BACKGROUND
SDG&E's AMI project is a key step in advancing California's goal of increasing price responsive demand
The California Energy Action Plan (EAP) II lists demand response as a top-priority resource for meeting the state's growing energy needs. The EAP II specifies that 5% of system peak demand should be met by demand response by 2007 and that dynamic pricing tariffs be made available to all customers.
The installation of AMI for residential and small commercial and industrial customers moves the Commission closer to achieving its demand response goals as the advanced meters are a necessary device to enable participation in demand response programs and tariffs.
In August 2005, the Commission approved $9.3 million1 in funding for SDG&E to carry out pre-deployment AMI activities through year-end 2006 (Phase 1), and on April 12, 2007, the Commission approved a settlement via D.07-04-043 allowing SDG&E to move forward with its AMI project2.
Commission approval of SDG&E's AMI project was contingent upon Energy Division's confirmation that SDG&E's AMI contracts with third-party vendors meet the minimum functionality criteria set forth in R.02-06-001.
A May 9, 2005 Assigned Commissioner/Administrative Law Judge Ruling in A.05-03-015 required SDG&E to show that its AMI project meets the functionality criteria set forth in Rulemaking (R.) 02-06-001:
1. Implementation of price responsive tariffs;
2. Collection of usage data at a level of detail (interval data) that supports customer understanding of hourly usage patterns and how those usage patterns relate to energy costs;
3. Customer access to personal energy usage data with sufficient flexibility to ensure that changes in customer preference of access frequency do not result in additional AMI system hardware costs;
4. Compatible with applications that utilize collected data to provide customer education and energy management information, customized billing, and support improved complaint resolution;
5. Compatible with utility system applications that promote and enhance system operating efficiency and improve service reliability, such as remote meter reading, outage management, reduction of theft and diversion, improved forecasting, workforce management, etc.; and
6. Capable of interfacing with load control communication technology.
The AMI business proposal by SDG&E included plans to replace and/or retrofit electromechanical watt hour meters and gas meters, discontinue manual meter reading, establish a two-way communications infrastructure, provide automated reading of meters, integrate customer information and billing systems, measure energy use in 15 minute or one hour increments and enable electric demand response/load control devices to help reduce peak energy use.
At the time SDG&E's AMI project was approved in D.07-04-043, however, SDG&E had not selected an AMI technology and had not signed contracts with technology vendors. While the Commission approved SDG&E's AMI project, it was unable to make a specific finding that the project met the minimum functionality requirements as set forth in R.02-06-0013. Thus, the Commission made approval of SDG&E's AMI project conditional upon its review and approval of SDG&E's contracts with third-party vendors to ensure the contracts comply with these requirements.4
SDG&E has divided its AMI project into two phases. Phase 0, which involved the establishment of program requirements and other project startup activities, has been completed. Phase I, the construction and deployment of the AMI system, meters and communications network, was scheduled to begin in May 2007 and reach completion during second quarter 2011.
Phase I of SDG&E's AMI project consists of developing a new information technology system, integrating that system into the company's existing information and billing systems, preparing for AMI meter installation and physically installing the meters in customer premises and the associated communications infrastructure to collect and transmit electricity usage data.
SDG&E had plans to begin Phase I of its AMI project with the development of a Meter Data Management System (MDMS) that will be integrated into the utility's legacy systems. The purpose of the MDMS is to accept and process the vast amounts of data that the new meters will generate.
At the same time, SDG&E's plan was to begin planning and preparing for the deployment of the new meters and communication modules so that the deployment, scheduled to begin in the fourth quarter of 2008, will progress smoothly.
In October 2005, SDG&E issued Request for Proposals (RFPs) for program management, system integration, MDMS, installation services, as well as the actual AMI technologies for electric meters, gas modules and communication infrastructure. SDG&E evaluated the responses and selected two vendors, Capgemini and Itron, to provide the system integration, program management and MDMS products and services. SDG&E selected two other vendors for field testing of the AMI technologies in 2006 and 2007.
SDG&E selected Capgemini as its main strategic partner on the project and it will be involved in all aspects of the AMI installation during Phase 1, including Program Management and System Integration functions. SDG&E also signed an agreement with Itron, Inc., to license Meter Data Management software (and maintenance support) that would retrieve, validate and store interval consumption data from electric meters and daily reads from gas meters. Included in this agreement was a Revenue Protection Suite software that would "mine" the data to help SDG&E identify potential instances of energy theft.
