9. Cost Effectiveness
Cost effectiveness is one major criterion in determining whether to approve the SoCalGas AMI deployment proposal. The Commission evaluated previous AMI applications primarily on the basis of whether they are cost effective over the life of the project. Parties to this proceeding agree that approval of an AMI system should be contingent on its being found cost effective; the SoCalGas policy witness acknowledged this requirement during hearings.31 The SoCalGas business case estimates that the present value revenue requirement benefits of this project proposal are $27 million greater than its costs, and on this basis, SoCalGas asserts that the proposal is cost effective and should be approved. This section assesses the major elements of the SoCalGas cost effectiveness calculation, covering issues raised related to benefits (including treatment of terminal value, benefits from the elimination of meter readers, and estimates of energy conservation benefits), as well as issues related to the costs.
9.1. Benefits
One of several benefits included in the SoCalGas analysis that is questioned by the parties is the estimated terminal value of $26.4 million. SoCalGas defines the terminal value as "the stream of annual benefits per gas meter module discounted back to 2034 dollars."32 SoCalGas suggests that, because the gas modules have a useful life of 20 years, the AMI meter modules deployed for growth and meter failure in years 2016 through 2034 (the end of the business case analysis) will have remaining value beyond the end of the AMI project in the years 2034 through 2053. SoCalGas calculates an annual average benefit per meter and multiplies that average benefit by the estimated remaining meter population in each year. SoCalGas further suggests that, as the costs of post-deployment meters are incorporated into total project costs, their remaining value at the end of the analysis period should be included as a benefit in the business case.
Both DRA and TURN reject the concept of terminal value as defined by SoCalGas and applied in this case. DRA notes the possibility that evolving technologies may make the chosen AMI solution functionally obsolete by 2040, in which case the meters may not be useful throughout some or all of the years 2034-2053 and would not have value during that time.
Parties differ with regard to Commission precedence on the treatment of terminal value. TURN asserts that the Commission rejected a similar calculation of terminal value benefits of an AMI system in its evaluation of the SDG&E AMI deployment case. SoCalGas argues to the contrary that both SDG&E and PG&E AMI upgrade cases accepted the concept of terminal value in final cost-effectiveness analyses.
While the methodology SoCalGas presents to calculate its terminal value differs from that applied in SDG&E and PG&E's case, including a terminal value benefit is in concept consistent with what the Commission has done in the past. The implication of assigning a terminal value of zero in cost benefit analysis is that the remaining assets (post-2034) will be rendered immediately useless at the end of the analysis period. In reality, however, the AMI system that is initially deployed (2009-2015) will gradually be replaced prior to 2034. It is plausible, therefore, to assume that the gas modules installed in later years of the analysis period for normal failure replacement and customer growth will represent a continuum of technological change, and be upwardly compatible as the AMI system evolves.
If the terminal value benefit were to be excluded from SoCalGas'
cost-benefit showing, SoCalGas would need significantly to alter its assumptions regarding the installation of replacement and growth meters post-deployment. In particular, it would invite the assumption that installing meters post deployment is not an economically rational action for the company. At a minimum, it would require that the company exclude post-deployment meter costs from its business case. This change in assumptions would not accurately reflect the reality of expenses and benefits to result from initial AMI deployment.
We will count SoCalGas' estimated terminal value benefit as an element of the project's overall cost-effectiveness, to reflect, in a logical manner, the residual value of the project elements at the end of the analysis period.
9.1.2. Cost Savings from Elimination of SoCalGas Meter Reading Workforce
A second major component of the SoCalGas business case that is questioned by parties is the estimated savings from the elimination of the SoCalGas meter reading workforce. SoCalGas calculated the benefits for this item assuming that it would be eliminating a meter reading staff comprised of full time employees, and reported that the workforce savings attributable to its AMI proposal under this assumption will be $757.5 million. DRA, TURN, and UWUA note that only 10% of the SoCalGas meter reading workforce currently consists of full time employees, with 90% employed part time. DRA asserts that if SoCalGas calculated this benefit assuming that the current (90% part time and 10% full time) meter reading workforce breakdown will still be in place, benefits from this item would be reduced by approximately $48.4 million.
