The Distribution System Operator (DSO) Future

The Distribution System Operator (DSO) Future
Doug Karpa Policy Director Clean Coalition mobile The fastest path to the renewables-driven DER future 28 JUNE 2017

roadblocks and problems
What are the roadblocks and problems to getting to a high distributed energy resource (DER) future? What is slowing us down? What are the problems we will need to solve?

Four Birds with one stone
Improve reliability and simplify grid operations Eliminate market distortions Save ratepayers money Capture the value stack for DER Germany is the best example we currently have to show the efficacy of CLEAN Programs and the WDG market. If there is any confusion, Germany is in green and California—known as the leading market it the U.S.–is in red. It is astonishing that Germany is adding 11 times more solar than California even though California has a 70% better resource. Rooftop solar in Germany today is priced at the California-equivalent of 7-10 cents/kWh, which would be the most cost-effective resource deployed in California. Ground-based solar projects typically generate about 25% more kWh/W than rooftop projects, because they use tracking, which allows the panels to follow the sun throughout the day. The net result is that ground-based projects are generally about 20% more cost-effective than rooftop projects. The difference between the 25% and the 20% is that the O&M costs for ground-based projects are a bit higher due to their moving parts. (07_gp, 23 Sep 2013)

The Distribution System Operator (DSO): A dedicated operator of the distribution grid
Centralized Generation The DSO manages Interactions with the Transmission Grid Bidding of energy services into Transmission-level Wholesale Markets Balancing within Distribution grid (power, voltage, frequency) Distribution-level Energy Services Markets *

DSO DSO DSO DSO DSO The DSO Grid Model Transmission Grid
Transmission System Operator T-D Interface Distribution Grid DSO DSO DER Generation Storage Demand Response Consumer load Microgrids DSO DER Generation Storage Demand Response Consumer load Microgrids DSO DER Generation Storage Demand Response Consumer load Microgrids DSO DER Generation Storage Demand Response Consumer load Microgrids DER Generation Storage Demand Response Consumer load Microgrids 5

Creating the DSO: The Clean Coalition Plan
Step 1: Separate transmission from distribution Split existing utilities from transmission assets with a bright line separation between transmission and distribution businesses. Germany is the best example we currently have to show the efficacy of CLEAN Programs and the WDG market. If there is any confusion, Germany is in green and California—known as the leading market it the U.S.–is in red. It is astonishing that Germany is adding 11 times more solar than California even though California has a 70% better resource. Rooftop solar in Germany today is priced at the California-equivalent of 7-10 cents/kWh, which would be the most cost-effective resource deployed in California. Ground-based solar projects typically generate about 25% more kWh/W than rooftop projects, because they use tracking, which allows the panels to follow the sun throughout the day. The net result is that ground-based projects are generally about 20% more cost-effective than rooftop projects. The difference between the 25% and the 20% is that the O&M costs for ground-based projects are a bit higher due to their moving parts. (07_gp, 23 Sep 2013) There is no (big) step 2

California’s electricity grid market structure TODAY
Participating Transmission Owner (PTO) (incl. utilities) HV T-grid High Voltage (HV) Transmission Grid PG&E LV T-grid SCE LV T-grid Low Voltage (LV) Transmission Grid Above 200 kV Above 69 kV SDG&E LV T-grid Distribution Grid Other Utility LV T-grid Transmission & Distribution Facilities PG&E D-grid SCE D-grid SDG&E D-grid Other Utility D-grid OPERATED BY CAISO OPERATED BY UTILITIES UTILITIES OWN TRANSMISSION & DISTRIBUTION This graphic illustrates how high voltage (HV) and low voltage (LV) TAC currently work in California. Note that there are two categories of transmission—high (200+ kV) and low ( kV). The cost of any low voltage transmission investment is restricted to the service territory in which it is located. This means that PG&E’s LV facilities are paid for by ratepayers in PG&E utility service territory. The service territory separations function as firewalls between cost allocation for each service territory. Those voltage thresholds also act as firewalls for transmission costs. For example, only HV transmission investments are eligible for statewide cost-allocation, so any facilities below 200kV are “firewalled” from having their costs allocated to other service territories. The Clean Coalition proposes using an analogous system to firewall costs under an expanded CAISO.

