PG&E's SmartMeters Go Over Budget

In 2002, the California Public Utilities Commission (CPUC) directed the state's utilities to come up with a program to decrease usage during high demand periods. The idea was to utilize digital and communication technology to create a flexible network that could respond to demand instantaneously.

The original plan proposed by PG&E in 2006 to address this directive does not resemble the SmartMeter program that is currently being deployed.

According to the original decision filed at the CPUC, the proposal approved by the CPUC in July 2006 was for a $1.68 billion retrofit of the current system (with an additional $49 million in predeployment costs and $129 million in contingency). Communications modules would simply be added to existing meters and the data would be transmitted back through electric wires. Most meters would not have to be fully replaced.

It was not until March 2009 (after over 250,000 of the original communications devices had been installed in the Bakersfield area), that the CPUC approved an upgrade to the two-way, wireless communication system that is currently being installed. The final approval was for PG&E to spend approximately $2.2 billion to install the new SmartMeters.

Read about the Smart Meters work here.

PG&E announced in its most recent report to the CPUC that it was forecasting the Smart Meter deployment would go $136 million over budget. Of the first $100 million over budget, the utility is allowed to seek 90 percent of that from ratepayers, with the remainder coming from shareholders. For the additional $36 million, PG&E will have to make a case to the CPUC.

The Utility Reform Network (TURN), the state Division of Ratepayer Advocates, and the City and County of San Francisco all opposed the Smart Meter upgrade in official CPUC documents and requested that it be rejected, largely because they said it was not cost-effective.

“That was what most of the fight we had was about,” said TURN attorney Marcel Hawiger, who worked on the original decision.

PG&E argued in its CPUC applications that the costs of the deployment would be offset within 20 years by savings. The biggest savings the company claimed in its original proposal was $86.2 million annually in meter reader costs. 

A PG&E meter reader in Northern California, who did not want to be identified, said that although the number of meter readers has decreased, the annual budget for meter readers has gone up, because so many of them have to work overtime. With fewer meter readers and some areas having Smart Meters installed while others don’t, the remaining meter readers have had to pick up additional routes or parts of routes and are working far longer hours.

Jeff Smith, communications manager for PG&E, said they could not comment on the number of meter readers in the state, except to note that 80 percent of full-time meter readers have been offered other positions in the company. 

Other savings, in the final CPUC decision, included $18.6 million annually in billing costs, $11.5 million in turn-on and shut-off costs, and $2.7 million in customer contact costs.

“That was my favorite,” said Hawiger. “We’ll save money, because people won’t call us.”

At the heart of the arguments from the consumer advocate groups was a debate over how much the utility would save once it was able to implement demand response pricing – meaning when demand for electricity was higher, prices would go up, encouraging people to shift their usage to periods of time where demand was lower.

In the upgrade proposal approved in 2009, PG&E claims it will save just under $900,000 annually because of energy conservation and demand response benefits.

The CPUC has approved additional costs for PG&E to implement demand pricing, including around $20 million for marketing, education and outreach. There are a number of programs customers can opt into currently, including a critical peak pricing program that allows customers lower rates on non-peak days in exchange for drastically increased rates on certain peak usage days, which customers would be notified were occurring. Read about more pricing plan options in the works.

The CPUC also approved on May 5 PG&E’s general rate case for the next three years. The rate case approved a $395 million increase in revenues allowed for PG&E in 2011 and an additional $180 million increase in revenues in 2012 and 2013. PG&E had originally requested a $1 billion increase for 2011 and $300 million in 2012 and 2013.

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The number of inaccurate meters may be higher than previously reported, according to documents provided by Patch. 

Despite assurances from PG&E that the highest security standards are being upheld on the wireless data and that .

Stop Smart Meters – an activist organization – will be staging a protest outside the PG&E headquarters in San Francisco tomorrow, May 20, at 11:30 a.m. 

“This program was launched with virtually no prior testing on the human health effects of powerful pulsed radiation into people’s living areas. Now that thousands of Californians are reporting strikingly similar symptoms, including headaches, nausea, heart palpitations and tinnitus, the utilities along with state and federal governments are refusing to act in the public interest,” said Joshua Hart, director of Stop Smart Meters.

Because of concerns about the wireless aspect of the system, . , which has not yet been considered by the CPUC, included charged $135 to $270 to have an employee turn off the meter, plus a $14 to $20 monthly fee to keep it off. PG&E would also charge customers an exit fee when they terminate service, to turn the meter back on for future customers.

A number of towns and municipalities, including the County of Marin, have , as well, though PG&E has said, repeatedly, that they are governed exclusively by the CPUC and that municipalities have no jurisdiction. The Marin County Sheriff agreed and said he would not enforce the ban.

Fairfax renewed  for another year at its May 4 town council meeting. PG&E has voluntarily delayed installation in Fairfax, with only a few hundred meters being deployed but not turned on, until educational events could be held. .

“In the meantime, they are continuing to install Smart Meters [around the state], so there really is no other protections, other than if we continue our moratorium,” said Fairfax Mayor Larry Bragman.

Mark Toney, executive director of TURN, said that the main concern is not supposed health effects from wireless radiation, but the health consequences of meters being turned off or from people being unable to afford their bills at the increased rates during peak usage times, which typically come on extremely hot days.

“More people have died because of shut-off related issues than from San Bruno,” said Toney.

One of the benefits touted about the Smart Meter program was the ability for PG&E to turn on and off meters remotely, without having to send expensive crews out, and for the utility to know when power outages occurred. However, the ease with which meters could be turned off resulted in a 69 percent increase in disconnections for low-income customers from September 2008 to August 2009.

Toney said TURN, then, worked to implement consumer protections and decreasing that number of turn-offs.

As of May 11, just under 8 million of PG&E’s Smart Meters had been installed. The utility is aiming to have 10 million total gas and electric meters installed by mid-2012.

With the majority of meters deployed, Toney said the focus now should be on issues such as meters being turn off and the potential for drastically increased rates on hot days.

“We fought the fight [of stopping the meters] and we lost,” he said.