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Under Gov. Gavin Newsom’s order , the California Public Utilities Commission has initiated a “root-cause analysis” of the state’s August 14-15 blackouts. Its joint report with the grid operator and California Energy Commission is expected to be completed at the end of this month.

The blackouts were “intolerable,” but combined with the pandemic, west-wide heat storm, and raging wildfires, were “inexcusable,” Assembly Committee on Utilities and Energy Chair Chris Holden said.

But why did the blackouts happen?

“The blackouts are a collective failure to plan and anticipate,” said V. John White, Executive Director of the Center for Energy Efficiency and Renewable Technology, and veteran of California regulatory debates. “The blackouts showed we are out of time and we still don't have an orderly plan to get to a reliable grid.”

The CPUC has not begun procurements to replace the water-cooled natural gas-burning plants ordered for phase-out in 2010 or to replace the Diablo Canyon nuclear units scheduled to close in 2024-2025. Its inaction also resulted in falling levels of the demand response that turned out to be vital during the blackouts .

Nor did the commission follow up on long duration storage procurement mandated by AB 33 in 2016 , according to White. In addition, it let its troubled relationship with community energy delay reliability procurements.

It also imposed restrictive conditions on energy imports and has been slow to approve new transmission for energy imports, according to White.

The commission also has not advanced rate reform, California Independent System Operator Senior Manager for Infrastructure and Regulatory Policy John Goodin said. “Customers must be exposed to prices, and homes and buildings need to be automated so they can react to more dynamic and time varying grid-informed, grid-supporting prices.”

The CPUC is overwhelmed with regulatory issues and internal and external organizational challenges, Lawrence Berkeley National Laboratory Electricity Markets and Policy Senior Advisor Steven Schiller added. “It was designed to regulate large monopolies and those processes do not fit today’s market.” He added that they have become so focused on risk that they are creating risk.

It is fair to criticize regulators for being too risk averse, CPUC Deputy Executive Director for Energy and Climate Policy Edward Randolph acknowledged. “But rules protecting reliability are one of the most fundamental things regulators must get right.” He said the CPUC must be very conservative but also avoid stifling innovation and market transformation.

Some CPUC measures helped prevent further blackouts

Residential and commercial-industrial customers “ delivered ” load reductions in response to millions of Pacific Gas & Electric communications, utility spokesperson Ari Vanrenen said in an email. On August 17 alone, demand response programs dispatched about 480 large customers and 1,500 capacity bids. And 234,450 customers earned rate rewards for load reductions.

California’s private demand response providers also delivered but considerably less than what was within reach.

“We reduced over 200 MW of load on August 14 and 18, almost 200 MW on August 17, and almost 1 GWh of total energy usage from August 13-20,” OhmConnect CEO Cisco DeVries said. “That is equivalent to taking over 600,000 homes offline for an hour.”

OhmConnect customers were paid over $1.3 million for responding, he added. “About 739,000 adjustments to devices and appliances were made, with 580,000 done on customer set-it-and-forget-it preferences by our automation, and we didn't have a single dispatch failure.”

On the first day of the blackouts, smart battery provider Stem ’s deployments “supplied about 50 MW to its customers, which reduced peak loads equivalent of taking 20,000 homes offline,” its VP for Policy and Regulatory Affairs Ted Ko said.

But OhmConnect could have had more capacity in place if the commission had acted on demand response, DeVries said.

And Stem could have provided twice the 50 MW of load reduction it delivered if rules recognized and compensated the multiple uses of batteries and allowed it to export stored energy to the grid.

Potential battery storage goes unused

A 2017 LBNL study for the CPUC called the flexibility of customer-sited battery storage "‘the ideal DR technology’ but the commission did not follow through,” Ko added.

The study showed the need for more flexible demand response and storage, but participation rules for those emerging technologies are pending, Randolph said. It takes time to develop them because they must be consistent with the ISO’s specific reliability needs.

Uncertainties about how to integrate them remain, but their potential is becoming clear and we need to move faster, Randolph added.

A 2019 CPUC study showed that over $600 million per year could eventually be saved with technologies that integrate more renewables and support reliability, Gridworks Executive Director, and former CPUC Energy Advisor, Matthew Tisdale said.

“Caution about one demand response program’s $10 million budget led to a billion dollar or more power outage,” he added. “With a fast-changing climate, we can no longer afford to be timid. Incrementalism got us blackouts.”

Disorderly transition

The system is transitioning, but not in an orderly way, White warned. “ The commission was effective in regulating a few large investor-owned utilities but now municipal utilities and CCAs are just as important. He said a new planning approach that preserves the independence of all power providers and highlights they are all part of a larger system is needed.

That may require a multi-agency effort with more transparency and more opportunity for public participation.

“The blackouts show the complacency and bureaucratic confusion of the last few years has to be replaced with a sense of urgency. The good news is it can be done,” White said.