Electric Rule 21: Rulemaking and Regulatory History

The California Public Utilities Commission (the Commission) has issued several Rulemakings (R.) and Decisions (D.) throughout the years with the objective to facilitate interconnection of generating facilities, to address policy and technical issues essential to timely, non-discriminatory, cost-effective and transparent interconnection, and revise the rules and regulations governing the interconnection of generation, distributed energy resources (DERs) and storage facilities to the electric distribution systems.  The Energy Division of the Commission supports these activities.

2025-Present

D.24-12-034 states that the Commission “intend[s] to open a new proceeding that focuses on issues affecting interconnection of distributed energy resources under Electric Rule 21.”

D.21-06-002 states that “One year from the closure of … [the R.17-07-007] proceeding, Commission Energy Division is authorized to seek informal comments on new interconnection issues and potential revisions to interconnection policies, from entities listed on this and future interconnection proceeding service lists. The comments shall be used to draft the preliminary scope in an Order Instituting Rulemaking for the successor interconnection rulemaking.”

2017-2024

R.17-07-007

The Commission opened R.17-07-007 on July 13, 2017 to consider refinements and, if necessary, revise the rules and regulations governing the interconnection of generation, distributed energy resources (DERs) and storage facilities to the electric distribution systems of the Large IOUs.  D.24-12-034 issued on December 23, 2024, closed the proceeding.  

The proceeding was divided into three phases:  

  • Phase 1:  Phase 1 covered issues aimed at streamlining interconnection such as planning, construction, billing and incorporating the Integration Capacity Analysis (ICA), which is designed to help contractors and developers identify project sites where existing grid infrastructure has capacity available to interconnect new DERs, into Rule 21.  As part of Phase 1, the Large IOUs and other stakeholders participated in four working groups, resulting in three decisions: 
    • D.19-03-013, issued on April 5, 2029, adopted proposals from the Working Group One Final Report dated March 15, 2018.  D.20-07-040, issued on July 23, 2020, corrected errors in the prior decision. Among the proposals adopted were: expanding the existing Screen Q exemption for net energy metering (NEM) facilities with net export less than or equal to 500 kilowatts (kW); allowing the Large IOUs to require well-defined technical specifications for telemetry for systems between 250 kW and 99 megawatts (MW) when utility-related telemetry cots are estimated to be less than $20,000, if deemed necessary but if not, maintaining the threshold for requiring telemetry at 1 MW; and allowing customers to replace existing inverters with inverters of equal or greater ability, pursuant to D.14-12-035 and encouraging, but not requiring, customers to replace existing inverters with smart inverter at end of life.  Please see the decisions for a complete list of the proposals adopted.  
    • D.20-09-035, issued on September 24, 2020, adopted proposals from the Working Group Two Final Report dated October 31, 2018, the Working Group Three Final Report dated June 14, 2019, and the Vehicle-to-Grid (V2G) Alternating Current (AC) Interconnection Technical Sub-Group Report dated December 11, 2019.  D.21-01-027, issued on January 21, 2021, and D.22-04-001, issued on April 8, 2022, corrected errors in the prior decision. Among the proposals adopted were: incorporating the results of the ICA into Rule 21 to streamline the Fast Track process; allowing Distributed Energy Resources to perform within existing hosting capacity constraints while avoiding grid upgrades through the use of Limited Generation Profiles; clarifies the rules applicable to the interconnection of Direct Current (DC) and Alternate Current (AC) Electric Vehicle Supply Equipment (EVSE); and provides the option of less costly Power Control System (PCS) instead of relays. Please see the decisions for a complete list of the proposals adopted.
    • D.21-06-002, issued on June 4, 2021, adopted proposals from the Working Group Four Final Report dated August 12, 2020.  Among the proposals adopted were a modified, notification-only approach for certain projects; a study on costs shifts resulting from a prior distribution upgrade exemption; an option for independent unintentional islanding studies; establishment of a working group to look at distribution-level solutions to anti-islanding (the Unintentional Islanding Working Group); and a future pilot to test operational alternatives to address operational flexibility constraints.  The Unintentional Islanding Working Group concluded in December 2023 and its final report is available on Gridwork’s website-Unintentional Islanding Working Group Final Report
  • Phase 2:  Phase 2 was cancelled.  D.24-12-034 issued on December 23, 2024 closed the proceeding after it was suspended by an April 26, 2022 the Administrative Law Judge's Ruling Suspending Proceeding Schedule and whose statutory deadline extended by D.24-08-019 .   This phase was expected to cover rate setting issues, including distribution upgrade cost sharing and rate setting issues resulting from the implementation of Phase 1 as outlined in the May 12, 2021 Assigned Commissioner's Second Amended Scoping Memo and Ruling for Phase II of Proceeding
  • Phase 3:  Phase 3 addressed revisions to Rule 21 and equivalent tariffs for small and multi-jurisdictional utilities (SMJUs).  D.22-04-003, issued on April 7, 2022, adopted recommendations from the California Association of Small and Multi-Jurisdictional Utilities (CASMU) Working Group Eight Final Report dated October 4, 2021.  D.22-04-003 adopted to not make any changes to the interconnection processes for SMJUs, with three minor modifications involving cost itemization, itemized billing processes, and participation in the Unintentional Islanding Working Group.  The decision concluded that given the SMJUs’ small customer base size and their low distributed energy resources interconnection rates, as compared to the larger investor-owned utilities, it is reasonable to not require changes to their interconnection processes.  