In contrast, SoCalGas asserts that the DRA analysis is incorrect, and fails to consider the impacts of recent labor agreements. SoCalGas states that under the terms of these labor agreements, basing the savings calculation on the current distribution of part time and full time employees extrapolated to 2016 would result in a $65.7 million increase (not decrease) from its original benefits estimate from this category.
All parties agree that SoCalGas' meter reading costs are low. SoCalGas began using a predominantly part-time labor force in 1998, and that use of a part-time meter reader workforce was negotiated and agreed to by SoCalGas labor unions to reduce operating costs and help prepare for implementation of automated meter reading technology. SoCalGas' alleges that, in the absence of an approved AMI decision, meter reader compensation will return to market levels by 2016.
We find SoCalGas' assumptions regarding labor costs acceptable for two principal reasons. First, the record in this proceeding supports SoCalGas' position that the estimated benefits in this category are reasonable, and potentially understated. There is ample evidence that the company's labor costs in this category are increasing, and approaching market rates. For instance, the company cites recent labor negotiations whose outcomes suggest it may be difficult for SoCalGas to maintain its low labor costs into the future. Whereas SoCalGas had initially forecast its meter reader labor costs would increase by $48.4 million beginning in 2016, the new SoCalGas Labor Agreement resulted in a $17.8 million increase being incurred in 2009. Considering that SoCalGas could enter into two additional Labor Agreements prior to 2016, it is a reasonable projection that cost increases in excess of the remaining $27.4 million forecast by SoCalGas as "Avoided Meter Reading Costs" could materialize within the relevant timeframe.
Second, we find the policy implications of the alternative assumption illogical. SoCalGas' ability to manage its workforce in anticipation of AMI should not undermine its efforts to cost-justify its project. Every other utility that has come before this Commission with an AMI case has had substantially larger costs in this category. A plausible implication of the alternative finding on this point, for instance, might be that SoCalGas is encouraged to transition back to a full-time labor force, thus making the case for AMI more attractive under our frame of analysis, only to eliminate those positions as soon as the numbers pencil out in favor of AMI. We accept SoCalGas' forecast benefits from the avoided Meter Reading costs, for the purposes of determining the cost-effectiveness of this application.
Another significant fraction of the benefits SoCalGas claims from its proposed AMI system consist of savings gained when customers use information feedback about their past gas usage to reduce gas usage in the future. SoCalGas estimates these gas conservation benefits at about $148 million.
DRA, TURN, and UWUA all argue that SoCalGas overstates the level of conservation benefits, and DRA provides possible alternative assumptions for calculating conservation benefits, under which it calculates conservation benefits of $49 million.
9.1.3.1. SoCalGas Methodology for Estimating Conservation Benefits
SoCalGas considers data from existing studies of customer behavior when provided with timely information on energy usage, and uses this data on customer savings along with assumptions of customer participation when provided with this feedback to estimate levels of conservation benefits from its proposed AMI system. SoCalGas differentiates between mechanisms for direct feedback, such as from an in-home display that automatically shows recent gas usage, and indirect mechanisms, which include Web-based interfaces where customers can look up their recent usage. SoCalGas assumes that in the first year in which its AMI system is fully operational, 6.5% of customers will utilize direct feedback mechanisms to monitor their gas usage, and another 6.5% will utilize indirect feedback mechanisms. SoCalGas further estimates that customers utilizing direct feedback mechanisms will reduce their usage by 10% over the course of one year, whereas customers utilizing indirect feedback will reduce their total gas usage by 5%. Under these assumptions, a total of 13% of customers would reduce their total gas usage by an average of 7.5% in the first year of full AMI functionality. SoCalGas further estimates that conservation benefits will increase annually from this base level during the life of the project. The SoCalGas calculations result in total conservation of just under 1% of the SoCalGas customer usage, with an associated savings of $148 million. This is the amount SoCalGas includes as a conservation benefit in its cost effectiveness analysis.
