4. Opt-Out Plan

PG&E states that it had evaluated various opt-out alternatives, and determined that the radio-off alternative was the most feasible and could be offered at a reasonable cost.⁷ It further states that other alternatives evaluated were a wired meter and a legacy (analog) meter.

A combined workshop to consider opt-out alternatives for all of the investor owned utilities was held on September 14, 2011.⁸ The following opt-out alternatives were considered:

1. Analog meter - Under this option, an electromechanical (analog) meter would be used in place of the wireless SmartMeter. This option would require the meter to be read manually every month.

2. Digital meter with no radio installed - Under this option, a digital meter, with no radio communications ability, would be used in place of the wireless SmartMeter. Some of these meters may be able to store interval energy consumption data. This option would require the meter to be read manually every month.

3. SmartMeter with radio transmission turned off - PG&E's proposed alternative, this option would retain the existing SmartMeter, but have the radio communications ability turned off. Under this option, the meter would need to be read manually every month.

4. Wired smart meter - Under this option, interval energy consumption data would be transmitted to the utility through a traditional telephone line, fiber optic, a power line carrier or other wired technologies. Since this option would allow the meter to communicate with the utility, the meters would not need to be read manually every month. This option is not available for gas meters.

PG&E states that the radio off option will not affect the accuracy of electric usage measurement. However, under this option, certain electric SmartMeter functions would be disabled. These would include:⁹

1. Hourly interval data of electric energy usage or daily gas usage.

2. Any tariff or demand response program which requires interval data.

3. Customer account internet presentment of interval data.

4. Remote service connect/disconnect capability.

5. Real-time meter diagnostic alarms and health assessment checks.

6. Real-time monitoring for security events on the metering device.

7. The ability for remote installation of meter or communication board firmware which may be required for upgradability.

8. Outage information and power status.

9. Time-of-Use (TOU) profiled energy usage data collection and access to any tariff that requires a device to collect TOU data.

10. HAN connectivity inside the home and access to any tariff or program that requires HAN in its application.

4.1. Parties' Positions

PG&E maintains that the radio off option is the most practical solution available because it optimizes the SmartMeters already deployed and additional SmartMeters already purchased for future deployment. It further states that the radio off option provides greater flexibility when customers choosing the opt-out option move or sell their homes. PG&E contends that the current options for offering a smart meter with wired communications are not technologically feasible as they are not available for gas meters and are limited to approximately 30,000 meters.¹⁰ Additionally, PG&E argues that it makes no sense to offer a non-communicating SmartMeter (i.e, one with no radio unit installed), since that meter would serve the same function as a SmartMeter with the radio off. Finally, PG&E maintains that the analog meter opt-out option is not feasible, as these meters are no longer being manufactured. Moreover, PG&E states that offering an electric analog meter option is inconsistent with California's energy policy to implement mandatory TOU rates for residential customers, as analog meters cannot provide interval energy-consumption data.¹¹

Many of the parties oppose PG&E's proposed option. Among other things, parties contend that the radio off option would not address the concerns raised by customers regarding the effect of RF emissions on health.¹² Network, EON and Fairfax all further assert that radio transmission is just a small part of the RF emissions from the SmartMeter. They maintain that even with the radio off, the SmartMeter still emits RF emissions. Consequently, they argue that an analog meter is the only feasible opt-out option.¹³

While DRA is generally supportive of PG&E's proposed opt-out option, it believes that the Commission should also consider whether the SmartMeters comply with the Federal Communication Commission's (FCC) guidelines.¹⁴ It further notes that the Commission should consider the "functional requirements for alternative metering systems used by customers who opt out" in order to preserve the benefits of the SmartMeter system.¹⁵

Lake argues that widespread installation of SmartMeters could lead to violations of FCC compliance requirements.¹⁶ It further alleges that the SmartMeters adversely affect the environment and overburden utility easements. Consequently, Lake asserts that installation of SmartMeters should be subject to review under the California Environmental Quality Act (CEQA) (Public Resources Code §§ 21000 and 21001).¹⁷