Transmission & Distribution Facilities
Clean Coalition Proposal: Restructuring to improve competition and innovation Transmission & Distribution Facilities Only Participating Transmission Owners own transmission assets Participating Transmission Owner (PTO) HV T-grid High Voltage (HV) Transmission Grid Above 200 kV OPERATED BY CAISO LV T-grid LV T-grid LV T-grid LV T-grid Low Voltage (LV) Transmission Grid BRIGHT LINE Above 69 kV This graphic illustrates how high voltage (HV) and low voltage (LV) TAC currently work in California. Note that there are two categories of transmission—high (200+ kV) and low ( kV). The cost of any low voltage transmission investment is restricted to the service territory in which it is located. This means that PG&E’s LV facilities are paid for by ratepayers in PG&E utility service territory. The service territory separations function as firewalls between cost allocation for each service territory. Those voltage thresholds also act as firewalls for transmission costs. For example, only HV transmission investments are eligible for statewide cost-allocation, so any facilities below 200kV are “firewalled” from having their costs allocated to other service territories. The Clean Coalition proposes using an analogous system to firewall costs under an expanded CAISO. Utilities own & operate distribution only PG&E D-grid SCE D-grid SDG&E D-grid Other Utility D-grid Distribution Grid OPERATED BY UTILITIES

One weird trick to reform your energy grid
Only the ownership and maintenance of transmission assets changes Grid Segment Current Market Structure DSO Restructuring Owned/ Revenue Operated High Voltage (HV) Transmission Grid (above 200kV) Participating Transmission Owners, Utilities CAISO Participating Transmission Owners Low Voltage (LV) Transmission Grid (above 69 kV) Utilities Distribution Grid Transmission Markets TSO Distribution Markets (none) DSO

The reality is a bit more complex….
Transmission Grid TRANSMISSION GRID WHOLESALE MARKETS Independent System Operator T-D Interface Distribution Grid DSO bids aggregated DER energy and services into wholesale markets DSO procures power & services for distribution DSO presents power & services to T-Grid DSO facilitates DER services sales to ISO Distribution System Operator DSO delivers revenue streams to DER owners DSO “balances” Distribution Grid DSO schedules power & services from DER Owners DER Owners Generation Storage Demand Response DSO matches DER owners to customers in Distribution Grid Wholesale Market Consumer load 10

Why would anyone do this?
Improve reliability and simplify grid operations Eliminate market distortions Save ratepayers money Accelerate the penetration of DER Germany is the best example we currently have to show the efficacy of CLEAN Programs and the WDG market. If there is any confusion, Germany is in green and California—known as the leading market it the U.S.–is in red. It is astonishing that Germany is adding 11 times more solar than California even though California has a 70% better resource. Rooftop solar in Germany today is priced at the California-equivalent of 7-10 cents/kWh, which would be the most cost-effective resource deployed in California. Ground-based solar projects typically generate about 25% more kWh/W than rooftop projects, because they use tracking, which allows the panels to follow the sun throughout the day. The net result is that ground-based projects are generally about 20% more cost-effective than rooftop projects. The difference between the 25% and the 20% is that the O&M costs for ground-based projects are a bit higher due to their moving parts. (07_gp, 23 Sep 2013)

DSOs solve four emerging problems:
1. GRID RELIABILTY DSOs can provide critical distribution grid management to ensure both transmission and distribution grids remain reliable in a high DER world. DSOs can greatly simplify grid operations

DSOs solve four emerging problems: 1. GRID RELIABILTY
High renewable penetration correlates with HIGH reliability Daniel Shugar, April 27, 2017 David Hochschild, CEC, David Owen, CAISO, Renewable energy no threat to electric grid, as Trump aides claim, S.F. Chronicle, June 16, 2017

The TSO’s Nightmare Transmission Grid Transmission System Operator T-D Interface Distribution Grid ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 14

DSOs present aggregate generation and load to TSO Transmission System Operator T-D Interface DSO DSO DER Generation Storage Demand Response Consumer load Microgrids DSO DER Generation Storage Demand Response Consumer load Microgrids DSO DER Generation Storage Demand Response Consumer load Microgrids DSO DER Generation Storage Demand Response Consumer load Microgrids DER Generation Storage Demand Response Consumer load Microgrids 16

Transmission Grid Transmission Grid Wholesale Markets Independent System Operator T-D Interface Distribution DSO procures power & services for distribution DSO presents and schedules power & services to T-Grid Distribution System Operator DSO procures and schedules power & services from DER Owners Put in the boxes for the DER variety DSO “balances” Distribution Grid DER Owners Generation Storage Demand Response Consumer load 17

