TO: DIRECT ACCESS WORKING GROUP
Sub-Group "C"
Metering & Communications
Prepared By: Nancy I. Day, New Energy Ventures, Inc.
newev@newenergy.com
Phone: 818-666-0900, Fax: 818-666-0900
To date, several parties have advocated positions regarding meter ownership and control of customer information. The purpose of this paper is to combine those positions with my own in a matrix form to illuminate the issues and the arguments.
ISSUE STATEMENT: Historically UDC's have controlled the meter that measures electricity sales. This control included the following: technical specification, bulk purchase, storage, installation, testing and periodic replacement. The information measured by the meter was periodically gathered by the UDC and used for a number of business purposes including billing, system design, resource planning, marketing, research & development and other business functions. In certain instances the CPUC required customers to reimburse the UDC for the cost of specialized meters (e.g., TOU meters, real-time meters for non-core natural gas customers) but the UDC still retained meter ownership and control. Since the traditional UDC monopoly is being unbundled to permit greater competition, now is the time to determine whether a change in UDC monopoly ownership and control of meters and customer information is consistent with the new electric industry structure. Safeguards are needed to ensure that monpoly control of meter deployment and information does not restrain competition.
Interval meters are required for customers who wish to purchase electricity on a real-time basis either through direct access to competitive generation or through virtual direct access UDC service. (An exception to this requirement may be permitted for certain customers groups whose energy use is reliably characterized by profile.) Since all utility customers are not likely to want direct access or virtual direct access service on the first day of eligibility, the installation of interval meters will occur over an extended period of time and in a geographically dispersed manner. There could be exceptions to this transition if, for example, entire communities are aggregated for purpose of direct access purchases, or a new development is constructed and the UDC or the developer elects to install interval meters instead of the old-style displacement meters. Even UDC periodic meter replacement programs do not involve geographically contiguous areas and therefore, perpetuation of that system as a means to update the meter stock with interval meters will not result in service area saturation in the near term. One UDC favors a State policy requiring the installation of interval meters and proposes to replace all of the meters in its service area within the next two years. This issue is integral to the discussion of meter ownership because gradual replacement of the meter stock may make one ownership option more cost-effective than another.
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| Interval meters are required for customers who wish to purchase electricity on a real-time basis. | UDC's can purchase meters in large quantities and pass the savings on to the customers in the form of lower rates. | INFOCO could obtain the same economies of scale as the UDC because it would be purchasing for the entire State. | Interval meters are available in the market today from a variety of competing suppliers. Furtherance of competition in the electric services industry requires that customers be given the choice of meter and metering capabilities that suit their energy use needs. The demand for these meters will be a product of the costs and the benefits as determined by each customer. As the demand grows, the meter costs and benefits will be driven by market forces not a perpetuation of inefficient monopoly practices. |
| Accurate information is essential to permit billing for services by the UDC, ISO, PX, and retailers. | The CPUC must establish the minimum standards for energy measurement and communication system architecture. Only systems certified as meeting these minimum standards would meeting the CPUC's interval meter standard. | Same as UDC. However, an INFOCO, providing information management services for a larger base of clients than a single UDC, could produce even greater economies of scale than the UDC. | Same as UDC. Customers and retailers are concerned that UDC's (and their service providers) will extract monopoly rents for customers to acquire their information. In addition, the value of the customers' information should accrue to the customers' benefit. An INFOCO could market aggregated customer information and flow the revenues back to the INFOCO subscribers in the form of lower subscription rates. UDC's must not be permitted to channel revenues from the monopoly business (energy measurement and information management) into unregulated affiliates. |
| Customer safety and electric system integrity must be assured. | Only qualified individuals my install electric meters in accordance with CPUC minimum standards. Authorized parties (UDC or licensed meter inspector) must be allowed access to the meter for legitimate purposes. | Same as UDC. | Same as UDC. |
| Access to customer information is required for development of competitive markets and pursuit of informed customer choice. | UDC's maintain monopoly control of customer information by virtue of their ownership and control of the meter. CPUC regulation requires UDC's to "separate" competitive enterprises from their regulated business to eliminate the potential for market abuses and cross-subsidies. However, the revolving door moving personnel from regulated to non-regulated UDC business and back effectively precludes the CPUC from enforcing these prohibitions. | A totally separate but regulated INFOCO would eliminate the potential for UDC market abuses and permit equal access to information based on CPUC established protocol. Greater system efficiency would result by operating a system available to all subscribers across the State (e.g., IOU's, Munis, customers, retailers, regulators, etc.). | Eliminating UDC monopoly control of customer information is essential to mitigate the unfair market power they (and their affiliates) enjoy. An unregulated INFOCO or multiple INFOCO's, open to all subscribers on equal terms and conditions, is favored over the creation of another monopoly service. History has shown that regulation is an imperfect substitute for competition. The INFOCO services should be subject to competitive bid and the result will be high quality, customer-responsive services. |