PSC-20-09-00016-P Recovery of, and Accounting For, Costs Associated with the Companies' Advanced Metering Infrastructure (AMI) Pilots Etc.

5/20/09 N.Y. St. Reg. PSC-20-09-00016-P

NEW YORK STATE REGISTER

VOLUME XXXI, ISSUE 20

May 20, 2009

RULE MAKING ACTIVITIES

PUBLIC SERVICE COMMISSION

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. PSC-20-09-00016-P

Recovery of, and Accounting For, Costs Associated with the Companies' Advanced Metering Infrastructure (AMI) Pilots Etc.

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

The PSC is considering a plan, filed by Consolidated Edison Company of New York, Inc. and Orange and Rockland Utilites, Inc. (the Companies) as to the recovery of, and accounting for, certain costs, and other matters.

Statutory authority:

Public Service Law, sections 4(1) and 66(1)

Subject:

The recovery of, and accounting for, costs associated with the Companies' advanced metering infrastructure (AMI) pilots etc.

Purpose:

To consider a filing of the Companies as to the recovery of, and accounting for, costs associated with it's AMI pilots etc.

Substance of proposed rule:

In their joint filing of a Supplemental Plan on April 14, 2009, Consolidated Edison Company of New York, Inc. (Con Edison) and Orange and Rockland Utilities, Inc. (Orange and Rockland) (collectively, Companies), state that a 2007 Commission Order instructs the Companies to provide a detailed accounting proposal designed to identify and isolate all the costs and benefits of the advanced metering infrastructure (AMI) pilot program and identify lost revenues not otherwise accounted for through operation of revenue decoupling mechanisms. The Companies will track total costs associated with the pilot programs. Within the total costs, the Companies will also track the incremental costs, for which they would seek cost recovery. As a means of recording costs applicable to the AMI pilot, the Companies will establish cost segregation orders (CSOs) to track:

• The cost of the meters with communication devices, including labor to install those meters;

• Related communication devices, e.g., receivers, including installation labor; and

• Associated software costs.

The CSOs established to track these costs will clear on a monthly basis to PSC account 182.3, "Other Regulatory Assets," to facilitate timely recovery of those expenditures. Separate Regulatory Asset accounts will be established for electric and gas expenditures. The Companies will establish separate work orders for incremental O&M expenses, (e.g., licensing fees, telecommunication charges, and marketing). The work orders will subsequently clear on a monthly basis to separate PSC accounts 182.3, "Other Regulatory Assets," to facilitate recovery of those expenses. Separate Regulatory Asset accounts will be established for electric and gas deferred expenses. Non-incremental O&M expenses (e.g., company labor, including overtime) will be tracked in a CSO and will clear to expense accounts monthly. The Companies will not seek recovery of non-incremental costs as part of the AMI pilot projects.

The Companies estimate the pilot projects to have a cost in the range of $40 million to $50 million. They believe that, for the efforts described in their Supplemental Plan, funding for up to one-half of the costs may be available under the Smart Grid portion of the American Reliability and Recovery Act of 2009 (ARRA) and plan to seek such funding. The Companies propose to recover from ratepayers the remaining pilot costs not funded under the ARRA. To accomplish this, the Companies are seeking the Commission's authorization of surcharge mechanisms to recover costs that are not provided by federal funding. Upon authorization of the surcharge mechanisms by the Commission, the Companies will make the appropriate compliance tariff filings. Upon receiving a grant of federal funding, the Companies will commence expenditures for the AMI pilot projects and will begin to recover their remaining costs through the approved mechanisms. As the AMI project capital costs are being incurred, the Companies propose to begin recovery of the carrying costs on such expenditures. Prior to the projects being placed in service, the carrying cost will be equal to each company's currently authorized pre-tax rate of return for each service. After the projects are placed in service, the carrying cost will also include an allowance for depreciation. Cost recovery would also include all incremental operation and maintenance (O&M) expenses incurred in the implementation and operation of the AMI projects. These capital and O&M costs would be recovered from all gas and electric customers on a monthly basis until such time as base rates are adjusted to include recovery of AMI costs. Federal funding will be applied against unrecovered costs as it is received. If portions of the federal funding exceed the Companies' unrecovered costs, the amounts above this level will be utilized to offset any remaining costs to be incurred. An amount equivalent to any remaining federal funds after the pilot projects are completed will be credited to ratepayers. If the Commission desires that the Companies commence work sooner, the Companies request that the Commission approve (at least 18 months before meter-to-bill capability must be in place) a cost recovery methodology that provides for full recovery of all Supplemental Plan costs. If the Commission so decides, the Companies will make the appropriate compliance tariff filings to begin the recovery of AMI costs.

