Demand Response

Demand response (DR) is a way for customers to lower their bills or receive financial incentives while helping California reach its climate and environmental goals. The Commission broadly defines demand response as reductions, increases, or shifts in electricity consumption by customers in response to economic or reliability signals. Economic signals come in the form of electricity prices or financial incentives, whereas reliability signals appear as alerts when the electric grid is under stress and vulnerable to high prices. Demand response programs aim to respond to these signals and maximize ratepayer benefit.

DR resources provide California ratepayers with various economic and environmental benefits including:

Avoiding the purchase of high-priced energy, lowering overall cost of electricity
Providing greater reliability to the grid, helping to prevent blackouts
Avoiding the consumption of fossil fuels which can harm the people and the environment
Helping the integration of renewable energy resources on the grid
Avoiding or deferring the construction of new power plants, distribution and transmission infrastructure

Demand response programs are administered by California’s regulated investor-owned utilities (IOUs), Community Choice Aggregators (CCAs), and third-party commercial entities known as 'Aggregators' or 'Demand Response Providers' (DR Providers). Residential, commercial, agricultural and industrial customers can choose to participate at their discretion in demand response programs offered by the IOUs, CCAs, Aggregators, or DR Providers and reduce their energy bills for doing so.

Demand Response Rulemaking

On 9/29/2025, the Commission issued a new Order Instituting Rulemaking (OIR) to Enhance Demand Response in California. This Rulemaking 25-09-004 now serves as the Commission’s primary venue for deliberations on Demand Response policies.

Scoping Memo Ruling

Staff Proposal: Guiding Principles