UCAN's Opening Brief on SDGE's Application for Adoption of an Advanced Metering Infrastructure
TABLE OF CONTENTS I. EXECUTIVE SUMMARY...........................................................................................5 A. Introduction / Background..............................................................................................5 B. UCAN’s recommendations..............................................................................................8 C. Areas of agreement .........................................................................................................10 II. POLICY ISSUES.........................................................................................................12 A. CPUC Guidance re: AMI ...............................................................................................12 1. Commission rulings ..........................................................................................................12 2. Standard Practice Manual ................................................................................................13 III. LEGAL ISSUES ..........................................................................................................14 A. Burden of Proof ...............................................................................................................14 B. Demand Response Benefits From Customers Larger than 200 kW Must Be Excluded From This Proceeding...................................................................................17 IV. SDG&E’s APPLICATION IS NOT COST-EFFECTIVE .....................................21 A. SDG&E’s BUSINESS CASE IS A 34-YEAR MISTAKE...........................................21 1. How SDG&E’s AMI Program Is Worse than the PG&E Program that the Commission Previously Approved.................................................................................23 B. Financial Modeling Methodology ...............................................................................25 1. Discount rate and present value method .......................................................................25 2. Term or period of analysis (analysis years) ...................................................................25 3. Other Cost/Benefit Issues ................................................................................................30 V. OPERATIONAL BENEFITS ....................................................................................32 VI. DEMAND RESPONSE IMPACTS AND BENEFITS..........................................32 A. Avoided Demand Response Programs ......................................................................33 1. The Commission’s Requirements on a Framework For AMI Business Case Analysis Do Not Recognize Avoided Demand Response Programs As An AMI Benefit ........................................................................................................................34 2. If The Commission Does Not Entirely Exclude Avoided Demand Response Benefits From The Business Case Analysis, Dollar Values Should Be Adjusted Downward To Reflect Recorded Program Expenditures ...........................35 3. SDG&E’s Forecast of 2008 Demand Response From Its Demand Response Programs Provides More Demand Response Than SDG&E Forecasts To Achieve From its Advanced Meter Deployment By 2038............................................36 B. Demand Response Impacts by Customer Segment - Residential Response is Dramatically Overstated................................................................................................39 1. Participation in the SPP and Anaheim Pilots.................................................................40 2. Erroneous Acceptance and Rejection Rates for the SPP...............................................43 3. SDG&E Failed to Factor in the Number of Customers Willing to Act .......................44 4. The Basis of UCAN’s Adjustment of SDG&E’s Short-Run Participation Forecast ...............................................................................................................................46 5. Small Bill Savings Will Not Maintain Participation......................................................46 6. SDG&E’s Forecasted Customer Response is Undermined by Reality .......................48 7. Reasons for increased DR over time are not related to AMI .......................................52 8. Demand Response under Alternate Avoided Capacity Cost......................................53 VII. Valuation of Demand Response .............................................................................53 A. Avoided Generation Capacity Costs ...........................................................................53 1. It Is Critical to Net Out Energy Savings from the Cost of a Combustion Turbine Powerplant ..........................................................................................................54 2. Combustion Turbine Costs...............................................................................................55 B. Reserve Savings Are Uncertain....................................................................................60 VIII. OTHER BENEFITS..........................................................................................................60 A. The Commission Should Reject SDG&E Attempts to Quantify Benefits Associated With Reduced Electric and Gas Theft, Improved Meter Accuracy and Other Billing Exceptions........................................................................................60 1. Energy Theft and OBR Benefits .......................................................................................61 2. The Commission’s Framework for Business Case Analysis Classifies Energy Theft Benefits Non Quantifiable ........................................................................61 3. SDG&E Expresses Considerable Uncertainty That Energy Theft Benefits May Not Be Positive..........................................................................................................64 B. If The Commission Approves SDG&E’s Recommendation to Quantify Meter Accuracy Benefits It Should Adjust That Benefit Calculation Downward.........67 1. Meter Accuracy and Energy Theft Benefits Are Based On Outdated Data...............67 2. SDG&E’s Calculation of Meter Accuracy Benefits........................................................68 3. Exclude SB-3 Gas Benefits For Energy Theft and Gas Meter Error ............................70 4. Exclude Benefits Associated With Billing Exceptions That SDG&E’s Testimony Treats As A Non-Quantifiable Benefit ........................................................71 5. Many of SDG&E’s Conjured Benefits Lay Outside the Scope of the Commission’s Framework ...............................................................................................72 C. T&D Benefits should be Reduced...............................................................................76 VIII. Cost Allocation ...........................................................................................................76 IX. AMI Technology and Related Cost Issues ............................................................76 X. Risks and Risk Management ...................................................................................82 XI. SUMMARY AND UCAN RECOMMENDATIONS ...........................................82 A. Interim Actions to be Taken Pending a Resubmission of an AMI Proposal ......82 B. Require SDG&E to Refile its AMI Proposal with an accompanying IRP. ..........85
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