9. Alternative AMI Program Options
We remain committed to our belief that the operational and DR benefits of AMI technology should be made available statewide over time. Therefore, we are interested in alternative AMI program options that may deliver many of the benefits identified by SDG&E in a cost-effective way. Prior to the parties' settlement, we solicited alternative AMI program options for SDG&E, as discussed in this section. A brief discussion of these alternatives also informs the reasonableness of the settlement.
9.1 December 15, 2006 ALJ Ruling and Comments
UCAN suggests a gradual roll-out of cheaper time-of-use meters for residential customers.113 UCAN notes that data shows that large customers had much higher use during summer on-peak periods and much lower load factors than small customers.114 In addition, most customers use very little energy. UCAN references survey data showing that about 63% of SDG&E's 1997 residential customers used less than 6,000 kWh/year, with an average usage among these customers of 3783 kWh/year.115
Therefore, one alternative to the full SDG&E AMI Project would be a targeted roll-out of AMI technology. In order to move toward cost-effectiveness-while still achieving the Commission's overall objectives and gaining the public policy benefits of AMI-SDG&E potentially could significantly reduce the number (and overall cost) of installed meters by limiting installation in the residential sector to those customers most likely to reduce peak usage, and/or to those customers with the greatest potential peak reductions. In the residential class, most of the likely DR would come from a relatively small group of households. A summary of SPP participation provided in shows that 30% of the SPP participants were high responders, providing 80% of the total demand reduction on critical days.116
Based on the potential for a cost-effective targeted roll-out, ALJ Gamson issued a Ruling on December 15, 2006 reopening the record and seeking further information about possible alternatives to SDG&E's recommendation. Specifically, the Ruling sought information to allow consideration of an AMI program whereby all commercial and industrial customers would receive AMI technology as proposed by SDG&E, but only residential customers inland would be outfitted at this time. Parties were also given the option to propose other alternatives. SDG&E provided the requested data on January 4, 2007. SDG&E, UCAN and DRA commented on January 16, 2007.
The Ruling suggested targeting the residential customers most likely to reduce peak usage. These will be customers with high usage, as they have the greatest ability to decrease their overall usage and receive a significant enough financial benefit. Customers who lower usage may be able to reduce their usage significantly, but the financial reward would be small. Even for customers with high usage, the greatest impact would probably be from those with discretionary usage that could be reduced at peak times. Residential customers in the warmer Climate Zone 3 are more likely to have higher, and more discretionary, usage.
SDG&E's data shows that a partial roll-out to Climate Zone 3 customers incorporating the parameters of this decision does not significantly improve cost-effectiveness. While costs (based on the Ruling's parameters) decrease significantly from $583 million to $406 million due to installation of fewer residential meters, benefits decrease significantly as well due to partial retention of meter readers, reduction of other operational benefits, and some reduction of DR benefits. SDG&E shows that the cost-effectiveness of the partial roll-out is nearly the same as full roll-out - that is, neither are cost-effective using the Ruling's parameters. UCAN and DRA also do not believe this option is cost-effective.
9.2 SDG&E AMI Alternative Proposal
As allowed by the December 15, 2006 Ruling, SDG&E proposed what it characterizes as a new alternative. Essentially, this alternative constitutes SDG&E's recommended AMI Project with a few new assumptions, but little or no change to the proposed project.
First, SDG&E proposed to use a 20-year evaluation timeframe, based on the use of that figure in the PG&E case. Second, SDG&E proposes an assumption that all residential customers would be placed on a critical peak pricing schedule after 2013. Third, SDG&E proposes an assumption of implementation of proposed Title 24 provisions requiring all new construction and remodels to have PCTs central air conditioned buildings. Under SDG&E's alternative scenario, SDG&E estimates costs of $608 million and benefits of $626 million, leading to a positive cost-effectiveness outcome of $18 million.
As discussed herein, we utilize a 17-year analytical timeframe for SDG&E because it corresponds to the useful life of the Project. The PG&E analogy supports this 17-year timeframe, as we used a 20-year timeframe for PG&E to correspond with a 20-year useful life for PG&E's AMI Project. There is no basis in the record for a 20-year timeframe. We have discussed SDG&E's proposal to assume residential critical peak pricing rates after 2013 in Section 6.9.1. We found no need to adjust our cost-effectiveness analysis for this proposal. We have discussed SDG&E's proposal to assume new CEC Title 24 energy code requirements for PCTs in Section 6.9.4. We use a value of $13 million to $24 million for this benefit.
SDG&E's alternative does not sufficiently improve net benefits compared to our analysis of SDG&E's original AMI Project to make its alternative cost-effective.117 Further, SDG&E now supports the Settlement Agreement.
9.3 UCAN Alternative
UCAN recommends that, instead of the AMI Project, SDG&E can achieve the Commission's DR objectives by taking the following steps:
· Deploying interval meters to a limited subset of SDG&E customers - those SDG&E customers that are over 20 kW in size.
· Expanding the Comverge program so as to secure cost-effective and immediate peak demand reductions benefits amongst residential customers.
· Aggressively pursue air conditioner efficiency (for all sizes of customers) and combined heat and power producing chilled water to reduce air conditioning demand (for larger customers).
· Re-assess UCAN's 2000 proposal for a gradual roll-out of cheaper time-of-use meters for residential customers - starting at the end of the AB1X period, with meters required first in new single-family construction and potentially later in customers above a certain size.
