7. Technology

PG&E selected Distribution Control Systems, Inc. (DCSI) to provide a Power Line Carrier technology for electric meters and Hexagram, Inc. to provide a fixed network system with radio frequency communication channels owned by PG&E for gas meters.16 These selections followed a detailed Request for Proposal (RFP) and evaluation process. PG&E's testimony showed that the DCSI system has been deployed by a number of other utilities (none as large as PG&E) to provide a sufficient demonstration of the technology's reliability and functionality. The technology provides two-way communications to each customer's meter. The technology also allows other functions including direct polling to the meter by PG&E which can assist in completing customer service related requests; and it has the potential for direct communication with in-home devices like thermostats and load control switches.

DRA's AMI technology consultant concluded "(t)he systems selected by PG&E are reasonable, relatively mature, and have evolved to strike an acceptable balance in cost, functionality and flexibility."17 TURN expressed reservations about the scope of the RFP and, as noted elsewhere, the concern that remote meter reading could be accomplished with a less comprehensive system.

Although the Commission found in D.05-09-044 that PG&E's proposed AMI system met the functionality requirement (Finding of Fact 2), it also concluded that we must still find "that the system selected by PG&E is the correct or best system, or provides the best value for ratepayers." (Conclusion of Law 2.) This follows on the Assigned Commissioner's directive that "we must be able to make an affirmative finding that the proposed systems meet the functionality criteria set forth in the Joint Assigned Commissioner and Administrative Law Judge's Ruling Providing Guidance for the Advanced Metering Infrastructure Business Case Analysis issued February 19, 2004 in Rulemaking (R.) 02-06-001." (Assigned Commissioner Ruling of May 18, 2005.) This followed a still earlier ruling in R.02-06-001 that delayed the proceeding to allow "... the California Energy Commission to host a technical conference to begin the process of developing open architecture standards for advanced metering infrastructure." The Ruling continued that the "(f)ree flow of data ... is crucial to the economics of the investment we are considering and the long-term viability of the systems the utilities will consider installing. Ideally, we would like to see national standards for data exchange ..." (Assigned Commissioner and Assigned ALJ Ruling of November 24, 2004.)

We know from PG&E and its vendor that the proposed AMI system is not an open architecture design.18 It is a proprietary design, which requires either a licensing agreement for other suppliers to use the AMI communications system, or a second communications system that operates around the AMI network, to communicate with customers or at their appliances.

PG&E and DRA both testified that the proposed system meets the Commission's functionality requirements to provide PG&E operational efficiencies, improve information about the operating system, and permit PG&E to offer time-sensitive rates.19 Further, the system will allow two-way communication between PG&E and the meter (and potentially the customer), which has both distribution system reliability and customer service benefits. The AMI system is designed to provide 15, 30, or 60 minute interval electric meter data for commercial customers, depending on the requirements for their respective rate, and hourly interval data for residential customers. This design is necessary for any future offer of more complex dynamic pricing for energy cost recovery.20

Only TURN opposed the selected technology as excessive in order to "charge fewer than 15% of PG&E's customers' higher prices [CPP rates] for up to 75 hours of the year." TURN also argued that the costs could easily exceed the forecast based on TURN's comparison of the AMI project to large-scale information technology computer-based systems. (TURN's Opening Brief, p.18.)

We believe that TURN takes too narrow a view of the scope and long-term applications for the AMI project and we are not persuaded that the selected project technology is inappropriate. As already discussed, we accept the cost forecast as robust and inclusive of a reasonable allowance for overruns. We do not believe that AMI module-equipped meters, with a service life of 20 years, will only be used for CPP rates. They will provide significant operating data and consumption data with many applications in demand forecasts, service-related issues, and rate design.

TURN's posture throughout the proceeding revolves on its belief that the Commission is using AMI to implement an "ideological commitment to promoting future retail competition in the residential sector" (TURN's Opening Brief, p. 1) and "the subsequent Rulings of Assigned Commissioner Peevey have doggedly and unwaveringly pursued the single objective of promoting the universal deployment of hourly metering capability as requested by the meter vendors who filed the Petition to Modify D.97-05-039."21 (Opening Brief, p. 3.) In short, TURN fears an attempt to revive the deceased electric restructuring of the mid-1990s.

This decision does not restart direct access nor does it directly foster retail competition. The three principal benefits of AMI as discussed throughout this decision are (1) the numerous operational benefits including improvements to system and procurement planning; (2) the potential for more accurate cost allocation and rate design because of accurate hourly consumption billing data; and (3) timely and more detailed consumer awareness of energy consumption.

Despite our avowed preference for an open architecture PG&E proposes adopting a confidential or proprietary system. This is, at least in part, as the record indicates, because there is no open AMI architecture (i.e., no established interoperability standards among vendors at the meter module level) available at this time.22 With open architecture, the opportunity exists for competition in customer-side of the meter service and product competition using the consumption data and two-way communication link between the meter module and PG&E. Additional benefits could include operational and demand response potential with an AMI network.

We need not disclose the confidential terms but we are satisfied that the contracts between PG&E and the vendors contain adequate provision for technology licensing at fair prices that will promote the development of new in-home energy management products and services. We therefore find we can approve the deployment of a non-open architecture technology. This is based on findings in this decision of sufficient identified, probable and quantifiable, operational and demand response benefits.

The biggest concern is whether the proprietary nature of the AMI network is too important a short-coming in the project's design when we have a pronounced preference for open architecture. But there were no viable open architectural systems in the responses to PG&E's RFP. Therefore, we are faced with the choice of deploying or deferring AMI.

We find the operational benefits and the demand response benefits of critical peak pricing (discussed elsewhere in this decision), and the potential for future applications, even with a proprietary system, outweigh the benefits of waiting for an open architecture option. PG&E has obtained contract terms that will facilitate licensing the proprietary design on commercially reasonable terms. Further, we know that the AMI communications module provides no bottleneck to preclude any other vendors' communication device or system from using the power line to communicate directly with smart devices (thermostats, switches, motors, etc.,) beyond the meter.23 We therefore find that PG&E's proposed AMI system meets our functionality requirement and is a deployable technology.

16 Ex. 1, Ch. 2, p. 2-13.

17 Ex. 101, Ch. 2, p. 2-11.

18 See transcript, March 19, 2006, portions of which are confidential, and Ex. 11, Chapters 4 & 5.

19 Ex. 2, Ch 1, p. 1-2 (PG&E) and Ex. 101, Ch. 2, p. 2-2 (DRA).

20 Ex. 2, Ch. 1, p. 1-4.

21 "After the development of retail direct access was terminated due to the deregulation disaster, a group of meter vendors - self-styled as the California Consumer Empowerment Alliance - filed a petition to modify D.97-05-039 in March of 2002, requesting that the Commission require the utilities "to undertake universal installation of advanced meters to all customers on a mandatory basis."" (TURN's Opening Brief, p. 3, footnotes omitted.)

22 Ex. 101, p. 2-15.

23 See transcript, March 19, 2006, portions of which are confidential, and Ex. 11, chapters 4 & 5.

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