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Battle heats up over Southern California Gas smart meter proposal

SoCalGas says the radio-controlled meters will help customers save money. But critics denounce the plan as a boondoggle, contending the costs far outweigh the benefits.

March 10, 2010|By Marc Lifsher

Reporting from Sacramento — Natural gas consumers could pay more than $1 billion to put radio-controlled smart meters on their homes, even though an agency judge has ruled that the proposal by Southern California Gas Co. is a money loser.

The Los Angeles company, which serves 20.5 million people from south of Fresno to the Mexican border, says it needs the meters so customers can get up-to-the-minute information about how much natural gas they use to run furnaces, water heaters and stoves.

"That gives customers a chance to adjust usage . . . such as putting on a sweater and tightly closing windows," said Michelle Mueller, vice president for customer operations at SoCalGas, a unit of Sempra Energy of San Diego. "They can make changes before the bill comes next month."

With smart meters for electricity, consumers can adjust their use and see changes in their monthly bills, critics said, but they can't use smart meters to get much of a change in their natural gas bills.

Worse, they said, customers must pay about $200 per meter not only for the equipment and installation, but also for a guaranteed return to SoCalGas for its outlay.

Even Mueller acknowledged that the most that could be saved over 30 years, conservatively, is 1% of the annual natural gas consumption.

Consumer groups, the utility workers' labor union, the state's ratepayer advocate and others denounce as a boondoggle the proposal that the five-member California Public Utilities Commission may approve as early as Thursday.

"People know that their gas bill is more expensive in the wintertime when it's cold, and it's lower in the summertime when it's hot and they don't use their heater," said Dave Ashuckian, deputy director of the PUC's independent Division of Ratepayer Advocates. "We don't think they need smart meters to help them remember that."

Ashuckian's agency has endorsed a proposed decision by a PUC administrative law judge who found that SoCalGas overstated the estimated savings from replacing or retrofitting 6 million old-style meters.

"The project as proposed does not appear to be cost-effective," wrote Gladys M. Dinglasan. "The benefit-to-cost ratio is approximately 86%, and costs exceed benefits by approximately $146 million."

Most of those benefits would come from eliminating about 1,000 meter readers, who could be added to the state's growing ranks of the unemployed.

SoCalGas disputes the judge's findings, saying that the new project would be slightly in the black at the end of the technology's 30-year life span.

The company's position, so far, has gained at least one influential PUC ally: Commissioner Dian M. Grueneich. The commissioner, a former president of the California League of Conservation Voters, has written an alternative gas-meter decision that concludes that SoCalGas "provides reasonable assurance that the project can be cost-effective given adequate safeguards."

What's more, Grueneich said, SoCalGas's push for remotely read gas meters is consistent with the PUC's support for installing high-tech electric meters in areas served by the state's three investor-owned power companies: Southern California Edison Co., San Diego Gas & Electric Co. and Pacific Gas & Electric Co.

Grueneich declined to be interviewed on the pending decision. On Thursday, she and fellow commissioners are expected to vote on the gas-meter proposals.

But Grueneich and SoCalGas are wrong, many experts said, if they contend that smart gas meters could produce the same kind of energy savings as smart electric meters. Natural gas and electricity are fundamentally different power sources, they said.

Natural gas can be purchased months in advance of when it's consumed and stored in underground caverns. Electricity can't be readily stored, except in the form of water behind dams, and must be generated to meet fluctuating demand, such as on extremely hot afternoons when air conditioners are working across most of Southern California.

Smart meters, which tell consumers how much electricity they're using at any moment of the day, are a key tool that the PUC wants to use to encourage consumers to use less power during peak hours and more at off-peak times. Electric utilities are moving toward so-called time-of-use pricing that charges more per kilowatt hour during weekday summer afternoons than at night, early morning or the weekends.

"There is very little additional information that a gas meter is going to provide to a customer," said Mark Toney, executive director of consumer group the Utility Reform Network.

"Gas doesn't have the same peak-load considerations as electricity," he said. "It's basically about the seasons, winter and summer, and the different uses that you have."

The big winner from installing new gas meters won't be consumers. It will be SoCalGas, which is guaranteed by the PUC to earn an 8.7% return on capital it invests in the project, warned Sam Weinstein, assistant international president of the Utilities Workers of America labor union.

That's money that by law must come out of ratepayers' pockets.

"We just think this is a poor excuse for going green," Weinstein said. "What it really does is to make the customers a cash cow for the gas company."

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