DSOs solve five emerging problems: 1. GRID RELIABILTY
Key DSO functions 1 and 2 First function of DSO: Reliability Maintain distribution grid reliability Implement advanced distribution management functions DERMS T-D- Interface transactions Second function of DSO: Scheduling coordinator Scheduling coordinator for distribution grid Scheduling coordinator to the T-D interface for transmission grid. Advanced distribution functionality can make both distribution and transmission more reliable and efficient. California needs a suite of modern tools to manage DERMS for all DER, including generation, storage, DR, EV, and other emerging technologies T-D interface management

2. Eliminate market distortions & conflicts of interest
DSOs solve four emerging problems: 2. Eliminate market distortions & conflicts of interest 2. Eliminate market distortions & conflicts of interest DSO market structures can ensure cost effective resources procurement. Current market structures distort procurement incentives and prices in favor of remote resources. Conflicts of interest mean distribution level services are underdeveloped.

California’s electricity grid market structure TODAY
DSOs solve four emerging problems: 2. Eliminate market distortion & conflicts of interest California’s electricity grid market structure TODAY Participating Transmission Owner (PTO) HV T-grid High Voltage (HV) Transmission Grid PG&E LV T-grid SCE LV T-grid Low Voltage (LV) Transmission Grid Above 200 kV Above 69 kV SDG&E LV T-grid Distribution Grid Other Utility LV T-grid Transmission & Distribution Facilities PG&E D-grid SCE D-grid SDG&E D-grid Other Utility D-grid OPERATED BY CAISO OPERATED BY UTILITIES UTILITIES OWN TRANSMISSION & DISTRIBUTION THIS CREATES CONFLICTS OF INTEREST This graphic illustrates how high voltage (HV) and low voltage (LV) TAC currently work in California. Note that there are two categories of transmission—high (200+ kV) and low ( kV). The cost of any low voltage transmission investment is restricted to the service territory in which it is located. This means that PG&E’s LV facilities are paid for by ratepayers in PG&E utility service territory. The service territory separations function as firewalls between cost allocation for each service territory. Those voltage thresholds also act as firewalls for transmission costs. For example, only HV transmission investments are eligible for statewide cost-allocation, so any facilities below 200kV are “firewalled” from having their costs allocated to other service territories. The Clean Coalition proposes using an analogous system to firewall costs under an expanded CAISO.

Distributed Energy Resources
DSOs solve four emerging problems: 2. Eliminate market distortion & conflicts of interest Remote Generation Utilities get paid for: Power and services delivered. Transmission charges for profits on existing assets Guaranteed profits on new required transmission Distributed Energy Resources Utilities get paid for: Power delivered. Transmission access charges* Utilities don’t get paid for: Guaranteed profits on new required transmission *The Clean Coalition is sponsoring SB 692.

Long Range Transmission Lines
Transmission Access Charges (TAC) Campaign 2. Eliminate market distortion & conflicts of interest Remote Power Long Range Transmission Lines Substation Distribution Grid Local Renewables Transmission Grid Problem: Local DER pay transmission charges, even though they don’t use transmission and don’t induce investment Solution: Meter transmission at substation downflow so that local energy is not subject to transmission fees Increases the value of local energy Makes local renewables more competitive in procurement Saves ratepayers by avoiding new transmission investment  SB 692, participation in CAISO stakeholder initiatives The core problem is that local renewable projects are being disadvantaged because CAISO hits their energy with transmission fees even that energy doesn’t use the transmission system. Transmission Access Charges (TAC) are collected to pay for the transmission grid, and CAISO assesses these based on the number of kilowatt-hours that use the transmission grid. In IOU service territory, they measure usage by adding up all the kilowatt-hours that cross the customer meter (aka, the customer energy downflow). This means that energy from local renewables is subject to TAC, even though that energy does not use the transmission system. It doesn’t have to be this way, and in many parts of California, it’s not. There is a better system already in place for municipal utilities and utilities that manage their own transmission lines. For those utilities, CAISO assesses TAC based on meters at the end of the transmission grid—based on the kilowatt hours that cross meters at the Transmission-Distribution interface. Subjecting local renewable energy to TAC makes DG projects significantly more expensive (the levelized cost of TAC is roughly 30% the cost of wholesale renewable energy) and disadvantages DG projects in energy procurement, resulting in less DG projects approved. Over the long run, this means that more transmission is built to support remote power plants at significant cost to ratepayers.

