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Texas Commissioners Agree on Entity Responsible for Collecting Smart Meter Opt-Out Fee (TDU vs. REP)

July 5, 2013

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Copyright 2010-13
Reporting by Paul Ring •

During the July 3 open meeting, Donna Nelson, Chairman of the Public Utility Commission of Texas, and Commissioner Kenneth Anderson agreed to a framework allowing customers to opt-out of having a provisioned advanced meter, including agreement on the entity responsible for billing the charges in order to opt-out.

Specifically, Nelson and Anderson agreed that, although it departs from current practice in the market, the transmission and distribution utility (TDU), not the retail electric provider (REP), should collect the opt-out charge.

From their discussion, it was clear that this included the initial opt-out fee, but it was not completely clear if the TDU would also collect the monthly ongoing AMS opt-out fee.

Nelson supported placing this obligation on the TDU, despite the REP handling nearly all billing in the market (apart from certain construction services which, despite REPs' arguments, are not analogous to the AMS opt-out, which is essentially a discretionary service, albeit a more costly one), by noting that the TDU has, to date, handled all communication regarding AMS implementation in the market.

Commissioners agreed that there will be an initial, upfront customer charge for the smart meter opt-out, as well as an ongoing monthly customer charge to reflect ongoing expenses associated with the opt-out. The fees shall reflect all direct and indirect costs resulting from the customer's decision to opt-out from a provisioned advanced meter.

Commissioners generally followed a line of thinking that an interim amount for each opt-out fee, specific to each TDU, should be established in the final opt-out rule, with the amounts later updated as a result of rate proceedings to determine the actual cost at each TDU. While seeing merit in this approach, Anderson also noted that if the final fees, as determined in each rate proceeding, are significantly higher from the interim fees, it may prompt customers to terminate their opt-out, raising additional issues regarding the previously paid fees.

The interim opt-out charges have not yet been determined and will be subject to further review prior to a proposal for adoption, but Nelson suggested $200 for the upfront charge, and $10-$20 per month for the ongoing charge. While asking for more data from the TDUs, Anderson worried that these charges (particularly the monthly charge) may not fully recover all incremental costs from a customer opt-out, which Commissioners agreed should be paid solely by the customers opting out.

Commissioners did not specifically discuss whether customers opting out would be permitted to bypass the current AMS surcharge, an idea raised previously.

In addition to collecting the opt-out fee (either in whole or part), Commissioners agreed that the TDUs should serve as the man point of contact for communication regarding the opt-out. While it was unclear if the customer would still be required to initiate an opt-out request with their REP (as proposed in the draft rule), Commissioners agreed that the TDU should be the entity responsible for sending a notice/acknowledgement form to the customer, which must be signed by the customer and returned to the TDU to effect the opt-out.

This acknowledgement form shall require the customer to affirm that they understand that the lack of a provisioned AMS meter may (or will):

• Result in longer outage restoration times;

• Subject the customer to fees for discretionary services (out-of-cycle reads, etc.), which have largely been reduced to $0 for AMS customers;

• Subject the customer to a REP switching timeline that may last up to 45 days; and

• Prevent the customer from being served under certain retail products, such as prepaid or TOU products

Commissioners also agreed that they will need to address the issue of what product a REP should be allowed to default a customer to, should a customer currently on a product requiring a provisioned smart meter elect to opt-out.

Nelson proposed that customers opting-out of a provisioned AMS meter should be given the option of:

• An analog meter, provided such meters are commercially available to the TDU and meet certain accuracy tests;

• A digital meter; or

• An AMS meter with the communication function turned off

With Commissioners agreeing on these threshold issues, Staff will draft a proposal for adoption to allow final implementation of an opt-out.

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