SmartMeters—Information from PG&E

The SmartMeter™ Program continues to be rolled out. My house was updated this summer. So far the bills appear to be what I would expect; however, there has been some controversy over the accuracy of the meters. This information has been provided by PG&E.

SmartMeter™ Program
Frequently Asked Questions

About The SmartMeter™ Program

Q: What types of meters are being used?
A: We are using industry-standard gas and digital electric meters to measure our customers’ energy use. We use the same metering quality-assurance practices as always to ensure accuracy and performance of the meters. The main difference is that the meters have a SmartMeter™ communication device installed in or on the meter to automatically transmit to PG&E the reading displayed on the meter.

Q: Does the SmartMeter™ communication equipment affect the performance of the meter?
A: No. It is similar to adding a global positioning system (GPS) in your car. While a GPS can tell you where you are, it will not change or affect your car’s performance. The latest SmartMeter™ technology uses a small radio similar to a cell phone in or on the meter to transmit the reading to a data collector where it is then sent directly to PG&E via secure wireless network (e.g., cell phone infrastructure).

Q: Are meters with SmartMeter™ technology accurate?
A: Yes. We have a robust set of testing and monitoring practices in place to ensure the accuracy and reliability of our meters. Every meter is tested and certified for accuracy before it leaves the manufacturer, either General Electric or Landis + Gyr. We also perform additional testing through our own internal quality assurance process. We test meters at our Fremont meter lab and also field test meters at the request of our customers.

As of this month, we’ve field tested 1,086 meters system wide, including 404 in the Bakersfield-area. Of all those tested, we have had one reported first generation DCSI electromechanical meter that ran 2.7 percent slow, which was calibrated in the field by one of our meter techs in Bakersfield. We continue to accept all requests for meter tests from our customers.

Q: Can customers opt out of the SmartMeter™ program?
A: No. The California Public Utilities Commission (CPUC) has directed PG&E to install meters with SmartMeter™ technology for all of our customers. If we have difficulty installing a meter, both Wellington, the authorized contractor who installs most of the meters, and PG&E make a combined total of 10 attempts to reach out to each customer in person, by phone or by mail before a meter is installed.

Though PG&E is allowed to discontinue gas or electric service for customers who refuse a meter installation, we stopped sending customers letters mentioning this in early October. This method was effective in getting customers to set appointments for meter installations, but we now hope to convince customers of the value of the SmartMeter™ program through improved education and outreach.

Q: Besides reading the meter; what will the SmartMeter™ program do for customers?
A: By providing more information than ever to our customers about their gas and electric use, the SmartMeter™ program gives customers greater control of their energy use and costs. Customers with a SmartMeter™ electric meter can view their energy use in near real time directly on their meter and can view daily and hourly energy use online at through My Account.

And the program gives customers new rate choices, like the SmartRate program. In the future, the system will help PG&E identify outages and assist with more timely power restoration and when customers move, they will be able to obtain electric service within minutes. In the long run, the SmartMeter™ program is expected to benefit our environment by decreasing demand on the power grid and resulting in fewer power plants than would otherwise be needed, both of which are good for our customers and California.

Q: Why is PG&E already replacing SmartMeter™ electric meters? Was there something wrong with the first generation of meters?
A: There is nothing wrong with the first SmartMeter™ devices that were installed, which included the best technology available at the time. PG&E evaluates the costs and benefits of new technologies and, when practical, upgrades technology. Following a program approved by the California Public Utilities Commission, PG&E is now upgrading those first SmartMeter™ devices, with a version that provides better two-way communications. They also have the ability to be upgraded remotely over the air and contain a home area network (HAN) device that in the future will be able to communicate with home appliances to automate your energy use and better take advantage of new pricing options. If customers have questions about their meter, speak with them about the program or encourage them to call our SmartMeter™ customer service line at 1-866-743-0263.