Parties disagree with SoCalGas on several aspects of the SoCalGas calculation, including the percentage of customers likely to take advantage of information feedback in order to reduce usage, the amount by which participating customers would reduce usage, and the degree to which any observed savings can be credited to AMI deployment. DRA also argues that the cost of a dedicated in-home display or other display device should be included in the cost effectiveness analysis. In addition, parties suggest that the SoCalGas cost effectiveness analysis should have been conducted using the traditional cost effectiveness tests mandated for Commission-authorized energy efficiency programs in California, including the Participant Test, Ratepayer Impact Measure Test, the Total Resource Cost Test, and the Program Administrator Cost Test.33 These tests would include a wider variety of costs than those included in the SoCalGas analysis.
DRA and TURN suggest that SoCalGas has overestimated the conservation effect to be expected from customers utilizing either direct or indirect feedback, suggesting that the appropriate savings by participating customers is 4%. In addition, DRA estimates that initial customer participation would be lower than the 13% estimated by SoCalGas, though it could ramp up to a higher level than SoCalGas estimates in later years. Based on these alternative assumptions, DRA estimates that the conservation effect from the SoCalGas proposal would begin at 0.32%, rather than the 1% estimated by SoCalGas, and would reach a maximum level of 0.64% during the project period, still below even the initial SoCalGas estimate.
UWUA and other parties question the applicability of the studies of the effect of information feedback on customer usage and conservation relied on by SoCalGas in calculating its conservation benefits. UWUA asserts that the studies do not reflect California or SoCalGas usage characteristics, prices, or demographics,34 and notes that most of the studies focus on electric usage and conservation.35 For these reasons, UWUA does not accept that the results of these studies constitute a valid basis for calculating conservation estimates for this project. UWUA also asserts that the effect of a 5% bill savings on a customer's bill would be relatively low, and questions whether an expensive project should be based on "such a minor impact."36
Gas conservation impacts are a new category of benefits in the Commission's consideration of AMI cost-effectiveness. While both PG&E and SDG&E have previously proposed and received approval from this Commission for deployment of gas AMI systems, in both cases the utility proposed gas AMI as part of a larger project that included electric AMI deployment. In neither case did the Commission consider gas conservation benefits as part of the business case used for determining cost effectiveness. Each application did, however, contemplate and include conservation benefits on the electric side as part of the business case analysis.
Given their novelty, it is difficult to foresee the exact magnitude of gas conservation benefits which will follow from customers' improved access to their own natural gas usage data, and much effort has been expended in this proceeding to examine the assumptions underlying SoCalGas' forecasts in this area. In the absence of former Commission action or empirical data on the conservation impacts of a stand alone gas AMI system, we are left to make an informed judgment. Our task is to determine whether the assumptions made by SoCalGas serve as a suitable basis for analysis.
In this regard, there are three main issues to assess underlying SoCalGas' conservation estimate - participation rates, conservation rates for participating customers, and attribution of potential savings to the SoCalGas AMI investment.
On the topic of participation rates, SoCalGas has assumed an initial 13% participation rate for its customers, and growing at 1% per year. SoCalGas' estimate of participation is based on a Customer Insight Panel which asked customers whether the gas usage would be influenced if the daily data on usage and cost were made available. As both SoCalGas and DRA testify, 38% of the panel strongly agreed with the statement, while 30% somewhat agreed, and 19% were neutral. To determine their participation rate assumptions, SoCalGas counted the first two categories of respondents as responsive, whereas DRA only counted the first. The second category is clearly on the positive side of neutral, and it would not be unreasonable to include some portion of the neutral respondents as potential participants, if encouraged by focused outreach efforts. For these reasons, SoCalGas' participation assumptions could reasonably be considered conservative when viewed in this light.
With regard to conservation rates of participating customers, SoCalGas has assumed between 5% and 10%, depending on the mode of feedback. These numbers are drawn from the mid-points of ranges of conservation estimates from 13 studies of conservation response in the face of information feedback. Several parties have expressed concerns that the studies used as the basis for the SoCalGas conservation estimates may not be fully applicable to natural gas usage by SoCalGas customers.
