Southern California Edison Company (U 338-E) Smart Meter Opt-Out Phase 2 Rebuttal Testimony

Transcription

1 Application No.: Exhibit No.: Witnesses: A K. Ellison G. Huckaby L. Letizia J. Lim L. Miller L. Oliva (U -E) Southern California Edison Company (U -E) Smart Meter Opt-Out Phase Rebuttal Testimony Before the Public Utilities Commission of the State of California Rosemead, California October, 01

2 Southern California Edison Company (U -E) Smart Meter Opt-Out Phase Rebuttal Testimony Table Of Contents Section Page Witness I. INTRODUCTION...1 L. Oliva II. PARTIES POSITIONS SUPPORTED BY SCE... A. TURN and CLECA s Separate Recommendations for Fully Cost Compensatory Opt-Out Program Fees are Appropriate... B. DRA s Recommendation for a Reduction in Field Visit Costs is Reasonable... C. Aglet s Proposal to Reflect the Most Current Authorized Rate of Return on Rate Base is Appropriate... K. Ellison L. Letizia III. SCE REBUTTAL TO ISSUES RAISED BY THE PARTIES... A. Rebuttal to Issues Related to Cost Recovery Proposals for Non-Opt-Out Participants to Pay for the Opt-Out Program Costs Should Not be Adopted.... Aglet s and EMF Safety Network s Proposal for Retroactive Fee Decreases Should be Rejected... L. Oliva L. Letizia. SCE s Cost Recovery Proposal Does Not Include Socializing Undercollected Program Costs.... Proposals for Additional Reasonableness Reviews Should be Rejected.... TURN s Proposal to Record Into the IOUs Smart Meter Balancing Accounts Any Opt- Out Costs Not Directly Recovered by Opt- Out Fees Should be Rejected... B. Rebuttal to Issues Related to Program Costs... K. Ellison -i-

3 Southern California Edison Company (U -E) Smart Meter Opt-Out Phase Rebuttal Testimony Table Of Contents (Continued) Section Page Witness 1. DRA s Proposal to Remove Costs Related to Exit Activities from SCE s Initial Fee Should be Rejected.... DRA s Proposal to Include SCE s Capital Expenditures in the Initial Fee Should be Rejected...1. TURN s Assertions Regarding Handheld Device Costs Are Incorrect...1 L. Letizia K. Ellison a) TURN s Assertion that SCE is Requesting Double Recovery of Handheld Device Costs is Incorrect...1 b) TURN s Comparison of GRC and Opt-Out Program Costs is Incorrect...1. TURN s Assertion That SCE s Meter Reading Forecast Costs Are Not Incremental to SCE s 01 GRC Application Is Incorrect...1. TURN s Assertion that SCE s Customer Communications Organization Costs Are Not Incremental to SCE s 01 GRC Application Is Incorrect...1. TURN s Assertion That SCE s Job Skills Training Costs Are Inflated and More Than SCE s 01 GRC Application Is Incorrect...1. Aglet s Proposal to Provide Credits for Smart Meters Is Inappropriate and Should Be Rejected...1. Aglet s Recommendation to Limit Customer Service and Information Technology Costs Should Be Rejected...1. Aglet s Recommendation to Wait to Install a Smart Meter After an Opt-Out Program Customer Terminates Service Should Be Rejected...1 L. Miller J. Lim G. Huckaby L. Oliva K. Ellison -ii-

4 Southern California Edison Company (U -E) Smart Meter Opt-Out Phase Rebuttal Testimony Table Of Contents (Continued) Section Page Witness C. Meter Reading Options DRA s Recommendation for a Joint Meter Reading Program Between SCE and SoCalGas is not Practicable...1. A Customer Self-Read Option Would Result in Significant Uncertainty of Obtaining Accurate and Timely Meter Reads and Should Not be Adopted...1 L. Oliva IV. OTHER ISSUES...1 A. DRA s Recommendation for Bi-Monthly and Quarterly Meter Reads Requires Further Analysis...1 Appendix A - SCE Witness Qualifications... -iii-

5 I. INTRODUCTION On April 0, 01, the California Public Utilities Commission (Commission or CPUC) issued Decision (D.) , requiring Southern California Edison Company (SCE) to modify its Edison SmartConnect program to provide for an opt-out option and established interim fees for this option. D also ordered a second phase (Phase ) of the proceeding to further consider program costs, fees, and cost allocation. In compliance with the June, 01 Assigned Commissioner s Ruling Amending Scope of Proceeding to Add a Second Phase (ACR), on August, 01, the California investor-owned utilities (IOUs, or utilities) 1 submitted direct testimony on the Phase cost issues. On October, 01, in compliance with the ACR, as modified by Administrative Law Judge (ALJ) Yip- Kikugawa s September, 01 Ruling, various parties submitted testimony. These parties provided various recommendations regarding SCE s Opt-Out Program cost recovery proposal, cost estimates, and associated program fees. SCE submits this rebuttal testimony in compliance with the ACR, as modified by ALJ Yip-Kikugawa s September, 01 Ruling, to address intervenors recommendations regarding cost and cost allocation issues associated with providing the analog opt-out option adopted for SCE s residential customers in Phase 1 of this proceeding. Certain issues raised by intervening parties pertaining to the legality of fees for customers with disabilities, smart meter cost-effectiveness studies, health/rf concerns, and commercial opt-outs are either being addressed through legal briefs or have already been deemed beyond the scope of this proceeding. 1 SCE, Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), and Southern California Gas Company (SCG). Parties filing intervenor testimony include Aglet, Center for Electrosmog Prevention (CEP), California Large Energy Consumers Association (CLECA), EMF Safety Network, the Utilities Reform Network (TURN), the Division of Ratepayer Advocates (DRA), and Jeremy Johnson. See June, 01 Assigned Commissioner s Ruling Amending Scope of Proceeding to Add a Second Phase at pp