· Take immediate steps to see that all residential swimming pools are equipped with load control devices that the utility can use at its discretion for up to 1000 hours per year through incentive programs and local licensing/code strategies.
UCAN contends that SDG&E proposed deploying AMI meters universally rather than deploy the meters incrementally and focus upon those customers who could most readily harness the functionalities of the new meters. UCAN supports deployment of interval meters to a limited subset of SDG&E customers - those SDG&E customers that are over 20 kW in size and believes pricing programs should be offered to these customers. UCAN notes these customers between 20 kW and 200 kW comprise only 1.25% of SDG&E's projected 2011 customer base but SDG&E expects them to provide 32% of its 2011 MW savings achieved from customers under 200 kW.118
UCAN suggests that for customers under 20 kW, the Commission should consider expanding the Comverge Summer AC Saver program.119 The program directly controls and cycles customer air conditioners, electric water heaters, and pump motors. As of June 2006, SDG&E reports a total enrollment of 8,740 customers for a total of 17.2 MW in dispatchable load reductions. UCAN asserts the program is a more cost effective alternative than SDG&E's PTR for obtaining measurable and dispatchable DR.
UCAN believes that efficiency and combined heat and power solutions must be an integrated part of a peak demand solution. UCAN notes that SDG&E, SCE and PG&E (as part of their 2006-2008 energy efficiency portfolios) are launching a statewide HVAC quality installation campaign.120 UCAN believes a ramp-up of this program, in conjunction with cash rebates to promote higher efficiency equipment, should be at the top of SDG&E's priority list. UCAN claims these steps could be taken immediately.
Further, UCAN suggests SDG&E should aggressively pursue equipping of all new and residential swimming pools are equipped with load control devices that the utility can use at its discretion for up to 1,000 hours per year. UCAN suggests SDG&E could offer a program by which pools without remote load control devices would pay a summer adder, or this could be achieved through a combination of tariffs, local building permit processes, and Title 24 changes.
UCAN's proposals have merit. As a whole, UCAN seeks to attain the benefits of AMI technology where cost-effective (i.e., for large customers) and to attain the desired benefits of DR for other customers through expansion of existing programs. However, we have concerns that UCAN's recommendations do not clearly lead us to a broader implementation of AMI technology, as it becomes more cost-effective and functionality improves. Further, UCAN now supports the Settlement Agreement.
9.4 Technological Improvements
We have found that SDG&E's original AMI proposal currently does not meet the functionality criteria required for this proceeding, as SDG&E is unable to show at this time that its specific requirements would be met. While we are confident that SDG&E ultimately will be able to meet our functionality criteria after contracts are signed with vendors, we now believe this level of functionality may not be sufficient for the longer run. Our vision is that all customers, over time, will have more access to more information about their electricity usage, be better able to act upon that information, increasingly be able to interact with the utility to better customize services, and have greater ability to work with their own selected suppliers and technologies to manage their environments. Had we adopted SDG&E's recommendations, we would have acted to continue movement toward enhanced Smart Grid functionalities.
In order to provide the Commission and policymakers with an alternative vision of grid investment possibilities, UCAN initiated a study in early 2006, conducted by the Energy Policy Initiatives Center (EPIC) located at the University of San Diego that examined the deployment of an integrated "smart grid" in the SDG&E service area. SDG&E later agreed to jointly fund the project with UCAN and to participate in the development of this report.
UCAN maintains that SDG&E's AMI proposal has a too-narrow focus upon DR and meter readings and that SDG&E has not adequately applied a system-wide view to its initiative. UCAN believes SDG&E would have benefited from having considered the findings of the EPIC study before unveiling its AMI proposal.
UCAN also took issue with SDG&E's decision not to incorporate a broadband component to its AMI proposal. UCAN noted that broadband communications capabilities, when added to an electric distribution grid, could facilitate the offering of a number of very useful end-user products and services, including:
o Automated monitoring and control of end-use equipment, including DR and load shedding;
o Billing data and energy consumption data;
o Real-time building security monitoring/reporting;
o Automated inventory tracking of various goods such as fuel stocks;
o Dynamic price information;
o Video on demand;
o Streaming audio delivered through a stereo or computer;
o Real-time, interconnected Internet-based games; and
o Transmission of data/telephone/fax without multiple fixed lines;
We believe it is likely that new technologies will increase functionality and/or reduce costs in the near future. We have received promising information from Southern California Edison Company in its recent AMI filing as well as in the Smart Grid study in San Diego. We hope the fruits of such advancement allow SDG&E's customers (large and small) to continue to garner the advantages of new technologies in the future, as has already been achieved through integration of HAN and remote connect/disconnect in the Settlement Agreement.
We agree with UCAN that there are a wide variety of possible technological advances, new functionalities and potential benefits which may be available to complement a cost-effective AMI program. Some of these functionalities and benefits are a part of the Settlement Agreement, to which UCAN is a party. The formation of the TAP should lead to a robust review of AMI-related technologies by the various stakeholders, thereby improving the overall Project.
113 UCAN suggests this could occur starting at the end of the AB1X period, with meters required first in new single-family construction and potentially later in customers above a certain size.
114 Ex. 201, p. 25.
115 Id.
116 Ex 44-E, p. SG-11.
117 After rejecting SDG&E's 20-year analytical timeframe and post-2013 residential CPP rate design, SDG&E's alternative is exactly the same as SDG&E's main AMI Project when newly-quantified benefits are included.
118 Ex. 201, p. 22.
119 Ex. 201, pp. 57-58.
120 Ex. 201, p. 23.