Long Range Transmission Lines
Transmission Access Charges (TAC) Campaign: 2. Eliminate market distortions & conflicts of interest Remote Power Long Range Transmission Lines Substation Distribution Grid Local Renewables Transmission Grid SB 692(Allen) Eliminate the Transmission Access Charge Distortion Problem: Local DER pay transmission charges, even though they don’t use transmission and don’t induce investment. Solution: Meter transmission at substation downflow so that local energy is not subject to transmission fees Makes DER more competitive in procurement ($0.027 per kWh) Saves ratepayers by avoiding new transmission investment

DSOs solve four emerging problems: 2. Eliminate market distortion & conflicts of interest Participating Transmission Owner (PTO) HV T-grid High Voltage (HV) Transmission Grid LV T-grid Low Voltage (LV) Transmission Grid Above 200 kV Above 69 kV Distribution Grid LV T-grid Transmission & Distribution Facilities PG&E D-grid SCE D-grid SDG&E D-grid Other Utility D-grid OPERATED BY CAISO OPERATED BY UTILITIES Utilities divest transmission assets and no longer generate revenue from additional transmission Utilities focus business on distribution grid assets This graphic illustrates how high voltage (HV) and low voltage (LV) TAC currently work in California. Note that there are two categories of transmission—high (200+ kV) and low ( kV). The cost of any low voltage transmission investment is restricted to the service territory in which it is located. This means that PG&E’s LV facilities are paid for by ratepayers in PG&E utility service territory. The service territory separations function as firewalls between cost allocation for each service territory. Those voltage thresholds also act as firewalls for transmission costs. For example, only HV transmission investments are eligible for statewide cost-allocation, so any facilities below 200kV are “firewalled” from having their costs allocated to other service territories. The Clean Coalition proposes using an analogous system to firewall costs under an expanded CAISO.

Distributed Energy Resources
DSOs solve four emerging problems: 2. Eliminate market distortion & conflicts of interest Remote Generation Utilities get paid on: Power and services delivered. Transmission charges for existing and new assets. Distributed Energy Resources Utilities get paid on: Power and services delivered. Distribution services Indifferent to profits on avoided transmission Avoid transmission access charges by 2018* *The Clean Coalition is sponsoring SB 692.

Key DSO functions 3 Third function of DSO:
DSOs solve four emerging problems: 2. Eliminate market distortion & conflicts of interest Key DSO functions 3 Third function of DSO: Procure cost effective mix of distributed and remote resources. Act as fierce DER competitor in energy markets. Decoupling profits for transmission from procurement removes market distortion and conflict of interest. Ratepayers only pay for new and existing transmission on remote generation using transmission assets. California needs a suite of modern tools to manage DERMS for all DER, including generation, storage, DR, EV, and other emerging technologies T-D interface management

3. Plan better investment and develop distribution level services.
DSOs solve four emerging problems: 3. Save ratepayers money by smarter investment 3. Plan better investment and develop distribution level services. DSOs will have a strong incentive to avoid excess transmission investment. DSOs will have strong incentives to develop distribution level service.

Large new transmission needs increase: Rate base Guaranteed profits
DSOs solve four emerging problems: 3. Save ratepayers money by smarter investment Unplanned DER siting adds hundreds of millions to utility profits Southern California Edison found that planned siting of ~4 GW of local renewables would reduce SCE’s upgrade costs by over $2.2 billion Large new transmission needs increase: Rate base Guaranteed profits (Source of graphic: The Impact of Localized Energy Resources on Southern California Edison’s Transmission and Distribution System, Southern California Edison, May 2012) Source: Southern California Edison (2012) Transmission is borne by ratepayers. DER interconnection borne by developer.

Fourth function of DSO:
DSOs solve four emerging problems: 3. Save ratepayers money by smarter investment Key DSO function 4 Fourth function of DSO: DSOs can run distribution grids more efficiently Avoid transmission costs with distribution planning DSOs have incentives to develop management systems for optimal visibility and scheduling. Ratepayers would save from optimized investment and services scheduling. California needs a suite of modern tools to manage DERMS for all DER, including generation, storage, DR, EV, and other emerging technologies T-D interface management

DSOs solve four emerging problems: 4. Accelerate deployment of DER
DSOs can facilitate energy services markets to capture of full value stack for DER. DSOs would remove market distortions against DER. DSO have incentives to promote and develop DER supportive services.

