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

Two years after providing approval to Florida Power and Light to install smart meters, the Florida Public Service Commission has decided to have a public workshop regarding the devices due to public outcry. Scheduled for September 20, 2012, the workshop will give the public the opportunity to provide comments regarding smart meters. The Commission has also directed its staff to gather additional insight about the technology, policies, jurisdiction, costs and benefits of smart meters. The information will be compiled and brought back to the Commissioners for further discussion. In its quest for information, the utility is asking some very good questions that any utility seeking smart meter deployment should be addressing. Below are the documents requested in Smart Meter Data
Request #1:

30. Please provide copies of any material(s) given to customers on smart meters.

31. Please provide any call center scripts on smart meters or smart meter opt-out.

32. Please provide any materials given to customers in response to their concerns about the health effects from smart meters.

33. Please provide the procedures for smart meter installation used by either the utility or contractors.

34. Please provide copies of any FCC regulations that smart meters must comply with.

My view is that public workshops and smart grid education in general are a great idea. Extensive consumer engagement has been a lesson learned the hard way for the trailblazers in an industry where consumer education is typically providing regulatory notices and bill inserts. For some reason, the smart meter is different and more is required. Given the ease with which information is available today, if utilities don’t educate their customers, someone else will. While the magnitude and message need to be balanced with the deployment schedule, I am of the general view that education should precede installation.

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.

Based on its Energy Overview, Michigan’s total energy consumption is relatively high, due in part to the State’s large population (8^th in the nation), northern climate and industrial sector.  Activities such as durable goods manufacturing by the automotive, glass, metal castings and chemical industries, as well as mining, pulp and paper manufacturing/production promotes robust energy usage. With an understanding of how energy affects the Michigan economy, the Michigan Public Service Commission began smart grid activities as early as 2007 (Case No. U-15278) before the phrase smart grid became en vogue. In fact, the forward-thinking Commission has a section on its website dedicated to providing smart grid information. It includes a helpful FAQ for customers that addresses such things as the safety of smart meters:

“Are the radio frequency (RF) communications used by the smart meters safe?
The scientific and medical evidence to date suggests that exposure to RF fields does not cause adverse health effects, provided that exposure is within the safety guidelines. The Unites States federal government and the international health community, including the World Health Organization, plus numerous independent studies have deemed low-level radio frequency to be completely safe. The Federal Communications Commission (FCC) has adopted Maximum Permissible Exposure (MPE) limits for radio transmitters of all types, including smart meters. These limits also include a prudent margin of safety. Even so, smart meters operate far below the limit.
The following reports provide additional information on radio frequency:
Radio-Frequency Exposure Levels from Smart Meters   
No Health Threat from Smart Meters    
Electromagnetic Fields and Public Health   
Health Impacts of Radio Frequency from Smart Meters   
Radio Frequency Safety”

Despite these efforts, the opposition to smart meters has spread from Marin County, CA to Michigan. On January 12, 2012 the MPSC issued an Order opening a docket in “hopes of increasing the Commission’s and public’s understanding of smart meters.” Given the importance of smart meters to energy efficiency, I am hoping this massive education effort does not conclude with opt-outs. A hybrid approach makes the deployment more expensive and could eventually be a bear to manage. Think five years from now when the opt-outs relocate. Eventually there could be meter changes as frequently as move-in/move-outs…and that would not be so smart.

Millions of Smart Meters are being deployed annually creating the potential for mountains of analog meters to fill up landfills. Utility Services of the Americas has a solution – meter recycling. While attending and presenting at SmartEnergy International 2011 in San Francisco this week, I had the opportunity to speak with Brian Shine and Steven Snyder about their company's timely and useful service. Utility Services of the Americas’ innovative process yields a zero-landfill method to discard old meters. Regardless of your location, they will arrange for the packaging, transport and recycling of your electric, gas, water and parking meters, adding to the environmental benefits of the smart grid.