TURN believes that while the radio off option may address the concerns expressed by customers regarding RF emissions and privacy, it would not resolve concerns over the accuracy of the meters.¹⁸

Network, EON and Fairfax further maintain that any opt-out option should also be made available to local governments (town and counties) that have enacted ordinances for community-wide opt-out.¹⁹ Network also asserts that a radio off option is not acceptable because there is no assurance that the SmartMeter is actually turned off.²⁰

4.2. Discussion

PG&E's proposed radio off option is one of four possibilities that could be offered to residential customers who do not wish to have a wireless SmartMeter. While PG&E has argued that this option is the most feasible, we cannot ignore parties' comments questioning whether this option best addresses the concerns raised by customers. As evidenced by the numerous speakers at Commission meetings, letters to Commissioners and the ALJ, and comments made by parties and other individuals at the September 14 workshop, there is a great deal of concern that the radio off option would not reduce the level of RF emissions. In response to those concerns, the ALJ issued a ruling seeking information on the RF emissions under the various options.²¹ Among other things, the ALJ's October 18^th Ruling asked for both the average duration and duration of communications between the electric and gas SmartMeters with the utility and level of RF emissions at those times. The ALJ's Ruling also sought information comparing the level of RF emissions from a SmartMeter with the radio off, from a digital meter with no communications capability, and from an analog meter.

PG&E's responses to the questions in the ALJ's October 18^th Ruling were filed on November 1, 2011. These responses directly address some of the more controversial questions that the Commission heard at the September 14^th workshop, during the Public Comment period at Commission meetings, in letters to Commissioners, and/or calls to the ALJ and our Consumer Affairs Branch.

One of the more controversial disputes raised during the September 14 workshop was how many times in total (average and maximum) an electric SmartMeter transmits during a 24-hour period. At the workshop, PG&E stated that the cumulative transmission time was 45 seconds per day, while other parties maintained that the transmission was constant. PG&E's response reveals that the total average transmission duration is 45.3 seconds, while the maximum is about 15 minutes during a 24-hour time period.²² PG&E's vendor, Silver Spring Network, reports that a typical electric SmartMeter will communicate for about 45 seconds per day not 15 minutes. However, in instances in which the network is not complete, then the meter may attempt to communicate with the network more often resulting in a maximum duty cycle of 15 minutes.²³

PG&E also includes in its November 1^st response the FCC's response to a request for the FCC to step in and ask for the removal of SmartMeters. The FCC said:

As general background information, the FCC's exposure limits are derived from recommendations from human exposure to RF fields by the Institute of Electrical and Electronics Engineers, Inc. (IEEE) and the National Council on Radiation Protection and Measurements (NCRP), and by the U.S. Environmental Protection Agency (EPA), the Food and Drug Administration (FDA) and other federal health and safety agencies. These recommendations were developed by scientists and engineers with extensive experience and knowledge in the area of RF biological effects and related issues. The exposure limits were developed to ensure that FCC regulated transmitters do not expose the public or workers to levels of RF energy that are considered by expert organizations to be potentially harmful.

In the case of SmartMeters, the FCC has no data or report to suggest that exposure is occurring at levels of RF energy that exceed our RF exposure guidelines. In contrast, the California Council on Science and Technology recently released a report that found that "[s]cientific studies have not identified or confirmed negative health effects from potential non-thermal impacts of RF emissions such as those produced by existing common household electronic devices and smart meters." With no indication that the SmartMeters in question might not comply with FCC exposure limits we have no reason or authority to order them removed or their operation discontinued.

