case now must be consistent with what the IOUs present in the distribution reports. Having these reports will allow us as commissioners and other stakeholders to better track whether the utility is really aligning all of these investments. Now you might think, well, why do we need all this process, right? Why can't we just tell them to do it? Well, one of the challenges with the growth of distributed energy resources is that their development is at odds with a typical way that a utility makes money. Utility makes money from investing in capital and then getting a rate of return on those investments. So what we're really asking here is for utilities to be agnostic to whether they own a resource or whether a third party owns it. And we ask them to be agnostic, but to be thoughtful about whether these resources can be thoughtfully used. And so there is this more fundamental issue with aligning utility incentives with this growth of distributed energy resources. We put in both structure into the format that the utilities are most engaged with, the rate case. But we also come up with this outside advisory group to help give recommendations so they're not only coming from the utilities themselves. We also are looking at are there ways to provide a financial incentive to the utilities to select distributed energy resources as alternatives to wires investments. And so we do have a pilot program underway that would allow the utilities to recover the cost of the investment as well as earn a 4% pre-tax return on those investments. Now that is less than what they earn typically in terms of rate of return on other investments, but we think it is a reasonable place to start. So this year we'll be looking to see what type of uptake there is of this pilot and to continue to look at this issue. I will say this is a challenging issue across the board when we look at new resources about whether the old paradigm for compensating utilities is necessary as we move forward. There are also several other policy questions that remain that we'll have to tackle as we really try to integrate this technical analysis into our policymaking. For example, if there are good places to cite solar PV, there must be bad places. And right now we don't limit where people can cite customer choice as a value. And we want to make sure in our mode has been if customers want to adopt solar PV, they can. If they want to adopt electric vehicles, they can. But this analysis shows us there's places where you shouldn't invest. How do we approach our program offerings? Is it equitable to exclude certain parts of the state or certain geographies from access to these resources because of the grid costs or maybe reduced grid benefits? Another challenge overall is that to sustain this work requires a significant amount of technical expertise. And this is particularly something I highlight when I talk to other states about opportunities because it can be a big lift. And we spent over a year and a half in technical workshops figuring out this analysis. Each utility has had to invest millions in their IT system in order to incorporate new rates, new designs. So next let me turn to the second main focus of our DER action plan, which is rates and tariffs. As I was saying in the beginning, when we talk about rates, it's just what is the economic signal we are sending to customers who have these resources regarding how they should use them, when they should use these resources versus when they should rely on the grid power. It's incredibly important for us to send the right economic signal now because we're trying to get customers to use power at times when it's cheapest and best for the grid. And there's a lot of variation in a day, in a season, in a year due to the amount of renewable energy we have coming on the system. There are literally times of the day and times of the year where we have to curtail and get rid of renewable power because there simply is not the demand to meet that power need. There are times of the day like that as well. So for example, we find that in the middle of the day when the sun is shining, that that is the cheapest time to use power. But it's also the time when if you have solar PV on your roof, you'll provide that power and you won't get the best price for it because, again, it's that time of the day when it's plentiful. So we're trying to get customers to shift their demand later in the day and to have these resources provide power to the grid when we really need it. So we're doing this in a few ways. One is switching overall to time of use rates. This is something that commercial customers have been used to, but we're switching the time of day. Commercial customers, we used to be told you want to use power at night, especially when wind is prevalent. Now we're saying use it in the middle of the day. We're also switching residential customers like myself and some of you to time of use rates. For PG&E's territory, those rates will be in effect starting in 2020. And for SDG&E in San Diego's territory, we'll start to see those time of use rates come online in 2019. This is a significant change. I will say it is an area ripe for research because although we support this direction and think it best aligns with cost causation principles in terms of where actually our power costs are coming from, it is a different change in behavior. So we are spending quite a bit of money, $202 million to date to be exact, on marketing education and outreach about time of use prices. I will say when I wrote down this number, I thought I have not seen one piece of marketing on time of use pricing. So I got to go back and see what exactly we're doing with that money. But stay tuned. But it is an area where I