Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

Rising Power Prices: The Metering Industry's Big Break?

San Diego Gas & Electric turns vendor heads with its plan to install real-time meters, but the company could face heat from regulators.
Fortnightly Magazine - October 1 2000

all customers-"even those who are unwilling or unable to reduce their demand in response to high prices."

Does this claim hold water? George Roberts, director of regulatory affairs and strategy at Schlumberger, suggests the answer is "yes."

In comments he filed with utility regulators in Virginia, in that state's pending investigation of electric metering and billing, Roberts cited evidence from business and academia suggesting that hourly interval metering indeed can moderate electricity prices. Roberts reported that in "a wide range of studies," electricity customers have shown reductions in energy use "averaging over 10 percent" when "furnished with energy usage data "going beyond the monthly meter read." .

For instance, Roberts cites the work of Frank Wolak, of Stanford University, and Robert Patrick, of Rutgers University, on the importance of electric metering in the restructured markets of England and Wales. Their 1996 study, says Roberts, found that the lack of hourly metering enabled generators in the U.K. to "manipulate market prices for energy and capacity, resulting in excess profits."

Closer to home, Roberts notes a study conducted for the U.S. Department of Energy by Science Applications International Corp., on the effects of load shifting on wholesale prices. In that study, says Roberts, SAIC concluded that customer response to price signals could reduce average spot market prices in New York by between 3.2 and 4.9 percent, even using "very conservative" assumptions.

Finally, Roberts notes congressional testimony from Robert Levin, vice president of the New York Mercantile Exchange, presented two weeks after the infamous Midwest power price spike of $7,000 per megawatt-hour recorded on June 25, 1998. Levin testified that "a 5 percent reduction in demand at that point could have dropped some of these prices 80 or 90 percent."

The Installation: A Real-Time Timeline
Residential customers would wait until 2002—or later.

The Plan:

San Diego Gas & Electric asks the California PUC to authorize installation of real-time energy meters, in two phases (large and small customers), for all customers that do not already have such equipment.

Requested PUC Action:

  • Approve vendor selection.
  • OK equipment selection.
  • Approve expenditures for Phase I, up to $25 million.
  • Set cost limit for Phase II.
  • Authorize recovery both of Phase I and Phase II costs; set cost allocation method.

Phase I:

  • $25 million to install real-time energy meters for large customers with peak demands of 20 kilowatts or more (22,000 accounts, representing nearly 46 percent of utility's system peak demand).
  • Sept. 25, 2000 -Bidders respond to RFP.
  • Sept. 29, 2000 -Utility files testimony to support plan.
  • Dec. 19, 2000 -PUC decision.
  • June 1, 2001 -Installation and testing complete.

Phase II:

  • Install real-time meters for remaining small-volume and residential customers, with demands less than 20 kW (about 1.2 million customer accounts).
  • Nov. 15, 2000 -Issue RFP. n March 1, 2001-Utility files testimony to support plan.
  • Sept. 6, 2001 -PUC decision. n June 1, 2002-Installation and testing completed for first 200,000 of some 1.2 million residential and small customers with demands less than 20 kW.
  • ?????-Installation and testing completed for small customers.

-B.W.R.

But does it make sense to install