6 SCE s rebuttal testimony is organized into four chapters. This chapter provides the procedural background and overview of SCE s rebuttal testimony. Chapter II describes the recommendations from intervening parties that are supported by SCE. Chapter III provides SCE s rebuttal to recommendations from parties regarding SCE s Opt-Out Program cost recovery proposal, cost estimates, and program fees. Chapter IV provides SCE s rebuttal to recommendations on other smart meter opt-out issues that are within the scope of this proceeding. --

7 II. PARTIES POSITIONS SUPPORTED BY SCE Chapter II describes three recommendations raised by various parties that SCE supports. First, TURN and CLECA recommend that program participants pay the full costs of the Opt-Out Program. Second, DRA recommends a reduction in field visit costs as a result of SCE s updated cost analysis. Finally, Aglet recommends the IOUs reflect the most current authorized rate of return on rate base in their calculations of the opt-out revenue requirements. As described below, SCE supports each of these recommendations. A. TURN and CLECA s Separate Recommendations for Fully Cost Compensatory Opt-Out Program Fees are Appropriate TURN and CLECA separately support the recovery of all Opt-Out Program costs from program participants. Both TURN and CLECA recognize that SCE and SDG&E s cost recovery proposals are based on cost of service or cost causation principles, whereby customers electing to participate in the Opt-Out Program should pay the associated costs for the utility to offer and operate the program. As such, the Commission should adopt TURN and CLECA s recommendation for fully cost compensatory Opt-Out Program fees. B. DRA s Recommendation for a Reduction in Field Visit Costs is Reasonable DRA recommends reducing SCE s costs related to field visits by $,000 and decreasing the associated initial fee proportionately by $. SCE corrected an assumption applied in its meter exchange forecast, which resulted in a reduction in the field visit and meter testing costs. As such, SCE supports DRA s recommendation to reflect the reduced costs in SCE s proposed fees. TURN Testimony at p. ; CLECA Testimony at p.. DRA Testimony at p. -. SCE s updated estimate includes a reduction of $,000 for field visits and a reduction of $,00 for meter testing for a total reduction of $1,00. --

8 C. Aglet s Proposal to Reflect the Most Current Authorized Rate of Return on Rate Base is Appropriate Aglet proposes that the Commission order the utilities to adjust their cost calculations, and, if necessary, opt-out rates to reflect revised rates of return adopted in the respective utility 01 cost of capital proceedings. SCE agrees with this recommendation and will reflect the most current authorized rate of return on rate base in its opt-out capital revenue requirements and resulting opt-out fees. Aglet Testimony at pp

9 III. SCE REBUTTAL TO ISSUES RAISED BY THE PARTIES The purpose of this Chapter is to provide SCE s rebuttal to certain intervening parties Opt-Out Program recommendations. This Chapter is organized into three sections. Section A contains SCE s rebuttal to issues related to SCE s cost recovery proposal. Section B contains SCE s rebuttal to issues related to SCE s Opt-Out Program cost estimates. The Chapter concludes in Section C, which contains SCE s rebuttal to intervenor recommendations for meter reading options. A. Rebuttal to Issues Related to Cost Recovery Several parties recommended a fee structure for Opt-Out Program customers that would include Opt-Out Program costs being borne by entities not participating in the Opt-Out Program. SCE s cost recovery proposal is based on cost causation principles, whereby Opt-Out Program costs would be assessed solely to program participants. This proposal ensures that customers who do not participate in the program are not unfairly burdened with Opt-Out Program costs. SCE provides its rebuttal to recommendations that Opt-Out Program costs be borne by non-participating entities in the following Sections. 1. Proposals for Non-Opt-Out Participants to Pay for the Opt-Out Program Costs Should Not be Adopted Aglet, EMF Safety Network, and CEP recommend that Opt-Out Program costs be borne by shareholders and/or by customers who are not participating in the Opt-Out Program. These recommendations are inappropriate and should be rejected. Regarding shareholder funding of Opt-Out Program costs, D , Conclusion of Law, the Commission found that: Aglet Testimony at pp. -; EMF Safety Network Testimony at p. ; CEP Testimony at p

