Following Thursday’s state regulatory approval, Pacific Gas and Electric Co. customers will be the first in the state to have time-of-use pricing options on a widespread basis under the five-year, $1.7 billion smart metering system the utility now has the authorization to begin implementing. In contrast, Southern California Edison Co. customers will probably have to wait up to two years for similar options, but when they get them Edison hopes they will get a broader array of user-friendly options they can build onto their smart meters.

Different philosophies and different approaches — both involving millions of meters and hundreds of millions of dollars — but the head of the California Public Utilities Commission (CPUC) and a former president and board member at Edison, Michael Peevey, Thursday left no doubt which approach he favors. He and his colleagues on the commission praised PG&E, and Peevey scolded Edison — again — for “lagging” among the major utilities in terms of bringing a comprehensive change-out proposal for new meters to the CPUC.

PG&E’s Senior Vice President for Regulatory Affairs Tom Bottorff said the primary driver is improving customer service and as part of that, he sees three primary benefits from PG&E’s push to change out all of its 9 million natural gas and electricity meters: (a) more information for customers to manage their individual energy use and get better services tailored to their particular needs; (b) more accurate billing; and (c) faster identification and correction of operating problems.

Edison’s Paul De Martini, director of the utility’s advanced metering infrastructure (AMI) program, said his utility wants customers to be able to have interactive rate options to manage their power use and bills, as well as being able to implement various related smart energy devices, from thermostats to individually monitored appliances. Edison is looking to “create a positive business case (for both the customer and itself) that adds value for the customers.”

“That is what we’re looking at; it is not seeking the ‘perfect’ product, but it needs to be better than what we call ‘last year’s technology’ would allow us to accomplish. That is what got us off on the path we are now on” Edison has established an informal industry group, Utility AMI, that now has some 50 companies involved, De Martini said, and it has been working with vendors on the next generation technology.

Edison has chosen to take what De Martini called a “clean-sheet approach” to determine how a new smart meter system might best be used — beyond “the basic automating of the meter reading process,” which for Edison current manual processes are viewed as “very efficient, one of the lowest cost-per-meter-reads of any utility in the United States.” So to broaden its approach, Edison tied in with national research efforts at the Palo Alto, CA-based Electric Power Research Institute (EPRI) and U.S. Department of Energy studies on creating more intelligent grid systems.

For its part, PG&E contends it is starting with the current “state-of-the-art” technology, and although it is a “proprietary” (not open) architecture, as new products are developed its system will allow customers to add enhancements, such as smart thermostats that automatically raise temperatures during peak-demand hours in the summer to cutback on air-conditioning loads.

Communications modules on electric meters will transmit data over power lines and the gas meter modules will use radio signals to send information to 5,000 data collection units mounted on utility poles throughout the utility’s territory. Eventually 900 current meter reading jobs will be eliminated, and PG&E has committed to finding other positions for the employees. It has a negotiated agreement with the International Brotherhood of Electrical Workers Local 1245 on how to provide alternatives.

Lowering utility and customer costs and increasing the stability and reliability of the state energy infrastructure are the two main incentives from the CPUC’s standpoint. PG&E estimates that it can recoup 10% of the multi-billion dollar cost of the new metering system through operational savings, assuming that at least 15% of its customers choose peak-pricing options and manage to significantly reduce their energy usage at peak hours.

PG&E will offer “critical peak pricing” as an option to residential customers who can voluntarily shift electrical use away from peak-demand hours, reducing their rates by nearly 3 cents/kWh during the summer (June through September) during noncritical peak pricing times. During the peak-pricing times (2-7 p.m.), customers choosing the program would pay a 60 cents/kWh surcharge in addition to their regular rates. Numbers would be different for business customers choosing the program, PG&E said.

“A typical critical peak pricing customer who reduces energy use by about 25% during the peak-demand hours will save about 10% on electric bills during the four-month summer rate period,” said PG&E’s Bottorff.

In contrast, Edison is still “engaging” the industry of meter vendors and others to develop a “balanced” system that is not overly customized and will offer customers other options that they can pursue aside from the utility, such as a solar photovoltaic (PV) system with net-metering capability for individuals to “sell” their excess power back to the grid.

Using an analogy to the early days of videotape players, De Martini said, what Edison doesn’t want is the “Betamax version, we want the VHS version, built on open technology that is recognized and accepted by others.” Edison is interested in what is called “open innovation,” and prides itself on working very closely with the industry to come up with a meter system that will be very user friendly.

Ultimately, the turtle may win the race, but Edison remains under increased pressures from the CPUC to speed up its transformation to begin to catch up with PG&E, which at present is way out front in terms of installing a new metering system.

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