Cautionary tale in California?

A legal move in a distant city is drawing attention in Nevada.

Attorneys for the city of San Francisco petitioned Thursday for the California Public Utilities Commission to halt a smart-meter program that utility Pacific Gas & Electric is rolling out across the Golden State.

San Francisco’s motion grabbed the attention of consumer advocates in Nevada, where power utility NV Energy has proposed its own smart-meter initiative. But NV Energy officials on Friday assured that extensive testing will help the utility dodge the pitfalls associated with Pacific Gas & Electric’s smart-meter program.

“We are absolutely going to take every action we can to protect consumers,” said Rob Stewart, NV Energy’s senior vice president of customer relationship.

Pacific Gas & Electric customers with digital meters have complained of skyrocketing utility bills, raising suspicions that the devices either malfunction or are used to intentionally overcharge on power bills, San Francisco’s lawyers said. PG&E has blamed the bigger bills on higher-than-average temperatures and rate increases.

“Common sense should argue against installing millions of defective smart meters until their problems are fixed, and questions about their accuracy are fully resolved,” said San Francisco City Attorney Dennis Herrera.

Eric Witkoski, the consumer advocate charged with protecting Nevada’s ratepayers in utility cases, echoed Herrera’s comments.

“We are very concerned about the problems in California regarding meter accuracy and the effect on consumer bills,” Witkoski said Friday. “There has been a transition in California where the utility was denying there was any problem with the meters’ accuracy, and now they are acknowledging such problems do exist.”

PG&E has installed 5.8 million smart meters in its service territory, and plans to install another 3.9 million digital meters. PG&E has acknowledged that at least 60,000 customers are currently receiving inaccurate bills, Herrera said.

The meters have generated plenty of controversy and even a few lawsuits in states including California, Texas, Maryland and Connecticut.

In Nevada, NV Energy has asked the state Public Utilities Commission to sign off on a smart-meter initiative beginning later this year. Through its $301 million Advanced Service Delivery project, NV Energy wants to replace all 1.45 million of its meters in the state with digital versions. The utility secured $138 million in federal stimulus funds to help pay for the project. The rest could come from power rates, depending on the commission’s decision.

Advanced Service Delivery will cut operational expenses and keep power rates lower in the long term, Stewart said. The project will also allow for faster detection of outages, and it will enable the company to craft optional billing programs for customers interested in saving money by switching to off-peak power use.

NV Energy officials say they’ve been watching the PG&E experiment as carefully as anyone else, and they’re learning from the utility’s missteps.

“About 99 percent of PG&E’s problem was due to the implementation process, and not due to the inaccuracies of the meters,” Stewart said. “We’ve built our consumer-confidence plan to catch as many of those types of procedural mistakes in deployment as we can, so there’s no confusion with the fact that the meters are very accurate, and that they can provide benefits to consumers.”

Before NV Energy deploys a single meter, it will install heavy firewalls and test its communications systems for security and privacy, Stewart said. The company will test its devices beyond the quality-control checks performed at the meters’ manufacturing plants, and it will give sample meters to a third party for independent analysis.

A 10,000-meter pilot program will follow, through which NV Energy will determine whether its back-office and communications systems work with the new devices. NV Energy plans to read pilot meters manually for three months to gauge how their numbers compare with information coming from company systems, and those meters won’t be united with billing functions until the tests are complete. If pilot customers’ power bills differ more than 1 percent to 2 percent from comparable invoices from a month or a year earlier, the company will flag those bills and investigate what’s behind the higher expense.

NV Energy will also consider the timing of its implementation. PG&E made the “classic mistake” of turning on its digital devices just as summer arrived and rates increased, Stewart noted.

Once the 10,000-meter pilot program checks out, NV Energy would proceed to yet another pilot with 120,000 additional customers in Southern Nevada. It’ll be the same testing, conducted to make sure the company’s safeguards work on a larger scale. The test meters would go live by April . In fall 2011, NV Energy would begin seeking customers to participate in optional peak-pricing trials.

Despite the safeguards, consumer advocates remain concerned.

Witkoski’s office has asked the state Public Utilities Commission to limit NV Energy’s pilot program to 30,000 customers, and to test at that level for a year. Commissioners and the company could monitor deployment, accuracy and customer acceptance in that period, and all parties could then comment on whether further deployment is appropriate. The U.S. Department of Energy, which is partly funding the project, doesn’t require a complete rollout until 2015, so there’s plenty of time for such a measured approach, Witkoski said.

Other consumer advocates agreed with the slower rollout.

“What is the rush, exactly? This technology does not appear ready for prime time,” said Mindy Spatt, communications director for The Utility Reform Network in San Francisco. “And its benefits, such as home-energy networks and checking prices per kilowatt hour online, are years and years away. The benefits of smart meters are completely prospective, but the costs are today.”

Contact reporter Jennifer Robison
at jrobison@reviewjournal.com or 702-380-4512.