10 Since SCE s deployment of the Edison SmartConnect Program is consistent with the requirements of D.0-0-0, it should be allowed to recover the costs associated with offering the opt-out option to the extent those costs are found to be appropriate, reasonable and not already being recovered in rates. Thus, the costs to implement SCE s Opt-Out Program are not due to SCE s failure to comply with the directives of D.0-0-0, and any shareholder funding would constitute an unwarranted penalty. Therefore, recommendations for shareholder funding of Opt-Out Program costs are unreasonable and should be rejected. Moreover, Aglet s claim that its proposal for a mandatory ten percent shareholder funding of the Opt-Out Program costs is similar to the no longer used Annual Energy Rate (AER) mechanism is misleading. Contrary to Aglet s characterization, the AER was a symmetrical ratemaking mechanism that provided both upside and downside potential for shareholders. Aglet s recommendation is simply a one-sided proposal for shareholder penalties only. As the Commission stated in D , opt-out costs should be recoverable from opt-out customers to the extent the costs are found to be appropriate, reasonable, and not already being recovered in rates. Aglet s proposal should be rejected. In addition, Aglet recommends that customers with disabilities pay no Opt-Out Program fees and that all other customers be assessed an arbitrary $0 initial fee and a $ monthly fee. Regarding no fees for customers with disabilities, as SCE discussed in Chapter I of this rebuttal testimony, the issue of fees for customers with disabilities is already being considered through legal briefs in this proceeding. Thus, the issue of whether opt-out program participants should be assessed fees should not be addressed in this track of Phase, which addresses program costs, cost allocation, and program fees. Regarding its fee proposal for customers without disabilities, Aglet provides no factual support for its recommended $0 initial fee and $ monthly fee. SCE s costs and resulting fees are fully D , Conclusion of Law (COL) at p. 0. Aglet Testimony at p.. --

11 justified and supported. Moreover, Aglet s proposal should be rejected because such fees would result in non-participating customers unfairly paying the costs for a program from which they receive no benefit. CEP and EMF Safety Network similarly recommend that Opt-Out Program participants pay no fees, claiming that assessing such fees is unlawful. SCE opposes these recommendations for several reasons. First, pursuant to D.0-0-0, SCE is compliant in deploying its Edison SmartConnect meters as required by the Commission and applicable law. Second, the Commission in D has already determined that customers electing to participate in the Opt-Out Program are responsible for the costs of providing the program, stating, [T]his decision further finds that customers electing the optoption shall be responsible for costs associated with providing the option. 1 Moreover, Conclusion of Law from D provides, A residential customer selecting the opt-out option should be assesses an initial charge and a monthly charge. 1 Accordingly, the Commission has already found that opt-out fees are appropriate.. Aglet s and EMF Safety Network s Proposal for Retroactive Fee Decreases Should be Rejected Aglet recommends that, if the Commission adopts Opt-Out Program fees that are less than the current interim fees, then those fees should be applied retroactively (i.e., customers receive refunds for the difference). Aglet suggests that a decision that adopts fees that are lower than the interim fees and does not apply fees retroactively would unfairly punish Opt-Out Program customers. On the other hand, if a decision adopts fees that are higher than the interim fees, these fees should not be applied retroactively. Aglet further claims that its recommendation would allow utilities to recover only those costs authorized by the Commission. 1 EMF Safety Network Testimony at pp. 1-; CEP Testimony at pp D at p.. 1 D , p Aglet Testimony at pp

12 Aglet s reasoning is flawed because its proposal would only allow adopted fees to be applied retroactively if they are decreased from the present interim levels. This one-sided approach is unfair and unsupported by any evidence that this approach is reasonable. Thus, Aglet s recommendation should be disregarded, and the Commission should adopt SCE s proposal that any updated fee structure (i.e., either greater or less than the interim fees) adopted by the Commission should not be applied retroactively. Similarly, EMF Safety Network recommends that Opt-Out Customers receive refunds for the interim Opt-Out Program fees stating that the CPUC did not evaluate Opt-Out Program costs before adopting the interim fees. 1 This assumption is false. The Commission in D.--00 required SCE to file a Technical Feasibility and Cost Information Proposal. SCE filed this proposal on November, 0. The Commission evaluated SCE s cost estimates for various opt-out options prior to issuing D SCE s Cost Recovery Proposal Does Not Include Socializing Undercollected Program Costs In its prepared testimony, SCE proposes fully compensatory opt-out fees; that is, no socialization of any Opt-Out Program costs for the 01 through 01 period. The cost recovery of optout related costs incurred after 01, including the recovery of the ongoing capital-related revenue requirements associated with 01 through 01 capital expenditures, will be addressed in SCE s 01 General Rate Case (GRC) application or other appropriate proceeding. It is in that proceeding that adjustments in opt-out fees after 01 may be necessary to reflect any SmartConnect Opt-Out Balancing Account (SOBA) over-collection or under-collection as of December 1, 01, in addition to post-01 opt-out cost forecasts. DRA states in its testimony that SCE has not indicated whether unrecovered 01 through 01 capital investments would be allocated to all customers or just to those who opt out during 1 EMF Safety Network Testimony at p. --