Q: I’ve heard that a lawsuit was filed against PG&E claiming that we are defrauding customers with the SmartMeter™ program. What happens now?
A: In late October, PG&E was served with a class action lawsuit related to the SmartMeter™ program. We strongly believe the allegations in the lawsuit are untrue, and we look forward to -presenting the facts, which are our best defense. While our legal team manages the company’s response to the lawsuit, we are working hard to communicate the benefits and proven accuracy of the program to customers and the media.

We are continuing to install between 12,000 and 15,000 meters with SmartMeter™ technology a day across our service area and remain confident in the future of the program. As we work toward our goal of a smart grid, there will be many steps along the way. SmartMeter™ electric meters are the first step.

Q: What are we doing for our customers in Bakersfield to regain their confidence and trust?
A: We continue to reach out to the Bakersfield community through members of the media, elected officials, community leaders and directly with customers. We have created both a Community Advisory Board, made up of community members such as the Mayor of Bakersfield, business leaders and members of other community-based organizations.

We also created a Customer Advisory Group, made up of 11 residential customers, many of whom testified on the customer panel organized by Senator Dean Florez during his Town Hall meeting in October. Both groups have met and are very positively engaged. We look forward to building on these relationships as we continue to address our customers’ concerns in Bakersfield.

Q: If the meters are accurate, why are so many customers experiencing higher bills?
A: Higher electric bills can usually be attributed to recent electric rate increases for top tiers of energy use, coupled with higher electric usage in hotter summer months. In the Bakersfield community there were 17 days in July 2009 that were at or above 100 degrees, compared to only six days at or above 100 in July 2008.

We have also seen many instances of customers previously enrolled in the CARE program, paying 8 cents per kWh for their baseline amount, and 9.5 cents for any use above baseline, who stopped being eligible for the program (because they had not submitted their certification documents, had a change in family circumstances, etc.). About 1,500 customers drop off the CARE program each month.

When customers leave the program, their energy costs jump from 16 – 35 cents per kWh, which increases the average monthly bills significantly. For example, one customer we spoke with in Fresno had a July bill of $409.80, but when they enrolled in the CARE program, that same month’s bill dropped to $158.12.

We understand that any increase in energy costs for our customers may be difficult to absorb, and PG&E has many different programs available to help them manage their energy use and better control their energy costs. As a PG&E employee you are in a unique position to share information about our energy efficiency, demand response and financial assistance programs with your friends and neighbors to educate our customers about all the ways they can control their energy use.

Q: What are tiered electric rates?
A: To encourage energy conservation, the State of California requires utilities like PG&E charge residential customers more for electricity use above a certain level (the baseline amount) each month through a tiered-rate structure. Customers are charged the lowest rate, currently 11.5 cents per kWh for residential customers, for the baseline amount. Electricity rates rise progressively as electricity use reaches the second, third, fourth and fifth tiers. A customer using energy in the fifth tier, which has increased from 36 cents per kWh in 2008 to 44 cents currently for residential customers, could see their energy costs in that tier increase substantially over last year, even if they are taking steps to conserve energy.

The recent rate increases have been to the top three tiers of energy use, so customers who use the most energy, like those with central air conditioning; a pool or spa; or large electronic appliances, have seen the highest increases in their bills.

Q. If most businesses offer a discount for buying more of their products, why do we charge more for using more energy?
A. To encourage energy conservation, the state of California has enacted public policy to decouple the revenues of investor owned utilities, like PG&E, from their sales. Decoupling means that PG&E does not make more money if we sell more energy. And in addition to a return on our capital investments, PG&E also receives financial incentives if we reach certain energy reduction goals. So we actually make more money when customers use less energy.

Under decoupling, utilities collect a fixed level of revenue, regardless of their actual energy sales. If energy sales are higher than the target level, the excess revenues go back to the customer. And if sales are lower than the target, utilities recover the shortfalls the following year from customers. Decoupling provides an incentive for utilities to focus on effective energy efficiency programs and invest in activities that reduce load. Under decoupling, California’s per capita energy use has remained relatively flat over the last 30 years, while energy use per capita in the rest of the country has increased by 50 percent, as shown below in a chart from the California Energy Commission.

