BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 441
                                                                  Page  1

          Date of Hearing:   August 17, 2005

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                   Judy Chu, Chair

                     SB 441 (Soto) - As Amended:  July 12, 2005 

          Policy Committee:                              UtilitiesVote:8-2

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill prohibits the Public Utilities Commission (PUC) from  
          requiring the installation of advanced metering infrastructure  
          (AMI) in buildings constructed prior to January 1, 2006 with  
          annual average usage of less than 1,000 kw per month prior to  
          evaluating:

          1)The effect, for every year of repayment for AMI costs, on  
            average annual electric rates for residential and small  
            commercial customers. 

          2)Impacts of any proposed time-differentiated rates on  
            residential customers in hot climate zones. 

          3)The amount of peak-load reduction with AMI compared with other  
            demand reduction alternatives. 

          4)The cost effectiveness of AMI deployment in selected portions  
            of an electrical corporation's service area compared to  
            deployment throughout the entire service area.

           FISCAL EFFECT  

          The PUC indicates the bill is consistent with activities already  
          underway and that any costs can therefore be absorbed within  
          existing resources.

           COMMENTS  

           Background and Purpose  . AMI is the infrastructure that allows  
          utilities to measure customer usage on a real-time basis and to  
          read customers' meters remotely.  Current residential and small  








                                                                  SB 441
                                                                  Page  2

          commercial customer meters only measure the gross amount of  
          electricity used and not usage based on time of day. This makes  
          it difficult to implement different pricing strategies intended  
          to reduce peak demand.  AMI includes real-time meters and the  
          utility's communications equipment that remotely reads the  
          meters to bill customers based on their time of use.  

          The installation of AMI is intended to assist the utilities with  
          reducing peak demand by permitting them to charge a different  
          retail price to reflect the utility's actual wholesale cost of  
          electricity.  According to the PUC, AMI can reduce  
          administrative costs, through increased automation, by linking  
          the meter-reading and billing procedures. 

          Over the past two years, the California Energy Commission (CEC),  
          the PUC, and the utilities conducted a pilot project that tested  
          different types of pricing programs to identify the most  
          effective program for reducing demand for residential and small  
          commercial customers during peak periods. The PUC subsequently  
          issued directives for the investor-owned utilities (electrical  
          corporations) to establish comprehensive time-of-use tariffs and  
          metering programs in order to reduce peak load energy demand.  
          The PUC is currently reviewing the merits of these proposals and  
          evaluating the effectiveness of each option in an ongoing  
          proceeding, which includes public evidentiary hearings.

          The previous version of this bill would have prohibited the PUC  
          from requiring AMI installation for residential and small  
          commercial customers unless it was deemed feasible, and  
          prohibited an electrical corporation from placing a time-of-use  
          schedule on such customers without their consent. The bill was  
          amended to instead require the PUC to first examine the specific  
          factors listed in this analysis summary prior to requiring AMI  
          installation.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081