Smart Grid Legal News - High Voltage Insight on Smart Grid Issues

On January 24, 2013, the Pennsylvania Public Utility Commission (“PaPUC”) entered orders dismissing two formal complaints filed by PECO customers requesting to opt-out of smart meters. In the Theresa Gavin v PECO Energy Company case and Maria Povacz v PECO Energy Company, the Commission’s Orders adopt the Initial Decisions (“ID”) issued by the ALJs. In support of dismissing the complaints, here are some of the interesting points the orders make (emphasis added):

• Section 2807(f)(2) of the Public Utility Code, states

(2) Electric distribution companies shall furnish smart meter technology as follows:
(i) Upon request from a customer that agrees to pay the cost of the smart meter at the time of the request.
(ii) In new building construction.
(iii) In accordance with a depreciation schedule not to exceed 15 years.

• In 66 Pa. C.S. §2807(f)(2), the use of the word “shall” in the statute indicates the General Assembly’s direction that all customers will receive a smart meter. The statute does not have a provision for customers to “opt out” of the smart meter installation. 
• The Commission has interpreted current law to require smart meter installation. The Commission cannot regulate in violation of a statute.
• Pennsylvania electric utilities are following the law by not permitting customers to opt-out.

Yes, there are some jurisdictions who have said no to opt-out. Maybe this will be a new trend.

Although the order was issued earlier this year, as one of the few Commissions to say no to smart meter opt-outs, I thought it was worth reporting. On December 7, 2011, the Office of Peoples Counsel petitioned the District of Columbia Public Service Commission to initiate a formal investigation to determine whether it is reasonable for Pepco to offer an opt-out provision to its AMI program. In its response, Pepco cites a number of reasons against creating an opt-out provision, including the fact that the ARRA grant it received is contingent upon full implementation of AMI. Most importantly, Pepco pointed out that the DC Council approved AMI for "all" consumers and did not include an opt-out provision. Therefore, creating an opt-out provision is beyond the authority of the Commission. The DC PSC agreed:

Once the Commission determined that Pepco had received sufficient ARRA funding, Pepco had statutory authority to implement an Advanced Metering Infrastrucfure for "all" consumers. OPC does not cite, nor are we aware of anything in the statute or its legislative history that reflects a legislative intent to give the word "all" anything other than its common meaning. The word "all" means every member, without exclusion. Where the language of the statute is plain and unambiguous, there is nothing for this Commission to do but apply the statute according to its terms.

I recently had the opportunity to interview the Chairman of the Pennsylvania Public Utility Commission, Robert F. Powelson, regarding his views on smart meter opt-outs and other issues affecting Pennsylvania’s energy future. Because I live and practice in Pennsylvania, I may be biased but I think Smart Grid Legal News readers will agree it is refreshing and rare to hear regulators like Chairman Powelson promote smart meters, energy efficiency and other practices that advance our energy future.

Evers: Chairman Powelson, thank you for taking the time to discuss smart meters with me. Why is it important for customers to have smart meters?

Powelson: Act 129 of 2008 has really paved the way for the rollout of smart meters, also referred to as Advanced Metering Infrastructure (AMI), and the implementation of Act 129 continues to benefit Pennsylvania customers. As I see it, smart meter technology is a “win-win” situation for the Commonwealth – both electricity customers and electricity providers alike reap the benefits of advanced meters. 

Smart meters give customers greater control over their energy consumption by allowing them to measure their energy usage, monitor real-time electricity prices, and adjust their consumption and behavior in order to realize significant savings on monthly bills. Customers can even shut down appliances during peak periods or pre-program appliances and devices to operate only at predetermined (and lower cost) timeframes if they so choose.

Similarly, electricity providers also benefit from increased smart meter deployment. The two key concepts here are efficiency and reliability. AMI makes meter reading quicker and more efficient by eliminating the current practice of estimated meter readings. Additionally, with smart meters, utilities have the ability to monitor distribution networks to allow for the immediate detection of irregularities, which leads to drastically reduced response time in addressing outages. 

Finally, smart meters can help reduce both overall electricity use and peak demand use, leading to lower emissions from fossil power plants that will not have to generate as much power – a direct environmental benefit.

Evers: Chairman, across the country several states have implemented an opt-out process due to customers concerns about health and privacy. I am concerned about the impact of an opt-out process as people relocate in and out of homes with smart meters. I call it a smart meter mosaic. I joke that real estate disclosure forms will soon have to start indicating the home's level of smartness. Seriously, I think the implementation and long-term management of such a process could eventually put upward pressure on rates for everyone. What are your views regarding a smart meter opt-out process?

