The commission approved an aggregated virtual power plant (VPP) settlement on Oct. 29 that establishes a standard-offer, performance-based program to compensate aggregators of distributed energy resources for capacity and other grid services. The settlement was joined by a broad range of parties including staff, AEU, ACE, Boulder, WRA, Sun and Tesla; the Office of the Utility Consumer Advocate objected to parts of the settlement arguing for earlier competitive procurement.

Under the settlement: eligible aggregators can receive set compensation under an agreed tariff on a first-come, first-served basis until a 25 MW per year cap is reached; the settlement set a five-year budget allocation the company used to justify the cap (parties cited a $79 million budget figure tied to the program); compensation covers generation, transmission and distribution components; VPPs that provide distribution value must be located on targeted feeders with historical summer evening peaks (4 p.m. to 10 p.m.); annual event limits and notice expectations were established, and the company will make best efforts to provide 24 hours' notice though it may call events with as little as one hour's notice.

The settlement prohibits the utility from acting as an aggregator for the first 24 months of the program. After two years of operation, the company must file an evaluation advice letter proposing whether to continue, modify or discontinue the program and whether to shift toward a competitive solicitation or allocate minimum capacity amounts to constrained feeders. The settlement also contains reporting requirements and two separate stakeholder processes to evolve program details.

Commissioners discussed UCA's request for an initial competitive solicitation and concluded that the program infrastructure is new; they favored launching a standard-offer to build experience and recommended that the two-year evaluation consider competitive procurement, penalties for nonperformance, and scale to ensure the VPP program can deliver tangible capacity value that offsets other capital investments.

The commission approved the settlement and directed staff and the company to monitor program performance and report in the two-year evaluation.