5. Are the Minimum Functionality Criteria Satisfied?

In the May 18, 2005 Ruling, Commissioner Peevey set forth six minimum functionality criteria that the proposed AMI metering and communications system must meet in order for the Commission to consider approving ratepayer funding of pre-deployment activities. The six minimum functionality criteria described in the ruling indicated that the AMI system should:

· be capable of supporting a wide range of price responsive tariffs;

· collect data at a detail level that supports customer understanding of hourly usage patterns and their relation to energy costs;

· allow access to personal usage data such that customer access frequency does not result in additional AMI system hardware costs;

· be compatible with customer education, energy management, customized billing, and complaint resolution applications;

· be 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

· be capable of interfacing with load control communication technology.¹

PG&E presented a thorough case in Exhibits 1 and 2 regarding the specifics of how it expects its selected system to meet these six minimum functionality criteria. PG&E notes that the key to meeting these criteria is selection of a system that is sufficiently flexible to respond to changing regulatory requirements. For example, PG&E identified at least one sub-criteria from the list (the ability to support two part hourly real time pricing rates) as something that can be accommodated but could become significantly more costly to provide than expected, depending upon the complexity of the rate design ultimately selected by the Commission. In addition, PG&E stated that it has not yet begun defining what an energy cost information tool would encompass. Depending upon the definition, such a tool could be more or less costly to implement within the selected AMI system, but there is nothing in the selected system that impedes development of different energy information tools.

ORA points to the PG&E testimony that costs may rise to support different aspects of the functionality criteria as proof that PG&E might not meet the minimum functionality criteria. For example, ORA identifies that PG&E does not currently anticipate providing same day access to hourly usage data for every customer as proof that PG&E may not meet the criteria that the selected system should allow access to personal usage data such that customer access frequency does not result in additional AMI system hardware costs. ORA also appears to find fault with PG&E for not spending a significant amount of time and money testing its system for purposes of assuring that the minimum functionality criteria are met. (ORA Brief, p. 8.)

When asked by the ALJ to explain PG&E's due diligence process to ensure that the system selected met the minimum functionality, PG&E witness Corey explained:

"[I]n addition to vendor assurances that we can meet all of those [minimum functionality] requirements, we did have conference calls with a number of utilities that have deployed the specific technology that we are looking at. And we've made site visits to two other utilities that deployed similar technology; in one case, exactly the same technology. And we're confident in their representations that...these systems can provide the functionality that the Commission requires." (RT 121:26-122:5.)

PG&E has presented a convincing case that the system it has selected will meet the minimum functionality criteria identified by Commissioner Peevey. We do not find it unreasonable that PG&E cannot specify each and every way that costs might be impacted by regulatory approaches (like rate design) that the Commission might develop in the future. The system selected appears to be sufficiently flexible to accommodate different approaches to rate design and informational tools. Based on the evidence presented and the due diligence activities that PG&E conducted, we find that PG&E's proposed AMI Project will meet the minimum functionality criteria established by Commissioner Peevey. This finding does not prejudge that the system selected by PG&E is the correct system or best system or provides the best value for ratepayers. These are issues to be decided in A.05-06-028.