RF measurements reported by others indicate that Smart Meters produce exposure of no more than 65% of the FCC limit at the face of the meter when programmed to transmit continuously. The devices normally transmit for less than a one second a few times each day and consumers are normally tens of feet or more from the meter face, so the actual exposures are typically thousands of times less than this "worse case" measurement condition.²⁴

Another issue that was the topic of intense discussion during the workshop was whether the SmartMeter was a 1-watt powered meter, as represented by PG&E, or actually two or more watts, as represented by EON. PG&E's response indicates that its electric SmartMeters are rated to transmit at one watt. However, PG&E also states the meter's instantaneous peak level in terms of "effective isotropic radiated power" (EIRP) is 2.5 watts based on the SmartMeters' 4.0 dBμ antenna gain.²⁵ This is similar to saying that a flashlight with a 1 watt bulb that focuses the light output in one direction appears as bright as a 2.5 watt bulb without the help of the flashlight's focusing capability. Therefore, while it is true that the EIRP from the SmartMeter is 2.5 watts, this level of emissions is below the FCC allowable RF emissions.²⁶

The Commission has also received a number of questions regarding whether there is RF emission when the meter is not transmitting. PG&E states that "all digital circuitry - from that contained in clocks, in stereo equipment, or in answering machines - emits de minimus RF that is governed by FCC limits for unintentional RF emissions."²⁷ PG&E also includes a table in its response comparing the level of RF emissions under the radio-off and a radio out options. PG&E states that these values were calculated as part of the SmartMeter's certification.²⁸ This table is reproduced in Table 1 below.

Table 1

RF Emissions by Meter Type

Meter Type	RF Measured Value With Radio Out	RF Measured Value With Radio Off	FCC Allowable RF Emissions
Electric: GE	38.3 dBμV/m	39.3 dBμV/m	49.0 dBμV/m
Electric: L+G	31.3 dBμV/m	24.7 dBμV/m	49.0 dBμV/m
Gas: Aclara	No discernable emissions	No discernable emissions	40.0 - 54.0 dBμV/m

PG&E acknowledges that the analog meters emit no RF.²⁹ However, this fact alone does not lead to the conclusion that the analog meter opt-out option should be selected. As noted in Table 1 above, the RF emissions for SmartMeters with the radio off and a digital meter with no radio installed are below the FCC allowable RF emissions.

In advocating for adoption of an analog meter opt-out option, various parties have asserted that this option is necessary due to the alleged effect of RF emissions on human health. However, the issue of whether RF emissions from SmartMeters have an effect on individuals is outside the scope of this proceeding. Further, we determined in Decision (D.) 10-12-001 that PG&E's SmartMeter technology complies with FCC requirements.

More importantly, the alleged effect of RF emissions on health is not material to the resolution of this application. Eligibility to opt out of receiving a wireless SmartMeter is not predicated on whether the meter has affected the customer's health. Rather, as has been stated by the ALJ, a customer shall be allowed to opt out of a wireless SmartMeter for any reason, or for no reason. Therefore, while some parties may argue that one opt-out option would address certain customer concerns better than another option, such an argument is not determinative of the option to be selected.

In determining the best opt-out option to be adopted, we must balance the concerns expressed by customers against California's overall energy policy. The Commission authorized the state's investor owned utilities to replace analog meters with smart meters in order to give consumers greater control over their energy use. Electric SmartMeters enable a utility to provide customers with detailed information about their electric energy usage at different times of the day, which in turn enables customers to manage their energy use more proactively.³⁰ In our decision authorizing smart meters for PG&E, we set the following minimum functionalities for these meters in order to proceed with California's goal to give customers information and choice about their energy consumption:³¹

· be capable of supporting a wide range of price responsive tariffs;

· collect data at a detail level that supports customer understanding of hourly usage patterns and their relation to energy costs;

· allow access to personal usage data such that customer access frequency does not result in additional AMI system hardware costs;

· be compatible with customer education, energy management, customized billing, and complaint resolution applications;

· be compatible with utility system applications that promote and enhance system operating efficiency and improve service reliability, such as remote meter reading, outage management, reduction of theft and diversion, improved forecasting, workforce management, etc.; and

· be capable of interfacing with load control communication technology.

