AMI Comes to PGE Territory

In our most recent article regarding the PGE rate case now in progress, we mentioned many items of disagreement between ourselves and the Company, costs we felt weren’t justified or should be trimmed. One item we discussed at some length in our Surrebuttal, but didn’t bring up in our blog on the topic, was advanced metering infrastructure, or AMI. We didn’t discuss it there, not because it wasn’t important, but because we felt it was important enough to merit a discussion of its own.

CUB had opposed the approval of PGE’s AMI project, which requires replacing a previous round of advanced meters, and a great many old-fashioned meters, on the grounds that we felt the technology would keep improving, the time wasn’t right for another major capital investment, and projected cost savings might not materialize for customers. Many of our concerns are still valid, in the wake of the PUC’s approval of the new AMI for PGE’s service territory. But the new meters are already being installed, in a test area in SE Portland. All PGE customers can expect to see their old meters replaced with new AMI meters within the next 2 years.

CUB Executive Director Bob Jenks lives in SE Portland and was among the first to have his meter replaced. The letter that accompanied the service call claims that PGE customers can “anticipate savings of $18 million per year” with the new advanced meters. Bob has analyzed the numbers and says this claim is dishonest. First off, the amount spent on installing the meters is expected to reach $180 million over 20 years. Total net savings over 20 years, taking into account the cost, is expected to be $35 million. This would make actual expected savings, if all goes according to plan, $1.5 million per year.

But we have a few concerns even about whether this savings will be fully achieved. This is the second attempt PGE has made to shift to AMI. In 2001, PGE got approval to begin installing them, but now is abandoning those meters and replacing them with newer advanced meters. We wonder whether they will “get it right” this time, or whether customers will have to pay to replace this system in a few years. Also, in PGE’s rate case, approximately $8 million of initial costs originally attributed to this project have been removed from recent accounting, and so we question the validity of their cost analysis. Furthermore, customers of NW Natural will be paying higher costs due to the end of the joint meter reading project which was in place before PGE decided to pursue AMI; many of those NW Natural customers who will absorb the slightly higher cost of their meter reading in future are also PGE customers. Finally, there is the issue of possible damage to meter bases, with associated repair costs, in the meter changeover.

The system for which electricity companies claim responsibility goes from generation to distribution and right up to the meter that measures usage for individual residences. But there it ends. If, in the course of installing the new meter at your house, the meter base sustains some damage and requires repair, that cost is your responsibility. PGE will have repair people ready to go upon authorization of the repair, and will even help you finance the cost of the repair with monthly payments, but the cost (estimated to be at least $100-$400) is still customers’ to bear. Now, this cost will not be incurred for the majority of customers. Bob’s new meter was installed without any difficulty and most people will probably find that their new meter goes in without a problem, as well. However, for those whose meter base does break in installation, they face this unexpected cost and a potential interruption in electricity service, if PGE is not able to reach them immediately to authorize repair.

CUB is particularly concerned with how this potential financial burden will affect low-income customers. A meter base repair costing a few hundred dollars would inconvenience many folks, but for low-income customers, it could be a real hardship. PGE has acknowledged the need to develop a plan to assist low-income customers in the event they are hit with a necessary meter base repair, and two months ago, the Company promised it would develop such a plan. Earlier this week, an update sent to CUB on the installations made no mention of the low-income assistance plan. We will not let them off the hook on developing one, and soon.

All of these downsides having been mentioned, CUB will acknowledge that smart meters, as AMI is sometimes known, does offer potential advantages. Smart meters can do several things: Most obviously, they reduce the ongoing costs of meter reading, but this cost decrease must be balanced against the cost of installation (which is what PGE failed to do when claiming savings of $18 million).

Smart meters can make it easy to do real-time pricing, which charges customers more at times of peak usage, such as in the early evening. CUB doesn’t support this kind of peak pricing, because it can get very expensive (customers in California have been charged as much as 40 cents per kilowatt hour for electricity at peak times), and many people do not have the flexibility in their schedules to run the dishwasher in the middle of the day or the washing machine only late at night.

Finally, and this is where CUB sees the most promise for smart meters, they can enable smart technology in appliances to automatically start processes like dishwashing or clothes washing, or even hybrid car charging, at times when demand on the system is low. It could conceivably even send information back into the grid, so that when temperatures heat up, and an entire area turns up their air conditioners at once, the smart appliance air conditioners can cycle on and off, keeping people cool but also making sure that everyone’s air conditioner doesn’t run at the same time. This takes the burden off of busy families who aren’t then expected to rearrange their electricity usage according to peak hours, and at the same time, reduces the burden of peak electricity on our system.

Leveling out the high peaks of electricity demand is called flattening the load, and it is a good thing to do for several reasons: 1) it’s less expensive for electricity customers as a group; 2) it puts less strain on the electricity grid, meaning less risk of a “brownout” or even “blackout”; and 3) it reduces the amount of extra power, often more expensive and more “dirty,” that the utility has to generate or purchase at peak times.

CUB would have liked to see PGE wait until more smart appliance technology was available to be working in concert with the smart meters they wanted to purchase and install. We were overruled. So this is what you can expect with the advanced meter infrastructure - the good, the bad, and the possible.

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