4. Positions of the Parties

4.1. PG&E

PG&E argues that it "has proposed a viable, cost effective AMI Project that will transform PG&E's business significantly, improve customer service and satisfaction, and provide the Commission with a powerful tool for shaping California energy policy." (PG&E's Opening Brief, p.1.) PG&E's policy witness testified that the AMI deployment should be approved because it possesses the following reasonable features: (a) cost effectiveness, (b) voluntary (opt-in) participation in demand response rates, (c) rates can remain almost flat, (d) improved customer service, (e) implements state and regulatory energy policy goals, and meets the Commission's desired functionality requirements, and (f) reasonably addresses labor impacts. (Ex. 1, pp. 1-1 and 1-2.)

4.2. DRA

DRA supports PG&E's project only if it is cost-effective and with the caveats now captured by stipulations. DRA states that the Commission "should ... ensure that the potential benefits are realized. It should also adopt ratemaking mechanisms that ensure that ratepayers share in the benefits. It should direct PG&E to ... mitigate the risks of using a proprietary technology. Finally, the Commission should require periodic reports from PG&E" describing deployment and technological problems. (DRA's Opening Brief, p.1.)

4.3. TURN

TURN argues that the "AMI project is not cost effective, and, as such, the Commission should not approve this application. ... PG&E bases its business case analysis on an overly optimistic demand response forecast, an incorrect avoided generation cost value, and an uncertain 20-year economic useful life and study period." (TURN's Reply, p. 1.) TURN's testimony (Ex. 201) suggests the Commission should reject the proposed AMI deployment, or at least require specific changes. TURN opposes approval or recommends changes because the project is not cost effective - there is a $523 million gap from operations (based on only a 15-year study) and only $90 million in demand response benefits under the TURN High Case. TURN also recommends that the Commission require PG&E to develop a new business model that includes open architecture in the entire network and re-file that new business model.

If AMI deployment is approved, TURN then recommends that the Commission require PG&E to:

o indemnify ratepayers against premature retirement prior to the end of PG&E's proposed 20-year life,

o flow through program costs and operational benefits using a mortgage amortization to eliminate intergenerational inequities with front-loaded capital costs in the early years and benefits increasing with inflation in the later years,

o install AMI meters in new construction at the time of the original meter set even if networks are not available in those areas to hook up the AMI to reduce duplicative and expensive labor costs,

o request demand response funding in 2009 and beyond on an ongoing basis rather than pre-approving it in this case in light of uncertainties in future demand response penetration,

o as a condition of the approval of this application, to obtain from the vendors an agreement (at no additional cost to PG&E) that the vendor will license its technology at nominal cost so that all vendors of smart thermostats can use it, thereby mitigating potential monopolization of the market for a device soon to be mandated by the California Energy Commission. (TURN Ex. 201, pp. 2 - 3.)

4.4. SPURR, SVLG and eMeter

SPURR, SVLG and eMeter all support AMI deployment. They also support SPURR's and SVLG's proposal for open, automated, non-discriminatory, and real-time access to AMI data, as discussed elsewhere in this decision.

4.5. SSJID and Yolo/Cities

SSJID and Yolo/Cities have contested condemnation proceedings to acquire PG&E's service territory and thereafter SSJID intends to provide electric service to customers in its service territory and Yolo/Cities would switch to the Sacramento Municipal Utility District (SMUD). They therefore request that PG&E should not be allowed to deploy AMI in the disputed territory because they believe the equipment would not be useful if service is provided, respectively, by SSJID and SMUD.