The MDMS agreement included the option to license Mass Market Customer Care Residential Rate Analysis Module software, which could be deployed in SDG&E's customer web portal, allowing customers to view details of their daily consumption on a "day after" basis via the Internet. This software package provides tools that will help customers better manage energy consumption and lower monthly bills. This type of software is important because the effectiveness of demand response depends on customers' participation, and customers are more likely to participate if participation is easy and they see concrete benefits.
On June 7, 2007, the Commission approved Resolution E-4094, authorizing SDG&E to enter into contracts with private vendors Capgemini and Itron to begin implementing Phase I of its Advanced Metering Infrastructure (AMI) Project as requested by Advice Letter (AL) 1890-E filed on April 18, 2007.
An "RFP Addendum" (as part of the settlement agreement) was issued by SDG&E on May 10, 2007, for AMI project technologies and installation services. Responses were received by June 20, 2007, which were subsequently evaluated by SDG&E and resulted in the awarding of contracts submitted via AL 2016-E and are the subject of this resolution. A brief description of the new contracts follows (as described in AL 2016-E).
ITRON Main Agreement
This agreement formalizes Itron's role as SDG&E's AMI technology solution provider. Itron will be involved with SDG&E and their legacy systems integrator (CapGemini) in all aspects of design, implementation, and support of SDG&E's Smart Meter Program.
Major Itron responsibilities included in the agreement are:
· Providing Itron OpenWay AMI technology equipment including electric meters, gas modules, secondary (non-Itron) electric meter communications modules, network devices, installation tools, and associated accessories including:
o OpenWay electric meters - OpenWay electric meters will provide full two-way communications and robust interval data collection functionality along with the ability to collect and store over 1 year of profile data. OpenWay electric meters will include an integrated, fully rated 200 AMP connect/disconnect switch for all residential customers 200 AMPs or less. In addition, every OpenWay electric meter includes a ZigBee-based interface.
o OpenWay gas modules - OpenWay gas modules will attach to gas meters and transmit gas consumption and interval data to a nearby electric meter via ZigBee
o Network devices - The network will include (i) a wide area network provided by one or more carriers selected by SDG&E to establish connectivity between network devices and the software headend system, (ii) a radio frequency local area network that establishes connectivity between the electric meters, (non-Itron) electric meters, and stand-alone cell relays, and (iii) a ZigBee Smart Energy communication network (Home Area Network or "HAN") that establishes connectivity between the network points, and gas modules, and HAN devices.
· Providing AMI technology software including an integrated headend solution and associated firmware;
· Providing professional consulting and implementation services including project management for all design, run, build, transfer, and support services; and
· Providing installation services including project management for all network devices, electric meters, and gas modules.
Three Supporting Agreements
OneSource Reseller Agreement: This agreement formalizes OneSource's role as an authorized reseller to be appointed by Itron within 60 days of the Main Agreement's effective date for nearly all of SDG&E's Itron's OpenWay electric meters and gas modules that will be installed by Itron's subcontractor during mass deployment. OneSource will assist with forecasting, issuing purchase orders to Itron, physical receipt of equipment, shipping inspection, warehousing facilities, delivering equipment, first in first out rotation, and inventory. This agreement provides for SDG&E to directly pay OneSource for warehousing, material handling, inventory and logistic services provided by OneSource as a subcontractor to Itron.
Bridge Agreement: The Bridge Agreement between SDG&E and Itron, effective February 8, 2008, was created to cover required project-related work until a comprehensive contract (the Main Agreement described above) for the entire project could be agreed upon. The Main Agreement will supersede the Bridge Agreement. The Bridge Agreement specified Itron's software and professional services including system design, installation, configuration, and testing of various OpenWay collection engine environments for the Smart Meter initiative until April 30, 2008.5
5K Agreement: The 5K Agreement between SDG&E and Itron, effective April 4, 2008, was entered into in connection with an initial deployment of approximately 5000 Smart Meters and related hosted software services. The Main Agreement will supersede the 5K Agreement.
1 D.05-08-028.
2 The settlement agreement added new functionality to SDG&E's original proposal and improved its overall cost-effectiveness.
3 D.07-04-043, Conclusion of Law #1.
4 D.07-04-043, Ordering Paragraph #2.
5 The Bridge agreement was later amended, extending the service term to June 30, 2008.
