CalChamber Companies Take Action to Maintain Grid Reliability; Governor Announces Compensation for Demand Reduction

When called on to take immediate emergency action to conserve energy by Governor Gavin Newsom, California Chamber of Commerce members responded, helping to avert rolling blackouts and keep the lights on for all Californians.

Over the weekend of July 8–11, California faced a significant issue with energy shortages. The problem had, as with last year, many causes:

• California regulators were slow to plan for the transition to renewable power, not ensuring resources were available during increasing evening peak hours.

• Projects that were ordered last year for energy reliability were delayed by supply chain issues related to the COVID-19 pandemic.

• Climate-induced heat waves beat down earlier than predicted.

• Drought reduced capacity at in-state hydroelectric dams.

• Some traditional evening power resources went unexpectedly offline.

The California Independent System Operator (CAISO), which operates the majority of California’s regional grid, began issuing Flex Alerts asking customers to conserve power during the peak hours of 4 p.m.–9 p.m. Governor Newsom declared a State of Emergency on July 9, allowing emergency use of backup generation and waiving other regulations related to power generation to ensure adequate power to meet demand.

Add to that, on the evening of Friday, July 9 and Saturday, July 10, the Bootleg fire raging at the California/Oregon border threatened major transmission lines, cutting off one of California’s major resources for zero-emission evening power — hydroelectric power. Governor Newsom issued a further Executive Order freeing up power at California’s ports on July 10.

CalChamber Members Respond

CalChamber’s members are some of the most aggressive businesses at both short-term and long-term energy consumption reduction.

• For example, Walmart has made significant investments in energy-efficient technologies, including interior and exterior LED lighting, skylights that facilitate reductions in electric lighting during the light of the day, and have deployed renewable resources to reduce the strain on the grid.

Additionally, Walmart participates in California demand response programs and has utilized its demand response infrastructure to reduce load during grid emergencies throughout the Western United States.

Finally, Walmart partners with the Center for Sustainable Energy, the California Energy Commission, and Southern California Edison to conduct the Big Box Efficiency Project, aimed at evaluating best practices to reduce energy consumption by 20%.

• CalChamber member Target has participated in demand response programs throughout California for a decade, with 239 locations under contract to deliver energy reduction when dispatched.

Actions include lighting reduced by 50% on the sales floor and increasing HVAC temperatures. An additional 27 locations are equipped with automated energy reduction programs, which voluntarily shed load to address potential shortages.

Compensation to Reduce Demand or Use Backup Power

Following these events, Governor Newsom made these benefits more permanent, issuing his July 30 Emergency Proclamation, which will remain in effect through October 31, 2021, hopefully the end of this year’s wildfire season.

That proclamation extended the earlier allowances to free up capacity, but also directed the Department of Finance (DOF) to issue payments to utilities that set up a customer incentive program to reduce electricity demand of 500kW of incremental load reduction per hour or more.

California released information on the programs last week, with a customer template and claim forms for commercial customers that reduce load or utilize backup generation during emergency events. A program overview is available at the DOF website at dof.ca.gov/Programs/California_State_Emergency_Program/.

The Governor’s proclamation also requires the California Air Resources Board to develop by November 15, 2021 a state-funded plan to mitigate any additional emissions that result from the capacity generation allowed under these orders.

Finally, the July 30 Emergency Proclamation also provides some streamlining for California Energy Commission approval of longer-term storage projects, with the intent to avoid future power shortages.

With power consumption going up, and the hots getting hotter and earlier in the year, California certainly faces some challenges. CalChamber members continue to step up to the plate to reduce energy demand to keep the lights on in California while still delivering goods and services necessary to keeping our economy moving.

Keep an eye out for new programs from your local utilities, and subscribe to updates from CAISO to get real-time alerts on the state of California’s energy grid.

This article appeared first as a Capitol Insider blog post.

Staff Contact: Leah Silverthorn

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Leah B. Silverthorn joined the CalChamber policy team in May 2018 as a policy advocate specializing in climate change, air quality, energy, environmental justice, and transportation and infrastructure issues. She brings to the CalChamber more than decade of legal experience in environmental, energy, and land use matters. Immediately before coming to CalChamber, she was the principal owner of Silverthorn Legal, based in Seattle, Washington. She focused on environmental litigation, contaminated property redevelopment, and environmental cost recovery and defense. She is an honors graduate of Indiana University-Bloomington, with a B.S. in public affairs and environmental management. She earned her J.D., with honors, at the Indiana University McKinney School of Law, where she was articles editor for the Indiana International and Comparative Law Review and a member of the Moot Court Board.