12. Assignment of Proceeding
Dian M. Grueneich is the assigned Commissioner and David M. Gamson is the ALJ in this proceeding.
1. The May 9, 2005 Assigned Commissioner/Administrative Law Judge Ruling in this proceeding requires that SDG&E must show:
a. that it meets the functionality criteria set forth in the Joint Assigned Commissioner and Administrative Law Judge's Ruling Providing Guidance for the AMI Business Case Analysis issued February 19, 2004 in Rulemaking
(R.) 02-06-001;b. that its proposed AMI Project is cost-effective; and
c. that it has a serious plan for accomplishing the task of integrating the AMI investment into its operating systems to ensure that the expected benefits in the areas of customer service, billing, outage management, and operations and maintenance accrue.
2. SDG&E has not yet chosen an AMI technology, has not selected technology vendors and has not signed contracts with any technology vendors to support its AMI project.
3. SDG&E has a clear plan for implementing its AMI Project. The plan involves identifying vendors based on its RFPs, negotiating contracts with selected vendors, and performing the needed work between 2007 and 2010. This plan also applies to the Settlement Agreement.
4. SDG&E's pre-tax authorized rate of return is 8.23%.
5. SDG&E's AMI Project should be evaluated on a Project basis, not on a company basis.
6. Terminal value in the context of project evaluation means residual value, not going concern value.
7. The analytical timeframe for evaluating the cost-effectiveness of SDG&E's AMI Project is 17 years, because the useful life of the project is 17 years.
8. SDG&E has not selected and executed contracts with vendors for its proposed AMI Project. SDG&E obtained bids from its RFPs, and estimated costs based on those bids. These costs are appropriate for evaluating the cost-effectiveness of SDG&E's AMI Project.
9. SDG&E's RFP specification for bi-directional metering does not increase costs.
10. SDG&E's RFP specification for a 99.5% accuracy requirement is not an over-specification.
11. For the purposes of considering cost-effectiveness, we will assume DRA's risk-sharing approach is adopted and reduce SDG&E's costs by $23.5 million.
12. Over 17 years, SDG&E's estimated costs are $607 million, before adjusting for the DRA risk-sharing proposal. The DRA risk-sharing proposal reduces SDG&E's estimated costs by $23.5 million, resulting in a final cost estimate of $583.5 million.
13. There are $14.5 million in operational benefits in SDG&E's proposal which are out-of-scope for this proceeding and should not be counted in evaluating its cost-effectiveness.
14. SDG&E's proposal has operational benefits of $54.9 million.
15. A reasonable estimate of meter accuracy benefits is 0.30%.
16. SDG&E's recommendation for energy theft benefits is reasonable.
17. For analytical purposes of SDG&E's business case, it is reasonable to assume 50% of households would both be aware of SDG&E's proposed Peak Time Rebate program and take action to reduce peak energy usage in response to it.
18. Large customer DR that would occur without AMI being implemented should not be counted as AMI benefits.
19. SDG&E's $85/kW-Year nominal levelized value is equivalent to a $60/kW-Year real escalating value.
20. SDG&E methodology for CT market energy value results in a reasonable approximation of this value at $22.89/kW-year.
21. CT generators will be needed for other hours in the year aside from the estimated 91 hours when peak events are called. DRA's recommendation for a real reduction of $7.39/kW-year to SDG&E's estimated avoided capacity value is reasonable.
22. SDG&E's hypothesis that the Commission will make a specific 1% reduction in planning reserves based solely on the hypothetical possibility of AMI-caused demand changes is too speculative a benefit and too remote from the AMI Project to consider and quantify for these purposes of considering the cost-effectiveness of SDG&E's AMI project.
23. SDG&E's rate design flexibility benefit of a $13.79/kW-year capacity value is reasonable.
24. The $52/kW-year figure for SDG&E's avoided capacity cost is reasonable to use for purposes of this application.
25. SDG&E's historical figures are a reasonable basis to estimate future DR activities for the purpose of evaluating the cost-effectiveness of SDG&E's AMI business case. Based on historical data, the benefits resulting from SDG&E's avoided DR programs should be reduced by $33 million (based on a 17-year analytical timeframe).