13 the next GRC cycle, 1 and CLECA opposes shifting the recovery of undercollected costs to all distribution customers after 01 in SCE s next GRC. 1 Consistent with SCE s prepared testimony, SCE affirms that opt-out customers should be responsible for 0 percent of the Opt-Out Program costs for the length of the program. SCE expects to propose any adjustments necessary to the opt-out fees in its 01 GRC (or other appropriate proceeding) to reflect 0 percent of the opt-out costs in the fees. 1. Proposals for Additional Reasonableness Reviews Should be Rejected In its testimony, CEP and Aglet both address the issue of reasonableness reviews. CEP recommends a reasonableness review of all opt-out programs, 1 and Aglet proposes that, in lieu of a reasonableness review, shareholders should be responsible for percent of the recorded costs. 0 Both of these recommendations are based on a misunderstanding that SCE is asking for opt-out cost recovery with no reasonableness review of the costs. SCE has set forth its forecasted opt-out costs and activities in its prepared testimony, which is the opportunity for the Commission to review SCE s forecasted Opt- Out Program expenditures and activities for reasonableness. In its prepared testimony, SCE requests a finding by the Commission that the funding requested is expressly conditioned on full recovery of all verified costs in rates without further after-thefact reasonableness review or restriction. 1 The Commission should perform a full review of forecasted costs and approve the scope of the Opt-Out Program activities in this application. SCE s incurred costs that are consistent with the scope and the costs as adopted by the Commission, however, should not be 1 DRA Testimony at p CLECA Testimony at p.. 1 In further response to CLECA, it is only SCE s position to allocate any undercollected opt-out costs to all distribution customers effective upon a decision in Phase of this proceeding in the event the Commission authorizes some socialization of Opt-Out Program costs. 1 CEP, p.. In addition, on page of its prepared testimony, CEP proposes that the Commission hire an independent, mutually agreed-upon entity to audit the costs and revenues recorded in the utilities memorandum accounts. SCE is puzzled by this proposal because CEP is proposing full shareholder funding of all opt-out costs. Regardless, the ERRA Review proceeding, as described later in this testimony, affords all parties the opportunity to audit the opt-out costs and activities. 0 Aglet Testimony at p.. 1 SCE Testimony at p.. --

14 subject to an after-the-fact reasonableness review. As with all balancing accounts, the recorded operation of SCE s proposed SOBA will be reviewed and verified by the Commission in SCE s annual Energy Resource Recovery Account (ERRA) Review application to ensure that the costs recorded are stated correctly and are consistent with a final decision issued in this proceeding. The ERRA proceeding is the appropriate forum for review of opt-out costs and revenues. The ERRA review applications are the established vehicles in which the majority of the IOUs balancing and memorandum accounts are reviewed, including the Smart Meter balancing accounts. At that time, contrary to Aglet s assertions that SCE s proposal provides no protection whatsoever against utility spending on unnecessary activities or equipment, the Commission may disallow any costs that it deems are not in compliance with its Phase decision in this application.. TURN s Proposal to Record Into the IOUs Smart Meter Balancing Accounts Any Opt-Out Costs Not Directly Recovered by Opt-Out Fees Should be Rejected TURN agrees with SCE s proposal to recover 0 percent of the Opt-Out Program costs from opt-out customers. However, TURN states that, in the event there is still a need to recover legitimate opt-out costs that are not recovered in opt-out fees for example, if the Commission adopts some socialization of opt-out costs then those additional costs should be recorded in the utilities respective advanced meter balancing accounts. TURN believes the costs for accommodating customers who do not want an advanced meter are an additional cost of advanced meter deployment. In the event the Commission does not adopt fully compensatory opt-out fees and instead implements some socialization of these costs, SCE disagrees that any shortfall (i.e., unrecovered opt-out revenue requirements) should be recorded in its Edison SmartConnect Balancing Account (ESCBA). The ESCBA is expressly authorized to recover up to $1. billion in Edison SmartConnect meter deployment costs through year-end 01. Costs associated with opt-out activities are not included in the Aglet Testimony at p.. TURN Testimony at pp.. For SCE, the advanced meter balancing account is the Edison SmartConnect Balancing Account. --

15 $1. billion cost cap, nor was a smart meter Opt-Out Program even contemplated at the time the ESCBA was established. In addition, the ESCBA will be closed at the end of deployment, and opt-out activities will continue after 01. Instead, if the Commission ultimately adopts opt-out fees that are not fully compensatory, SCE proposes to transfer monthly SOBA undercollections to the distribution sub-account of SCE s Base Revenue Requirement Balancing Account (BRRBA) to be recovered from customers through distribution rates. B. Rebuttal to Issues Related to Program Costs 1. DRA s Proposal to Remove Costs Related to Exit Activities from SCE s Initial Fee Should be Rejected DRA recommends that the Commission remove SCE s exit-related costs from SCE s Opt-Out Program proposal. DRA bases its recommendation on the assertion that these costs could be easily mixed with GRC smart meter costs and that it would be difficult to prevent duplicative costs. This recommendation should be rejected. SCE s normal operational activities and those activities in support of the Opt-Out Program (and the associated costs) are distinct and can be tracked separately. For example, SCE s normal operations provide for remote service disconnections and reconnections through the Edison SmartConnect system, while service disconnections and reconnections for an Opt-Out Program customer will require a field visit. These are two distinct activities that SCE tracks separately. As such, DRA s argument that it would be difficult to prevent duplicative costs in this limited situation is without merit. DRA s objection to the exit costs appear to be based on the fact that exist cost would be applied to only 0.1 percent of SCE s residential customers. This is irrelevant because exit-related The CPUC s final decision on SCE s 01 GRC is pending. However, the October 1, 01 Proposed Decision provided that the ESCBA will be closed at the end of deployment, except for certain costs related to Home Area Network and related programs for programmable communicating thermostats and in-home display devices. DRA Testimony at p. -. DRA Testimony at p