Speaking of benefits, meter recycling can also help utilities with their smart meter business cases. Brian tells me their clients receive money back based on the total poundage of the recycled meters. So in addition to cutting the landfills some slack, meter recycling can assist with driving down the costs of smart meter projects. Sure, a few analog meters will have to be saved for Central Maine Power's service territory, where customers will still have the analog option, but most analog meters will face early retirement and meter recycling is a great way to save both money and the environment.

On May 19, 2011, after taking into consideration all public correspondence and filings, the Maine Public Utilities Commission issued a Part 1 Order requiring Central Maine Power to implement an opt out program. What is interesting about the order is that it seems to go beyond addressing the RF issues and requires more than what is necessary to comfort those customers with smart meter health concerns. As stated in its press release, CMP will provide residential and small commercial customers with four choices:

1. the default smart meter which will become the standard meter in CMP territory;
2. the ability to select a smart meter with the transmitter-off;
3. the ability to keep the customer’s existing analog meter; or,
4. the ability to move the new smart meters elsewhere on their property at the customer’s expense.

This decision seems to be a long way from the Commission’s order in February 2010 where the Commission approved this very same CMP AMI program  that is now the subject of an opt out order that not only provides for the transmitter to be off, but even requires CMP to keep in use analog meters. In February 2010, the Commission stated that CMP’s AMI program would, “improve customer service, enhance storm restoration efforts, reduce utility operational costs, save ratepayer and utility costs, and ultimately provide customers with necessary tools to use electricity more efficiently.”  It will be interesting to see the extent of the anticipated reduction in utility operational costs as CMP maintains the systems and networks to support both analog and smart meters.

In Maine the Commission can issue an order in two parts. The first providing the decision and the latter providing the background, analyses and reasoning underlying the Commission’s decision. I’m looking forward to reading the Part II Order to see if it addresses my questions after reading the Part I Order:

• What happens when people move? It is possible that customers will relocate within and outside of CMP’s service territory. At some point, radio off customers will move into transmitter on homes or analog metered homes and vice versa.  Who pays for the administrative and operational cost of what will eventually become  an opt-in and opt-out mosaic with two subparts?
• Can CMP’s customers relocating within Maine but outside of CMP’s service territory expect to have the same opt-out option at their new home?
• Why have an opt-out option when the FCC and FDA have approved the smart meters for use?
• Analog? Really? When the analog meters are ready for replacement will CMP be required to purchase analog meters for the chosen few 10 or 15 years down the road? Admittedly, functional yet used meters should be on sale as other utilities abandon analog just like the FCC did with our television transmission.

The costs to customers for the various options will be:

1. For the electro-mechanical meter option: an initial, one-time charge of $40.00 and a recurring monthly charge of $12.00
2. For the standard wireless “smart meter” with the NIC operating in receive-only mode: an initial, one-time charge of $20.00 and a recurring monthly charge of $10.50
3. For any customer that does not enroll in the opt-out program within the 30 period specified above and later chooses to do so: a $25.00 surcharge. CMP may waive the surcharge if it determines there is a sufficient reason for the customer’s failure to notify CMP within the 30-day period

I suggest realtors in Maine begin to prepare new disclosure forms to alert potential buyers to the home’s level of smartness.

Pecan Street Project has kicked off the first phase of its smart grid demonstration project in the Mueller community of Austin, Texas. One hundred residences volunteered to have Incenergy’s Home Smart Grid System installed. This system will capture electric and gas usage data for the home and six major appliances on a minute-by-minute basis. It will also gather data from the 10 homes that have solar PV rooftops. 

Project researchers will use the data collected during the first phase, which will last a year, to design the second phase that aims to produce user-friendly ways to manage individual appliances, systems, electric vehicle charging and rooftop PV systems. The second phase will involve up to 1,000 homes and 75 businesses. 

Project team members include the UT Austin, Incenergy, Austin Energy, Texas Gas Service, Environmental Defense Fund, the City of Austin and the Greater Austin Chamber of Commerce. 

Austin Energy, a smart grid success story, has already deployed 400,000 meters with only 25 meters having to be replaced and only a little over 200 requesting meter accuracy tests. Austin Energy credits its success to understanding what customers really want and having an extensive communication and outreach effort.  