California is failing to lead in distributed renewables
DSOs solve four emerging problems: 4. Accelerate deployment of DER California is failing to lead in distributed renewables Cumulative deployed solar capacity deployed Cumulative MW Sources: CPUC, CEC, SEIA and German equivalents. Germany is the best example we currently have to show the efficacy of CLEAN Programs and the WDG market. If there is any confusion, Germany is in green and California—known as the leading market it the U.S.–is in red. It is astonishing that Germany is adding 11 times more solar than California even though California has a 70% better resource. Rooftop solar in Germany today is priced at the California-equivalent of 7-10 cents/kWh, which would be the most cost-effective resource deployed in California. Ground-based solar projects typically generate about 25% more kWh/W than rooftop projects, because they use tracking, which allows the panels to follow the sun throughout the day. The net result is that ground-based projects are generally about 20% more cost-effective than rooftop projects. The difference between the 25% and the 20% is that the O&M costs for ground-based projects are a bit higher due to their moving parts. (07_gp, 23 Sep 2013) As of 2017, Germany deployed more than twice as much solar as California despite California’s 70% better solar resource, mostly as DER.

Why don’t we have more DER? DER provides a host of key benefits. Grid management Local Capacity Frequency response Voltage management Avoid distribution grid upgrades Avoid transmission grid upgrade Markets Saves money Greater market efficiency Diversity of energy services Environmental benefits Protect habitat Reduce GHG emissions Reduce air pollution Community benefits Provide local jobs Alleviate community health load Address environmental justice and inequity. 32

Why don’t we have more DER? California needs mature markets to capture the full value of DER to incentivize deployment. DER only has limited capacity to recover its full value: Marketable Power Frequency response Capacity Markets missing Voltage management Reliability services Distribution deferral Customer services Markets in development Demand response Resiliency Avoided Transmission infrastructure Community benefits, pollution reduction 33

Transmission Grid Transmission Grid Wholesale Markets Independent System Operator T-D Interface Distribution Grid DSO bids aggregated DER energy and services into wholesale markets DSO facilitates DER services sales to ISO Distribution System Operator DSO delivers revenue streams to DER owners DER Owners Generation Storage Demand Response DSO matches DER owners to customers in Distribution Grid Wholesale Market Consumer load 34

Key DSO functions 5 Fifth function of DSO: DSOs sell DER services to ISO at the T-D interface DSO bids aggregate services to wholesale markets at the T-D interface. DSOs facilitate distribution level wholesale markets to match DER services to customers. DER owners capture a much broader range of values from coordination of various markets. California needs a suite of modern tools to manage DERMS for all DER, including generation, storage, DR, EV, and other emerging technologies T-D interface management

The Clean Coalition Plan Step 1:
Clean Coalition Proposal: Restructuring to drive competition and innovation The Clean Coalition Plan Step 1: Separate transmission from distribution Split existing utilities from transmission assets with a bright line between transmission and distribution businesses. Germany is the best example we currently have to show the efficacy of CLEAN Programs and the WDG market. If there is any confusion, Germany is in green and California—known as the leading market it the U.S.–is in red. It is astonishing that Germany is adding 11 times more solar than California even though California has a 70% better resource. Rooftop solar in Germany today is priced at the California-equivalent of 7-10 cents/kWh, which would be the most cost-effective resource deployed in California. Ground-based solar projects typically generate about 25% more kWh/W than rooftop projects, because they use tracking, which allows the panels to follow the sun throughout the day. The net result is that ground-based projects are generally about 20% more cost-effective than rooftop projects. The difference between the 25% and the 20% is that the O&M costs for ground-based projects are a bit higher due to their moving parts. (07_gp, 23 Sep 2013) There is no (big) step 2

DSOs solve five emerging problems: 5. Create new opportunities Participating Transmission Owner (PTO) HV T-grid High Voltage (HV) Transmission Grid LV T-grid Low Voltage (LV) Transmission Grid Above 200 kV Above 69 kV Distribution Grid LV T-grid Transmission & Distribution Facilities PG&E D-grid SCE D-grid SDG&E D-grid Other Utility D-grid OPERATED BY CAISO OPERATED BY UTILITIES SHAREHOLDERS CASH OUT OR MAY BECOME PARTICIPATING TRANSMISSION OWNERS SHAREHOLDERS OWN DISTRIBUTION UTILITIES / DSOs This graphic illustrates how high voltage (HV) and low voltage (LV) TAC currently work in California. Note that there are two categories of transmission—high (200+ kV) and low ( kV). The cost of any low voltage transmission investment is restricted to the service territory in which it is located. This means that PG&E’s LV facilities are paid for by ratepayers in PG&E utility service territory. The service territory separations function as firewalls between cost allocation for each service territory. Those voltage thresholds also act as firewalls for transmission costs. For example, only HV transmission investments are eligible for statewide cost-allocation, so any facilities below 200kV are “firewalled” from having their costs allocated to other service territories. The Clean Coalition proposes using an analogous system to firewall costs under an expanded CAISO.