R.11-09-011

R.11-09-011, which was closed by D.16-06-052 issued June 23, 2016, was reopened on April 7, 2021 by the Administrative Law Judge’s Ruling Reopening Record to Consider the Modification of Decision 12-09-018 and Rule 21  “to determine if an exception in Section B.1 [Applicability] of Rule 21 remains appropriate and whether it could result in reliability and safety concerns for the grid, thereby requiring a modification of Decision 12-09-018.”  The exception allowed all Net Energy Metering (NEM) Generating Facilities to interconnect through Rule 21 regardless of whether they interconnected to the distribution or transmission system.   The purpose of reopening the proceeding was to address safety and reliability concerns due to an increasing number of large generating facilities interconnecting to the transmission grid through Rule 21 under the NEM tariff.  As stated in the Ruling, R.11-09-011: 

the Commission’s Energy Division became aware of instances where distributed energy resources, sized in the tens to hundreds of megawatts for each installation, are interconnecting to the transmission system and taking service under the net energy metering tariff, raising grid stability issues. First, the current rule does not provide for telemetry information sharing between the utilities and CAISO. Second, Section B.1, as currently written cannot ensure that the assets connected to the transmission system are safely configured to meet transmission grid requirements, especially as it relates to inverter programming.   

D. 22-07-001, issued on July 14, 2022, determined that an increasing number of large generating facilities interconnecting through the transmission grid under the net energy metering tariff, i.e., Rule 21, creates challenges to the ability of the California Independent System Operator to ensure the safety and reliability of the transmission grid.  To address this concern, the Commission found that an immediate revision of the net energy metering exception in Section B.1 of Rule 21 was necessary as there were no viable solutions in the record to address the concern.  Hence, Section B.1 was revised to limit the exemption of net energy metering generating facilities interconnecting through Rule 21 to those facilities less than or equal to one megawatt of capacity.  

D.23-06-005, issued June 8, 2023, closed the proceeding.  The Decision PG&E, SCE, and SDG&E to provide, to the California Independent System Operator, the telemetry data currently required by Rule 21, which is collected from interconnecting distributed energy resources customers. The Decision finds “The sharing of telemetry data will mitigate (1) safety and reliability risks on the transmission and distribution systems; and (2) negative impacts on the wholesale market, which are created by the lack of generation output visibility — or load masking — caused by both export and non-export generating facilities with capacities larger than one megawatt.

