ALJ/DKF/sid Date of Issuance 3/13/2009

Decision 09-03-026 March 12, 2009

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Pacific Gas and Electric Company for Authority to Increase Revenue Requirements to Recover the Costs to Upgrade its SmartMeterTM Program (U 39 E).

Application 07-12-009 (Filed December 12, 2007)

(See Appendix A for a list of appearances.)

DECISION ON PACIFIC GAS AND ELECTRIC COMPANY'S

PROPOSED UPGRADE TO THE SMARTMETER PROGRAM

TABLE OF CONTENTS

Title Page

DECISION ON PACIFIC GAS AND ELECTRIC COMPANY'S

PROPOSED UPGRADE TO THE SMARTMETER PROGRAM 2

1. Summary 2

2. Background 3

3. PG&E's Request 5

4. Positions of the Other Parties 6

4.1. DRA 6

4.2. TURN 7

4.3. CCSF 8

4.4. CAL-SLA 8

5. Choice of Technologies 8

5.1. HAN Gateway Device 9

5.1.1. CCSF's Position 10

5.1.2. Discussion 12

5.2. Load Limiting Switches 14

5.2.1. CCSF's Position 15

5.2.2. Discussion 17

5.3. Advanced Solid State Meter 18

5.4. Network Technologies 19

5.4.1. DRA's Position 20

5.4.2. Discussion 22

6. Cost-Benefit Analysis 23

6.1. Incremental Cost/Benefit Analysis 23

6.1.1. Positions of the Other Parties 25

6.1.2. Discussion 26

6.2. Total Cost/Benefit Analysis 29

6.2.1. DRA's Position 30

6.2.2. TURN's Position 31

6.2.3. Discussion 32

6.3. Future Upgrade Cases 33

7. Costs 34

7.1. Meter Devices 34

7.1.1. DRA's Position 35

7.1.2. Discussion 39

7.2. HAN Retrofit 40

7.2.1. DRA's Position 41

7.2.2. TURN's Position 45

7.2.3. Discussion 48

7.3. Electromechanical Meter Retrofit 50

7.3.1. Positions of DRA and TURN 51

7.3.2. Discussion 56

7.4. HAN Connectivity 57

7.4.1. DRA's Position 60

7.4.2. TURN's Position 62

7.4.3. Discussion 63

7.5. Information Technology 64

7.5.1. DRA's Position 66

7.5.2. TURN's Position 67

7.5.3. CCSF's Position 70

7.5.4. Discussion 71

7.6. Title 24 PCT Program Costs 72

7.7. Peak Time Rebate Program Costs 74

7.8. Project Management Costs 76

7.8.1. Positions of DRA and TURN 76

7.8.2. Discussion 78

7.9. Operation and Maintenance Expense 78

7.10. Technology Assessment Costs 79

7.10.1. DRA's Position 80

7.10.2. TURN's Position 82

7.10.3. Discussion 84

7.11. Training Costs 86

7.12. Risk Based Allowance 87

7.12.1. TURN's Position 87

7.12.2. Discussion 88

8. Operational Benefits 92

8.1. Field Technician Labor Savings 92

8.2. Reduced Bad Debt Savings and Cash Flow 93

8.2.1. Reduced Bad Debt Savings 93

8.2.2. Improved Timing of Cash Flow Savings 94

8.3. Tax Benefit from Meter Retirement 94

8.3.1. TURN's Position 95

8.3.2. Discussion 95

8.4. Remote Programmability 96

8.4.1. DRA's Position 97

8.4.2. TURN's Position 98

8.4.3. Discussion 99

9. Conservation Benefits 99

9.1. Electric Conservation Benefits 101

9.1.1. DRA's Position 101

9.1.2. TURN's Position 107

9.1.3. CCSF's Position 109

9.1.4. Discussion 110

9.2. Gas Conservation Benefits 112

9.2.1. DRA's Position 112

9.2.2. Discussion 114

10. Demand Response Programs 115

10.1. PG&E's PTR Program Proposal 115

10.1.1. DRA's Position 119

10.1.2. Discussion 121

10.2. PTR Benefits 122

10.2.1. DRA's Position 123

10.2.2. TURN's Position 124

10.2.3. CCSF's Position 131

10.2.4. Discussion 132

10.3. TURN's Demand Response Guarantee Proposal 134

10.3.1. Discussion 136

10.4. PG&E`s Proposed Title 24 PCT Program for
Residential Customers 138

10.4.1. DRA's Position 141

10.4.2. TURN's Position 143

10.4.3. Discussion 149

11. Adopted Incremental Costs and Benefits 152

11.1. Conclusion 153

12. Cost Recovery 155

12.1. General Proposal 155

12.2. Generation/Distribution Allocation 156

12.2.1. DRA's Position 156

12.2.2. Discussion 157

12.3. Streetlight Allocation 158

12.4. Discussion 159

12.5. Benefits Recognition 162

12.5.1. DRA's Proposal 162

12.5.2. TURN's Proposal 163

12.5.3. Discussion 165

13. Revenue Requirement 166

14. DRA's Water Utility Proposal 167

14.1. CCSF's Position 168

14.2. PG&E's Position 168

14.3. Discussion 169

15. Procurement Diversity 171

16. DRA Motion to Reopen the Record 171

16.1. Discussion 173

17. Comments on Proposed Decision 175

17. Assignment of Proceeding 176

Findings of Fact 176

Conclusions of Law 188

ORDER... 195

APPENDIX A - List of Appearances

DECISION ON PACIFIC GAS AND ELECTRIC COMPANY'S

PROPOSED UPGRADE TO THE SMARTMETER PROGRAM

1. Summary

By this decision, we authorize Pacific Gas and Electric Company (PG&E) to proceed with its proposed SmartMeter Program Upgrade at a cost of $466,760,000, subject to the conditions specified in this decision, and to increase revenue requirements to recover the related costs.

The principal components of this electric meter upgrade include an integrated load-limiting connect/disconnect switch, a home area network gateway device and an advanced solid state meter. With the authorization of the upgrade to PG&E's previously authorized advanced metering infrastructure program, the devices and functionalities are now comparable to that previously authorized for San Diego Gas & Electric Company and Southern California Edison Company.

Briefly, the decision:

· Adopts PG&E's incremental meter device cost estimates.

· Reduces incremental cost estimates for certain retrofit, demand response program, project management, information technology, operation and maintenance and technology assessment costs, along with related contingencies.

· Determines that, on a present value revenue requirement basis, the upgrade is cost effective.

· Adopts a two-tier peak time rebate for PG&E and defers the design of the incentive and funding of the program to PG&E's November 2009 rate design window filing.

· Denies a request to exclude street light customers from the rate increase.

· Orders PG&E to pursue automated meter reading for water meters, by working with the water utilities in its service territory, either through multi-party workshops or direct dialogue.

This proceeding is closed.