Despite utility requests to fast-track their advanced-meter proposals, the California Public Utilities Commission will hold hearings. Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric sought expedited approval of their advanced-metering deployment and cost-recovery proposals. They argued that public hearings were not necessary because the utilities were complying with CPUC orders directing them to deploy advanced-metering infrastructure (AMI) to enable customers to manage and lower their energy usage. However, consumer groups protested, calling on the CPUC to hold formal hearings before authorizing the utilities to bill ratepayers millions of dollars for advanced-metering systems that could reap substantial profits for shareholders. Administrative law judge Michelle Cooke on July 13 and 14 held scoping conferences on Edison's and PG&E's proposals and set schedules for the evidentiary hearings with the goal of having final commission decisions by next May or June. Cooke previously scheduled hearings on SDG&E's AMI proposal for next January. The utilities are proposing sharply different strategies for deploying advanced-metering infrastructure that will enable utilities and customers to monitor their real-time energy usage and shift demand to off-peak periods when prices are lower. In the initial July 2004 rulemaking order, CPUC president Mike Peevey stressed that the commission would need to conduct a detailed cost-benefit comparison of the utilities' different AMI strategies and scenarios. PG&E and SDG&E are looking to the marketplace to provide advanced-metering technology, software, and standards to monitor their customers' energy usage and reduce peak demand. PG&E asked the CPUC for authority to bill ratepayers $49 million to pay for the predeployment costs of its advanced-metering system, to set up a memorandum account, and to exempt the utility from the standard reasonableness review. Edison, however, concludes that the current generation of advanced meters will not adequately serve the utility's needs, are not reliable enough, and are too expensive to purchase for Edison's 4 million customers that need them. Edison currently has automated meter reading for half a million customers. Moreover, Edison contends that it would be too risky for the utility to make a major investment in AMI at this time because the technology is developing so quickly that the equipment may become obsolete before the demandresponse benefits accrue. Edison asked the CPUC to authorize the utility instead to spend $31 million of ratepayer funds to develop and deploy an advanced integrated meter (AIM) that would integrate additional and evolving technologies into the next generation of automated meters. Edison envisions that its AIM technology would provide greater durability, more versatility, and a longer life cycle by utilizing an open and multifunctional design for both the meters and communications. Edison claims that AIM meters would provide "significant improvements in system reliability, customer billing and service options, outage management and operational efficiencies," as well as providing additional functions currently not available, including integration of load, demand limitation, two-way communications between the utility and customers, data storage, and customer information displays. The utility envisions that developments in home connectivity, distributed generation, and broadband over power lines could interface with the AIM technology. The Utility Reform Network protested Edison's proposal, urging the CPUC not to allow the utility to put its ratepayers at risk to fund its entry into an unproven new activity that ultimately may prove too costly to deploy. TURN argued that Edison should be required to deploy existing advanced-meter technologies if that's cheaper than building its own system from scratch. "The commission should not be swayed by the lure of new technology," said TURN. Another ratepayer organization, the Office of Ratepayer Advocates, commended Edison's proposal as a "reasonable and prudent approach" that seeks to maximize ratepayer benefits. However, ORA asked whether it was "appropriate and reasonable" for Edison ratepayers to pay $31 million to help meter manufacturers develop advanced meters that will likely be deployed widely at a substantial profit. Edison has not foreclosed its ability to purchase technology from the market once the utility assesses its needs, said Janet Combs, Edison's attorney. "We're not preparing to get into the metering business. Someone else will build it for us," she said. The ALJ limited Phase 1 to $12 million of Edison's total $31 million proposal. She set the issue of whether ratepayers should fund Edison's due diligence within the scope of the proceeding. Phase 1 will assess the design requirements and incremental benefits of Edison developing its own meter technology, whether the benefits outweigh the costs, and whether ratepayers should fund it. PG&E plans to install 9.3 million advanced meters for all of its gas and electric customers over a five-year period beginning in 2006. The utility estimates that it will cost $1.46 billion to deploy all of the meters, 90 percent of which it expects to recoup in savings from lower operational costs. PG&E is seeking to offset the remaining costs in rate increases, which the utility estimates will amount to 69 cents per month for average residential customers. In the long term, PG&E expects to make up the shortfall through lower electricity purchasing costs. TURN and the Coalition of California Utility Employees, or CUE, filed joint protests to PG&E's and SDG&E's proposals. Both utilities propose to lay off their entire union meter-reader workforces and outsource the job of installing advanced meters to contract employees. TURN and CUE argued that the utilities should be required to perform all AMI work with their existing employees so that they can be retrained for new jobs rather than displaced by automation. TURN and CUE argue that PG&E's request for "$49 million of ratepayer money with no strings attached" would violate the CPUC's reasonableness rules and statutory requirements.