BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 441|
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THIRD READING
Bill No: SB 441
Author: Soto (D)
Amended: 5/3/05
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 7-2, 4/19/05
AYES: Escutia, Alarcon, Battin, Bowen, Dunn, Kehoe,
Simitian
NOES: Morrow, Cox
NO VOTE RECORDED: Campbell, Murray
SUBJECT : Electricity: rates: advanced metering
infrastructure
SOURCE : The Utility Reform Network
DIGEST : This bill prohibits the Public Utilities
Commission from requiring the installation of advanced
metering infrastructure for specified buildings unless
certain findings are made and prohibits specified customers
from being placed on a default time-differentiated rate
schedule without the customer's consent.
ANALYSIS :
Existing law:
1. Requires the Public Utilities Commission (PUC) to set
the rates (tariffs) charged to customers of
investor-owned utilities (IOUs).
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2. Requires the PUC to conduct pilot studies of real-time
metering, which authorize the PUC to adopt real-time
pricing tariffs.
3. Requires certain customers using distributed energy
resources to participate in a real-time metering and
pricing program, when available, in which rates for any
energy purchased from the IOU reflect the actual cost to
purchase the energy at the time it is consumed by the
customer.
This bill prohibits the PUC from requiring the installation
of advanced metering infrastructure (AMI), as defined, for
any building constructed prior to January 1, 2006, and
occupied by a customer with an average usage of less than
1,000 kilowatts per moth, unless it first finds that the
installation will save each customer class more than it
will cost. The findings must be at a public hearing and
based upon the evidence presented at the public hearing.
The bill prohibits the PUC from placing on a default
time-differentiated rate schedule, or other rate schedule
using AMI, any customer with average annual usage of less
than 1,000 kilowatts per month and occupying a building
constructed prior to January 1, 2006, unless the customer's
affirmative consent, in writing, is obtained.
This bill defines "advanced metering infrastructure" to
mean interval data recording meters, along with two-way
communications and any other equipment necessary for the
installation and operation of the meters.
Background
The value and price of electricity varies by time of day
and season. Consumption of electricity is much lower at
4:00 a.m. than it is at 4:00 p.m. and so is the price.
Traditional mechanical meters record the total amount of
electricity consumed between readings, but do not record
actual consumption patterns (temporal data). Time-of-use
(TOU) or real-time meters measure energy as it is being
used, providing an exact reading of how much energy was
used at any given time.
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Time-differentiated pricing (TDP) refers to a system in
which customers pay their utility's actual cost of
purchasing electricity at the time it is consumed. To
accomplish this, customers must have real-time meters and
the utility must have communications equipment to read the
meters and tariffs to bill its customers at real-time
rates. Collectively, this constitutes "AMI."
TDP contrasts with the current rate system used by most
residential customers, in which electricity consumption is
recorded on a gross monthly basis and customers are billed
at rates which reflect the system average cost of
electricity, regardless of whether the individual customer
consumed it during periods of high or low demand.
TDP may also differ from TOU rates, currently used by
commercial, industrial and agricultural customers, as well
as a small number of residential customers. TOU rates
establish two or three different prices for different times
of the day, and different rates for different seasons, but
do not reflect actual, day-to-day variations in demand and
price, which can be significant.
TDP exposes customers to market price signals and gives
them reason to respond to those signals, e.g. by using less
electricity at times of peak demand, and more at times of
low demand. The absence of price-responsive demand
associated with fixed retail rates has been cited as a
contributor to spiking wholesale prices. TDP supporters
believe it will result in reduced demand during peak
periods and empower customers to collectively mitigate
supplier market power by curtailing use when wholesale
prices spike. Actual customer response to TDP has not been
widely tested. Implementation of TDP for customers of the
IOUs requires installation of AMI at significant cost to
ratepayers.
According to The Utility Reform Network (TURN), sponsor of
this bill, the PUC is currently considering authorizing or
requiring IOUs to install AMI for their customers,
including all existing residential and small commercial
customers, regardless of their size or location. The IOUs
have requested to spend $120 million in 2005 for AMI. The
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entire statewide cost of AMI installation is estimated at
several billion dollars. The PUC has not conducted any
evidentiary hearings to determine whether universal
deployment of AMI for small customers will be
cost-effective for ratepayers. The claimed benefits of AMI
include operational benefits, such as outage detection and
reduced meter reading costs, as well as reduced costs of
generation due to shifting of peak load. The claimed
operational benefits alone have not been sufficient to
justify the costs of AMI, and may be achievable through
cheaper technologies. Further, residential peak load
reductions may be achievable more cost-effectively and
reliably through direct load control programs, appliance
efficiency standards and conservation measures. The PUC
has not examined these questions in an evidentiary hearing.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/18/05)
The Utility Reform Network (source)
Coalition of California Utility Employees
OPPOSITION : (Verified 5/18/05)
California Manufacturers and Technology Association
Pacific Gas and Electric Company
Sempra Energy
NC:mel 5/18/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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