16 activities and manual disconnects/reconnects would not be necessary in the absence of the Opt-Out Program. Further, DRA never states that the exit costs are not appropriate costs for cost recovery. DRA s recommendation only delays SCE s efforts for proper cost recovery under the cost causation principles and should be rejected by the Commission.. DRA s Proposal to Include SCE s Capital Expenditures in the Initial Fee Should be Rejected In an attempt to lower monthly fees, DRA states that SCE appeared to include cost items in its monthly fees that could have been recovered in the initial fees, including the cost of handheld devices and meter testing. SCE opposes this DRA recommendation. The costs of the handheld devices are appropriate capital expenditures and, therefore, consistent with the ratemaking treatment for capital expenditures, the capital-related revenue requirement (i.e., depreciation, taxes and return) is recovered over the life of the asset. Incorporating the handheld meter capital revenue requirement in the initial fee is problematic because this fee is designed to recover costs that are one-time in nature. For example, the installation of a legacy meter is one-time in nature. As such, the cost recovery of the handheld devices, like all of the capital-related opt-out costs, is more appropriately recovered through the monthly, ongoing opt-out fees, as proposed by SCE.. TURN s Assertions Regarding Handheld Device Costs Are Incorrect a) TURN s Assertion that SCE is Requesting Double Recovery of Handheld Device Costs is Incorrect TURN recommends that SCE s cost estimate for additional handheld devices should be rejected, asserting that SCE has already requested funding for handheld devices in its 01 GRC Application. TURN s assertion is incorrect. SCE s 01 GRC forecast included funding for 0 handheld devices for meter reading devices that will be used to read Edison SmartConnect meters. In DRA Testimony at p. -. TURN Testimony at pp The handheld devices requested in SCE s 01 GRC will be used to read meters only in geographic areas where it is difficult to obtain over-the-air meter reads. -1-

17 contrast, the devices requested in SCE s opt-out testimony will be used to obtain meter reads from legacy meters. Thus, the devices requested in SCE s 01 GRC Application (used for smart meters) are different from the devices requested in SCE s Opt-Out application (used for analog meters). Consequently, the Commission should reject TURN s recommendation and allow SCE to recover analog handheld device costs as an appropriate Opt-Out Program cost. b) TURN s Comparison of GRC and Opt-Out Program Costs is Incorrect TURN incorrectly compares the cost between the handheld devices requested in the 01 GRC Application and the handheld devices necessary for the Opt-Out Program. 0 In SCE s 01 GRC Application, TURN only considers the direct capital hardware costs, which do not include device overhead expenses (e.g., scheduling, incremental licenses, and maintenance). These overhead expenses were not included in SCE s 01 GRC Application, as these expenses were reduced as part of SCE s operational benefits related to the deployment of Edison SmartConnect meters. The Edison SmartConnect operational benefits do not apply to the handheld device expenses needed to support the Opt-Out Program, hence the costs are appropriately included in SCE s cost estimates. Furthermore, TURN incorrectly assumes SCE is purchasing only handheld devices based on the fact that SCE is requesting an additional. full-time equivalents (FTEs) for meter reading activities. TURN s assumption is incorrect. Because Opt-Out Program customers are distributed throughout SCE s service territory, SCE will utilize new and existing field service representatives (FSRs) to obtain meter reads under the working model that the closest FSR will obtain the read. This approach maximizes operational efficiencies, rather than having FSRs solely dedicated to opt-out activities covering SCE s entire service territory. As such, SCE requires handheld devices to equip all FSRs with handheld devices capable of reading legacy meters. TURN s recommendation to exclude Opt-Out Program handheld device costs is incorrect and should be rejected. 0 TURN Testimony at pp

18 TURN s Assertion That SCE s Meter Reading Forecast Costs Are Not Incremental to SCE s 01 GRC Application Is Incorrect TURN recommends a reduction in SCE s Opt-Out Program meter reading cost estimate based on an incorrect assumption that SCE assumed 0 FTEs are needed in the 01 GRC Application to manually read Edison SmartConnect meters. TURN notes that SCE is requesting funding for. FTEs to support the Opt-Out Program to read only,0 meters compared to 0 FTEs to read 0,000 Edison SmartConnect meters. 1 TURN s recommendation is incorrect. As described previously, the Edison SmartConnect meters that will need to be read manually are local to certain geographic areas where it is difficult to obtain over-the-air reads. Opt-Out Program customer locations are distributed throughout SCE s service territory, which eliminates meter reading route efficiencies. This requires additional FSRs to manually read these meters, perform other Opt-Out Program-related activities, and perform the work of other FSRs who now have this added responsibility. Therefore, TURN s recommendation should be rejected.. TURN s Assertion that SCE s Customer Communications Organization Costs Are Not Incremental to SCE s 01 GRC Application Is Incorrect TURN recommends the Commission reject SCE s Customer Communications Organization (CCO) Opt-Out Program costs, stating that SCE has not demonstrated that the costs are incremental or that such costs cannot be covered through existing rates. TURN justifies its recommendation by asserting that the incremental calls related to the Opt-Out Program are minimal compared to the call volume forecast included in SCE s 01 GRC Application. TURN s recommendations are wrong. While TURN correctly cites SCE s projected Opt-Out Program call volumes, TURN incorrectly assumes all of the CCO s costs are driven only by the incremental call volume associated with the Opt-Out Program. The CCO s forecasted incremental costs for the Opt-Out Program include required training for Customer Service Representatives (CSRs) on handling new opt- 1 TURN Testimony at pp. 1-. TURN Testimony at pp