Furthermore, in PG&E's most recent rate design decision we stated that "the Commission's dynamic pricing principles seek to increase customer involvement in (a) managing California's energy supply, (b) reducing greenhouse gas emissions, and (c) managing future power plant development costs, by providing real economic incentives to reduce electric demand during peak periods.³² We remind parties that while we believe that residential customers should be offered an opportunity to opt-out of receiving a wireless SmartMeter, the selected option should not impede state energy objectives. As such, it is important that the selected opt-out option has the capability to allow customers to take advantage of smart grid benefits in the future.

PG&E states that although the SmartMeter with its radio turned off is not currently able to provide interval energy consumption data, there may be future technologies that allow for the manual retrieval of this data.³³ Since the ability to collect interval energy consumption data is a key component to attaining California's overall energy objectives, including matching customer demand with procurement of generation resources, we do not find it reasonable to adopt an electric SmartMeter opt-out option that would not be able to collect that information. As noted above the single most important reason to transition from analog meters has been the capability of supporting a wide range of price responsive tariffs that analog meters cannot do.

Although a wired smart meter would be capable of collecting and transmitting interval energy consumption data, we do not find it to be a reasonable opt-out option at this time. This option would likely require a significant investment in infrastructure and would not be available for use on a large scale within the near future. Additionally, this option is not available for gas SmartMeters.

The proposed decision also did not find the analog meter option reasonable, as this option is unable to track interval energy consumption data. However, TURN notes in its comments that "[a]ny future time variant pricing tariff must offer all residential customers an opportunity to `opt-out' without penalty."³⁴ It therefore argues that any customer who opts out of wireless SmartMeter would also opt out of any time-variant pricing. Other intervenors argue in their comments to the proposed decision that an analog meter opt-out option also be adopted. Finally, PG&E states in its reply comments that it supports approval of an analog meter opt-out option, in addition to the non-communicating option.³⁵

The proposed decision recommended adoption of a non-communicating meter - that is, a SmartMeter with the radio-off or a digital meter with no communications capability. This option was proposed to enable customers to take advantage of already deployed energy policies, such as net energy metering, demand response and energy efficiency measures. As stated above, California's energy policies encourage customers to become smart energy users by giving customers more information and better information about their usage in order for customers to make smart choices to reduce their consumption or shift their consumption to reduce the need for additional power plants and a better climate. For example, customers who install small solar, wind, biogas, and fuel cell generation facilities (1 MW or less) to serve all or a portion of onsite electricity needs are eligible for the state's net metering program. Net Energy Metering (NEM) allows a customer-generator to receive a financial credit for power generated by their onsite system and fed back to the utility.  The credit is used to offset the customer's electricity bill.  NEM is an important element in managing California's energy supply, reducing greenhouse gas emissions, and reducing the need to build future power plants.

Demand response is another program that requires interval energy consumption data. Demand response is a resource that allows end-use electric customers to reduce their electricity usage in a given time period, or shift that usage to another time period, in response to a price signal, a financial incentive, an environmental condition or a reliability signal. It also allows ratepayers to save money if they lower peak time energy usage, which are high-priced.  This lowers the price of wholesale energy, and in turn, retail rates.  Demand response may also prevent rolling blackouts by offsetting the need for more electricity generation and can mitigate generator market power. Demand response programs require a meter that is able to collect interval data.

In light of parties' comments on the proposed decision, however, we revise the proposed decision and now adopt an analog meter opt-out option. This determination, however, does not diminish our commitment and support to the development of California's energy policies. As such, further review of the feasibility of continuing to offer an analog meter opt-out option may be warranted in the future to ensure that this opt-out option does not impede the full implementation of net metering, demand response and smart grid. At a minimum, this opt-out option should be re-evaluated once default TOU pricing is employed for all residential customers.

Some parties have recommended in their comments that we adopt more than one opt-out option. However, we decline to do so at this time. From a customer standpoint, it would be less confusing if there is only a single opt-out option. Further, in its October 28, 2011 response to an ALJ Ruling requesting cost information, PG&E stated that it would incur additional costs if multiple opt-out options were offered.³⁶ As a result, we believe that further examination of the additional costs associated with offering multiple opt-out options is warranted before more than one opt-out option is offered.

