2. Procedural Background

On September 29, 2008, Southern California Gas Company (SoCalGas) filed an application seeking authorization of a proposal for advanced metering infrastructure (AMI) deployment activities and associated cost recovery mechanism.¹ In this application, SoCalGas requests Commission approval to deploy a stand-alone gas AMI system at a cost of $1.079 billion. The proposal would involve the installation of approximately 6 million AMI gas modules between 2009 and 2015. SoCalGas also requests approval of a balancing account as a cost-recovery mechanism for its AMI deployment costs.

On October 2, 2008, SoCalGas filed a motion in this proceeding requesting expedited approval of $12.4 million in pre-deployment funding to support project management office set-up, vendor evaluation and selection, and information technology systems and integration activities related to requirements and design. In this motion, SoCalGas argues that its proposed pre-deployment activities will be necessary to the implementation of an approved AMI system within the company's service territory, and that the $12.4 million is not in addition to, but part of, the amount requested in the initial application. The assigned Administrative Law Judge (ALJ) extended the deadline for responding to this motion to November 3, 2008, to ensure parties had adequate time to review the application and motion before filing their responses.

SoCalGas estimates that its AMI proposal will deliver about $27.3 million in net benefits, with operational savings covering approximately 84.5% of the AMI lifecycle costs. SoCalGas expects that the AMI system will provide usage information to customers leading to a reduction in customer energy usage, and that the resulting energy conservation benefits will cover the additional costs of the system and provide some net benefits. SoCalGas initially requested a decision on this application by June 2009.

The Commission received two timely protests to this application. On October 31, 2008, the Division of Ratepayer Advocates (DRA) filed a protest. DRA questioned both whether the proposed stand-alone gas-only AMI system is consistent with Commission policy directives, as claimed by SoCalGas, and whether the project as proposed will be cost effective. DRA recommended that the Commission either deny the application outright, or hold hearings to more thoroughly examine the factual and policy issues raised by this proposal. On November 3, 2008, The Utility Reform Network (TURN) filed a protest questioning the estimates for both operational and conservation benefits provided in the SoCalGas application, and suggesting that any conservation benefits may be achieved through other, less expensive means. Both DRA and TURN expressed an intention to conduct an analysis of several aspects of the proposed system including its cost effectiveness, and suggested a schedule that included evidentiary hearings for resolving issues found to be within the scope of this proceeding.

The ALJ assigned to this proceeding held a prehearing conference (PHC) on December 8, 2008, to create a service list, discuss the October 2, 2008 motion for an expedited decision on pre-deployment funding, develop a schedule, identify issues, and address other matters as necessary for the expeditious processing of the case. At this PHC, the ALJ denied the motion for an expedited decision on pre-deployment funding.

Assigned Commissioner Grueneich and ALJ Hecht issued a Scoping Memo and Ruling on January 6, 2009 establishing a schedule for this proceeding, under which DRA and other parties were to serve testimony by March 9, 2009. On March 6, 2009, SoCalGas served errata to its opening testimony, and on March 26, 2009, a ruling established an updated schedule to allow parties an opportunity to assess the SoCalGas errata before finalizing their testimony. DRA, TURN, and the Utility Workers Union of America (UWUA) served opening testimony on April 23, 2009, and SoCalGas served rebuttal testimony on May 7, 2009. Four days of hearings took place between May 22, 2009, and May  28, 2009, and parties filed opening and reply briefs by July 2, 2009.

¹ AMI consists of both metering and communications infrastructure.