26. The projected benefits of SDG&E's AMI Project are $502 million, not counting newly-quantified benefits.
27. There are a variety of benefits associated with SDG&E's AMI Project previously considered non-quantifiable which have now been quantified, based on filings received January 16, 2007. The value of these benefits is $32 million to $43 million.
28. The total benefits of SDG&E's proposal are $534 million to $547 million.
29. The total cost of SDG&E's proposal is $38.5 million to $49.5 million greater than the total benefits.
30. SDG&E's alternative proposal in its January 16, 2007 comments does not significantly improve net benefits compared to our analysis of SDG&E's original AMI Project.
31. UCAN's alternative proposal has merit. However, UCAN's recommendations do not clearly lead to a broader implementation of AMI technology, as it becomes more cost-effective and functionality improves.
32. The Settlement Agreement among SDG&E, DRA and UCAN has unanimous support of all active parties, representing different viewpoints.
33. The Settlement Agreement encompasses SDG&E's application and testimony, with specified modifications.
34. The Settlement Agreement leads to a total cost of $652 million, and total benefits between $692 million and $703 million (including newly-quantified benefits).
35. There are between $40 million and $51 million in net benefits for the Settlement Agreement. Without the newly-quantified benefits, the Settlement Agreement has $8 million in net benefits. With the newly-qualified benefits, the Settlement Agreement has between $40 million and $59 million in net benefits.
1. Neither SDG&E's AMI proposal nor the proposal in the Settlement Agreement at this time meet the functionality criteria set forth in the Joint Assigned Commissioner and Administrative Law Judge's Ruling Providing Guidance for the AMI Business Case Analysis issued February 19, 2004 in Rulemaking (R.) 02-06-001. However, both proposals would be likely to meet these criteria once SDG&E executes signed contracts with vendors in response to RFPs for the project.
2. SDG&E's proposal and the proposal in the Settlement Agreement meet the implementability criterion in the May 9, 2005 Ruling.
3. SDG&E has not demonstrated that its proposed AMI Project, as proposed in this application, is cost-effective. The projected costs of SDG&E's AMI Project so outweigh the projected benefits that any reasonable consideration of non-quantifiable benefits cannot make the Project cost-effective.
4. SDG&E's AMI Project should not be adopted as proposed in this application.
5. SDG&E's January 16, 2007 alternative AMI Project is not cost-effective and should not be adopted.
6. UCAN's alternative recommendations should not be adopted at this time.
7. The proposal in the Settlement Agreement is cost-effective.
8. The totality of the information provided is sufficient to allow a determination of the overall reasonableness of the Settlement Agreement and to permit the Commission to discharge future regulatory obligations with respect to the parties and their intentions.
9. The Settlement Agreement is reasonable in light of the whole record, consistent with the law, and in the public interest.
10. SDG&E should seek proposals for a HAN communications interface, based upon an open standard capability for residential, commercial, and industrial customers.
11. SDG&E should work with the other major California utilities to achieve a statewide open standard for HAN communications systems interface that is secure, upgradeable and extensible.
IT IS ORDERED that:
1. The February 9, 2007 Settlement Agreement Regarding San Diego Gas & Electric Company's (SDG&E) Advanced Metering Infrastructure (AMI) Application (A.), A.05-03-015 (Appendix A herein), among SDG&E, the Division of Ratepayer Advocates and Utility Consumers' Action Network is adopted, subject to Commission review of contracts executed with vendors, as set forth in Ordering Paragraph 2.
2. SDG&E shall file one or more Advice Letters with the executed contracts with vendors for its AMI Project, as adopted herein. These contracts are contingent upon Commission approval that they meet the functionality criteria set forth in the Joint Assigned Commissioner and Administrative Law Judge's Ruling Providing Guidance for the AMI Business Case Analysis issued February 19, 2004 in Rulemaking 02-06-001.
