5. Discussion

The issues and concerns raised by parties in this proceeding are similar to those addressed in D.12-02-014, which modified PG&E's SmartMeter Program to include an analog meter opt-out option for residential customers who did not wish to have a wireless smart meter installed at their location. As such, we believe that this decision provides guidance on how to resolve this proceeding.

As noted above, there are four opt-out approaches that could be offered to residential customers who do not wish to have a wireless smart meter. While SDG&E maintains that a meter with interval data collection capability is the desired opt-out solution, it concedes that an analog meter opt-out solution is workable at the current time. UCAN, DRA and CEP all advocate that an analog meter opt-out option be offered. In advocating for an analog meter option, these parties have asserted that the option is necessary to address the alleged effect of RF emissions on human health. However, as we stated in D.12-02-014, "the issue of whether RF emissions from smart meters have an effect on individuals is outside the scope of this proceeding. Further, as we determined in D.10-12-001 that PG&E's SmartMeter technology complies with Federal Communications Commissions requirements."36 Moreover, no party has proposed that eligibility to elect the opt-out option be solely predicated on whether the meter has affected the customer's health. In D.12-02-014, we determined that PG&E residential customers should be allowed to select the opt-out option for any reason, or for no reason. We believe that this determination should also apply to SDG&E residential customers.

In determining the best opt-out option to be adopted, we must balance the concerns expressed by customers against California's overall energy policy. As such, we believe that while residential customers should have the option to opt-out of receiving a wireless smart meter, this option should not impede state energy objectives. 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. In D.07-04-043, we noted that the deployment of smart meters would

... improve customer service by providing customer premise endpoint information, assist in gas leak and electric systems outage detection, transform the meter reading process and provide real near-term usage information to customers. AMI will also support such technological advances as in-house messaging displays and smart thermostat controls.37

As such, we believe that any selected opt-out option should have the capability of collecting interval energy consumption data. Nonetheless, as noted by UCAN, there are currently no mandatory time of use (TOU) tariffs for residential customers. As such, we agree that an analog meter opt-out option could be accommodated at this time.

Based on these considerations, and consistent with our decision to allow PG&E to offer an analog meter opt-out option to its residential customers, we find that UCAN's application should be granted. SDG&E's AMI Project shall be modified to include an analog meter opt-out option for SDG&E residential customers who do not wish to have a wireless smart meter. 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.38 At a minimum, this opt-out option should be re-evaluated once default TOU pricing is employed for all residential customers.

As with our determinations in D.12-02-014, we decline to adopt more than one opt-out option at this time. As with PG&E, 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.

We reject CEP's proposal that the opt-out option include a "smart meter free zone." As discussed in this decision, we have determined that a residential customer may opt out for any reason, or no reason at all. Once that choice is made, the opt-out customer will be assessed an initial opt-out fee, monthly charges and an exit fee. Adopting CEP's proposal would in effect remove a customer's ability to make such a choice and allow an opt-out customer to impose additional costs on his or her neighbors. We note, however, that in the second phase of A.11-03-014 (PG&E's SmartMeter Opt-Out Application), we will be considering whether to allow the opt-out option to be exercised by local entities and communities in PG&E's service territory. We believe that consideration of such an issue would also be appropriate in this proceeding.39

We also reject CEP's proposal that the opt-out option be extended to commercial customers. CEP provides no support of why this proposal is warranted. More importantly, many commercial customers take service on mandatory TOU tariffs, which necessitate meters capable of capturing interval energy consumption data. As such, extension of the opt-out option to commercial customers could conflict with California's ongoing energy policies.

SDG&E requests that the estimated revenue requirement in its proposal be adopted and that the proposed initial and exit fees and monthly charges be found reasonable. It further requests that it be authorized to establish two new two-way interesting-bearing balancing accounts to track the costs associated with providing a gas and an electric opt-out option. However, as evidenced by the cost adjustments made in response to UCAN and DRA's comments, we agree with UCAN and DRA that further consideration of SDG&E's cost estimates is warranted. Consequently, the costs associated with offering the analog opt-out option shall be considered in a separate phase of this proceeding. Further, this phase shall consider whether to allow the opt-out option to be exercised by local communities and governments and, if so, whether the costs for a community exercising the opt-out option would differ from an individual customer exercising the opt-out option.

