A divided California Public Utilities Commission (CPUC) approved Southern California Gas Co.’s (SoCalGas) billion-dollar multi-year proposal for installing more than five million advanced meter systems in its service territory. It is the last of the major private-sector utilities in the state to gain CPUC approval in what is a statewide effort costing $5 billion and involving more than 20 million so-called “smart” electric and natural gas meters.

A CPUC administrative law judge (ALJ) in the case recommended that the regulators’ reject the Sempra Energy gas-only utility proposal for shifting to an advanced meter infrastructure (AMI), contending it was not cost-effective or of sufficient benefit to consumers. The focus of contention appeared to be related to how many real economic advantages there are in installing sophisticated meters in gas-only utility systems.

Making the tie-breaking third vote, CPUC President Michael Peevey said he thought that the ALJ’s estimates on the projected long-term savings were too low and that the regulatory panel needs to “expand its vision for AMI to gas customers.”

Commenting that most of the emphasis for AMI is focused on the electrical sector in demand response efforts, Peevey said the decision helped expand that focus to the natural gas sector, noting that once SoCalGas customers are educated on the capabilities of the advanced meters there is the potential for reducing the utility’s overall demand by at least 1%, or a potential $148 million savings for its ratepayers, and Peevey considers that a “low” estimate.

A utility consumer group, The Utility Reform Network (TURN) urged the CPUC to delay acting on the SoCalGas request, which the group has strongly opposed, until the regulators next meeting (April 22) in Los Angeles where the gas utility is headquartered. “The commission should have welcomed the opportunity to hear directly from Southern California customers before imposing $1 billion in excess rates,” said TURN Executive Director Mark Toney.

Noting that in the recent past the CPUC has authorized AMI efforts for the three other major utilities (Pacific Gas and Electric Co., Southern California Edison Co. and San Diego Gas and Electric Co.), Commissioner Dian Grueneich said the SoCalGas advanced metering effort is “consistent with several of the state’s energy objectives” and provides “reasonable assurances” the effort can be cost-effective. However, the decision made some modifications and added some safeguards in the utility’s proposal, including more stringent cost protections and requirements for consumer education ahead of the new meters’ deployment.

Nevertheless, commissioners John Bohn and Nancy Ryan voted against the proposal, with Bohn contending that the program “just does not pencil out.” While calling it an “extremely close call,” Ryan said that she doesn’t think SoCalGas’ program meets the CPUC-mandated cost-benefit test as the earlier electricity-driven metering efforts did.

Ryan called the energy saving projections by the gas-only utility “highly speculative.”

In reacting to the CPUC authorization to spend up to $1.05 billion on the new meters between now and the end of 2017, SoCalGas COO Anne Shen Smith said the new meters will give the gas utility customers “the same kind of timely information that they get from their banks, cell phone companies and other utilities.”

Smith said that the full implementation of the new metering system will result in lower operating costs, which she noted will translate into lower rates.

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