California regulators Thursday unanimously took a bold step to transform all private-sector energy utility customers to interactive, two-way metering systems over the next five to seven years, authorizing a $1.74 billion, five-year transformation for Pacific Gas and Electric Co.’s nine million electric and natural gas meters. The other major utilities regulated by the California Public Utilities Commission (CPUC) are expected to launch similar programs next year.

Setting aside concerns that the technology is not right and a so-called “open architecture” eventually is needed in smart metering systems, the five CPUC members unflinchingly joined one another in approving the major change out, something PG&E began to champion two years ago as one of its major corporate objectives.

CPUC President Michael Peevey, the lead commissioner on the case and a long-time advocate of smart meters, said Sempra Energy’s San Diego Gas and Electric Co. has an application for a similar utility-wide change-out program, following current pilot tests, and it should receive a CPUC decision early next year.

However, Peevey again chastised Southern California Edison Co. for spending too much time studying the different technologies available, and he urged the utility he formerly headed a decade ago to make an application to the regulatory panel in “the not-too-distant future.” (Earlier in the week Edison officials vigorously defended their utility’s approach of making a “rigorous business case analysis” of so-called advanced metering infrastructure, or AMI.)

Peevey said the state regulators expect PG&E to closely monitor technology upgrades in the smart meters and “offer them to its customers whenever it is feasible.” He addressed recent criticism from some stakeholders who previously agreed with PG&E’s metering change but now think the utility is not adapting a sufficiently advanced technology.

Nevertheless, the other commissioners praised the utility and the CPUC action, calling it a “major step forward.”

To begin the company-wide deployment, PG&E will start in the hottest parts of its service territory — the inland central valley from Bakersfield north to Sacramento over the next two to three years. 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.

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