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Texas TDUs' Estimates of Customers Electing to Opt-Out of Advanced Metering Vary Widely

October 1, 2013

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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Texas TDUs have filed widely varying estimates of the number of customers electing to opt-out of having a provisioned advanced meter, in filing their compliance tariffs to set the rates for the AMS opt-out.

The per-customer costs of the various opt-out options are discussed in our related story today (click here). Due to the recovery of fixed costs, these per-customer costs can significantly change based on the number of customers electing the opt-out.

Oncor's filing assumes 1,000 customers will choose to take non-standard metering service. Oncor has approximately 575 customers who have not had their existing meters replaced with an advanced meter pending the adoption of a rule providing an opt-out alternative, and assumes a similar number of customers would join these customers in electing an opt-out.

In contrast, CenterPoint Energy Houston Electric, which has about two-thirds of the customers that Oncor has, assumed that 100 customers will initially select non-standard metering service. CenterPoint Energy Houston Electric currently has 39 meters that have not been replaced with an AMS meter. The company additionally has had approximately 150 inquiries about non-AMS meters.

However, it's unclear how well relying on inquiries concerning AMS meters will be in forecasting customer uptake of the opt-out. Customers, knowing through press coverage and legislative efforts that an opt-out was not being provided under current tariff, may have felt no need to waste time contacting the TDU if their meter had already been replaced.

Notably, CenterPoint Energy Houston Electric's assumption of only 100 customers electing an opt-out is lower than the estimate at every other TDU, including those with a mere fraction of CenterPoint Energy Houston Electric's approximately 2 million customers.

AEP Texas Central (about 790,000 meters) estimates that 800 customers in its service area will request the opt-out, and AEP Texas North (about 185,000 meters) estimates that 200 customers in its service area will request the opt-out.

The largest contrast with CenterPoint Energy Houston Electric is that Texas-New Mexico Power, with about 240,000 meters, has estimated that 1,081 customers will opt-out. Notably, TNMP's estimate is based not just on its own opt-out list, but on the average opt-out rate (then applied to TNMP's size) at utilities in other states which are offering an AMS opt-out for a fee.

TNMP reported this average opt-out rate as 0.45%. If applied at CenterPoint Energy Houston Electric, this would result in some 9,000 customers opting out.

While more customers opting out would mean fixed costs would be spread over more customers (reducing the per-customer costs), a larger number of opt-out customers would create new expenses, CenterPoint Energy Houston Electric said.

For example, after 250 Non-Standard Meters CenterPoint Energy Houston Electric said that it will no longer be possible to process On-Cycle bills manually. Costs will increase as additional IT costs will be incurred to automate on-cycle billing. After 5,000 Non-Standard Meters, CenterPoint Energy Houston Electric said that it will no longer be possible to utilize Field Services Representatives to read the Non-Standard Meters. Costs will increase as new systems and processes will be required

Also of note is that CenterPoint Energy Houston Electric bases its opt-out participation assumption on its view that, "As Commission Substantive Rule 25.133 requires that the costs associated with the non-standard metering service be paid by those who choose to opt-out of AMS service, it is logical that many of the customers who had a passing interest in the service will no longer be interested. It is likely that they will not be willing to pay an additional amount for the decreased level of service associated with non-AMS metering."

This view of the opt-out as a "decreased level of service" shows a fundamental misunderstanding of the opt-out, and those customers who desire it. For customers, the opt-out is a value-add service, and while the vast majority of customers may not elect the opt-out, there is a core of customers willing to pay for the value they associate with not having an advanced meter. Accordingly, participation should not be easily dismissed just because it will add incremental costs to customers.

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