3. SDG&E shall consult with the Commission's Energy Division to determine what information SDG&E shall provide in its quarterly reports to the Energy Division on AMI implementation progress, which reports are the subject of paragraph 9 of the Settlement Agreement.
4. SDG&E shall work with the other major California utilities to strive for statewide, clearly defined and commercially available open standards for Home Area Network (HAN) communications systems.
5. SDG&E shall establish the Advanced Metering Infrastructure Balancing Account (AMIBA) by an advice letter no later than 30 days from the effective date of this decision, and record costs up to $617 million.
6. SDG&E is authorized to book shareholder rewards or costs in its Reward and Penalties Balancing Account (RPBA) up to a maximum of $5 million.
7. A.05-03-015 is closed.
This order is effective today.
Dated April 12, 2007, at San Francisco, California.
************ APPEARANCES ************
Marc D. Joseph
Attorney At Law
ADAMS, BROADWELL, JOSEPH & CARDOZO
601 GATEWAY BLVD., STE. 1000
SOUTH SAN FRANCISCO CA 94080
(650) 589-1660
mdjoseph@adamsbroadwell.com
For: Coalition of California Utility Employees
Paul Angelopulo
Legal Division, RM. 5031
505 VAN NESS AVE
San Francisco CA 94102 3298
(415) 703-4742
pfa@cpuc.ca.gov
For: ORA
Frederick M. Ortlieb
Office Of City Attorney
CITY OF SAN DIEGO
1200 THIRD AVENUE, 11TH FLOOR
SAN DIEGO CA 92101
(619) 533-5800
fortlieb@sandiego.gov
Chris King
EMETER STRATEGIC CONSULTING
1 TWIN DOLPHIN DRIVE
REDWOOD CITY CA 94065
(650) 631-7230
chris@emeter.com
For: California Consumer Empowerment Alliance
Renee H. Guild, CEO
GLOBAL ENERGY MARKETS
2481 PORTERFIELD COURT
MOUNTAIN VIEW CA 94040
(650) 279-7692
renee@gem-corp.com
Chris King
Chair,Svlg DR Subcommitte
224 AIRPORT PARKWAY, SUITE 620
SAN JOSE CA 95110
(408) 501-7864
chris@emeter.com
Karen P. Paull
Legal Division, RM. 4300
505 VAN NESS AVE
San Francisco CA 94102 3298
(415) 703-2630
kpp@cpuc.ca.gov
Kelly M. Morton
Attorney At Law
SAN DIEGO GAS & ELECTRIC
101 ASH STREET
SAN DIEGO CA 92123
(619) 699-1500
kmorton@sempra.com
For: San Diego Gas & Electric
Vicki L. Thompson
Attorney At Law
SEMPRA ENERGY
101 ASH STREET, HQ-13D
SAN DIEGO CA 92101-3017
(619) 699-5130
vthompson@sempra.com
For: San Diego Gas & Electric
Justin Bradley
Director Energy Programs
SILCON VALLEY LEADERSHIP GROUP
224 AIRPORT PARKWAY, SUITE 620
SAN JOSE CA 95110
(408) 501-7864
jbradley@svlg.net
Scott H. Debroff
SMIGEL, ANDERSON & SACKS
RIVER CHASE OFFICE CENTER
4431 NORTH FRONT STREET
HARRISBURG PA 17110
(717) 234-2401
sdebroff@sasllp.com
For: Hunt Technologies, Inc,& Cellnet Technology, Inc.
Nina Suetake
Attorney At Law
THE UTILITY REFORM NETWORK
711 VAN NESS AVE., STE 350
SAN FRANCISCO CA 94102
(415) 929-8876
nsuetake@turn.org
For: TURN
Michael Shames
Attorney At Law
UCAN
3100 FIFTH AVE., STE. B
SAN DIEGO CA 92103
(619) 696-6966
mshames@ucan.org
For: UCAN
(END OF APPENDIX B)