Finally, we do not make any determination on whether to allow the opt-out option to be exercised by local entities and communities at this time. Parties advocating for a community opt-out option have not sufficiently addressed issues regarding implementation of such an option, including whether such an option is consistent with existing statutes and rules.³⁷ Further, as discussed below, we have determined that any residential customer electing the opt-out option will be assessed an initial fee and monthly charges. It is unknown at this time whether customers who are part of a community opt-out option should be assessed the same, or different, opt-out fees and charges. Consequently, we find that further consideration of whether to allow a community opt-out option should be included in the second phase of this proceeding.

⁷ Application at 5.

⁸ In addition to A.11-03-014, the Commission is considering whether SDG&E and SCE should also be required to offer opt-out alternatives in A.11-03-015 and A.11-07-020, respectively.

⁹ PG&E Testimony at 2A-4.

¹⁰ The two wired communications possibilities it considered were power line carrier and traditional telephone line.

¹¹ PG&E Testimony at 1-6 - 1-8.

¹² See, Alameda Protest at 2; Lake Protest at 5-8; Mendocino Protest at 5-8; Network Protest at 4; EON Protest at 13-14; Wilner at 2.

¹³ Network Protest at 4 & 6; EON Protest at 13-14; Fairfax Protest at 15.

¹⁴ DRA Response at 7-8.

¹⁵ DRA Response at 5.

¹⁶ Lake Protest at 5.

¹⁷ Lake Protest at 6 - 7.

¹⁸ TURN Protest at 2.

¹⁹ Network Protest at 5; EON Protest at 15; Fairfax Protest at 8-13.

²⁰ Network Protest at 6.

²¹ See Administrative Law Judge's Ruling Seeking Clarification, issued October 18, 2011.

²² PG&E's Response to ALJ's October 18 Ruling, filed November 1, 2011 at 5.

²³ PG&E's Response to ALJ's October 18 Ruling, filed November 1, 2011 at 5.

²⁴ PG&E's Response to ALJ's October 18 Ruling, filed November 1, 2011 (Attachment B).

²⁵ PG&E's Response to ALJ's October 18 Ruling, filed November 1, 2011 at 10 (Table 6-1).

²⁶ 47 C.F.R. § 15.247(c)(3) & (4).

²⁷ PG&E's Response to ALJ's October 18 Ruling, filed November 1, 2011 at 13 (citing to 47 C.F.R., Part 15, for a Class B digital device).

²⁸ PG&E's Response to ALJ's October 18 Ruling, filed November 1, 2011 at 14 (Table 10-1).

²⁹ PG&E's Response to ALJ's October 18 Ruling, filed November 1, 2011 at 15.

³⁰ D.08-09-039 at 2.

³¹ D.05-09-044 at 3 and 4.

³² D.10-02-032 at 4.

³³ PG&E Testimony at 1-6.

³⁴ TURN Comments, filed December 12, 2011, at 4. See also, Aglet Comments, filed December 12, 2011 at 4.

³⁵ PG&E Reply Comments, filed December 19, 2011 at 1-2.

³⁶ PG&E's Response to Administrative Law Judge's October 12, 2011 Ruling, filed October 28, 2011 at 2.

³⁷ For example, both PG&E's gas and electric rules define a "customer" as the person "in whose name service is rendered" and whose signature is on the application, contract or agreement for service. (See PG&E Electric Rule 1; PG&E Gas Rule 1.) The rules further state that a customer may seek relief from the Commission if it is "dissatisfied with [PG&E's] determination regarding level, charge or type of service, or refusal to provide service as requested." (See PG&E Electric Rule 4; PG&E Gas Rule 4.) Further development of the record is needed so that we may address whether and how a local entity or community can lawfully impact a customer's utility bill.