BEFORE THE PUBLIC UTILITIES COMMISSION 
OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the	) 
Commission’s Proposed Policies	) 
Governing Restructuring California’s	)	R.94-04-031 
Electric Services Industry and	) 
Reforming Regulation	)

Order Instituting Investigation on the	) 
Commission’s Proposed Policies	) 
Governing Restructuring California’s	)	I.94-04-032 
Electric Services Industry and	) 
Reforming Regulation	)

Itron Comments on Report On June 5, 1997 Direct Access Workshop on Load Profiling

Submitted by

Barry E. Goodstadt, Ph.D.
Vice President

Itron, Inc.
2818 N. Sullivan Road
Spokane, WA  99216
Phone: 509-924-9900  Fax: 509-891-3355
and
P.O. Box 1160
Columbia, MD  21044
Phone:  410-884-9365  Fax:  410-884-9367
email:  barry.goodstadt@itron.com

June 30, 1997

Itron Comments on Report On June 5, 1997 Direct Access Workshop on Load Profiling

As an active a participant in the Load Profiling Workshop and in other elements of the CPUC proceeding, Itron wishes to bring to bear some additional perspectives on load profiling which have not as yet been expressed in the draft workshop report.  Itron’s comments can be summarized as follows:

1.  Along with a number of others, Itron concurs with the UDC position with respect to using existing load profiling rate categories, systems and procedures for the 1/1/98 implementation date. Itron believes that this approach will meet the objective for this near-term implementation date.

2.  It is Itron’s understanding that load profiling may be used for billing the energy credit component of consumers’ bills.  With respect to the use of load profiling for billing purposes, Itron believes that, over the long term, the CPUC and workshop participants will come to recognize that load profiling is an inadequate and unsatisfactory system for deriving consumers’ energy bills and that ultimately direct measurement systems will be required for such purposes.  As documented in earlier filings by Itron,  radio-based automated metering systems are preferred by consumers over load profiling as a means of  addressing billing and consumption measurement issues connected with direct access. Itron also believes that load profiling is an appropriate method for developing load forecasts and for settlement applications.

3.  While participants in the workshops have devoted considerable attention to examining various methods for improving the accuracy of load profiling methods, such methods will always prove to be inadequate with respect to making it possible for load profiling to be used in billing.  As a consequence any attention paid to segmentation will divert attention away from direct measurement approaches which, over the long term, represent the only effective way to satisfy consumer billing needs.  Itron also supports additional enhancements to load profiling for the purpose of improving load forecasting and increasing accuracy for settlement since load profiling is appropriate for such applications. 

1.	Itron Concurs with UDC Position with Respect to Using Existing Load Profiling Methods and Systems for 1998					

In light of the need for a near-term solution for measurement to support direct access, Itron supports the UDC position with regard to the use of existing load profiling methodologies, rate categories, load shapes and systems for initial rollout of direct access in January, 1998.  This expedient approach, Itron believes will be required for participants to be ready for direct access in time for the start date.  
2.  	Over the Long Term Load Profiling Will Prove to be an Inadequate Method For Addressing Consumer Billing Concerns					

Itron’s point of view with respect to load profiling is that load profiles are simply estimates of an individual’s usage pattern.  As is the case with any “estimate” it is subject to error with respect to predicting a particular customer’s actual usage pattern.  For the purposes of load forecasting, such estimation does not present problems because the load forecast, itself, is meant to predict aggregate demand.  Similarly, for settlement purposes, precise indicators of individual customer consumption patterns are not necessary.  Thus, for load forecasting and for settlement, load profiling can be quite appropriate.  For the purposes of billing, however, load profiles present a series of problems.

First, when using the load profile as an estimate of the shape of the load in order to determine a consumer’s energy credit on the bill, it is clear that any individual’s actual usage pattern will vary in some degree from that of the load profile.  As a consequence, any one individual’s bill will be skewed (i.e., will be in error) to the degree that their actual usage varies from that of the load profile.  Accordingly, a savvy consumer could legitimately dispute any bills which have the energy component developed on the basis of load profiles since the profile does not adequately reflect their actual usage.

Second, using load profiles as a mechanism for billing provides no incentives for consumers to shift load into less costly time periods and, as a consequence, does not encourage conservation and cost savings.

Third, as noted in an earlier Itron filing (see December 20, 1996 Comments of Itron, Inc. upon Issues Raised in Opinion Ordering Separation of Transmission from Distribution Costs and Requesting Comment on Related Items) consumers greatly prefer the direct measurement capability offered by automated meter reading systems over the group measurement methods provided by load profiling techniques.  Thus, if they were given a choice, consumers would much rather have their actual load shape  measured directly than have it estimated using data from a large group of other consumers. 

3.	Load Profiles are a Poor Substitute for  Direct Measurement in Billing Applications and Efforts to Enhance Load Profiling Techniques will Divert Attention Away from Implementation of Direct Measurement to Support Billing											

Several commenters have offered proposals for various ways to improve upon load profiling techniques.  For example, SPURR/REMAC suggests the development of non-standard load profiles on identifiable homogeneous groups or segments.  While segmentation methods such as those proposed are frequently used in market research and in forecasting, they will never fully address measurement concerns associated with obtaining accurate measures for assigning energy credits for individual customers.  In effect, in order for such segmentation to provide adequate accuracy, segments of “size one” are actually required.  Such segmentation down to a single customer is, of course, quite impractical. 

In its alternate proposal, the Office of Ratepayer Advocates (ORA) suggests the use of regression techniques which develop forecasting equations for each hour of the day and each season.  They suggest that this approach could assist ESPs with load forecasting and simplify audit requirements which would occur with extensive segmentation.  We agree that such a method is useful for forecasting purposes.  However, such procedures would not provide valid data for billing purposes and the entire issue of using regression methods to arrive at load profiles for billing should be questioned.  In ORA’s example in their proposal, they point out that their model has an R-Squared of .56.  In laymen’s terms, this means that the variables they have included in their model accounts for 56% of the variation in usage.  This, of course, means that 44% of the variation cannot be accounted for.  Such a level of model accuracy is useful for research purposes and for some forecasting applications, but could clearly not be precise enough for consumer billing.  While others may attempt to improve upon ORA’s regression model, Itron anticipates that limited gains are possible in this area and that the use of such inaccurate models to support the determination of elements which are incorporated into bills is quite inappropriate. 

It is Itron’s view that the refinement of various load profiling tools for use in load forecasting and in settlement applications is quite appropriate and efforts to refine load profiling techniques and tools for this purpose should be encouraged. 

Itron cautions, however, that the use of load tools to support billing of consumers is inappropriate. Furthermore, there is a danger that excessive attention to enhancing load profile with a view toward their use in billing applications will provide a diversion which will take attention away from the establishment of direct measurement methods which can be implemented on a cost-effective statewide basis using radio-based automated meter reading systems.  Such direct measurement systems are more appropriate for supporting billing and have the potential to provide direct access to all Californians at a reasonable cost. 

Respectfully submitted,

Itron, Inc.

By:										June 30, 1997
	Barry E. Goodstadt, Ph.D. 
	Vice President, Market Research
	P.O. Box 1160
	Columbia, MD 21044
 	(410)884-9365