Parties note that few of the data describing gas conservation estimates cited in SoCalGas' supporting testimony come from California. This is by necessity, as this application would represent California's first large scale deployment of gas-only AMI. However, the chosen sample of studies is not irrelevant to California. To the contrary: the sample is relevant because in spite of differing climatic conditions, housing types and cultural practices across the sample, these studies observed effects that illustrate the common finding that when a largely invisible process (gas or electricity use) is made more visible, there is measurable conservation response on an order comparable to what SoCalGas has put forth in its application.
It is also true, as parties raise, that the end uses of gas by customers (primarily space and water heating) differ somewhat from electric end uses, and the total conservation impact from any information feedback will depend at least in part on the scope for conservation in customers' homes. While there may be fewer discretionary uses for gas than for electricity, the record shows that there is indeed opportunity for behavioral change affecting space heating and water heating to achieve the conservation levels on the order assumed by SoCalGas. To the extent that the opportunities in gas are limited relative to electricity, compensation for this fact can be found in the lower participation rates and conservation rates assumed by SoCalGas, relative to what has been assumed in the electric AMI cases.
In addition to the estimated conservation response, it is important to recognize that AMI can serve to support broad and ambitious goals articulated by this Commission. The California Long Term Energy Efficiency Strategic Plan (Plan) (www.californiaenergyefficiency.com) sets targets for deep energy reduction and envisages a "rapid evolution in both technology and customer behavior to make energy efficiency `a way of life' among Californians by 2020." (pp. 2-3) The energy use reductions considered in the Plan and other policy documents at local, state and federal levels are far in excess of the estimates made by SoCalGas in its application. In order to achieve a 40% reduction in energy use, or Zero Net Energy Homes, as envisioned by our Plan and policy goals, a whole suite of initiatives will have to be employed. In this context, our review here is as much strategic as it is technical.
In our view, SoCalGas has made a number of conservative judgments in composing its conservation estimate. It has taken a middle of the road estimate for both participation and conservation rates. The 5% and 10% indicative figures represent the mid range of 13 relevant studies. They relate to savings in the short- to medium-term, from behavioral change arising from increased awareness. Several of the studies on energy information feedback that were reviewed for testimony in this case were conducted before advanced metering was available. They were deemed relevant because they involved changes in the energy users' information environment of the type proposed by SoCalGas, i.e., more timely, accurate information. However it is highly plausible that with higher quality information, such as that afforded by AMI, will come greater responsiveness. SoCalGas has also not included any conservation benefits for higher volume core commercial and industrial customers, which may represent an area of further potential. We are confident that the assumptions put forth by SoCalGas do not represent the upper bound of what is achievable in the way of gas conservation following from increased customer feedback, but rather a moderate middle ground.
Finally, with regards to parties' concerns over attribution, the estimates drawn from to inform the basis of SoCalGas' conservation rates excluded in all cases energy reductions flowing from efficiency measures. The conservation rates represent solely those energy use reductions which would flow from behavior changes in response to energy use feedback. As there are currently no other programs to motivate those reductions there is no apparent risk of
double-counting in this regard. Future programs targeting the same reductions would occur in the context of our energy efficiency portfolios, which are subject to rigorous measurement and verification, in order to isolate the impacts of energy efficiency funds from those reductions stemming from other factors. We therefore, do not view double-counting as a major issue within the context of SoCalGas' business case here.
9.2. Costs
SoCalGas requests a contingency fund of $98.1 million on a total deployment funding request of $1.08 billion, or a 10% contingency fund. Specifically, this contingency encompasses deployment capital and O&M expenses, to cover unanticipated, unknown or irreducible risks that may impact project schedule, resource availability, functional requirements and other circumstances. The proposed contingency funding is higher that that proposed or authorized for the electric utilities AMI applications.
TURN and DRA note that its contingency request represents an additional 2% over the approximately 8% adopted for SDG&E and PG&E in their AMI applications. They argue that the Commission should reduce the proposed contingency funding accordingly. TURN notes that SoCalGas has already reduced its level of risk through its RFP process to determine cost estimates for its application. Because of this, TURN posits that the Commission should recognize SoCalGas' efforts to reduce its risk and lower the contingency funding to a more appropriate level - a risk allowance that is somewhere between 6% and 8% of SoCalGas' proposed deployment cost of $981 million.
