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The California Public Utilities Commission July 26 approved $45.22 million for research and development of Southern California Edison’s advanced metering infrastructure project that could enable customers to cut down on their peak power usage. Edison had sought authorization to spend $67 million this year in pre-deployment activities for its project. The Utility Reform Network and the Division of Ratepayer Advocates protested ratepayer funding for an untested system that may not benefit customers as “overbroad and unjustified” without the CPUC first finding that Edison’s new system is cost-effective. Edison had the burden of proof to demonstrate that its proposal was reasonable and in the public interest. The commission concluded that ratepayer funding for specified research and testing activities is a reasonable investment rather than a sunk cost in light of the CPUC’s past directives to utilities to investigate the cost-effectiveness of installing smart meter technology. Reasonable pre-deployment activities include testing advanced meter functionality and communications technology and equipment; and developing and refining estimates of the costs and benefits of advanced meter projects prior to deployment. The CPUC approved commissioner Dian Grueneich’s alternate funding proposal for Edison’s project over an administrative law judge’s proposed starkly reduced $29.02 million. The project will further the state’s policy goals of conserving energy and reducing greenhouse gas emissions from electricity production and consumption, commissioners said. “We cannot emphasize enough how critical demand response is in meeting our needs,” Grueneich said. “Our ultimate goal is to transform California investor-owned utility distribution network.” The commission has already approved pre-deployment funding for Pacific Gas & Electric and San Diego Gas & Electric advanced metering projects. The funding is for Edison’s pre-deployment costs for meter management, information technology, business process and organizational readiness, field deployment, customer tariffs and programs, systems integration, and program management and organization. The additional $16.2 million in Grueneich’s decision is set to cover Edison’s expenditures for information technology, meter data management, customer tariffs and programs, and systems integration. CPUC president Mike Peevey expressed disappointment in electric utilities’ lack of progress in implementing tariffs and demand-response programs to capitalize on their investments in infrastructure and technology. “The challenge is not in technology. The real barrier is overcoming resistance to critical peak pricing and other dynamic pricing that exposes customers to real time price signals,” Peevey said. He noted that the residential sector may provide the biggest source of price response to electricity demand in California. “I truly believe that demand-response will be a big win for both consumers, utilities, and our electric system in general. To the extent that it results in peak demand reduction and of energy consumption in general it will be a big win for the California environment.” In other action, the CPUC adopted tariffs and standard contracts for utility purchases of electricity generated by public water and wastewater agencies onsite from renewable resources. The purchases will be limited to a statewide aggregate of 250 MW on a first-come first-served basis and will help the utilities meet their renewable portfolio standard of 20 percent by 2010. Assembly Bill 1969 enacted by the state legislature last year requires electric utilities to purchase renewable energy from public water and wastewater customers at a market price determined by the commission. The legislation was prompted by concerns that the development of new renewable energy resources was slower than expected, limited by transmission constraints, and not keeping pace with increasing demand for electricity. The Legislature determined that public water and wastewater facilities are located and interconnected to utilities in a strategic manner to optimize delivery of electricity. Moreover, the Legislature concluded that “renewable energy produced at public water and wastewater facilities will reduce the demand for the production of nonrenewable energy needed to serve water-related electricity demand.” In addition, the CPUC authorized PG&E and Edison to purchase 228 MW of biogas, solar, small hydro, and other renewable energy from dairy, agricultural, and other customers in their service areas. The generators must be small-scale and no larger than 1.5 MW. Peevey noted that enabling diaries to sell biogas-generated electricity from livestock manure will reduce emissions of methane, which has 21 times the power as a greenhouse gas than carbon dioxide. “There’s a tremendous potential for rewarding these agricultural facilities for reducing greenhouse gas emissions,” he said. In a stretch for regulators, the CPUC also determined that Shell Oil’s pipeline from the San Joaquin Valley to the San Francisco Bay Area is subject to regulation by the commission. The decision was 4 to 1, with commissioner Rachelle Chong dissenting. Peevey accused Shell of playing a “literal shell game” to conceal its monopoly and anti-competitive actions. He said that Shell was trying to avoid being regulated as a public utility.

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