NASUCA Resolution on Advanced Electric Metering and Advanced Electric Metering Infrastructure Principles 2009-01

THE NATIONAL ASSOCIATION OF

STATE UTILITY CONSUMER ADVOCATES

RESOLUTION 2009-01

ADVANCED ELECTRIC METERING AND ADVANCED ELECTRIC METERING INFRASTRUCTURE PRINCIPLES OF THE

NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES

Whereas, the National Association of State Utility Consumer Advocates (“NASUCA”) has an earnest and long-standing interest in issues and policies that affect electric customers, including issues and policies that involve new technologies, reliability of electricity service, and rates; and

Whereas, many states and utility service territories are considering implementation of or are actively implementing advanced electric meters with the goals of reducing operational costs, increasing efficiency, increasing electric reliability, collecting real-time information about electricity usage and providing such information to customers, reducing electricity usage at peak times, achieving environmental benefits, enabling dynamic pricing options, et al.; and

Whereas, the interests of the public as electric consumers are of paramount concern, since deployment of advanced electric meters is ultimately paid for by electric ratepayers and will affect their electricity usage, rates, bills, and equipment in their homes and businesses; and

Whereas, in this Resolution the terms “advanced meters” and “smart meters” shall refer to advanced metering infrastructure (“AMI”) that is composed of at least the following characteristics:

(i) the ability to measure and record electricity usage data on a time-differentiated basis in at least 24 separate time segments per day,

(ii) the ability to provide for the exchange of information between the electricity supplier or provider and the customer’s electric meter in support of time-based rates or other forms of demand response,

(iii) the ability to provide data to such supplier or provider so that the supplier or provider can provide energy usage information to customers electronically, and

(iv) the ability to provide for net metering where applicable.

NOW THEREFORE, NASUCA RESOLVES:

That NASUCA supports the following principles to ensure that any implementation of AMI by electric utilities includes appropriate policies and procedures and reduces or eliminates potential negative impacts on customers:

1. That prior to implementation of advanced meters, states should consider the requirements of Section 1307 of the Energy Security and Independence Act of 2007 (now codified at 16 United States Code § 2621).  States and utilities should also conduct a detailed analysis of the costs and benefits of a proposed advanced metering program and attendant rate design changes, if any, including but not limited to consideration of the following items:
   1. the bill impacts resulting from rate design changes, such as time-of-use and critical peak pricing rates, on different residential and business customer classes;
   2. the bill impacts or other effects on users in various usage and demographic profiles, including low-income consumers, elderly consumers, consumers with severe health conditions, and other consumers whose electric loads are relatively low or not easily shifted to off-peak times of the day;
   3. how the costs of additional equipment that would be necessary to be purchased or rented by individual ratepayers in order to participate in any voluntary or mandatory utility advanced metering program affects the cost-benefit analysis;
   4. how the costs of advanced metering included in rates are allocated among the various classes of customers served by the utility; and
   5. whether an advanced metering program may lead to a reduced need to build new peaking capacity or transmission and distribution infrastructure, or to environmental benefits through decreased fuel use, or may reduce the electricity bills of some customers through dynamic pricing options, or may create other system or consumer benefits that offset the costs paid by ratepayers;

The above consideration of costs and benefits should be done through an evidentiary proceeding before the appropriate state or municipal utility commission.