SoCalGas argues that for a project of this financial magnitude and the long duration of the deployment period (2009-2015), a 10% project contingency is a prudent and reasonable amount. No other utility has had to change out so many meters, it argues. While this is indeed the case, SoCalGas has not adequately explained why the larger number of installations should increase the risk contingency 2%. Indeed, given the experience accumulated through California's AMI roll out to date, any differences between prior AMI cases and this one point directionally towards lower cost risk.
In general, the risk-based allowance adopted by the Commission for the PG&E, SCE, and SDG&E AMI cases has been in the range of 7.4% to 8.0%. Based on Commission precedent, and the fact the previous experience and RFPs have reduced the cost uncertainty for SoCalGas, we reduce the project's contingency funding allowance to 7%. This results in a $68.7 million allowance for contingencies.
SoCalGas asserts that attrition in both the part-time and full-time meter reader job classifications is significantly higher than the average annual attrition rate at SoCalGas. Over the last seven years the average attrition rate for part-time meter readers has been 83% and the attrition rate for full-time readers has been 42%. SoCalGas alleges that meter reading attrition may be impacted by the transitory nature of the manual meter reading work. Because SoCalGas expects greater meter reader attrition during the deployment period, it has included $225,000 in its cost benefit analysis for anticipated employee retention and retraining expense.
SoCalGas also alleges that it will seek to provide job opportunities to employees impacted by the project. Some management employees may take advantage of retraining opportunities while others may elect to retire during the deployment period. To support retraining, and workforce transition, SoCalGas has included $62,000. Some retraining opportunities include Customer Services Field Training -- SoCalGas personnel who retrofit meters with gas AMI meter modules and change meters that have pre-installed gas AMI meter modules will be trained in how to perform the work and operate the required handheld installation and diagnostic tools. SoCalGas has included costs for this training at a level of $55,000.
In sum, SoCalGas has included $117,000 to support retraining and retention of the workforce impacted by this project. SoCalGas employs on average about 970 meter readers. While a number of activities within the meter reading department will continue to be necessary after AMI is deployed, we find that SoCalGas' planned funding to assist the transition of the workforce affected by this project inadequate. In order to better protect the employment interests of this displaced workforce we direct SoCalGas to increase by $1 million its funds allocated for employee retention and retraining. This transition fund should be utilized to extend severance, vocational training, and other transitional opportunities to affected meter reading employees.
9.3. The SoCalGas AMI Proposal is Cost Effective
The initial business case presented by SoCalGas estimates, in present terms, the total costs of this project as $1,039.6 million, with total benefits of $1,066.9 million over the analysis period, leaving a margin of net benefits of $27.3 million. Based on our analysis, we find that SoCalGas' benefit assumptions are, individually and in the aggregate, sound and reasonable.
On the cost side, however, we find two adjustments necessary. First, to maintain consistency with past AMI authorizations and reflect the reduction in risk inherent in deployment following prior experience, we reduce the authorized contingency from 10% to 7%. This reduces the contingency fund associated with the project from $98.1 million to $68.7 million, reducing overall project costs $29.4 million. Conversely, we require that SoCalGas augment by $1 million its funds for workforce transition and retraining for those members of its workforce impacted by the AMI project. With these modifications, the project is cost effective; the benefit to cost ratio is approximately 1.06 because benefits exceed costs by approximately $56 million. While this is by some measures a slim margin, the cost-benefit ratio of the SoCalGas AMI proposal is comparable and in some cases an improvement over electric AMI projects this Commission has approved in the past. Based on SoCalGas' showing, this AMI project will provide operating benefits of over $2.9 billion to customers over the next
25 years. The proposal also provides system-wide technology platform with the ability to expand operating benefits as new applications emerge. We hope and expect that this AMI system will yield further, unforeseen benefits in the future, improving customer service, allowing utilities to operate more safely and efficiently, and reducing utility operating costs. Finally, we fully expect that SoCalGas will use this opportunity not only to induce behavioral conservation but also to scale-up participation in energy efficiency programs. The dramatic expansion in available energy usage information to customers should fundamentally alter their relationship with energy, and encourage greater subscription and utilization of the energy efficiency programs offered through the utility and others. While unaccounted for in the cost-effectiveness showing here, we view this synergy to be central to the opportunity afforded by AMI.