The Pecan Street Project seeks to continue the success that Austin Energy achieved by following the same customer-oriented approach: Two of the participants in the demonstration project serve on the executive committee, offering a valuable customer perspective. Imagine that! Customer involvement in the planning process! A great idea that should reap benefits as it will provide the project team with valuable insights on customer values and behavior.     

On February 8, 2011, George Jepsen, attorney general for the State of Connecticut submitted a brief requesting the Department of Public Utility Control reject CL&P's AMI deployment plan, citing the $500 million dollar ratepayer-funded plan would yield few benefits. Since CL&P customers already benefit from AMR meters, the AG does not believe the price tag is worth the near term deployment of AMI meters. In the event AMI deployment is approved, the AG requests the following limitations:

• Surgical deployment – provided only when requested by customers who are willing to pay for them
• Replacement deployment – as AMR meters die, replace them with AMI meters
• Prudence review – cost recovery via a base rate case and only after CL&P demonstrates the costs were prudent

It is unfortunate the AG does not see that a couple of the limits he is seeking to place on the program would erode and further minimize the benefits of AMI deployment. Operational savings are optimized when there is full deployment. CL&P submitted a cost-benefit analysis. Here are just some of the benefits:

• Peak load reduction of 125 megawatts annually. This is sizable enough to forgo running a small power plant. Numerous additional benefits stem from this fact alone. When you forgo a power plant, you eliminate all the expense, environmental impact, energy , etc. that goes along with running the plant
• Total energy reduction of 190 million kWh per year, saving enough energy to power 20,000 homes
• Carbon emission reduction of 100,000 per year, giving Connecticut air the positive equivalent of 13,000 less cars on the road
• Two percent reduction in storm outage duration

These benefits will be further optimized with full deployment, as that sets the stage for the best customer education and engagement process.

This month FERC released its Demand Response and Advanced Metering survey results. Conducted in 2010, the survey shows advanced metering is up a whopping 85% nationwide (see page 7). We can thank DOE for giving AMI a nice booster shot to the tune of $817 million. This is in addition to the $2.1 billion in grants DOE awarded for smart grid demonstration projects.

According to the assessment, over 500 entities offered some type of demand response program. The combined affect of these programs reduced electric usage to by more than 58,000 megawatts, reducing peak demand by 7.6%. In addition to these wonderful results, the report provides a handy list of acronyms and a glossary that will be helpful to those new to the industry.

The Department of Energy celebrated the season by unveiling its smart grid neighborhood...gingerbread neighborhood! Homes in this community come adorned with licorice solar panels and smart meters made of fig cookies. Energy efficiency never tasted so good! Thanks DOE for the sweet treat.

Although 2010 has been a mixed bag across the nation when it comes to implementing elements of the smart grid, the major Electric Distribution Companies (“EDCs”) in Pennsylvania have all received PaPUC approval of their smart meter implementation plans. And while the Commission appears eager to embrace the new technology, the common denominator among most of these electric distribution companies is a slow prudent rollout:

• Allegheny Power - By December 31,2010, Allegheny will have trained personnel, installed support equipment and software, established network designs and tested and certified Electronic Data Interchange transaction capability, paving the way for the first batch of 93,100 smart meters to be deployed in March of 2011.  Allegheny's Smart Meter Plan may be found on the Public Utility Commission's website by entering docket number M-2009-2123951 in the search box.

• Duquesne Light - Duquesne will extend and complement its existing advanced meter capabilities based on analysis and evaluation of several key issues.  The Company is conducting studies on smart meter network design, smart meter installation and training, and information technology systems and software upgrades. Like other utilities' plans, much of Duquesne's final deployment plan will be shaped by the outcomes of these assessments. Duquesne has a contractual obligation with Itron for Automatic Meter Reading infrastructure maintenance, which does note expire until the end of 2013.  Once the Itron contract expires, it will begin its 5-year major deployment of smart meters beginning in 2014 to be completed by January 2019, according to its 2009 smart meter plan. 

