A Proposal for

The Ultimate Deployment of Metering and Communication Systems

Draft, 7/17/96

Anthony Mazy, CPUC

Developing any position on the ownership and control of metering and communications systems has proved elusive. This problem may arise from the novelty of the present situation, the mutual assumption of utilities and aspiring power marketers alike that ownership of the system leads to rich marketing opportunities, or an assumption that only a few large questions need be decided, posing large opportunities and threats to all involved.

In making the suggestions which follow below, the following critical assumptions are incorporated:

1. Automated Metering and Communications (M&C) systems are now practical and offer both substantial cost savings over traditional methods of metering and billing and promise increased productivity from synergetic opportunities, and should be implemented to an appropriate degree without undue delay.
2. The is a significant public interest in the functionality of M&C Systems, since Customers have no choice but to take Electric Service under generally reasonable terms and depend upon the reliability, security, and efficiency of those systems as owned and operated by others.
3. There is no substantial public interest in the ownership or operational control of M&C systems, unless that ownership or control unreasonably impedes competition or creates an expectation of revenue entitlement; hence, a reasonable bias exists against public utility ownership or control of any facility which can be effectively and efficiently owned and/or controlled by others.
4. While some of the emerging power marketing enterprises may have the organizational and financial means to build or own, or otherwise manage implementation of, large-scale M&C systems, this is far from certain; it is also far from certain how to universally determine such capability. Thus, as an institution, power marketers are likely a poor choice to build or own, or control the implementation of, large-scale M&C systems.
5. Existing utilities clearly have the organizational and financial means (lacking only a clear mandate) to manage the implementation of large-scale M&C systems, and thus could be good choices to do so.
6. Utilities are unlikely to build or own any M&C systems themselves, but to contract with an M&C firm to provide service, with the M&C firm actually building, and retaining ownership of, the facilities.
7. M&C systems are inherently and intimately associated with Marketing functions (service specifications, pricing signals, evidence of delivery, and customer communications); hence, a reasonable bias should exist towards locating, if not ownership, then at least, control of these systems within the sphere of influence of legitimate marketing enterprises.

1. Let the initial deployment of M&C systems (most likely, but not necessarily, by utilities) proceed, consistent with any master plan and/or specifications which may be developed, provided that the M&C service must be configured in such a way that it is portable, and costs allocable, at the customer level;
2. The M&C service must be redirectable, at the head-end, and for data at the customer-account level, to any appropriate data site specified by the customer's ESP; and
3. Any subsequent, customer-selected ESP is to enjoy the option of buying out that customer's-portion of the M&C service, at cost, from the previous ESP; no one should incur any additional stranded costs.