9.4. The SoCalGas AMI Project is Approved
For the reasons stated above, the Commission authorizes SoCalGas to proceed with the implementation of a gas AMI system in its service territory, subject to the modifications described below. With this approval, we complete AMI coverage in all major energy utility service areas under our jurisdiction.
9.5. Ratepayer Protections
SoCalGas proposes a symmetrical sharing mechanism for actual costs experienced above and below the authorized level. Under its sharing mechanism proposal SoCalGas shareholders will be responsible for 10% of cost exceeding the authorized level and retain 10% of the savings below the authorized level with a maximum reward/penalty of +/- $10 million (i.e., a $100 million sharing band around the requested authorized deployment expenses of $1,079). This mechanism is similar to the sharing mechanism adopted in the SDG&E AMI decision (D.07-04-043).
Both DRA and TURN argue that if approved the Commission should alter SoCalGas' proposed risk sharing mechanism, because SoCalGas's AMI proposal already allocates substantial risk to ratepayers, since the project is not cost-effective solely on an operational basis. Its cost-effectiveness turns on actions by consumers which SoCalGas' showing presumes, but for which the company is not liable. Because of this, DRA and TURN propose alternate sharing mechanisms, which reallocate the balance of risk among shareholders and ratepayers.
TURN proposes that all cost over-runs less than $100 million be allocated 50/50 to shareholders and ratepayers with an explicit showing by SoCalGas demonstrating that the cost over-runs were caused by forces not controllable by the utility. Cost over-runs above $100 million would trigger a reasonableness review by the Commission with a similar requirement for the utility to demonstrate that cost over-runs were outside of its control. All cost under-runs and cost savings, under TURN's proposal, would be passed 100% back to ratepayers. DRA proposes a similar mechanism whereby shareholders bear 50% of cost over-runs. For cost under-runs, DRA recommends that the ratepayer/shareholder split remain at 90%/10%. Furthermore, DRA recommends that the size of the risk sharing band be +/- $60 million rather than +/- $100 million as SoCalGas proposes.
SoCalGas agues that such changes are not warranted, pointing to its projections that approximately two years after completion of AMI deployment, SoCalGas ratepayers wills see lower average bills compared to 2008 bill levels. SoCalGas also points out that no other Commission approved AMI case has shown so high a percentage of AMI life cycle costs covered by operating benefits, and thus SoCalGas customers will see a rapid reflection of AMI benefits.
Given the margin of net benefits on the overall cost-effectiveness of the business case, and because the business case relies on future ratepayer actions, we find that changes to SoCalGas' proposed sharing mechanism are warranted to provide ratepayers with greater protection.
Our approved mechanism represents a combination of the proposals on record. For cost overruns, we believe it is reasonable that ratepayers and shareholders share the burden 50% / 50%. However, we do not accept DRA and TURN's arguments that 90% to 100% of cost under-runs should be returned to ratepayers. In theory a risk sharing mechanisms should provide SoCalGas with an incentive to manage and control overall AMI project costs and return such benefits back to customers. We therefore, leave the cost under-run sharing rate at 90%/10% between ratepayers and shareholders as originally proposed by SoCalGas. The risk sharing band to which this mechanism applies shall remain +/- $100 million. The cost recovery mechanism proposed by SoCalGas is approved as proposed.
Because the cost-effectiveness of this proposal is reliant on the fact that the forecast conservation benefits are indeed realized, and we indeed view this project as a driver for greater conservation across SoCalGas' service area, we must take special care to ensure that the gas conservation impacts in the order of magnitude assumed within the business case are realized.
Part of this task can be met by ensuring the increased information flow generated by the advanced meters can be put to its highest possible use. In some cases customers will respond to relatively basic data. In other cases it will require that this data be processed, by either SoCalGas or potentially a third party, into customized diagnostics and actionable steps to improve a given customer's energy utilization. Thus, in our view, a critical component of this project entails providing customers and authorized third-parties access to gas usage data in a streamlined and straightforward manner.