• FirstEnergy – Before one meter is installed, the company will take the time necessary to address issues regarding personnel training, equipment procurement, software and testing. By the end of 2013, a pilot batch of 5,000 to 10,000 smart meters will be deployed;this technical trial will feature an Advanced Metering Infrastructure (AMI) test laboratory. Following a successful trial, it will deploy up to 60,000 smart meters to “de-bug” the system before full deployment. FirstEnergy's Smart Meter Plan on behalf of Met-Ed, Penelec and Penn Power may be found on the Public Utility Commission's website by entering docket number M-2009-2123950 in the search box. 

• PECO - In October 2009, the company was awarded $200 million dollars in a Smart Grid Investment Grant from the federal government, which will be used to defray the costs of smart meter procurement and installation. PECO has already selected vendors and smart meter technology, and is currently field testing its Advanced Metering Infrastructure (AMI) as well as developing the technology necessary to support smart meters and related systems. You can expect to see the first batch of smart meters for PECO be deployed in October 2011.  PECO’s Smart Meter Plan will ramp up deployment starting in August of 2012.  

• PPL – The company is a leader among Pennsylvania EDCs when it comes to smart meters.  PPL was an early adopter of Advanced Metering Infrastructure (AMI), having installed the meters several years before there was a legal requirement to even submit a plan. Accordingly, PPL states that its current meters either meets or exceeds the minimum requirements of Act 129 under the Public Utility Commission's order.  Notwithstanding, beginning in January 2011, PPL will launch pilot programs for bidirectional data communications capability, direct customer access to price and usage data and remote disconnection and reconnection. PPL will evaluate semiannually next-generation AMI technologies and smart-grid integration.  PPL's Smart Meter Plan may be found on the Public Utility Commission's website  by entering docket number M-2009-2123945 in the search box.

Based on PPL’s experience when it implemented AMI, it does not appear that Pennsylvania EDCs will have to deal with the customer backlash currently taking place in California.  Time and full deployment will tell.

Edward P. Yim contributed to this post.

On June 21, 2010, to the surprise of many, the Maryland Public Service Commission (“MPSC” or “Commission”) denied Baltimore Gas and Electric Company’s (“BGE”) Application to Deploy a Smart Grid Initiative (“Proposal”).  Stating, “Although we share BGE’s (and others’) hopes, and even enthusiasm, for the long-run potential and importance of the infrastructure upgrades known colloquially as the “smart grid,” we find the business case for this Proposal untenable.”  This decision jeopardizes approximately $136 million BGE was awarded from the Department of Energy (pdf) pursuant to the American Recovery and Reinvestment Act (“ARRA”) for smart grid funding.  The total price tag for BGE’s filed plan was $835 million.  The Commission stated that BGE should fairly allocate between itself and its customers the risk of the smart grid journey.  

In denying the Proposal, the Commission goes on to discuss concerns it has about exposing customers to unproven technology that could quickly become obsolete due to evolving Advanced Metering Infrastructure (“AMI”) technology standards.  The decision states BGE planned to install the ZigBee chip in its smart meters.  Currently, ZigBee is the dominant technology in the AMI market.  However, at this time, no appliance manufacturer has adopted ZigBee technology.  In order to provide customers with the option of deriving the full benefits of the smart meters that BGE hoped to install, the meters should be able to communicate with smart appliances when they are created.  The following quote from the decision highlights the Maryland Commission’s stance that it will not expose its ratepayers to the risks of being an early adopter:

The field of modern technology is replete with examples of innovations once considered the leaders into a new era that were never widely adopted. All the federal funding in the world would not have made Sony’s Betamax a wise investment, for example. Those who invest in new technology as it becomes available often find themselves re-investing much sooner than they anticipated.

This view by the Maryland Commission begs a few questions: “What if all the states took that stance?  Would the smart grid and all its technological moving parts have an opportunity to mature and provide BGE’s ratepayers and the rest of us all the benefits of a modern electrical grid? Since smart meters will ultimately teach customers how to use less of BGE’s core product, electricity, doesn’t the very filing of the Proposal qualify as an investment by BGE?