5. Summary of Party Positions
The parties take positions on the appropriateness of funding pre-deployment activities and the appropriate activities to fund based on both their different interpretations of Commission policy and precedent, and their differing assessments of the likelihood of future approval of some version of SCE's AMI project.
SCE believes that Commission policy, as expressed in the state Energy Action Plan, Energy Action Plan 2, and elsewhere, considers AMI to be an important element in reaching state energy goals, including the implementation of dynamic pricing. SCE points to the Commission's goals for price-responsive demand response, adopted in D.03-06-032, as supporting its position. In particular, SCE cites the Commission's acknowledgement in D.05-09-044 that "while the EAP II does not commit [the Commission] to approving any particular proposal on AMI full deployment, it does strongly suggest an inclination for the Commission to adopt some form of AMI deployment, perhaps only partial, on the basis of a further cost-effectiveness analysis."2 SCE's justifications for many of its proposed Phase 2 activities rely heavily on the precedent set in D.05-09-044, which approved PG&E's request for funding of pre-deployment activities as well as additional activities intended to keep PG&E's momentum towards full deployment.
TURN states that Commission precedent and regulatory procedures require that the Commission thoroughly review any project before approving ratepayer funding of related activities. TURN urges the Commission not to depart from what it describes as the Commission's "normal regulatory process." 3 TURN further contends that if the Commission authorizes funding before a final determination on the proposed AMI system is made, that ratepayer funding of any Phase 2 pre-deployment activities should be limited to product confirmation and testing that will inform the final regulatory review.4 Though TURN does not provide a detailed analysis of SCE's proposed pre-deployment expenditures, it suggests that certain broad categories of the requested funding do not meet this criterion. Like SCE, TURN cites D.05-09-044 in support of its position, stating that the relevant lesson to take from that decision is that the Commission evaluates AMI systems in large part on their anticipated operational (not demand response) benefits.5 Based on this reading of D.05-09-044, TURN suggests that before allowing funding for any activities beyond product confirmation and testing, the Commission should require SCE to show that their business case is likely to meet a cost-effectiveness threshold comparable to that met by PG&E in its pre-deployment application.6
DRA, like TURN, takes the position that "ratepayers should only be committed to funding projects once they have been fully reviewed by this Commission and found reasonable from the ratepayers' point of view."7 In recognition of the possibility that investments in research related to AMI might benefit ratepayers by assisting the state in meeting future energy policy goals, DRA proposes that the Commission consider approving ratepayer funding for approximately $15 million of proposed activities that DRA determines on the basis of its analysis may inform SCE's final business case and the Commission's ultimate decision on whether AMI will benefit ratepayers and should be approved.
Overall, TURN and DRA believe that the scope and scale of SCE's proposed pre-deployment efforts is overbroad and unjustified without a finding that moving forward with AMI is cost-effective. They argue that if the Commission decides that ratepayer funding is not appropriate for SCE's proposed AMI project, ratepayers will have paid up to $64 million for activities that have little or no value to ratepayers.
2 SCE Opening Brief, p. 6, emphasis in original.
3 TURN Opening Brief, p. 1.
4 TURN Opening Brief, p. 2.
5 TURN Opening Brief, p. 3.
6 TURN Opening Brief, pp. 3 - 4.
7 DRA Opening Brief, p. 2.
