Date: Thu, 27 Jun 1996 15:59:47 EDT
From: George M. Samaniego 
To: seancasey@cpuc.ca.gov
Subject: UNIVERSAL METERING WRITE-UP FOR DRA Web Site


Please post on DAWG Web Site.  Thanks.


         UNIVERSAL METERING WRITE-UP FOR DAWG
              REPORT D:  SECTION 2.9
              REPORT A:  SECTION 4.7

Proposition:  As a matter of State of California policy, hourly interval meters
should be made available to all electricity consumers in the state.


Argument For Universal Access:

Traditional utility obligations-to-serve included universal service at
reasonable cost.  The utility would plan resource acquisitions, connect
customers to utility service, and provide all billing functions.  The future
electricity market is fundamentally different.  The utility obligation is to
connect customers to the marketplace; all other energy related services can be
provided by non-utility providers.

In the future world customers will be able to choose between three fundamental
options.  First, residential customers may initially choose to take default
utility service with prices averaged over the billing cycle.  Secondly,
customers may choose to purchase energy hourly from the competitive market
(Power Exchange).  Third, end-users may choose to financially hedge the
volatility of the spot market price by agreeing to a contract with pricing
terms providing an acceptable amount of price certainty.  These may be in the
form of a purely financial instrument, such as a contract-for-differences, or
through a bilateral deal with a generator/broker/marketer in which a scheduling
coordinator is utilized.  The scheduling coordinator may be one of the two
principals to the contract, or a truly third party in the contract.

True customer choice in this world, one with all possible choices, requires an
hourly interval meter.  The absence of the meter relegates such customers to
second tier status.  There are proposals to create some form of choice for
these customers through multiple load profiles and other inefficient pricing
mechanisms.  However, these remain artificial substitutes for true customer
choice with efficient pricing.

Just as universal service in California traditionally meant that all customers
would receive service as a matter of policy, the state should again announce
its policy that universal service remains a fundamental policy, and that only
through universal deployment of hourly interval metering and communications
technology can the new form of universal service be achieved.

It is also true that the cost for implementing universal hourly interval
metering and communications is substantially less than fitting each meter
separately.  In fact, entirely different technology would be used for a
universal deployment instead of point-by-point deployment.  For residential
deployment only a universal system makes economic sense.  The cost is in the
neighborhood of $700 per unit for an individual meter and phone connection as
compared to perhaps $100 per unit for universal deployment using a network






system with todays technology.  Only this approach holds any prospect for
cost-effective deployment.  If the state announced its policy for such an
approach then several firms would likely become interested enough to more
aggressively pursue this option improving the possibility of further
technological and cost breakthroughs.

One of the benefits of a universal system is that many operational savings
occur.  For example, a universally deployed system would include automatic
meter reading (AMR).  The savings from this will vary by meter reading route,
but may average around $70 per unit.  This alone brings the cost of universal
metering closer to $30 than $100.  There are also system benefits from
universal metering such as planning upgrades to the distribution network.


Argument Against:

Universal hourly interval metering is simply too costly to pursue at this
time.

Universal hourly interval metering may result in some customers paying higher
bills for their electric services as time differentiated rates become a
reality.

Customers may not want to use hourly interval meters.

Billing system hardware does not allow for processing all of this information
on a system-wide basis.



dawgbmt2.doc/mmm/SDG&E/6-27-96

----------------------------------------------------------
George M. Samaniego - Distribution Management & Strategies
Principal Engineer, X8266, PINS SAMANIEG, Mail CP5203A