think it's going to require a big transition. And I will say the rates are different across utilities. And so one of the challenges about customer education is we're trying to educate people about why we're doing it. But people ultimately want to know what does this mean for washing my clothes? What does this mean for cooking dinner? And that's harder to say because it does vary on a case-by-case basis. We are required though specifically to look at impacts to the elderly, customers in hot climates who may not be able to adjust their usage. Another area where we're doing a lot of work on rates with electric vehicles. The interesting thing about electric vehicles is that if you have an EV, most people on average drive about 4% of the hours of the day. And so 96% of the time your car is idle. 10% the time you need to charge. So that leaves a lot of time when your car doesn't have to be doing anything. And therefore the opportunity if you're able to connect with smart devices to charge at times that are best for the grid. Unfortunately, even though we've had several time of use rates for electric vehicles for several years, we've not seen much customer adoption. A couple years ago, San Diego Gas and Electric, who had probably the most innovative rate structure in the space, had to admit that they only had 6% adoption of EV rates by EV drivers. Now we've seen those numbers go up substantially in the last couple of years, but it's still not the majority of the drivers. And there's lots of reasons for this. One being that I think customers ultimately still find it cheaper to drive an electric vehicle even if they're not utilizing these special rates. But we believe and what we've looked at has proven that there is a rate where everyone could save relative to the cost of gasoline and they could save more. So we are also thinking about how do we do more marketing education and outreach about these rates to make sure that customers switch to them if it's in their economic advantage. So those are just two of the main tracks that we're exploring as we're looking at about how to successfully integrate distributed energy resources on the grid. And when I think about it, it all sounds fairly complicated, this process, and taking a step back wondering, is it worth it? I mean, why do we need this level of refinement? And to answer that question, I think we need to take a look at the broader policy and regulatory landscape that this planning and decision making is a part of. And that is a landscape where we need the grid to be cheaper, more efficient, more integrated in a way we haven't before. Because the grid is not only becoming complicated from these new resources, there's all these external forces that are making it complicated as well. And so I do want to highlight the interaction between the distribution system planning and issues around fires, wildfire threat, cybersecurity, reliability, and affordability. All of you are very aware of the significant firestorms and wildfires we've had in California the last few years. And just to put a pinpoint and some statistics around the extent of that, we just had this summer, the largest fire in California's history, the Mendocino Complex fire, which destroyed land territory equal to more than half of the state of Delaware. That was preceded by Southern California fires last December that destroyed a land area the size of New York City. A month, two months before that, almost a year ago to the day in October, we had our deadliest fire in California with 44 people killed in the Northern California firestorm. We have been really focused on the economic loss and the human loss. But we are also thinking a lot about what are the implications for the distribution system? Because in this period, you have distribution wires that went down, that were not effective. And what we're talking about here with these distributed energy resources are, these are tools that can help to displace those investments. And so we've seen a real interest from local communities in adopting distributed energy resources like storage and solar to help them during times of stress and allowing them to microgrid, allowing them to island. In response to the fires, we're also allowing the utilities to more actively engage in de-energization of the grid. And that means they can cut power to customers if they think they're significant fire risk. And our fire maps show that over half the utility service territory is in a high fire risk area. Is this something sort of antithetical to what the utilities like to do? They like to sell you power, right? So the idea of shutting down that power is a new realm. And there's a lot of community concerns around this. There's concerns about what if you were someone with a medical issue or if you need power for your local business district. And so we are looking at a couple of proceedings about how DERs can fill that gap. I have one related to energy storage in response to legislation that is looking at distributed storage both at public sectors, institutions like hospitals and schools and on the grid. Given again the risk from fires, we are also seeing the utilities request significant amounts of money to further harden the distribution system. And already we've seen distribution rates go up and go up over time. And representing, I think over time you will see distribution and transmission rates representing a much greater share of your bill than the actual generation itself. So Southern California Edison for example just submitted a proposal for 637 million of specific grid hardening technology for the distribution system. This is outside of and in addition to what their case requests are. Given that many of these investments may