Clean Coalition Proposal: Restructuring to drive competition and innovation
Restructuring drives better alignment of shareholder value with ratepayer value for cost effective energy. Shareholders hold DSO assets and transmission assets/cash. Diversified value streams come from providing a range of new distribution services. Value comes from more efficient services. Transmission business no longer cannibalizes distribution business.

The Clean Coalition Plan makes three changes:
Clean Coalition Proposal: Restructuring to drive competition and innovation The Clean Coalition Plan makes three changes: Improves operation of the distribution grid Fosters creation of distribution energy services markets Adjusts ownership of transmission assets to remove conflicts of interest

Clean Coalition Proposal: Restructuring to drive competition and innovation
Five Key DSO functions First Function: Maintain distribution grid reliability Second function: Scheduling coordinator Third function: Procure cost effective mix of distributed and remote resources as fierce DER competitor in energy markets. Fourth function: Run distribution grids with advanced functionality and planning. Fifth function: Facilitate distribution wholesale markets and bidding to transmission grid markets. California needs a suite of modern tools to manage DERMS for all DER, including generation, storage, DR, EV, and other emerging technologies T-D interface management

Distribution System Operator
Clean Coalition Proposal: Restructuring to drive competition and innovation Transmission Grid TRANSMISSION GRID WHOLESALE MARKETS Transmission System Operator T-D Interface Distribution Grid DSO bids aggregated DER energy and services into wholesale markets DSO procures power & services for distribution DSO presents power & services to T-Grid DSO facilitates DER services sales to ISO Distribution System Operator DSO delivers revenue streams to DER owners DSO “balances” Distribution Grid DSO schedules power & services from DER Owners DER Owners Generation Storage Demand Response DSO matches DER owners to customers in Distribution Grid Wholesale Market Consumer load 41

DSOs are Good for All Stakeholders
DSOs can benefit… Ratepayers: Cost effective procurement Avoided investment DER owners and developers: Capture the full stack of DER value in a much larger market. Remove market distortions favoring remote generation. Distribution utilities: DSOs can expand the range of services utility business provide. TSOs: Simplifying transmission grid operation through management T-D interface Presentation of aggregate services at T-D interface Local Communities: Local renewables reduce pollution, improve resiliency, and provide local jobs. Society: Local renewables reduces GHG emissions and habitat loss. 42

A very brief history: 1990s AB 1890 (1997) Today: DSO Restructuring
Clean Coalition Proposal: Restructuring to drive competition and innovation A very brief history: 1990s AB 1890 (1997) Utilities divested generation assets Transmission System Operator (CAISO) established Today: DSO Restructuring Utilities divest TRANSMISSION assets DISTRIBUTION System Operators (DSOs) established

Participating Transmission Owner (PTO)
Clean Coalition Proposal: Restructuring to improve competition and innovation Wholesale Generators Wholesale Generation High Voltage (HV) Transmission Grid Participating Transmission Owner (PTO) HV T-grid Owned by Participating Transmission Owners Above 200 kV OPERATED BY CAISO LV T-grid LV T-grid LV T-grid LV T-grid Low Voltage (LV) Transmission Grid BRIGHT LINE Above 69 kV This graphic illustrates how high voltage (HV) and low voltage (LV) TAC currently work in California. Note that there are two categories of transmission—high (200+ kV) and low ( kV). The cost of any low voltage transmission investment is restricted to the service territory in which it is located. This means that PG&E’s LV facilities are paid for by ratepayers in PG&E utility service territory. The service territory separations function as firewalls between cost allocation for each service territory. Those voltage thresholds also act as firewalls for transmission costs. For example, only HV transmission investments are eligible for statewide cost-allocation, so any facilities below 200kV are “firewalled” from having their costs allocated to other service territories. The Clean Coalition proposes using an analogous system to firewall costs under an expanded CAISO. DSO owns and operates distribution grid PG&E D-grid SCE D-grid SDG&E D-grid Other Utility D-grid Distribution Grid OPERATED BY UTILITIES

The Distribution System Operator (DSO) Future
The fastest path to the renewables-driven DER future Doug Karpa Policy Director Clean Coalition mobile 28 JUNE 2017

The Distribution System Operator (DSO) Future

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