5. Cost of Opt-Out Plan
PG&E states that it had considered a radio-off, a wired smart meter and a legacy (analog) meter opt-out options. However, its application provided detailed cost information for only its proposed opt-out option, the radio off option. PG&E states that its cost estimates represent the incremental costs related to turning off the radio, meter reading while the meters are in radio off mode, an expectation of requiring additional network equipment to compensate for the count of meters in radio off mode and turning the radio back on when the customer moves. This results in an estimated revenue requirement for 2012-2013 of $113.4 million. This revenue requirement consists of the following:
Incremental Expense Costs (thousand $)
Field Deployment $56,351
Information Technology 406
Customer Communications and
Operations Support 18,379
Total Incremental Expense Costs $75,136
Incremental Capital Costs (thousand $)
Field Deployment $36,385
Information Technology 1,912
Total Incremental Capital Costs 38,297
Total Incremental Costs $113,433
5.1. Parties' Comments
Various parties oppose PG&E's proposed revenue requirement. Aglet believes the costs are too high and that less expensive alternatives should be considered.38 TURN echoes Aglet's comments and notes that some of the costs could possibly be reduced if customers were allowed to self-read the meters. It further urges further investigation of whether the radio transmission feature on the wireless SmartMeters could be turned off and on remotely.39
Fairfax also argues that PG&E's cost estimates are overstated since the costs are based on turning off already installed and functioning SmartMeters and do not consider those instances where an analog meter is installed, or where there is community wide opt-out. Fairfax further states that costs could be minimized if PG&E were ordered to retain a sufficient inventory of analog meters now. Similar to TURN, Fairfax also argues that costs could be lowered by allowing customers to read the meters and mail in a postcard.40
5.2. Discussion
Although only costs for the radio-off option were provided, the Scoping Memo stated that other parties recommending other reasonable cost opt-out alternatives would provide the estimated costs of the recommended alternative(s).41 Several parties proposed alternatives, but expressed difficulty in determining the costs for their recommended alternative. This difficulty was also noticed in a motion filed by DRA on July 22, 2011 and voiced at the September 14 workshop. Consequently, an ALJ Ruling was issued on October 12, 2011 directing PG&E to provide cost information for the following opt-out options:
1. Replacement of wireless SmartMeter with an analog meter;
2 Replacement of wireless SmartMeter with a digital meter with no radio installed; and
3. Replacement of wireless SmartMeter with a wired smart meter (telephone or fiber-optic).
PG&E's response to the October 12 ALJ Ruling was filed and served on all parties on October 28, 2011. As presented in Table 1 below, PG&E's estimated costs would be the same for all non-communicating opt-out options, while certain costs for the wired option will be significantly higher.
TABLE 2
ESTIMATED COSTS FOR OPT-OUT OPTIONS
Analog Meter |
Radio Out |
Wired |
Radio Off | |
Initial Costs |
||||
Meter |
$51.24 |
$29.28 |
$355.50 |
N/A |
Labor (Site visit) |
$128.00 |
$128.00 |
$128.00* |
$128.00 |
Monthly Charges |
$10.69 |
$10.69 |
$10.42 |
$10.69 |
Other Costs |
||||
Network Capital |
$36,385,335 |
$36,385,335 |
$36,385,335 |
$36,385,335 |
Information |
$2,317,621 |
$2,317,621 |
$25,983,287 |
$2,317,621 |
Call Center |
$3,007,620 |
$3,007,620 |
$3,007,620 |
$3,007,620 |
Operations |
$15,371,390 |
$15,371,390 |
$45,308,990 |
$15,371,390 |
Other Costs |
$57,081,966 |
$57,081,966 |
$115,766,712 |
$57,081,966 |
Revenue Requirement per Opt-Out Customer*** |
$416 |
$411 |
$613 |
$402 |
NOTES:
* Excludes additional $150.00 for wiring charge.
** Costs to read gas meter
*** Assumes 145,800 Opt-Out Customers
As outlined in Table 2 above, PG&E estimates that the majority of the estimated costs for all of the opt-out alternatives are associated with developing and maintaining a separate back office system for the non-communicating meters. PG&E's cost estimates are based on offering a single opt-out option and, it contends that there would be increased costs if multiple opt-out options were offered.42
PG&E's application provided testimony to explain the costs associated with providing a radio-off opt-out option. However, since we have now decided that PG&E should provide an analog meter opt-out option, more detailed information concerning the costs associated with this option is needed. As such, a second phase is needed in this proceeding to consider the costs associated with offering an analog opt-out option. As discussed above, this phase may also consider whether opt-out costs will vary if community opt-out is permitted.
38 Aglet Protest at 3.
39 TURN Protest at 3-4.
40 Fairfax Protest at 15-17.
41 Assigned Commissioner Ruling and Scoping Ruling, May 25, 2011 at 3.
42 PG&E Response of ALJ October 12, 2011 Ruling, filed October 28, 2011 at 2.