1. That since advanced metering is an evolving technology, states and utilities are encouraged to proceed with appropriate caution in ordering a widespread implementation of advanced meters, and to examine the experiences of other states.  To avoid customer frustration and/or stranded costs, it is important to carefully consider, before approving any deployment proposal: (i) whether the proposed  advanced metering product is or may soon become obsolete; (ii) whether the proposed advanced metering product has the required cost-effectiveness and functionality; and (iii) whether the advanced metering products or protocols are governed by national standards.  States and utilities are also encouraged to balance the risks inherent with deployment of this evolving technology against the cost of inaction on advanced metering, including failure to achieve potential reductions in energy use and/or capacity needs;
2. States and utilities are encouraged to consider the interaction of a proposed advanced metering program with broader “smart grid” measures that are associated with the distribution and transmission system (existing or proposed) to ensure, to the extent possible, that expectations of benefits of an advanced metering proposal are realized and the advanced meters do not become obsolete as smart grid infrastructure is introduced;
3. To determine costs and benefits of a proposed advanced metering program to a geographically targeted area, states and utilities are encouraged, prior to widespread implementation of advanced meters, to consider running a pilot program that is properly designed and includes independent evaluation.  States and utilities are also encouraged to design a pilot program to ensure accurate representation of the whole customer base in the relevant territory.
   [1]  It is essential to provide to potential pilot participants an accurate description of how their homes and businesses will be affected and a thorough description of the goals and operations of the pilot.  In the absence of a pilot, states and utilities are encouraged to use caution in relying on data about the costs and benefits of advanced metering in other states, nations and service territories, as differences in demographics, climate, appliance penetration or other characteristics could lead to dissimilar results;
4. That utilities should be expected to implement any advanced metering program with prudence and collect at most only the net costs in rates,[2] and any cost overruns, benefit shortfalls, or other negative impacts arising from the failure of a utility to implement an advanced metering program in a prudent way should remain the responsibility of utility shareholders, not ratepayers.  For example, but not by way of limitation, if a utility imprudently deploys advanced meters and associated technologies that become prematurely obsolete, the ratepayers should not pay the resulting stranded costs.  Prior to recovery by the utility of costs associated with an advanced metering program, the state or municipal utility commission should conduct a regulatory review or audit to ensure that such costs were prudently incurred;
5. That states and utilities are encouraged to analyze the interaction of proposed advanced metering programs with demand response measures and rate design to determine whether any proposed new infrastructure or program is the most cost-effective way to achieve the stated goals.  In particular, but not by way of limitation, States and utilities should be encouraged to consider whether some of the goals expected to be achieved through implementing advanced meters, such as reductions in overall peak electricity loads or in energy usage, could be (or already are being) accomplished at low net cost to ratepayers in the aggregate through rate design measures such as inclining block rates, or through direct load control programs, such as those that offer customers value for interrupting central air conditioning or heat pumps during critical peak hours;
6. That the implementation of advanced metering should not lead to mandatory or “opt-out” dynamic pricing of electricity usage for residential and small commercial customers.  Residential customers and small commercial customers should continue to be provided electricity under existing rate designs unless they affirmatively choose to receive dynamic prices that use smaller time increments, such as time-of-use rates or hourly pricing.  Similarly, a customer should not be required to cycle off an air conditioner or other appliance in exchange for a bill credit unless the customer affirmatively chooses to be part of such a program.
7. That States and utilities should not be permitted to use advanced meters as a means for reducing consumer protections with regard to electric service in general and termination procedures in particular.  The notices and warnings that typically are required prior to service termination provide important protections for low-income and other vulnerable customers and often avoid negative consequences, from misunderstandings to tragedies.  Because utility systems, including billing systems, remain imperfect, States should consider increasing consumer protections regarding service terminations as part of the implementation of advanced metering to ensure that mistaken terminations and the attendant risks and hardships do not occur.  This issue is of particular concern on weekends, holidays, and during severe weather conditions, when utility service personnel may not be immediately available to correct a mistaken termination;
8. The implementation of advanced metering should also not be used to degrade existing consumer protections in the area of prepayment.  The implementation of advanced metering should not lead to new requirements for prepayment of electric service;
9. That any implementation of advanced meters should be administered through specific policies and programs that meet Federal and applicable standards for cybersecurity and protect the privacy of customer usage information, both with respect to usage data derived by the utility for customer billing and information obtained concerning a customer’s specific usage of electricity; and
10. That any advanced metering program or pilot must be accompanied by a vigorous education and outreach effort to ensure, at a minimum, that participating and non-participating customers are aware of the projected goals and impacts of the program, that participating customers will understand how to utilize equipment provided by the utility and how the deployment would affect them, and to address concerns about privacy of customer usage information.

BE IT FURTHER RESOLVED that NASUCA authorizes its Executive Committee to develop specific positions and to take appropriate actions consistent with the terms of this resolution.  The Executive Committee shall advise the membership of any proposed action prior to taking such action, if possible.  In any event, the Executive Committee shall notify the membership of any action taken pursuant to the resolution

Approved by NASUCA

Boston, MA

June _30__, 2009