24. Incremental Notification Equipment Development
24.1. PG&E's Position
PG&E indicates that it is very concerned about defaulting small and medium C&I customers to PDP in 2011 without a way to send notice of a PDP event to the customer's premises that utilizes the SmartMeter. Currently there is nothing in the market or slated to come into the market for 2011 that can receive signals from PG&E's Home Area Network (HAN) without first being "tweaked" in PG&E facilities. Therefore, according to PG&E, "plug and play" devices compatible with PG&E's system are not expected to reach the market until 2012, at the earliest.
PG&E requests $1 million to accelerate the development of notification devices for small and medium C&I customers so devices with "plug and play" capability can reach the market in time for summer 2011. The dollars requested are to support nonrecurring engineering expenses to encourage the development of the devices and business requirements. PG&E indicates that it is not entering an unregulated market as an investor or vendor, but is merely ensuring that the market as a whole has timely access to the technology and standards needed to serve PG&E's small and medium C&I customers in the timeframe required by the PDP default implementation schedule laid out by the Commission.
PG&E will make that information available to the market by contributing any intellectual property rights, data and test results from the work supported by the requested funding to the Utility Communication Architecture International Users Group (UCAiug.) UCAiug has a creative commons policy pursuant to which all rights, data and results contributed to UCAiug are posted on its website and made available to anyone who wants to use the information, without charge. PG&E states that UCAiug is a top standard and technology forum in the industry and incorporates mature intellectual property right policies that define fair and reasonable use of the technologies that are included in the standards it develops.
According to PG&E, "plug and play" capability will require the devices to meet an SE 2.0 standard that should be developed by next year. PG&E states that there are substantial differences between the current standard, 1.0, and the new standard, 2.0. Because the normal sequence is for the standard to come out, and then the products are developed and tested, PG&E asserts that if that sequence happens, the products will not be ready by 2011. To accelerate product development, PG&E indicates that its proposed activities would compress the process and do things together in parallel, enabling devices compliant with SE 2.0 to reach the market in 2011.
PG&E anticipates working with entities that are selected through a competitive request for proposal process. The goal would be to fund development of devices at three levels. Tier 1 would be a simple device delivering intuitive lighting signals indicating when electricity is at low, medium or high demand. Tier 2 would communicate the current price of electricity, impending and current event notifications from PG&E, and potentially current premise electricity consumption in dollars and kWh. Tier 3 would provide the features found in Tier 2, plus the ability to send and receive control signals, optimize premise data for granular clarity, create control settings that can be triggered by pricing signals, and communicate with on-line optimization applications. PG&E seeks to support the nonrecurring engineering costs for these three tiers of SE 2.0 compliant devices because the C&I customer sector (up to 200 kW) is very diverse, with very diverse needs.
24.2. DRA's Position
DRA recommends no ratepayer funding for the development of any of these products. It is DRA's position that PG&E's proposal to have its ratepayers fund the development of notification devices is too poorly conceived to justify ratepayer funding. According to DRA, while an unregulated market for home area network (HAN) devices currently exists without the benefit of subsidies from captive ratepayers, it seems PG&E did not perform any analysis of the market to ascertain if the HAN devices it presumes its customers need, have been or are already being developed in a viable competitive market. Also, for small commercial customers, low-functionality customer notification devices already exist and are being used by customers of other utilities. DRA questions the need for devices with the higher functionality, stating that the low-functionality devices would be the least costly to produce and satisfy the need for basic notification.
DRA also states it is aware of no other utility demanding products made specifically to its individual rate design, nor has PG&E provided any evidence that PG&E's rate design is so unique or unorthodox as to require such special treatment before customers can operate notification devices.
DRA adds PG&E did not contact the Public Interest Energy Research (PIER) program, or the Electric Power Research Institute (EPRI) about developing customer notification equipment. Nor did PG&E contact other California utilities about sharing the cost of this development effort.
With respect to DRA's claim that the notification device design need not be designed to PG&E's PDP rate, PG&E states DRA ignores PG&E's testimony that given the dual participation rules adopted by D.09-08-027, the designs available in the market will not work, as far as informing customers whether a PDP or another DR program is being called. PG&E asserts that dynamic pricing requirements adopted by the Commission may require design modification of the device.
With respect to DRA's claim that devices already exist in the market, PG&E states that current products will not have "plug and play" capability under PG&E's AMI/HAN architecture, and are thus not suitable for PG&E's customers in 2011.
PG&E acknowledges that it did not propose joint development with EPRI or PIER or other utilities for the on-premise device project, indicating that the reason is that PG&E is under unique pressure to make such devices available by 2011 given the schedule in D.08-07-045. It has time pressure that other organizations do not share. PG&E indicates that it is still working with them on broader issues like development of standards associated with the use of, and communication with, such devices.
24.3. Discussion
In general, we feel there is additional value in having notification devices that have "plug and play" capability as well as the ability to provide notification information consistent with the parameters of PG&E's adopted PDP program. However, as indicated by PG&E, there other means for customer notification of PDP events,29 and we believe it is more important to have the notification device capability available when the PDP default process starts for small and medium C&I customers. Because we have deferred the effective date for defaulting these customers to PDP from February 2011 to November 2011, we do not believe it is necessary for PG&E to facilitate the development of notification equipment as requested. There should be sufficient time for market development of the devices in time for the 2012 peak season.30 PG&E's estimated costs for notification equipment development, in the amount of $0.767 million31 will therefore be excluded from costs adopted in this decision. This action is consistent with our general preference that development-related costs should be borne by those who will profit from the developed product rather than by ratepayers.
29 PG&E proposes that small and medium C&I and agricultural, with maximum demands less than 200kW, and residential customers will be notified by telephone or e-mail through automatic notification from PG&E. PG&E also states for such customers who have a SmartMeter, PG&E will utilize the existing SmartRate curtailment notification process to notify customers when a PDP event occurs.
30 PG&E indicates that the appropriate capabilities would be available by 2012. See PG&E/Sezgen, 3RT429.
31 This excludes the associated 40% contingency requested by PG&E, which is applied to all costs except $184,000 in project management labor. Contingencies are discussed further on in this decision.
