Position of the SE Utilities

The SE Utilities argue that builders should not be required to pay the meter cost to the utility as a non-refundable, up-front fee not subject to allowances. According to the SE Utilities, the flaw in the proposal to charge the meter cost as an up-front fee is that there is no linkage between charging the builder the cost of a meter and any resulting cost savings to the customer.

The SE Utilities point out that the line extension transaction is between the utility and the builder, not between the utility and the buyer of the building - the future utility customer - except in the relatively few cases where the future utility customer happens to build its own facility. Once the utility has charged the builder the cost of a meter, the builder has incurred this cost, and will attempt to recover it from the buyer of the building as market conditions permit. Once escrow closes on the building, the transaction between the buyer and the builder is complete and the buyer then begins its relationship with the utility as a utility customer.

Further, the SE Utilities point out that if the customer at a new facility decides to become a direct access customer the customer has absolutely no ability at that time to obtain a refund from the builder for the cost incurred by the builder for the utility meter. The meter cost charged to the builder becomes "sunk" to the buyer once the buyer purchases the building. Thus, according to the SE Utilities, in the absence of a linkage between the utility/builder transaction and the decision of a customer to opt for direct access service, making the meter non-refundable to the builder through an up-front fee not subject to revenue-justified allowances, simply increases the costs of builders, and thereby increases costs to home purchasers.⁴

Further, the SE Utilities argue that in the few cases where the builder also intends to be the utility customer, it is questionable whether a builder/customer in this situation will focus on whether it intends to be a direct access customer in sufficient time to avoid payment of an up-front meter fee to be charged by the utility.

Also, the SE Utilities point out that the proper mechanism to promote meter competition is already in place, even in cases where the builder/customer makes the decision to take direct access service before the utility-provided meter is installed, and therefore could theoretically avoid this cost by purchasing a meter from a Meter Service Provider (MSP) instead. If any eligible customer, new or existing, decides to purchase a meter from a MSP, the utility provides the customer with a "meter ownership credit."⁵ If the customer can purchase a meter from a MSP at a price less than the utility's avoided cost, it is provided an economic incentive to do so by the subsequent credit it receives from the utility. The SE Utilities believe that this existing mechanism by itself has achieved competition in meter markets for customers eligible to purchase a meter from a MSP.⁶ According to the SE Utilities, it is therefore unnecessary to impose additional costs on all builders and buyers of new facilities in California when the proper mechanism to ensure competition in meter markets already exists that does not focus on the irrelevant fact of whether a customer is located at an existing facility or a new one.

Further, the SE Utilities point out that only a small fraction of direct access customers require special metering to participate in the direct access program. In the case of SDG&E, a scant two percent of direct-access customers require special metering because, for the vast majority of customers, the "load profiling" option offers a cost-effective alternative to special metering and involves a minimum of customer inconvenience. This option is available to all customers under 50 kW. The two percent of customers who require non-standard meters consists of those customers between 50 and 500 kW who do not have the load profiling option. Customers over 500 kW have an "interval meter" installed as the standard meter and therefore do not require any different type of meter to participate in the direct access program. Thus, the SE Utilities argue that even though all direct-access customers are eligible to purchase a meter from a MSP, and thereby receive a credit from the utility for the utility-provided meter, it should come as no surprise that customers do not make the extra effort to investigate their metering options unless they must purchase a non-standard meter in order to participate in the direct access program.