Powelson: In May, I testified before the Pennsylvania House of Representatives Consumer Affairs Committee on a proposal to partially repeal Act 129 and permit smart meter “opt-out” programs in the Commonwealth. My testimony addressed two pieces of legislation – House Bill 2186, which would allow consumers to opt out of having smart meters installed at their premises, and House Bill 2188, which would require consumer consent in order to share information from electric meters with government agencies. These bills represent a significant step backward in policy, with the potential to negate all of the reductions already achieved under Act 129.

The proliferation of opt-out requirements for AMI deployment has the potential to cripple efforts to modernize grid technology. Maine has received a lot of attention regarding its AMI opt-out, and Central Maine Power (CMP) has considered, analyzed and provided substantial cost information relating to a variety of potential solutions or mitigation measures for customers seeking to opt out of CMP’s Smart Meter Program. CMP estimates these incremental infrastructure and support costs to be as high as $70 million over the life of the AMI project – and that is assuming only 1 to 2 percent of CMP customers opt out. At an opt-out level of 10 percent, these incremental costs grow to hundreds of millions of dollars – exceeding the costs of CMP’s advanced meter project.

While I appreciate that there are consumers who have security and privacy concerns with respect to AMI, the PUC, legislature, and Electric Distribution Companies (EDCs) may be able to help alleviate these concerns through increased education and outreach. It is worth noting that many EDCs and their customers have had AMI in place for years, namely PPL and PECO. Additionally, we are already facilitating the continued implementation of smart grid technology by establishing rules that more precisely address conduct in the areas of reliability, privacy and security. California and Ontario have undertaken similar efforts through a “Privacy by Design” rulebook, which was integral to customer support for advanced meter roll out.

In sum, opt-outs cause operational gaps that will lead to additional costs for companies and their customers, defeating the stated purposes of Act 129. Such a system reduces reliability for all customers, as well as the benefits of a completely modernized electric grid. Simply put, there is no compelling reason for an “opt-out” program.

Evers: Smart meters have received a lot of attention but there is so much more to the concept of smart grid. Beyond smart meters, what do you see as other benefits as utilities upgrade their systems?

Powelson: Nationally, billions of dollars are being invested in smart grid technology because of the many benefits to consumers and utilities, as well as the positive impact on the environment through increased energy efficiency. (By way of background, federal support for the development of smart meter systems began with the Energy Policy Act of 2005, was supplemented with passage of the Energy Independence and Security Act of 2007, and funded by the American Recovery and Reinvestment Act of 2009 – which set aside $11 billion for the creation of a smart grid.)

For me it is not just about the technology. The most important objective is to better serve the needs of consumers and build stronger, more vibrant communities in which to live, work, and play. Smart meter and smart grid programs will be much more efficient in delivering electricity to homes and businesses; responding to outages and other emergencies; monitoring and seeking to curtail usage, especially during peak periods; preventing theft and fraud; and helping electric customers save dollars on their monthly bill. In short, the benefits to Pennsylvanians will continue to grow.

Evers: Recently many utilities have partnered with Opower and Facebook to allow customers to form teams for energy saving contests and compare energy usage with friends, hopefully creating positive peer pressure. Why are innovations like this important to our energy future?

Powelson: Any method of educating consumers and raising consumer awareness is vital. The real benefits will come when people start to realize that we are all in this together, and everyone contributing a little adds up to significant decreases in demand, which then puts a downward pressure on prices.

I particularly like this idea of comparing energy usage with neighbors and friends, as it dovetails nicely with the idea of “competition” in Pennsylvania’s electricity market. The more customers learn about competitive electricity providers, and the benefits and potential price savings available in the marketplace, the better. Increased dialogue that leads to decreased energy usage is exactly what we are looking for under Act 129.

Evers: Are there any other thoughts regarding Pennsylvania's energy future you would like to share?

Powelson: Pennsylvania has really embraced a two-pronged approach in considering its energy future. On one hand, we are doing all that we can as regulators, providers, and consumers to comply with Act 129 and become more energy efficient. On the other hand, we are strengthening Pennsylvania’s competitive marketplace to increase competition among electric generation suppliers and produce better pricing and greater savings for the Commonwealth’s 5.6 million electric customers.

In addition to fulfilling its regulatory and oversight responsibilities, the Pennsylvania PUC will continue to educate consumers on the benefits of both energy efficiency and conservation, including smart meter technology, as well the advantages of shopping with competitive suppliers for their electric generation.

