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In most parts of the country, how utilities plan their distribution systems – the network of poles, wires and other equipment designed to support electricity delivery at the local level – is something of a “black box.” But now, with the continued proliferation of distributed energy resources (DERs) – ranging from rooftop solar to onsite battery storage and demand response – available to help manage electric supply and demand at the distribution level, that black box needs to be opened. Colorado is doing just that by joining a growing number of states that are implementing distribution system planning (DSP) rules for the first time.

Colorado’s rules, which are expected to increase transparency around utility distribution system investments and facilitate new opportunities for deployment of DERs, provide one example of how states can support a cleaner, more flexible, more reliable grid. That has certainly been the direction AEE has been pushing in its engagement in this proceeding as well as others in , , and .

In 2019, the Colorado legislature passed , which required the Public Utilities Commission (PUC) to develop regulations that would provide greater visibility into utility distribution systems and provide new pathways for DERs to meet system needs. After concluding an on distribution system planning, the PUC opened a in December 2020 to develop the DSP rules. The Commission worked to consider stakeholder input throughout the first half of 2021 before issuing a on the regulations in early September.

In its DSP rules, Colorado has taken a comprehensive approach to considering how the distribution system can evolve to meet future grid and customer needs. Here are some of the highlights:

The Commission opted to include several recommendations put forward by AEE and other partner organizations, including increased stakeholder engagement requirements for utilities prior to filing DSPs, clarification of the grid benefits and services DERs can provide, process improvements to support fair and competitive NWA solicitations, a requirement for utilities to develop a final Action Plan laying out near-term distribution system investments and programs, and more. These modifications strengthen the DSP process and help ensure DSPs achieve the intended goals of supporting grid reliability and preparing the distribution system for a high-DER future.

Now that the rules are finalized, utilities are expected to file DSPs every two years; Xcel Energy’s first DSP will be submitted for PUC review by early 2022. Although issues surrounding HCA data updates, NWA cost-benefit analysis methodologies, and NWA solicitations will require additional focus in utilities’ individual DSP applications, the final DSP rules set in place a robust framework for more transparent, cost-effective grid planning that unlock more of the value that DERs can provide to the system. It’s time for more states to follow suit and view distribution system planning as a foundational step in developing a cleaner, more flexible, more affordable energy future.

AEE has published a set of seven issue briefs on key topics in utility regulation in a changing electric power system, including distribution system planning. Download any or all of the issue brief by clicking below. 

This content was originally published here.