be worthwhile, but it means we have to do as much as we can to make the system more efficient and the costs lower. And that leads to the last point I want to make which is around affordability. We continue to be mindful and concerned about how affordable our grid is. And we want to make sure that whether you elect to have distributed energy resources or not that you can pay for your power bill. We have a world renowned low income assistance program in California, but about a third of our utility customers are on that low income assistance program care. And so when you are in a paradigm where a third of your customers qualify for low income assistance, which has come up to a 30% reduction on the bill, I think you have an affordability challenge. So the commission issued two, started two rule makings last month related to affordability. One on affordability overall and the other on disconnections. And I had the honor to bring forward the affordability rulemaking to the commission. So I just wanted to explain a bit about what we're going to do there. And the idea of this rulemaking is to take a customer centric perspective and look at how affordable our utility services and what are situations where they become unaffordable. And so we're going to be looking at common metrics for assessing affordability across electric, gas, water, communications. The idea is that as a customer you have one wallet, one pocketbook, if people carry pocketbooks anymore, and you're paying all your bills from that. And so really getting a sense of how these things are cumulative. Because as I mentioned, we historically have done rate cases to determine how much revenue the utilities can get. But over 50% of what we're now putting into bills doesn't flow through a rate case. And it's some of the things that I've been talking about that we're really proud of are investments in electric vehicle charging. Investments in energy storage. But I do think it's hard for customers and consumer advocates to really plan when all of these investments are happening in an ad hoc piecemeal fashion. You would think that there are not set in stone rules about what's affordable. In the energy space, people talk about energy burden, which is that a certain percentage of your income, you shouldn't spend more than a certain percentage of your income on your electric bill. And the rule of thumb there is 5%. And pretty much most of California is within that. And I think, I want to say all, but I don't want to be absolute. You do see discrepancies within California, though. You see that in the Central Valley. Even if they're under the 5%, they're still spending twice, two times the percentage of their income on electricity bills than folks on the coast. And so we are looking at this at a very granular geographic level as well as a statewide level to understand what are just some things we need to be keeping track of so that if we need to make changes to what we're doing, we can. We have not been at this place, but we could be at a place where we have to say, you know, a race just can't go up more than this amount. So utilities come back with a plan that what would you cut from your proposals if we put this cap in place. So those are some of the questions that we're asking. On disconnections, the reality is even if you're tracking affordability, and then there's a question of what do you do once you track it? If you hit, you know, a number, then what happens? Do we not collect from folks anymore? So there are a lot of policy implications for this work, but we first need to start understanding the information. So there's always going to be customers who maybe can't afford their bills regardless. And those customers often are subject to disconnections. And disconnections is not anything new for utility, but the ability for the utility disconnects you has increased with our adoption of smart meters. Now utility can do that directly, remotely, without coming to your home. And we have seen an increase in disconnections. And more so, there is an anecdotal concern that we're seeing more disconnections than reconnections. So then you have to wonder, well, what's happening? Are people moving in together? Are they, you know, operating, you know, somehow not connected to the grid? You know, what is the circumstance there? But in PG&E's territory, Northern California, last year we saw 122,000 households disconnected. And that is, you know, that's more people than 122,000. And so my colleague, Commissioner Guzman Asseves, has been starting to have workshops around these issues and really identifying what is some low-hanging fruit that the utilities can do. You know, for example, what is their process for follow-up? Is there consistency around the rules? What are the processes for payment plans? All those things exist, but is everyone using the best practice? So there's going to be that discussion. And then a longer-term discussion about what do we need to do about disconnections? Ultimately, when a utility is unable to collect revenue, we make them whole for it as a commission. There is a question about, should we be making the customers whole? I mean, what is the obligation we have to customers to give them a basic amount of electricity? There is no official, essential right to electricity, but we're seeing some interesting work come out of organizations like the NAACP around these ideas. So a lot to come in this space. So I'm going to end now with the exact ending I used in my speech in six years ago, because I ran out of thoughts and I think it's relevant. And it's really kind of getting at the fact that there are a lot of complex issues. I've just given you a very quick tour through some of the technical, economic, social