This section provides an overview of SCE's application and the litigation positions of the active parties in this proceeding, to provide context for the analysis of the settlement agreement and the remaining issues disputed by TURN. The settlement agreement and stipulations are discussed in Section 8.
In testimony served with its initial Phase 3 AMI deployment application in July of 2007, SCE describes the overall objective of its proposed AMI system as providing "customers with lasting value through a cost effective AMI investment that can empower them to manage their own energy costs and enable new services through smart technology."12 SCE expects the project, which it calls Edison SmartConnectTM, to provide "a powerful tool to support federal and state energy policy objectives."13
According to SCE, its proposed AMI deployment would "install state-of-the-art `smart' meters in every household and business under 200 kW throughout its service territory,"14 a total of approximately 5.3 million meters over five years. SCE's AMI deployment proposal includes installation of both meter and communication systems intended to offer new functionality, including improved reliability, improved customer service, convenient remote service connection and disconnection, new billing and payment options, and measurement of interval electricity usage to support new rate structures and improved customer information.15 In addition, SCE maintains that its AMI proposal supports communication interfaces with technology such as programmable communicating thermostats and load management devices, as well as meter reading of third-party gas and water meters. SCE attests that its proposed AMI technology is compatible with broadband over power line use by third parties, is capable of remote upgrades, and would support future expansion.16
SCE's application requests $1.645 billion for deployment of AMI meters and associated communications technology over a five-year period beginning in 2008. According to SCE testimony, its proposed project would have been cost effective with $116 million in net benefits over the life of the project.17 SCE proposes recovering the costs of deployment through a balancing account mechanism, with the revenue requirement allocated among customer classes according to SCE's proposed distribution allocator. SCE also requests Commission approval to implement a voluntary PCT load control program, and to conduct outreach, marketing, and education to recipients of new AMI meters.
DRA's initial litigation position, reflected in its opening testimony, was that the Commission should adopt SCE's AMI deployment proposal with certain modifications, and approve $1.611 billion for deployment period costs. Among other adjustments recommended by DRA, DRA urged that the costs and benefits of a prepayment metering program should be removed from the original SCE proposal, estimated benefits of energy conservation should be reduced, and other changes should be made to reduce costs or increase benefits.18
TURN's litigation position in its opening testimony, served on January 25, 2008, is that the AMI proposal presented in SCE's application should not be approved. TURN disputes several assumptions, including some related to the amount of demand response and associated benefits that may be expected from demand response and dynamic pricing programs made possible by advanced metering. Based on its calculations, TURN believes that the proposed project will not be cost effective over its expected useful life. To address concerns related to the demand response benefits, TURN proposes that if the Commission approves AMI deployment, it should also adopt a penalty mechanism requiring SCE to pay financial penalties if it fails to achieve at least 65% of the demand response forecast in its application.19
12 Exhibit 1, p. 2.
13 Exhibit 1, Executive Summary.
15 Exhibit SCE-1 p. 2.
16 Exhibit SCE-1, p. 2; RT 211-212.
17 Exhibit SCE-1, p. 9.
18 Geilen, Exhibit 100, Chapter 1, pp. 3-5.
19 Marcus, Exhibit 200, p. 19.