Looking to the future: AUC releases final report of Distribution System Inquiry into modernization of grid to realize benefits of distributed energy resources

The AUC has released the final report of its Distribution S​ystem Inquiry (Proceeding 24116) which examined the need to modernize Alberta’s distribution system to realize benefits from advancing technologies.

A summary of the report, located on our website under Decision 24116-D01-2021​, can be found in a letter to stakeholders​ from AUC Chair Carolyn Dahl Rees.

The report focuses on the distribution side of our electricity system, on distributed energy resources, or DERs for short. Simply put, these are considered to be any technology that is connected to the distribution grid and affects the supply of and/or demand for electricity.

Evolving technologies have raised many questions about traditional planning approaches, rate structures, cost-recovery mechanisms, incentives and the evaluation of prudent utility costs. The main driver for the inquiry was the rapid advancement of technologies such as battery storage, rooftop solar, electric vehicles, combined heat and power systems, smart metering.

To do that, Alberta’s regulatory system needs to modernize, and that’s what the Distributed System Inquiry was all about. The AUC recognizes an inherent need of getting out in front of this wave of technologies, looking ahead and evolving a regulatory framework that meets Alberta’s needs. Not just the technological needs, but changing societal values and expectations such as low-carbon policies that incorporate renewables and storage, plus the greater choice and empowerment afforded by the application of smart home technologies or community-based generation.

The pervasive nature of the advancing-technology challenges means that this report is in one way just the beginning of what must be an iterative and collaborative process that extends across the sector. This includes working with partner agencies including the AESO as well as participating in any government-led policy discussion to ensure the grid evolves as it should.

Throughout the inquiry, the AUC received extensive stakeholder input into challenges associated with modernizing our system. How do we all, as a sector, be collaborative, flexible and adaptive going forward, given that we face some uncertainty about how much and how quickly digital technologies will change? What kind of changes may be needed to rate structures to encourage Albertans to use new resources in an efficient, least costly way? With new ways of providing services to consumers, how will these be delivered?

In this context, the Commission recognizes that its role in grid modernization must be seen as only one part of the changes within a broader regulatory framework development with other agencies and the Alberta government. The report identifies initial issues that require work, particularly removing barriers to investment to allow for better introduction of innovative technologies onto the grid.

With this report, the AUC has begun to incorporate short and medium-term initiatives with a focus on modernizing our regulatory framework for electricity storage in batteries, clarifying the role storage assets may play in generation, transmission and distribution in Alberta’s regulatory framework.

At the end of the day, modernization of the grid will have transitioned Alberta distributed energy resources to have better metering, pricing, information access and incentives to integrate distributed energy resources. The future is just around the corner.​​