issues that come up and opportunities as we're looking at distributed energy resources. But what I said six years ago, and it's still true today, is there are a number of activities the state is engaging in to reach its clean energy goals and therefore a host of opportunities for new contributions. We are facing complex, but I believe ultimately solvable problems. A key challenge is the variety of uncertainty that exists in demand and supply forecast, project viability and impacts, climate change impacts, and the effect of the interaction of a host of policies. The research community is strongly needed to analyze and provide tools for quantifying and reducing such uncertainty, and the inherent risk it poses when planning and building the energy system. All of that's still true. I think we made progress, but as you know, once you start to get, understand one issue, you're on earth, you know, a thousand more. So again, I want to invite you to continue to contribute this space, whether at the Public Utilities Commission where we're hiring, at a regulated utility, at an energy service provider, at a CCA, at a battery company. There is no place you can't go right now and have an impact. So with that, thank you. Appreciate your time. I look forward to your questions. Students here, so any student questions, follow up? Anybody want a job? Yes ma'am. So what, you might not have access to this information I guess, but what percentage of users do you project will adopt the de-gatement change due to the great time of use policy change, and what do you think that would do to the portability? That's a good question. So we've had pilots where we've done opt-in or pilot rates where customers have been encouraged or incentivized to participate and doing analysis about actually how price responsive those customers are. And what our pilots so far have shown is that customers do respond to price, that they are able to reduce their consumption. We even saw that with low-income customers, although their ability to reduce, their percentage reduction was less than non-care customers. We also looked particularly at senior citizens and found out in Nelson Central Valley and that they were making adjustments at a similar extent. So I do think that we expect mostly but to make behavioral adjustments. I do think we're going to see some variation between those who have smart technologies in their home and those who don't. If your ability, I have a toddler and so we use the washing machine every second of the day and I don't have a smart washing machine but it's something that I'll have to think about if I don't have the flexibility to change when we do our task. I do think this is going to be a challenge because we're asking people basically to not consume between 5 p.m. and 9 p.m. and that is the time when most people consume a lot of power and so I think we want people to be responsive but ultimately if they're not then the grid will be able to accommodate them but it will be more expensive. So I think it's going to be a choice between the adoption of these technologies or changing patterns or facing higher bills. Back up here, let's go. Doubling energy efficiency by 2030. In the other goals you talked that you were on pace were going to exceed that but you didn't say that for energy efficiency so I was wondering how is that going and what are the biggest challenges for reaching that goal? That is a great question. We talk about doubling energy efficiency. We're really talking about getting to 10% of our usage. It's not doubling to 50% but it is a really difficult challenge at this point and I'll say why. When we work in partnership with the Energy Commission which does energy efficiency targets and demand forecasts and planning and they've mapped out what if we scaled our existing programs how we get to doubling and even with scaling to the maximum technical potential, economic market potential there's still an unknown. There is a wedge literally on these slides that says we don't know how we're going to get these savings and they're going to come from technologies that are not at scale yet and that has really gotten us to start to, in addition to while that's happening so we need to get more energy efficiency than we ever did and where we used to get it from those sources are drying out so we have gotten significant amounts of energy efficiency from lighting changes but as CFLs and LEDs are introduced into energy efficiency code then we can't, that's not excess savings that we get and so we have seen lighting be incredibly cost effective but now we're having to look in other ways and so the more of the energy efficiency that's attainable is less cost effective and so that's gotten us doing a couple of things. One, as a commission we're more squarely taking on this topic of market transformation the idea that the way we go about buying energy efficiency now requiring to evaluate it on cost effectiveness approach in a certain time frame may not be appropriate that new technology spaces might need several years to grow that we might have to approve programs and budgets based on future cost effectiveness and not current cost effectiveness so our staff has a white paper out right now looking at how we approach market transformation the other point I'll just mention is historically we manage the voluntary programs that the utilities offer and there's been criticisms that the utilities aren't interested in energy efficiency because although we decouple their rates it's not about selling power and so that there could be more innovative models out there from others besides the utilities we have heard that complaint and what we ordered last year was for 60% of the portfolio for the