19 out calls. This training will educate CSRs on handling calls related to SCE s final, approved Opt-Out Program as part of this phase. The training will also include educating CSRs on issues including, but not limited to, the enrollment process, meter forms, meter change outs, customer fees, de-enrollments, dual meters, charges per premise. As such, these opt-out training-related costs, and costs related to the handling of new Opt-Out Program calls are incremental to the 01 GRC and are appropriately recovered in its proceeding and not the GRC. Thus, TURN s recommendations should be rejected.. TURN s Assertion That SCE s Job Skills Training Costs Are Inflated and More Than SCE s 01 GRC Application Is Incorrect TURN recommends rejecting SCE s Job Skill Training (JST) costs in its entirety, stating that SCE has not demonstrated the costs are incremental. Further, TURN characterizes the costs as inflated relative to the JST costs requested in SCE s 01 GRC. Both assertions are incorrect. As stated in previous sections of SCE s Rebuttal Testimony, costs driven by SCE s Opt- Out Program are incremental and were not included in SCE s 01 GRC as the Opt-Out Program did not exist at the time SCE filed its 01 GRC application in November 0. TURN cites several projects that were included in SCE s 01 GRC that will drive training needs. The scope of SCE s Opt- Out Program is not addressed by any of the projects TURN cites and should not be considered part of routine training, as SCE s Opt-Out Program policies and procedures did not exist prior to May 01, when SCE filed Advice Letter AL--E in compliance with D to establish the Opt-Out Program Tariff and program procedures. In addition, TURN incorrectly compares JST s Opt-Out Program cost estimate of $1.0 million to JST s 01 GRC forecast of $,000 and states that the Opt-Out Program cost estimate is 0 percent higher and only affects,0 customers. While SCE did request $,000 in Operations & Maintenance (O&M) expenses in SCE s 01 GRC, this amount was a request for O&M expense for one year (01) and should not be compared to JST s $1.0 million Opt-Out Program cost estimate, TURN Testimony at pp

20 which spans a three-year period (01-01). Comparatively, JST s 01 Opt-Out Program cost estimate of $,000 is approximately percent less than the 01 JST O&M costs in the 01 GRC, not 0 percent more as TURN suggests. Finally, TURN s assertion that training costs are inflated for,0 Opt-Out Program customers is wrong. This cost covers training for SCE employees across multiple customer-facing organizations such as the Meter Services Organization and the Revenue Services Organization, not just the Customer Communications Organization, as TURN incorrectly assumes. In addition, the volume of customers choosing to opt-out is not indicative of the cost to develop employee training material, which is constant, regardless of how many customers elect to participate in the Opt-Out Program. Likewise, the number of SCE employees who require training does not directly correlate to the participation volume, as each SCE employee involved in customer-facing activities within SCE s impacted organization requires education on SCE s Opt-Out Program policies and procedures. TURN s assumptions are wrong and should be rejected.. Aglet s Proposal to Provide Credits for Smart Meters Is Inappropriate and Should Be Rejected Aglet recommends that all IOUs implement SoCalGas proposal to issue a credit to Opt- Out Program customers for the avoided cost of purchasing a smart meter. Aglet s recommendation cannot be applied to SCE because SCE s deployment is nearly complete, and such a credit cannot be accommodated. SoCalGas has not begun its smart meter deployment and can account for the avoidance of smart meter purchases at the onset of its deployment. In contrast, SCE is over percent complete with its Edison SmartConnect deployment. Therefore, SCE has not avoided the purchase of Edison SmartConnect meters to complete its deployment as Aglet suggests. Furthermore, SCE did not request funding in the Opt-Out Program for meter capital, as all funding requests related to meters are included as part of SCE s GRC Applications. As such, in Aglet Testimony at pp

21 SCE s future GRC proceedings, SCE will account for any reduction of Edison SmartConnect meters that will need to be purchased as a result of increased inventory levels from the Opt-Out Program.. Aglet s Recommendation to Limit Customer Service and Information Technology Costs Should Be Rejected Aglet recommends that the Commission limit the recovery of customer service costs to outside vendor costs and employee training costs and limit the Information Technology (IT) costs to outside vendor costs and the costs of additional mesh network devices. Aglet supports these limitations by stating, [C]ustomer support staffing over time makes it impossible to determine with certainty that the utilities will actually hire new support personnel to execute their opt-out programs. Aglet provides no further justification for its recommendation. SCE clearly describes the Opt-Out Program activities that require additional customer service support in its testimony. Further, SCE has demonstrated that these activities are all incremental to SCE s 01 GRC Application (A.--01), which was filed in November 0. Smart meter optout was not considered by the Commission until 0, and SCE was not ordered to offer an Opt-Out Program until D was adopted in 01. These incremental customer support activities require staffing now, regardless of the three-year forecast period for the Opt-Out Program (i.e., 01-01). Regarding IT costs, Aglet notes that its same argument regarding customer service costs applies to IT costs and that each utility developed and used billing systems that would accept both smart meter data from activated meters and analog meter reader data. Aglet s recommendations are misguided and should be denied. SCE s underlying assumption in its 01 GRC Application was that all residential and small commercial customers with demands under 00 kw would eventually have an Edison SmartConnect meter, and their usage data would be managed by the new Edison SmartConnect systems. Therefore, SCE did not request additional funding to support legacy meters beyond the Edison Aglet Testimony at pp