Q: How can tiered rates make that much of a difference in a customer’s bill?
A: Here’s an example of how tiered rates could affect a customer’s bill. If an air conditioner (approximately three tons) uses 5,000 watts of electricity, it costs about 58 cents per hour at the Tier 1 rate. If a customer uses their air conditioner often throughout the month, using more electricity, they may move up to a higher priced tier. When a customer is in the Tier 5 rate, that same hour of air conditioner use can cost about $2.20 per hour. The same is true for other appliances.

The graphs below show how increased usage has an outsized impact on a customer’s bill. Doubling electric usage more than doubles the bill.

Q. Who sets PG&E’s rate structure, and why does PG&E keep increasing rates?
A. For the most part, the California Public Utilities Commission, a state agency, has the authority to set electric and gas rates, subject to certain rules imposed by the state legislature. PG&E makes rate proposals to the Commission based on our best forecasts of the cost of delivering energy to our customers. These expenses include things like owning and operating our distribution facilities, generation facilities and fuel. They also include the expenses for implementing required public purpose programs such as energy efficiency programs and low-income discounts.

These expenses can increase from year to year because of higher costs for fuel, equipment and power we must purchase on the open market when demand is high. The Commission decides on our funding requests and instructs us on how those expenses will reflect in rates.

Q. PG&E just gave a lot of customers a bill credit. Is this related to customers’ concerns with the SmartMeter™ program?
A. No. The credit is due to lower-than-expected natural gas prices this year. Electric rates are set every year based on market forecasts. If electricity costs are lower than forecast, PG&E refunds the difference to customers. This year the price of natural gas was less than expected, resulting in lower costs to generate electricity and a cost savings to our customers in the form of a refund. Normally the refund would be spread over the following year, but this year because of the tough economic climate, PG&E provided customers a one-time bill credit on their November or December bill. The size of the refund will depend on a customer’s usage and location (their baseline territory). Residential customers with relatively low usage (Tiers 1 and 2, or up to 130 percent of baseline usage for their area) and CARE customers were protected from the rate impact of the 2009 energy-cost forecast and therefore did not receive a credit.

Q. What can customers do to lower their bill?
A: Focus on energy efficiency. PG&E offers more than 82 energy efficiency programs to help customers reduce their energy use.

Become a SmartRate™ customer. The SmartRate program encourages customers to use less electricity from 2 – 7 p.m. on no more than 15 of the hottest summer days. Customers are charged more during those hours, but less for all other hours of the summer months.

Throughout our service area, about 25,000 customers participated in the SmartRate program this year with nearly 70 percent saving on summer bills. Residential customers saved up to $500, with an average savings of $30. This pricing plan would not be possible without SmartMeter™ technology.

Sign up for CARE. The California Alternative Rates for Energy (CARE) Program provides a monthly discount on energy bills for income qualified households and housing facilities. Qualifications are based on the number of people living in the home and the total household income.

Sign up for medical baseline. Residential customers with special energy needs due to qualifying medical conditions may be eligible to receive additional quantities of gas and/or electricity each month in addition to regular baseline quantities.

Balanced payment plan: PG&E’s balanced payment plan sets your monthly payment amount based on average energy use to eliminate big swings in your home or business payments and maintains consistent monthly payments during extreme-weather months.

About Kevin

Mayor - City of Oakley, Manager of Mainframe Operations and Optimization – USS-POSCO INDUSTRIES, Co-Founder and Board Member - Friends of Oakley A Community Foundation, Commissioner - Contra Costa Transportation Authority, Board Member - Tri Delta Transit, Transplan, San Joaquin Joint Powers Authority and RD 2137, Advisory Board – Opportunity Junction
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