utilities to be bid out to third parties so that individual companies that will have their profit maximizing will be able to design implement programs the idea is that if you have businesses are really focused on this they can have more innovation and that the utility should really be in their role of overseeing those contracts and not actual program design great right behind one for energy efficiency I like it sir I'd be really interested who your thoughts are on challenges that CCAs may face in integrating and if there's any I guess how CCAs and spiritual user are interacting in that space yeah so it's a relationship right so the utilities manage the actual technical distribution system and then so CCAs for those who don't know these are community choice aggregators and this is where communities end up forming entities to buy power on the community's behalf so your CCAs providing your generation but your transmission and distribution services are still being provided by the utility and so we have seen and then we've seen a real growth in CCAs I think about 11 out of 19 have started serving low this year and so to answer your question more directly we're still seeing figuring it out but we have seen CCAs interested in distributed projects some which they own some which they don't and so I think there's a relationship in terms of as they're figuring out how they want to plan their system coordinating with the utility on maybe location or the best way to do that so there's a relationship and maybe not as strong as one would think at this point let's go over here and then back we talked about decoupling prices and pushing it to 60% is that like a harbinger for a future model where a generation isn't involved in the utility at all it's just total distribution and everything else is independent not per se no but we might be moving in that direction California always likes to do things a little different and so our market structure is different than other states and that's the hybrid structure where the utility is divested of most of their generation as part of electricity crisis and so even though there is some utility owned generation more of it is through third parties as a general point utilities don't earn if it's not utility owned generation the cost of power is passed through to customers and so fundamentally they should be agnostic to whoever provides that power we are looking I'll just take this opportunity we are looking more broadly at what are the implications of customer choice so as I mentioned we have CCAs forming in PG&E's territory that's predicted to be 40% of customers will be served by CCA as compared to fully by the bundled utility there are projections ranging across the state to up to 80% of customers going in that direction over the next several years we also just had new legislation that allows for more direct access and that's when a private company sells power directly to a commercial customer we've had a cap on how much of that can happen and so the legislature has just raised that cap and then you also have this massive growth and distributed energy resources like I said and these are customers who are doing more of their own self generation so as a commission we've been looking at all of these movements and asking the questions like what does this mean to our mission to provide safe, reliable, affordable power and the big takeaway is a lot more people to coordinate with and every entity has their own objectives, their own planning cycles, and their own authority so how do we enable that as we go forward and we don't have all the answers yet but it's one of the questions that we're asking let's go over here, there and then Mark thank you again Dr. Peterbin, I'm curious I think at the beginning of the talk you mentioned that some of the without wires projects are looking at like a 4% rate of return for the utilities which is a little bit less than their standard right now they're close to 10% so how are you all I guess helping or working with utilities to I guess justify their new share responsibilities to their shareholders but still take on projects like that I mean so our obligation is to assure them the opportunity to earn a fair rate of return it's not to guarantee a rate of return but I think you have identified something which is a trend that we're working against which is Wall Street gets very skittish I used to work in banking as an aside I used to think that bankers were like wow they're risk taking, they're not risk taking they want other people to bear the risk and so part of what we have seen is a real interest in maintaining the status quo of how utilities earn and so I can't say that the utilities are really excited about the 4% but we're trying that in other spaces as well which is the idea that you could get nothing for this and so given that we're moving in this direction and we have legislative direction how do we provide incentives but that is an ongoing debate with utilities about what they can't earn a return on and what is the context we're also looking at performance based incentives which sound really great but are actually harder to do in practice it's something we've had mixed results with on energy efficiency and so I do think this is a space where we have a lot of intention I think in praxis the results are not coming as quickly as we would like because the other aspect is these resources have to be cost effective and at what point we want them to be cost effective but are they the cheapest options of cost effective and again we're not going to know that until some of these pilots get finished next row back and then Mark for the final okay so thank you for a great talk I mean you mentioned earlier that to ensure