22 SmartConnect Deployment period. The Opt-Out Program also requires systems modifications to allow for billing of Opt-Out Program fees, implementation of opt-out indicators to inform CSRs when an Opt- Out customer is contacting SCE, and several modifications to streamline and automate the existing manual processes currently supporting the Opt-Out Program. SCE did not request funding in its 01 GRC for such systems modifications, nor did SCE request funding for employees to perform these activities. Aglet s recommendations should be rejected.. Aglet s Recommendation to Wait to Install a Smart Meter After an Opt-Out Program Customer Terminates Service Should Be Rejected In instances when a customer terminates service in the Opt-Out Program, Aglet recommends that the Commission require the IOUs to wait a reasonable period of time before installing a smart meter at the premises and to notify the incoming customer of the availability of the Opt-Out Program, asserting that to do otherwise amounts to wasteful utility spending. Aglet s recommendation is misguided and should be rejected. Smart meters are the standard of service for SCE customers and are necessary to achieve the energy policy goals of the Commission and the State of California. Participation in the Opt-Out Program is an exception to normal utility operations that now include smart meters. Considering the relatively low participation rate experienced by SCE (i.e., approximately 0. percent), Aglet s recommendation that SCE leave an analog meter in place and notify customers of the availability of the Opt-Out Program will result in increased program costs related to the notifications themselves and subsequent verification of the customer s choice either to participate in the Opt-Out Program or receive the Edison SmartConnect meter. The Opt-Out Program as currently configured allows the incoming customer to make a definitive choice regarding participation in the Opt-Out Program. Aglet s recommendation would result in added costs and should be rejected. Aglet Testimony at p. 1. Aglet s recommendation could also result in customer confusion and customer dissatisfaction, as there could be situations in which incoming customers do not respond to the notification, and SCE will be forced to default the customer to the Opt-Out Program or to install a smart meter. -1-

23 C. Meter Reading Options 1. DRA s Recommendation for a Joint Meter Reading Program Between SCE and SoCalGas is not Practicable DRA recommends that the Commission require SCE and SoCalGas to investigate joint meter reading to potentially reduce Opt-Out Program meter reading costs. This recommendation is not practicable and would likely not result in cost savings for either SoCalGas or SCE. Approximately 0 percent of SCE customers also receive service from SoCalGas. This means that SCE would still need employees to read the meters for the areas in which a different gas utility provides service to SCE s electric customers. In addition, it is unknown at this time whether all of these customers would elect to opt-out of both electric and gas meters, which would further reduce the potential overlap of meter reading routes. SCE and SoCalGas would also require systems modifications to support the transfer of data between the two IOUs, as well as to accommodate the different billing determinants associated with gas and electric service. Such system modifications are significant, and SCE and SoCalGas would need to assess the resulting impacts to customer fees. In addition, training costs would also increase because employees from each utility would have to be trained to read the other utility s meters. SCE recommends that the Commission reject DRA s suggestion of a joint meter reading program between SCE and SoCalGas.. A Customer Self-Read Option Would Result in Significant Uncertainty of Obtaining Accurate and Timely Meter Reads and Should Not be Adopted TURN recommends the Commission investigate allowing customers to read their own meters. Similarly, CEP recommends customers be allowed to self-read their meters. These recommendations should be not be further explored. SCE already investigated the feasibility of customer self-reads in its Technical Feasibility and Cost Information Compliance Proposal in which SCE identified the risks related to such an option, such as the uncertainty of receiving timely and TURN Testimony at pp. -. CEP Testimony at p

24 accurate meter reads, which would impact SCE s ability to timely and accurately bill and collect revenues. As SCE concluded in its Technical Feasibility and Cost Information Proposal, the potential monthly cost savings do not appear to justify the risk of process uncertainty, revenue uncertainty, and customer bill impacts from potentially inaccurate meter reads associated with a customer self-read option. -0-

25 IV. OTHER ISSUES A. DRA s Recommendation for Bi-Monthly and Quarterly Meter Reads Requires Further Analysis DRA recommends that the IOUs investigate ways to mitigate meter reading costs and whether the benefits of the alternative approaches could outweigh the cost of implementing those approaches. Specifically, DRA recommends evaluating bi-monthly or quarterly meter reads supported by a level pay plan. 0 While quarterly or bi-monthly reads could result in a potential reduction in SCE s proposed monthly fee, there are numerous factors related to the implementation of such a program that would need to be addressed. For example, there would be the potential for delayed bills if SCE is unable to read the meter during the scheduled quarterly read and customer satisfaction issues if estimated bills are inaccurate, resulting in a high quarterly true-up bill. In addition, California Public Utilities Code Section 0(d) states, The commission shall require a public utility that estimates meter readings to so indicate on its billings, and shall require any estimate that is incorrect to be corrected by the next billing period, except that for reasons beyond its control due to weather, or in cases of unusual conditions, corrections for any overestimate or underestimate shall be reflected on the first regularly scheduled bill and based on an actual reading following the period of inaccessibility. Therefore, SCE does not typically estimate more than one consecutive monthly bill for a customer for non-access related issues. In light of these issues, the Commission should direct that further analysis be conducted to evaluate bi-monthly or quarterly meter reads, especially given the restrictions of Section 0(d). 0 DRA Testimony at pp

