14. Third-Party Metering Issues
The settlement agreement adopted in this decision addresses third-party metering, finding that SCE has taken reasonable steps to ensure that its system is capable of providing automated meter reading services to gas and water utilities, and requiring SCE to work with gas and water utilities in its territory through a series of workshops, the results of which will be reported to the Commission.58 One interested company is SoCalGas, which intends to develop its own AMI system and is interested ensuring that its system is compatible with SCE's system, and in utilizing SCE's AMI capability for automated third-party meter reading in areas in which their territories overlap. At hearings on March 12, 2008, the assigned ALJ asked three questions for expedited briefing on the possibility of and cost basis for third party metering under SCE's AMI system. These three questions were:
1. Should SCE be required to provide meter reading and related support services through their AMI and associated communication system to gas and water utilities within their territory?
2. If so, should these services be provided on a tariffed basis, or should they be nontariffed?
3. If SCE provides these services, how should the charges for them be determined? Should they reflect the fully loaded incremental costs, or should they be calculated on some other basis?
In order to provide some additional level of direction to SCE in its discussions with other interested utilities, beyond the settlement terms, this decision addresses these policy issues related to the appropriate terms for proving meter reading and related services to other utilities through SCE's AMI system.
14.1. Party Positions
SCE and SoCalGas submitted a joint brief addressing the first two questions: whether SCE should be required to provide contract meter reading and related services to other utilities, and whether these services should be provided on a tariffed basis. SCE and SoCalGas agree that SCE should be required to negotiate in good faith with interested utilities on providing such services, but SCE should not be required to provide metering services to other utilities.59 A good-faith negotiation process would enable SCE and the other utilities to determine the technical feasibility of providing automated meter reading and related services to a particular utility given that company's particular situation and needs, and whether automated meter reading makes financial sense in a given situation. SCE and SoCalGas agree that it is not appropriate to charge for meter reading services through a tariff, because the cost of the connection between SCE's AMI system and other utilities' metering systems may vary, and the charge to the utility should reflect the actual costs of the service. 60 For this reason, SCE and SoCal Gas also agree that these services should be provided on a non-tariffed basis through contracts negotiated between SCE and other utilities that reflect terms acceptable to the companies. SCE and SoCalGas further recommend that any contracts for third party metering of other Commission's jurisdictional gas or water utilities through SCE's AMI system be submitted to the Commission for review and approval through an application process.61
On the third question, SCE and SoCalGas take different positions. SCE and SoCalGas agree that charges for meter-reading services through SCE's AMI system should include SCE's fully-loaded costs, but SCE argues that the appropriate cost basis for any third-party metering services it may provide is the incremental cost plus some portion of the fixed cost of the system.62 SoCalGas, in contrast, argues that charges should not include a portion of the fixed costs of the AMI system.63
On the first question, DRA recommends that SCE be required to provide automated meter reading services to SoCalGas,64 and on the second question DRA takes a position somewhat consistent with the joint position taken by SCE and SoCalGas, saying that these services should be provided through bilateral contracts, with the rate negotiated between SCE and SoCalGas, rather than through a tariffed rate.65 DRA further urges that SCE should offer similar services to water companies on the same terms as those extended to SoCalGas. On the third question, DRA suggests that the negotiated rate for contract meter-reading services reflect a "cost plus" contract structure.66
TURN offers its view that SCE should work with other Commission-jurisdictional utilities, as provided in the settlement agreement, but that the Commission should review reports of the settlement workshops and be prepared to take an active role in encouraging SCE to provide services in this area, and should be prepared to direct other jurisdictional utilities to cooperate with SCE in this effort.67 Unlike other parties, TURN recommends that automated meter-reading services should be offered on a tariffed basis.68 TURN believes that the tariffed cost should reflect incremental costs of offering the services, and may include a portion of costs for system aspects and capabilities that serve both SCE customers and customers of the other utility.69
14.2. Discussion
All parties support the settlement agreement provision requiring SCE to hold workshops on automated meter reading services. SCE, SoCalGas, and DRA all take the position that SCE must work in good faith to ensure that its AMI system will support the provision of meter-reading and related services to third parties. These three parties also recommend that SCE should be strongly encouraged to work with other utilities to provide meter reading and related support services when it makes sense to both parties to do so. The settlement agreement provides a framework that will make this possible, and in fact SCE has already held and reported on at least one meeting with some interested utilities to explore this possibility. DRA further suggests that SCE be required to provide automated meter reading services to SoCalGas; neither SCE nor SoCalGas take this position. We agree that SCE should negotiate in good faith to provide SoCalGas and other utilities with automated meter reading services. Whether an agreement with any given utility is reached will depend on many things, including the services requested by the other utility, the technical feasibility of providing those services, and the cost effectiveness of having SCE provide those services. For these reasons, we do not require SCE to provide these services on a tariffed basis.
All parties also agree that in cases in which metering services are provided, the charges for these services should be based on the costs of actually providing the services; parties do not agree on whether the charges should include costs beyond incremental costs. In order to ensure that the charges for automated meter reading services reflect the costs of providing those services, we find that the appropriate charges for services should be provided on a contract basis, rather than though a tariff, with appropriate charges determined through negotiation by the parties to the contract. Any contract for automated meter reading services between SCE and another Commission-jurisdictional utility shall be submitted to the Commission for review through a future application. We agree that the charges for these services provided in a contract should include the incremental cost of providing the services, but it is not necessary to decide here whether those costs should be limited to incremental costs of providing the service or should include a portion of the system's fixed costs.
TURN's main argument for tariffing meter-reading services is that the Commission should actively monitor and regulate these services. In addition, TURN expresses concern over the appropriate treatment of revenues SCE receives through meter-reading contracts. To address these concerns, SCE should submit any contract it negotiates to provide metering services for other Commission-jurisdictional utilities to the Commission for approval by application, so the costs and appropriate rate treatment, including the treatment of revenues, can be determined based on the specifics of the case.
58 Settlement Agreement, Section J, pp. 8-9.
59 Opening Brief of Southern California Edison Company on Issues Related to Third Party Use of Advanced Metering Infrastructure (hereafter referred to as SCE Opening Brief on Metering Issues), filed April 4, 2008, p. 3.
60 SCE Opening Brief on Metering Issues, p. 4.
61 SCE Opening Brief on Metering Issues, p. 3.
62 SCE Opening Brief on Metering Issues, p. 6.
63 Response of Southern California Gas Company to Administrative Law Judge Hecht's Questions for Expedited Briefing on SCE AMI Deployment Activities and Costs, April 4, 2008, p. 4.
64 Division of Ratepayer Advocate's Opening Brief and Response to Administrative Law Judge Hecht's Questions for Expedited Briefing (hereafter DRA Opening Brief on Metering Issues) April 4, 2008, p. 1.
65 DRA Opening Brief on Metering Issues, pp. 2-3.
66 DRA Opening Brief on Metering Issues, p. 3.
67 TURN Opening Brief, p. 45.
68 TURN Opening Brief, pp. 46-47.
69 TURN Opening Brief, p. 48.