The 2007 Order directs the Companies to identify lost revenues not otherwise accounted for through operation of revenue decoupling mechanisms (RDMs). Two years ago, the Commission required utilities to file revenue decoupling proposals in ongoing and new rate cases. In accordance with the order in that proceeding, revenue decoupling proposals were filed in the Con Edison and Orange and Rockland electric and gas cases. RDMs are currently in place for Con Edison and Orange and Rockland electric service and for Con Edison gas service and cover most of their revenues. The Orange and Rockland gas revenue decoupling proposal is under review in its pending rate proceeding. Almost all of the Companies' electric revenues are covered by the electric revenue decoupling mechanisms. Most of Con Edison's gas delivery revenues are covered by an RDM. Because rates may be developed based on load information from various programs and load research, the Companies seek recovery of lost electric and gas delivery revenues associated with customer participation in rate programs that encourage reduction in customer usage to the extent not accounted for through their RDMs. The Companies propose that any difference between expected supply costs and actual supply costs received from pilot participants be reconciled through their respective supply cost mechanisms.

As invited in the Commission order in Case 09-M-0074, Con Edison seeks a waiver of the minimum functional requirement mandating two-way capability and related requirements. Con Edison has implemented mobile AMR in a substantial portion of its service territory in Westchester County under a Commission-approved project that began before the Commission issued its 2009 Order adopting minimum functional requirements for AMI and is on track to complete the saturation of this area with AMR technology. Mindful of the Commission's directive for two-way communication as a minimum AMI functionality, in this Supplemental Plan, Con Edison proposes to test the effectiveness of a "fixed network" installed over the AMR meters to enhance the communications capability of the AMR system in a portion of Westchester. As Con Edison explained in its 2007 filing, a "fixed network" requires the installation of data collectors and repeaters on utility pole tops, utility towers, or similar structures. The fixed network introduces an additional level of remote interaction between the utility and the data collectors to which the electric meters automatically communicate usage information hourly or more frequently. The utility would be able to gather this meter data information from the data collection system through radio signals more frequently than once per billing cycle -- for instance, once per hour. This meter data would provide the necessary information for demand response programs and the application of alternative rate forms, once billing is enabled. As indicated in that filing, comparing fixed network AMR with AMI, the fixed network will also enable other minimum functionalities required by the Commission that might have been assumed to require two-way communication, such as outage notification and on-demand meter reads. For Westchester, Con Edison plans to test home area network (HAN) devices that can interface with the existing AMR meter. The HAN equipment will provide, through use of the customer's existing Internet connection, two-way communications for customer and utility interaction. In addition, Con Edison believes that the AMR system will not fully meet the requirements for 60 days of data storage at the meter or the ability to reprogram the meter or add functionality remotely. With regard to the security capabilities defined, Con Edison believes that the information transmitted by the AMR meter meets most of the requirements.

Text of proposed rule and any required statements and analyses may be obtained by filing a Document Request Form (F-96) located on our website http://www.dps.state.ny.us/f96dir.htm. For questions, contact:

Leann Ayer, Public Service Commission, 3 Empire State Plaza, Albany, New York 12223-1350, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Jaclyn A. Brilling, Secretary, Public Service Commission, 3 Empire State Plaza, Albany, New York 12223-1350, [phone], email: [e-mail]

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement, Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement

Statements and analyses are not submitted with this notice because the proposed rule is within the definition contained in section 102(2)(a)(ii) of the State Administrative Procedure Act.

(09-M-0074SP3)