26 Appendix A - SCE Witness Qualifications

27 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY OF LINDA R. LETIZIA Q. Please state your name and business address for the record. A. My name is Linda R. Letizia, and my business address is Walnut Grove Avenue, Rosemead, California. Q. Briefly describe your present responsibilities at the Southern California Edison Company (SCE). A. I am a Regulatory Project Manager in the Regulatory Operations Department, and have responsibility for the management, development, and presentation of various ratemaking showings before the California Public Utilities Commission and the Federal Energy Regulatory Commission. Q. Briefly describe your educational and professional background. A. I graduated from the University of California at Davis in with a Bachelor of Science degree in Mathematics. I have been employed by Southern California Edison Company since 1. Since joining SCE, I have held various positions in the Regulatory Policy and Affairs Department. My responsibilities have included revenue allocation and rate design, the preparation of pricing studies and analyses, and the development of revenue requirements and ratemaking proposals for numerous regulatory proceedings before the California Public Utilities Commission. I have also been employed in the Capital Recovery Section and Corporate Budgets Section of the Controller s Department. I have previously testified before the California Public Utilities Commission. Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony in this proceeding is to sponsor the portions of Chapter III, entitled Edison SmartConnect Opt-Out Cost Recovery Proposal as identified in the Table of Contents thereto. Q. Was this material prepared by you or under your supervision? A. Yes, it was. Q. Insofar as this material is factual in nature, do you believe it to be correct? A. Yes, I do. Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best judgment? A. Yes, it does. Q. Does this conclude your qualifications and prepared testimony? A. Yes, it does. A-1

28 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY OF PAUL KEVIN ELLISON Q. Please state your name and business address for the record. A. My name is Paul Kevin Ellison, and my business address is Walnut Grove Avenue, Rosemead, California. Q. Briefly describe your present responsibilities at the Southern California Edison Company. A. I serve as the Director of the Meter Services Organization in the Customer Service Business Unit (CSBU). This is the senior leadership position in the organization. The Meter Services Organization is responsible for all aspects of the end-to-end meter process including: Evaluating and monitoring the business environment Planning, developing, and implementing meter process improvements Performing meter evaluations and laboratory testing Planning, testing and implementing new and efficient metering and associated technologies Meter installation, change, maintenance, assessments and compliance Field customer service requests, including turn-ons and turn-offs Routine and non-routine meter reading Investigating unauthorized use and recovery of revenue loss Ensuring the accuracy and integrity of revenue billing Q. Briefly describe your educational and professional background. A. I hold a Bachelors Degree in Business Administration from the University of Louisville and a Masters Degree in Business Administration from Bellarmine University in Louisville, Kentucky. I hold a black belt certification in Six Sigma from Villanova, University. In addition, I have completed a number of Executive Education programs. I have over 0 years of utility experience, the last six years with Southern California Edison Company. Prior to joining the Southern California Edison Company, I previously worked at LG&E Energy Corp (Louisville Gas and Electric Company and Kentucky Utilities Company) where I held a number of senior management and management positions in Customer Service, Marketing, T&D Operations and Economic Development. From April 001 until May 00, I served as Chief Operating Officer for a Louisville, KY based Software Company and with Merrill Lynch as a Financial Advisor, focused on the small business marketplace. I began work for SCE in 00 as the Director of the Government and Institutions group within the A-

29 1 1 Business Customer Division. I have been in my current position as the Director of the Meter Services Organization since March 00. Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony in this proceeding is to sponsor the portions of Chapter, entitled Program Assumptions and Cost Estimates, as identified in the Table of Contents thereto. Q. Was this material prepared by you or under your supervision? A. Yes, it was. Q. Insofar as this material is factual in nature, do you believe it to be correct? A. Yes, I do. Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best judgment? A. Yes, it does. Q. Does this conclude your qualifications and prepared testimony? A. Yes, it does 1 A-

30 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY OF GEORGETTE HUCKABY Q. Please state your name and business address for the record. A. My name is Georgette Huckaby, and my business address is Walnut Grove Avenue, Rosemead, California. Q. Briefly describe your present responsibilities at the Southern California Edison Company. A. I am the Director of Finance and Administration for the Customer Service Business Unit and I have responsibility for budgeting and reporting, financial analysis, internal controls, payroll and payments administration, and personnel office space planning for the business unit. Q. Briefly describe your educational and professional background. A. I graduated from California State University, Dominguez Hills in 1 with a Bachelor of Science degree in Business with an accounting concentration. My experience prior to joining SCE includes eleven years at Northrop Grumman Corporation. At Northrop Gruman, I held the positions of financial analyst and accountant in Overhead Administration, General Accounting, and Accounting Systems. I joined SCE in 1 as a business analyst and was promoted to Manager of CSBU Finance in 000 where I was responsible for the development of CSBU s O&M, capital and OOR forecasts and financial support in the 00 and 00 GRC. In 00, I was promoted to my current position as CSBU Director of Finance and Administration. Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony in this proceeding is to sponsor the portions of Chapter, entitled Program Assumptions and Cost Estimates, and Chapter, entitled Edison SmartConnect Opt-Out Cost Recovery Proposal, as identified in the Table of Contents thereto. Q. Was this material prepared by you or under your supervision? A. Yes, it was. Q. Insofar as this material is factual in nature, do you believe it to be correct? A. Yes, I do. Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best judgment? A. Yes, it does. Q. Does this conclude your qualifications and prepared testimony? A. Yes, it does. A-