3. Litigation Positions of Parties
This section provides an overview of the litigation positions of the three active parties in this proceeding. Subsequent sections develop the parties' litigation positions in detail. The Settlement Agreement is discussed in Section 4.
3.1 SDG&E
SDG&E states its application seeks to transform SDG&E's electric utility distribution network into an intelligent, integrated network enabled by modern information and control system technologies. SDG&E claims the AMI system will provide SDG&E's customers with the significant benefits that AMI offers today, and lays the foundation for future expansion that will enable greater operational efficiencies, reliability and customer service. SDG&E contends its application is cost-effective.
SDG&E's deployment is scheduled to begin in mid-2008. From 2008 through 2010, SDG&E seeks to deploy approximately 1.4 million new, AMI-enabled, solid state electric meters and 900,000 AMI enabled gas modules that can, among other things, measure energy usage on a time-differentiated basis.5 In advance of deployment, SDG&E intends to perform approximately 18 months of information technology (IT) related work beginning in early 2007. The IT work will enable the meter deployment and put in place systems suitable to manage and store the data the advanced meters will produce.
SDG&E contends deploying AMI will improve customer service in several ways. First, it will transform the meter reading process by improving the accuracy and timeliness of utility bills. Second, it will provide near real time energy usage information empowering customers to make informed choices about their energy usage. Third, by providing customer premise endpoint information, SDG&E will be able to monitor its system continuously, speeding detection of gas leaks and electric system outages. Fourth, AMI will improve safety and provide greater service reliability through superior outage response and service restoration.6
SDG&E's asserts its AMI proposal is an important first step towards developing a "smart grid" in the San Diego region. In addition to collecting data at the farthest endpoint of the distribution system, SDG&E's AMI solution will be capable of providing two-way communication to a customer's premise, which will improve both outage detection and restoration capabilities. AMI will permit transmission and distribution operators to sense, monitor and analyze information from many data sources, enabling system planners to optimize assets. SDG&E says AMI will support such technology advances as in-home messaging displays and smart thermostat controls.
SDG&E proposes that electric distribution rates be adjusted annually during years 2007 through 2011 based on the annual net changes in distribution revenue requirements. Net distribution costs and benefits associated with AMI full deployment would be recovered from all customer classes in which AMI will be installed, and accounted for by means of a balancing account mechanism. Distribution rates would never increase as a result of the AMI balance but rates may decrease. SDG&E proposes that AMI deployment operation and maintenance (O&M) and capital-related costs and benefits should be recorded monthly in a new AMI balancing account. SDG&E proposes to record actual O&M and capital-related costs and make annual adjustments for the variation from the Commission-approved annual AMI revenue requirement. Benefits would be tied to the annual average number of meters actually installed as compared to the annual average number of installed meters supporting SDG&E's revenue requirement calculation.7
3.2 DRA's Position
DRA's primary litigation position is that the Commission should deny SDG&E's application as not being cost-effective, and invite SDG&E to submit an amended or new proposal once SDG&E designs a cost-effective business case.
DRA supports the idea of integrating an AMI into California's electricity system, but only if ratepayers receive benefits equal to or greater than the amount of money they will be compelled to spend on that system. DRA claims SDG&E's AMI application presents a business case that will cost its ratepayers $98 million more than the benefits they will receive in return for their investment.8
Should the Commission approve SDG&E's application, DRA recommends that SDG&E be required to:
1. Accept risk-sharing mechanism on cost overruns.
2. Support open programmable communicating thermostat (PCT) standards expected under the expected Title 24 update and advertise the PCT benefits to ratepayers when PCTs are available.
3. Obtain license agreements from AMI communications manufacturers that allow in-home real-time information feedback device manufacturers free, or low-cost, access to electricity in real-time and gas hourly, or daily.
3.3 UCAN's Position
UCAN's litigation position in that the AMI proposal as presented is not cost-effective. UCAN claims that SDG&E did not comply with the specific guidelines established by the Commission for an advanced meter deployment. UCAN contends SDG&E proposed a plan focused on a narrowband communications platform and off-the-shelf real-time meters, rather than building a platform that could take advantage of emerging communications and "smart chip" technologies. UCAN contends SDG&E chose to deploy universally with little regard for customer usage or acceptance, rather than to deploy the meters incrementally and focus upon those customers who could most readily harness the functionalities of the new meters.
UCAN also contends that the application represents a missed opportunity, because those same monies will no longer be available to leverage the emerging Smart Grid functionalities or to justify investment in other more economic peak shaving programs. UCAN recommends that the Commission first direct SDG&E to conduct a Smart Grid pilot in defined areas that could serve to test and experiment with the emerging technologies identified in the University of San Diego Smart Grid report.9
5 Direct Access customers will continue with their current meters. See Exhibit 22, pp. EF-25-26.
6 SDG&E has identified other benefits which it states are difficult or impossible to quantify. These are discussed in Section 6.
7 Exhibit 34, pp. RWH-5 through RWH-7.
8 See Ex. 101, p. 1-1, Table 1-1.
9 Ex. 202, p. 6-13.