Recently, the Public Utilities Commission of Nevada conducted an investigation regarding NV Energy’s advanced service delivery program. It considered four alternatives to smart meters:

1. Analog Meter
2. Digital Meter
3. Non-communicating AMI Meter
4. Communicating AMI Meter with Limited Radio Transmissions

And the winner is: Digital Meter. The benefits cited by the Commission for this option are: (1) It provides a meter that does not store data and (2) it retains some economic benefits by reducing the number of meter readers necessary to read meters because of the drive by capability. 

The Commission then ordered NV Energy to file a trial opt-out tariff to allow customers to opt-out of smart meters with a digital meter. These digital meters are what I call the first generation of smart meters. The meters can be read with drive-by meter reading technology. Although it is 179 pages, NV Energy’s opt-out tariff filing is worth reading. Beyond addressing the cost for the opt-out, it provides great insight into other issues such as the cost to reinstall a smart meter, who can opt out in a
landlord-tenant situation, privacy and sample customer communications material.

S.214 also known as the Vermont Energy Act of 2012 was recently passed by the House and Senate and sent to the governor on May 14, 2012. It covers many energy related issues including updated renewable energy standards. However, many Smart Grid Legal News readers will find Section 2311 Smart Meters; Customers Rights; Reports most interesting. It requires an electric utility company to:

1. Provide customers with written notice before installing a wireless smart meter
2. Allow customers to opt-out of having a wireless smart meter at no additional monthly or other charge
3. Allows a customer to require removal of a previously installed wireless smart meter for any reason and at an agreed-upon time without incurring any charges for the removal

 With regards to the third option, I wonder how many times this can occur? If customers change their minds about the opt-out, will there be a fee to have one installed?

 In addition to the opt-out, several interesting reports are required, including a joint report to the Commissioner of Health and the Commissioner of Public Service. The report will (a) update a previous report entitled Radio Frequency Radiation and Health; (b) provide a summary of post deployment radio frequency level testing; and (c) provide evidence based on the potential health effects of wireless smart meters. The commissioners are to retain an independent expert to research and write the report which is due on January 15, 2013.

The California Public Utilities Commission (“CPUC”) recently modified Southern California Edison's (SCE) and San Diego Gas & Electric's advanced metering programs to include an option for those residential customers who do not wish to have a wireless Smart Meter installed at their location. Customers participating in the opt-out option will be assessed an initial fee of $75 and a monthly charge of $10 thereafter. Customers enrolled in the CPUC’s low income program (California Alternate Rates for Energy (CARE)) electing to opt-out will be assessed an initial fee of $10 and a monthly charge of $5. The CPUC cautioned that the initial fee and monthly charge are interim to allow residential customers to begin selecting the opt-out option immediately. The costs are subject to adjustment upon conclusion of a second phase where issues concerning the actual costs associated with offering an analog opt-out option will be addressed. The opt-out option is for residential customers only; the Commission declined a request to allow commercial customers an opt-out option. The Commission explains in both decisions that the opt-out option is a service.  

This opt-out option is a service because the standard for metering has been transitioned throughout the country and for the most part the world from the older technology, analog meters, to today’s technology, smart meters. In this decision we are not reversing that transition, however, we do approve an option for those customers who, for whatever reason, would prefer to not have a wireless smart meter. …As a result, this decision further finds that customers electing the opt-option shall be responsible for costs associated with providing the option.

I said 2011 was the year of the opt-out, but based on a couple of recent Commission orders, 2011 may have been a preamble. Texas, a state known for a robust competitive electric market and with millions of smart meters already installed, has decided to conduct an investigation to formally address the opt-out issue. When a decision has been made, smartgridlegalnews.com will let you know. 

In the meantime, I thought this well-written March 2011 Smart Grid Technical Advisory Project authored by the Lawrence Berkeley National Laboratory would shed some light on the importance of smart meters to the smart grid. The slide on page 16 presents some great questions for regulators to consider as they address the opt-out issue:

• Should advanced meters be mandatory or voluntary?
• How do you craft a potential opt-out option that does not undermine either the advanced metering business case or utility system smart grid operation?
• How should the cost of any opt-out provision be allocated?
• Should costs be allocated to those that opt-out? or
• Should costs be “socialized” and distributed across all customers?
• What implications does a metering opt-out provision have for rate, demand response, electric vehicle and other smart grid initiatives?

Bonus: For those who read the full report, you will learn that you can be advanced, but not smart.