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The California Public Utilities Commission (CPUC) has released its annual report about the state's efforts to modernize the electric grid. The report provides an overview of the commission's recommendations for the smart grid, utility deployment plans, and costs and benefits to ratepayers.

The CPUC focused on several areas, including the privacy and security of energy-usage data, consumer control, utility smart grid deployment plans and the commission's smart grid plans for 2012.

Gathering large amounts of customer data is vital to implementing programs that deal with energy efficiency, demand response and enhanced outage management. However, the potential for the data to be misused, as well as legitimate customer privacy concerns, makes it critical that the customer energy-usage data be adequately protected, according to the CPUC.

In recognition of the importance of protecting of customer energy data, the CPUC adopted privacy and security rules for customer data generated by smart meters that are deployed by California's investor-owned utilities (IOUs). The rules adopted implement the protections ordered by S.B.1476.

At the core of the privacy rules are the concepts set forth in the Fair Information Practice principles, which were adopted by the U.S. Department of Homeland Security, and are the basis for many other privacy rules.

These rules apply to electrical corporations, electrical corporations' third-party contractors, and any other third parties that access customer data directly from the electrical corporation (i.e., via a utility backhaul network).

The rules also require that electrical corporations provide customers with a privacy notice, detailing the purpose for which data is collected and shared, how the data may be used by the utility, how long the data will be retained, how a customer can dispute errors in the data, and how a customer can authorize a third party to access their usage data.

In addition, in the event of a security breach affecting more than 1,000 customers, the electrical corporation must notify customers within two weeks of such a breach.

The rules require that electrical corporations file an annual report with the CPUC on all security breaches of customer information, as well as reports on the number of third parties accessing customer data and the number of times the utility or third party was not in compliance with the rules.

The CPUC report also states that customers need to have timely access to information and a choice of tools to exercise control over energy consumption. To enable customer control, the CPUC offered direction on providing additional information to customers, including their bill to date, bill forecast data, projected month-end tiered rate and notifications as the customers cross rate tiers.

Furthermore, the decision directed the utilities to file with the CPUC a plan to allow authorized third parties to access customer data directly through the utility backhaul network. This access is expected to enhance the ability of third parties to provide additional services to customers to help them use electricity more efficiently and manage costs, according to the report.

As part of this effort, the utilities are working with the U.S. chief technology officer to implement a "green button," which will be a means by which a customer can download their usage information in one step and be able to share it with a third party if the customer so chooses. The utilities expect to offer this functionality by January.

Pursuant to S.B.17, in July, the utilities filed their respective 10-year smart grid deployment plans, which are currently being reviewed by the CPUC. While the plans are not intended to incorporate detailed cost-and-benefit analysis, the utilities have estimated that grid modernization will require an investment of $6 billion to $8 billion over the next 10 years.

The plans also include an overview of utility practices to ensure that the grid and future smart grid investments include cybersecurity protections. It is imperative that utilities see cybersecurity as a process and build this process into their plans and culture, according to the report. The CPUC will review cybersecurity information to ensure that the utilities have a coherent and implementable cybersecurity strategy that moves beyond compliance and into security.

By the middle of next year, the CPUC expects to adopt smart grid deployment plans for San Diego Gas and Electric, Southern California Edison and Pacific Gas and Electric Co. The CPUC staff is reviewing the IOUs' smart grid deployment plans in detail and has provided initial comments on the strength and weaknesses of the plans to the parties in the proceeding.

As the next step, the CPUC will hold a set of workshops in the first quarter of 2012 focused on the smart customer, smart market and smart utility. The commission expects to make a decision on the plans by July 1, 2012, the report states.

The CPUC plans to adopt an additional decision that will outline the information that utilities will need to report on the progress of smart grid deployment and on the benefits that are being realized from the investments.

The CPUC is considering whether to create a set of goals or metrics to measure progress toward grid modernization and to assess how smart grid investments are being utilized. Additionally, the CPUC may create additional working groups that will develop goals or metrics on specific topics, such as cybersecurity and the environment.

For example, a cybersecurity working group may develop a set of goals or metrics that can be used by the CPUC to monitor the effectiveness of utility cybersecurity practices, and potentially form the basis for any future CPUC action on developing cyber-security requirements.

An environmental working group may develop goals or metrics that will be able to measure the environmental benefits associated with smart grid investments. If these goals are adopted, the working groups will provide input into the yearly review process.

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