San Diego Gas & Electric (SDG&E) has unveiled a proposal to install technologically advanced electric meters for its customers over the next four years. The new meters would ensure accurate automated meter readings, lead to quicker response to electric outages and provide customers with more information regarding their energy use. Ultimately, utility officials say advanced meters should reduce the likelihood of electricity shortages and defer the need for future power plants.

This new program, outlined in a proposal filed with the California Public Utilities Commission (CPUC) this week, would start placing these advanced electric meters in all customers’ homes and businesses later this year.

“Implementing this advanced technology for customers is a major step forward in helping them control their energy usage,“ said William L. Reed, senior vice president of regulatory and strategic planning. “We already have similar advanced meters at about 8700 businesses and have found that these meters give customers a chance to participate in programs to reduce their electricity costs.”

California utilities tested an advanced metering system to reduce energy usage at peak times through a series of statewide pilot programs over the last two years. In 2003 and 2004, more than 2000 residential and commercial customers across California tested this type of equipment along with electric rates that changed at different times of the day. Pilot program participants were generally pleased, rating their satisfaction more than “7” on a 10-point scale, with “10” being the highest rating possible. Participants also used an average of 14% less electricity during critical high-demand, or “peak,” periods, typically 2 p.m. to 7 p.m. One study participant said she not only understood "peak load pricing," she also embraced it.

In its CPUC filing, SDG&E did not propose changing prices for electricity; however, it stated that most electricity rates would need to be adjusted to reflect more accurately the true costs of electricity used at various times of the day for the advanced metering system to reduce peak electricity usage.

“Similar to higher priced peak cellular phone minutes, energy used during certain peak periods would cost more, while energy used outside of those periods would cost less,” said Reed. “Overall, the average rate would stay the same.” For example, a customer could save by shifting the time they do their laundry from 4 p.m. to 8 p.m. under a modified pricing plan.

SDG&E would request that customers in the low-income-assistance CARE program continue to receive their discount, and that continued special consideration be provided for customers with medical reasons for needing electricity. Detailed rate proposals will be considered by the CPUC at a later time.

If the program is approved as filed, SDG&E would begin installing the new meters in 2005, with completion expected in 2009. When fully implemented in 2010, the advanced metering technology is expected to reduce customers’ usage during peak periods by approximately 360 MW, enough capacity to supply 360,000 homes. The meters also will provide quicker notification of outages to SDG&E, leading to faster restoration of service. SDG&E will work with customers to take advantage of savings opportunities.

SDG&E plans to spend approximately US$420 million in capital expenditures from 2005 to 2009 that will return almost $660 million of benefits to customers in today’s dollars over a 16-year period (2006-2021). These benefits come from operating more efficiently as well as avoiding the infrastructure needed to serve those few hours in the year when demand is extremely high. Additional operational benefits include: reduction in number of meter re-readings; reduction in customer calls about metering issues; and reduction in costs to reprogram meters, which will be done remotely. Also, precise information on customer usage patterns will enable SDG&E to design its system for maximum effectiveness, as well as reduce customer calls to discuss meter readings. SDG&E expects to reduce the meter-reader work force primarily through attrition during phase-in of the new meters.