2011-2016

R.11-09-011

On September 22, 2011, the Commission opened R.11-09-011 to "address the key policy and technical issues essential to timely, non-discriminatory, cost-effective and transparent interconnection."  D.16-06-052, issued June 23, 2016, closed the proceeding.
As part of the proceeding the Large IOUs and other stakeholders participated in the Smart Inverter Working Group (SIWG).  The SIWG was formed on February 13, 2013.  It was jointly sponsored by the Commission’s Energy Division and the California Energy Commission (CEC) to: 

  • Explore the smart inverter functionalities for facilitating large penetrations of distributed generation and storage into California’s grid while maintaining high levels of system reliability and power quality, and  
  • Make recommendations to the Commission on which new smart inverter capabilities should be included in Rule 21. 

The central challenge of the SIWG was to understand the entire range of possible functions for smart inverters and define a phased approach for recommending how California regulators could make policy changes to realize the benefits of smart inverters.  The SIWG recommended a phased approach to undertaking the technical steps:  Phase 1 addressed autonomous functionalities, Phase 2 addressed communications standards, and Phase 3 identified advanced functionalities, some of which utilize Phase 2 communications standards.

During the proceeding, the Commission adopted three substantive decisions: 

1999-2003 
R.99-10-025
On October 21, 1999, the Commission opened R.99-10-025 to develop policies and rules to facilitate deployment of distributed generation in California.  Working collaboratively with the California Energy Commission, the Commission undertook a redesign of Rule 21 to establish a more standardized and transparent engineering analysis for the interconnection of distributed generation—especially generation that offsets on-site load.  D.03-04-060, issued on April 17, 2003, closed the proceeding. 
During the proceeding, the Commission adopted two substantive decisions to revise Rule 21:  
  • D.00-11-001, issued on November 2, 2000, adopted the first set of Rule 21 language recommended by the California Energy Commission on June 27, 2000 with slight modifications.  The updated Rule 21 contained eight sections and one appendix. Section 1 governed applicability, followed by the general rules and obligations of both the distributed generation customer and the utility in Section 2.  Sections 3 and 4 described the non-technical and technical considerations for completing an interconnection agreement. Specific technical details on the screening procedures were detailed in the Appendix. Ownership and operational considerations, as well as procedures for settling disputes, were addressed in Sections 5 through 7. The rule ended with a common set of definitions to ensure consistency in the rule language. The appendix laid out a schematic and procedures for determining whether an application is eligible for simplified interconnection.  The appendix created the Initial Review Process. This Initial Review Process was developed to create a path for selection and rapid approval of those Applications for Interconnection that do not require an Interconnection Study—it was designed to permit the utility engineer to quickly identify, among other factors, whether a generating facility is configured to remain within certain technical limits, and thus unlikely to cause electrical disruptions on the grid.

The adopted rules promoted application of consistent rules across utility service territories and provided clear guidance to applicants seeking interconnection regarding the standards that must be met for simplified interconnection. 

The Decision found “By adopting clear standards to facilitate interconnection of new, small scale generating facilities, we take a first step towards relieving California’s electricity supply constraints.”  

  • D.00-12-037, issued on December 21, 2000, adopted the second set of Rule 21 language recommended by the California Energy Commission on October 25, 2000 in its entirety.  The new language built on the Rule 21 as adopted in D.00-11-001.  In some cases, language developed through additional meetings was designed to replace aspects of the proposed rule language adopted in D.00-11-001; in other cases, it proposes incremental language. A new appendix dealing with type testing and pre-certification was developed and adopted, as well as an interconnection application and agreement.   
1982

The Commission's first iteration of Rule 21 was adopted in 1982.  The provisions of Rule 21 originally applied solely to interconnection with Qualifying Facilities, defined as a Generating Facility meeting the criteria under the Code of Federal Regulations, Title 18, Chapter 1, Section 292, Subpart B of the Federal Energy Regulatory Commission’s regulations.  These included renewables, non-renewables, and cogeneration plants as defined by the Public Utility Regulatory Policies Act (PURPA) of 1978, which was enacted to encourage cogeneration and renewable resources and promoted competition for electric generation