Bloomberg Law
Oct. 23, 2020, 10:00 AM

California Considers Landmark Appliance Rule to Ease Grid Demand

Emily C. Dooley
Emily C. Dooley
Staff Correspondent

Imagine shutting down or throttling back demand from a network of pool heaters, air conditioning systems, or other appliances to stabilize the electric grid.

That’s on the mind of California energy regulators, who may set first-in-the-nation rules for appliances that could reduce energy use during peak demand times.

California Energy Commissioner J. Andrew McAllister calls the idea an elegant, affordable solution that could have avoided rolling blackouts that plunged nearly 2 million people into darkness over two days in August during a heat wave. Web-enabled applications can control thermostats, lighting, and home alarm systems already, so, he asked, why not expand that reality?

“It’s actually a reality that’s time is here,” McAllister said in an interview. “The solutions are here. They’re technologically very feasible today.”

The Energy Commission voted unanimously Oct. 14 to begin rulemaking that would set standards and labeling requirements for flexible demand appliances. Now begins workshops, public comment, economic analysis, and other tasks before a proposed rule could come before the board in late 2021.

Supporters say having a fleet of appliances that can respond to demand could cut out the need for more-polluting and expensive peaker plants that get kicked online during high demand times. It also could put money back in the pocket of consumers.

Opponents are concerned the Energy Commission rules could open appliances up to hacking, create safety issues, and be required to have specific ports—akin to a USB circuit.

“We want to be all in,” said Kevin Messner, senior vice president of policy and government relations for the Association of Home Appliance Manufacturers in Washington.

‘Charting the Path’

Messner’s group supports load-demand devices to better use resources. But he pointed to Washington state as reason for his concern. Starting in January, state law will require all electric water heaters to contain a certified port that would allow communication with a smart grid device.

A similar requirement in California could open appliances up to cyberattacks, Messner said.

“You would be taking a step back with security,” he said. “You have now created a massive incentive for hackers to figure out a gateway to access appliances.”

He also cautioned that the technology could stop washing machines during bleach cycles or cause food to rot in refrigerators. Different utilities, which could offer ports to customers, could also come with many varieties that could pose fire or other hazards not designed for by appliance manufacturers.

“It’s hard to know exactly what it would be,” Messner said.

McAllister said the rulemaking allows concerns and technology options to be discussed and “we’re charting the path forward.”

Lingering Questions

Whether the appliance rule will apply to a few devices or many more is still up in the air. Appliances that can store energy when supplies are in surplus and release it when needed could be part of the rule, as could just those that only reduce energy usage.

High on the list of requirements includes getting customer buy-in and not forcing regulations that would cost more than the actual benefit.

“We would never get to a place where we would turn a washer off in the middle of the cycle,” McAlliser said.

During the recent rolling blackouts, a few hours of lower thermostats or other actions could have prevented power outages, experts said.

The August blackouts were a confluence of many issues, according to a reportby the California Independent System Operator (CAISO), which runs most of the state’s grid.

The West was experiencing an intense heat wave, meaning more air conditioners were in use and the state could not import electricity from neighbors that were also experiencing high temperatures.

The state’s accelerated switch from fossil fuels to cleaner sources also created issues when nighttime and wildfire smoke decreased solar capacity while older forms of energy had been mothballed. Bids for capacity were also lower than demand.

CAISO issued flex alerts that week asking people to lower thermostats, not use dishwashers, and avoid unnecessary power use during peak hours. Despite that, nearly 500,000 power customers were cut off on Aug. 14, and another 321,000 lost power the following day.

“If we had that flexibility, then the lights would have stayed on no problem,” McAllister said.

‘Could Be Beneficial’

CAISO doesn’t set policy, but it generally encourages creation of appliance standards that can respond to demand, spokeswoman Anne F. Gonzales said in an email.

“Enabling appliances to respond in favorable ways to grid conditions, such as deferring a refrigerator’s defrost cycle, could be beneficial if done on a large scale,” she said.

Some of those types of reductions did happen during that week in August, OhmConnect Chief Executive Cisco DeVries said in an interview.OhmConnect, which operates in California, Texas, and Toronto, Canada, has 150,000 customers and controls 60,000 devices.

“We pay people to save energy in key times when the grid really needs the reductions,” he said.

The company uses text alerts to notify customers about peak demand times. For those with smart plugs, OhmConnect reduces energy demand but controlling electric vehicle chargers, garage freezers, or other connected appliances. Customers in turn get paid for their reductions.

During the week surrounding the rolling blackouts, the company paid out $1.5 million to customers and collectively reduced demand by 1 gigawatt. That’s equivalent to what’s produced by 3.125 million solar panels or 2,000 Chevrolet Corvette ZO6s, according to the U.S. Office of Energy Efficiency and Renewable Energy.

“If you have a lot of very small things, it adds up to something very big,” DeVries said.

‘Common Standard’ Needed

The Energy Commission rulemaking, required by SB 49 passed in 2019, will expand on that ability.

“It unlocks so much that we can’t do today,” he said. “We need a common standard to make sure this is a part of appliances going forward.”

A lot of effort has been focused on how to reduce demand in the commercial sector, and this rule could open up the plentiful residential market, said Ryan Hledik, principal at the economic and financial consulting firm The Brattle Group in San Francisco.

“Everyone has known for a long time there has been a lot of untapped potential in residential use,” he said. “I think a lot of people view appliance standards as one potentially very effective way to handle demand response and load flexibility for the residential class.”

Privacy, safety, and security concerns will have to be addressed. And it’s possible California could face opposition to its new authority, though McAllister said the state rule would not interfere with existing federal standards.

To contact the reporter on this story: Emily C. Dooley at

To contact the editors responsible for this story: Chuck McCutcheon at; Rebecca Baker at