the support of smart grid introducing legislature that new devices must provide additional services and to give the example of both regulation to what extent do you think that the new legislature will sort of is essential for grid stability and reliability versus it's going to sort of hinder the development of new novel devices that will as an example help for the energy efficiency spread I see that question one more time for the new legislature that you want to introduce to help support grid reliability in terms of providing additional services like voltage regulation to what extent is that essential for reliability of the grid but that it also hinders sort of development of novel devices that might help to reach energy efficiency as you said at the moment you don't know what it's coming for it's a good question it's fundamentally the challenge we face all the time which is how much do you push standardization and then what are the implications for standardization for innovation and I think the way California has approached it has worked where the legislation was very broad and said the utility plans need to facilitate distributed energy resources but the practical details are left to us and the aspects of the smart inverters that I mentioned those came out of multiple years of our smart inverter working group and in those working groups we bring together not just the regulators but the engineers in the utilities inverter companies, solar providers you bring everyone together so that by the time these standards go into place they have been developed by the broader industry community which is able to weigh in on some of these issues about impacts of innovation I think what's interesting though you can't forget this it's not just requiring these resources to provide these services this is the first step to compensating those resources to providing these services and so we do require now in terms of smart inverter and functionality the ability to have some frequency control and VAR support and the utility has an ability to communicate and directly affect the inverter so that it's responsive to signals but to the extent that we're actually relying on these resources to really provide those products then we need to be developing markets for VAR support frequency that distributed energy resources can be a part of and get compensated for and that is the holy grail ultimately I mean I think we're in a situation where all resources want the opportunity to provide as many services as possible and get compensated for it and we're just at the beginning of that inquiry I'll end with on this point just highlighting there's been some really fabulous work coming out at NREL and on this about what are some of the grid resources solar PV can provide there was a pilot between NREL National Rural Energy Lab KISO who's our grid operator and First Solar Company and they took a 300 megawatt a bigger solar facility and with smart inverters we're able to actually provide voltage support at night to provide frequency supply to provide spinning reserves and those are all functions that we didn't even know you said wow get excited about it those are some of the things that we just didn't know that solar could do ten years ago and so one of our challenges is for a technical community letting us know what's on the horizon because we're investing millions, billions of dollars in this space and if we know something's coming up it's really hard to retrofit or require that after the fact Mark Kirk, last question I was all wrapped up I'll try to keep it short I was down in Anaheim last week from CBC gave a talk and I had never seen the dragging curve before you know what that is like the more strained up curve it's not, it's the reload for EV charging over the course of the day and the peak is exactly in the evening when everybody comes home and plugs their chargers they're charging why don't we make a default setting on EVs that says you do not charge your car between 5pm and 9pm it's a simple software change for Tesla which is 80% of the market right now and it's the key off of the workplace to convince Tesla to do that I think well this is anything you've hit upon I think one of the ways we how we approach stuff in California which is maybe different other places where we really try to incentivize behavior versus the stick of forbidding it and yeah I mean we two things one the way we're directly addressing this issue is through time and use pricing which is very advantageous for people to charge in the day but then also acknowledging where our car is during the day not everyone's car is plugged in at home so we've been focusing on investments in workplace charging the first investments we approved for the utilities and electric vehicle charging was for workplaces and multi-unit dwellings the idea that you either want to charge at home or you want to charge at work yes there's a lot of interest in fast charging and public charging but that's not where we're seeing there can be control charging where those signals will result so I think you make a good point especially given that not everyone needs to charge in those hours but we also want to inspire people to buy electric vehicles and this is a challenge that we have where we want to support the EV market but what a lot of customers want are public fast chargers which are not as good for the grid they're more expensive and so we are still figuring out what is the electric utilities role and these resources again aren't working to help because that just creates another problem for the grid I think on behalf of the audience I thank you for and express a wish that will run for a high level public office just as soon as possible thanks again