In the context of our Smart Grid rulemaking, R.08-12-009, we have adopted concrete timelines for the provision of electric price and electric usage information to customers and authorized third-parties.37 In order to maintain consistency in our AMI policy and the rigor we expect in returning the benefits promised by AMI projects, we will require the same here for gas prices and usage.
Accordingly, we will set a deadline by which SoCalGas must be provide access to authorized third parties, provide access to near-real time gas usage data directly to consumers, and provide retail and wholesale prices to customers on a real-time or near real-time basis in a machine readable form. We will require that SoCalGas meet these requirements concurrently with meter installation.
We recognize that there are certain concerns that must be addressed relating to third party access to such information, such as confidentiality, the security of a customer's information, and processes relating to customer consent. Upcoming workshops within R.08-12-009 will explore these issues. We direct SoCalGas to participate in these workshops and utilize any resulting direction to meet the target we set here to ensure meter data can be made available to authorized third parties as meters are installed.
In testimony, SoCalGas witness Sarah Darby asserted that the conservation outcomes for the SoCalGas AMI project will depend on how energy use feedback is presented and supported. We agree, and therefore direct SoCalGas to host a public workshop within 180 days of the issuance of this decision to present a draft plan for AMI outreach and conservation support. In order to support the development of this plan, as well as ongoing AMI planning and implementation, SoCalGas shall convene a Technical Advisory Panel, similar to the one founded by SDG&E.
The plan should include marketing and education elements to prepare customers for the roll-out of advanced meters, beta versions of web-based Energy Management feedback pages, hard copy conservation materials for non
web-based customers, as well as strategies to channel customers towards energy efficiency offerings. In addition, we direct SoCalGas to work with the Commission's Business and Community Outreach (BCO) group to coordinate the scheduling of targeted outreach events, which should include consumer-oriented demonstrations of the meter and its benefits. A final written plan shall be submitted to the director of the Commission's Energy Division and served on the most recent service list for this proceeding within 60 days of the public workshop.
It is critical to acknowledge that initiating and sustaining the behavioral change necessary to maximize conservation response cannot be accomplished through a one-size-fits-all approach to marketing, education, outreach, and customer support. Thus, consistent with our objectives in other demand side programs, we direct SoCalGas to specify in its plan outreach strategies for all market segments, including ethnic, minority, and hard-to-reach communities and small businesses. It will be incumbent upon SoCalGas to discuss specific proposals for utilizing a competitive solicitation process for the selection of Community Based Organizations (CBOs) with a demonstrated record of success in reaching these market segments.
In order to ensure project objectives remain on track, we direct SoCalGas to establish a system to track and attribute the conservation impacts of its AMI
roll-out. Every six months, SoCalGas shall file a report of measured savings. In addition, the semi-annual reports should describe marketing, education, outreach, and customer support activities undertaken during the six month period.
These reports shall serve as a forum to adjust, as necessary the elements laid out in the final outreach plan described above. We expect that customer outreach, education and communications will continue to evolve and improve as SoCalGas conducts customer research, monitors customer reaction to new AMI technology and various customer usage presentation tools, and incorporates feedback from these activities into its AMI outreach and education activities.
If the project is falling short of SoCalGas' projections presented in this docket, the company must submit revisions to its outreach plan to increase awareness, participation, and durability of conservation actions among customers. Additional costs incurred in order to improve conservation response will be funded out of contingency funds or otherwise subject to the risk sharing mechanism outlined above.
31 SoCalGas witness Mueller RT, Volume 2, at 140, lines 16-19.
32 SoCalGas Exhibit 7, at 8.
33 See California Standard Practice Manual, http://www.energy.ca.gov/greenbuilding/documents/background/07-J_CPUC_STANDARD_PRACTICE_MANUAL.PDF.
34 UWUA Opening Brief, at 9.
35 UWUA Opening Brief, at 10-11.
36 UWUA Opening Brief, at 10.
37 D.09-12-046 at 54.