SDG&E proposes to recover the incremental costs associated with the opt-out option from those residential customers exercising the option. SDG&E's proposal includes an initial fee, monthly charges and an exit fee. These fees and charges would be discounted by 20% for those customers enrolled in the California Alternate Rates for Energy (CARE) program.

CEP maintains that all costs should be recovered from SDG&E or its shareholders. We disagree with CEP's position. The Commission authorized SDG&E's AMI Project in 2007 and SDG&E has almost completed its deployment of smart meters. Consequently, the standard for metering in SDG&E's territory is now a wireless smart meter. Requiring SDG&E to provide an option that deviates from the standard will require the company to incur additional costs, as identified in the November 28, 2011 filing. As discussed in this decision, we are not changing the standard adopted in D.07-04-043. Rather, we are granting UCAN's request to modify that decision to provide an option for those customers who, for whatever reason, would prefer to not have a wireless smart meter. Therefore, any customer electing the opt-out option is electing to not have the standard meter. As such, costs associated with providing an opt-out option should be the responsibility of those customers opting-out.

Since we will be considering SDG&E's revenue requirements in a second phase of this proceeding, we do not believe that it would be reasonable to adopt SDG&E's proposed fees and charges at this time. Rather, as we did in D.12-02-014, we adopt interim fees and charges at this time so that the opt-out option may be implemented without further delay. The interim fees and charges adopted here will be subject to adjustment pending the resolution of the second phase. Further, while we agree with SDG&E's proposition that the initial fee should take into consideration whether the customer is opting-out of one (single commodity) or two (dual commodity) smart meters, we adopt a single interim fee and monthly charge applicable to all customers at this time to avoid further confusion. The interim fees and charges are as follows:

For Non-CARE customers:

Initial Fee $75.00

Monthly Charge $10.00/month

For CARE customers:

Initial Fee $10.00

Monthly Charge $5.00/month

In its comments on the proposed decision, SDG&E requests clarification on whether the interim fee and monthly charges apply on a meter-by-meter basis, on a customer account basis, or on a premise basis regardless of the number of meters at the premise.40 As discussed above, a single interim fee and monthly charge should be utilized at this time. Therefore, on an interim basis, the fee and monthly charge shall apply to all gas and/or electric meters at the customer's premise, provided the customer participating in the opt-out option is the customer of record. The question of whether different fees and charges should be imposed on customers with multiple meters at the same premise will be addressed in the second phase of this proceeding.

We make no determination regarding whether to impose an exit fee at this time. The current record does not contain sufficient evidence to justify why such a fee is necessary nor what the appropriate amount should be. Therefore, we will consider the appropriateness of an exit fee in the second phase of this proceeding.

SDG&E is authorized to establish new two-way electric and gas memorandum accounts to track revenues and costs associated with providing the opt-out option. We allow SDG&E to track these costs and revenues in a two-way memorandum account so that it will preserve the opportunity to seek recovery of these costs and revenues once a final decision on costs and cost allocation is issued.41

36 D.12-02-014 at 15-16.

37 D.07-04-043 at 2.

38 This would include reviewing whether customers are electing the analog meter opt-out option as a means to avoid mandatory TOU tariffs and whether the opt-out fees would need to be adjusted to discourage this action.

39 As part of this consideration, we will address issues presented by multi-family dwelling units, where multiple smart meters may be located closely together.

40 Comments of San Diego Gas & Electric Company on Proposed Decision, filed April 4, 2012, at 2.

41 Authorization of a memorandum account does not necessarily mean that the Commission has decided that the types of costs to be recorded in the account should be recoverable in addition to rates that have been otherwise authorized, e.g., in a general rate case. Instead, the utility shall bear the burden when it requests recovery of the recorded costs, to show that separate recovery of the types of costs recorded in the account is appropriate, that the utility acted prudently when it incurred these costs and that the level of costs is reasonable. Thus, SDG&E is reminded that just because the Commission has authorized these memorandum accounts does not mean that recovery of costs in the memorandum accounts from ratepayers is appropriate.

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