IEE's Wood: Opt-out? Pay the cost!

Industry figure says don't socialize opt-out costs

Phil Carson | May 31, 2012


You may have caught the E&E TV segment from last week that featured Lisa Wood, executive director of the Institute for Electric Efficiency, talking about interval meters, aka "smart meters." 

The brief online interview segment touched on the basics: the progress of interval meter deployment, the impacts of opt-out programs, allegations over health effects, enabling consumer access to their energy use data. 

The exchange that caught my attention was when the show's OnPoint moderator Monica Trauzzi asked whether opt-out policies would slow grid modernization and, more importantly, who should pay for the cost of customers who opt-out of smart meters in favor of analog meters. 

This is an issue that's being hotly debated in California right now, with the California Public Utility Commission scheduled to take up the issue of fair fees and who pays, following the submittal and, in some cases, approval, of opt-out plans by the state's three major investor-owned utilities. 

Wood said unequivocally that consumers who opt-out should pay the costs. Making other customers pay for an individual's decision to opt-out is unworkable, she said.  

You may recall we've featured Wood in these pages, most recently in "IEE's Lisa Wood: `Change is Happening,'" but also in an op-ed piece she penned, titled "Time to Move Beyond Pilots.

I agree with Wood on who should pay for opting out and, certainly, I've expressed my own logic in a series of columns, most recently those titled "Meter Readers Have Their Day," "California: A Future With ... Analog Meters," "California: Mob Rule On Analog Opt-out Solution?" and "Smart Meters and Cultural Toxicity."

In the "California: Mob Rule" column, I argued that though individuals opting out may pose a relatively small impact to the system, an effort afoot to allow entire communities to opt-out represents a different scale of threat to the system. That's like refusing to pay for entrance and exit ramps on your local portion of a highway—you defeat the purpose of the system and establish the precedent that we can all just "opt-out" of anything we don't like. So I'm opting out of paying for those who opt out. And I think I'll make a few executive decisions regarding the defense budget; that ought to save me a bundle come next April. 

The notion being pushed by groups involved in the CPUC proceeding on the matter is that the entire utility customer base ought to pay for the cost of those who opt-out. I shredded that notion in "Meter Readers Have Their Day," where I argued:

"Suppose that Fairfax, Calif., population 7,000, estimated median household income $89,000—which is 50 percent higher than their fellow Californians—wins and the rest of PG&E's ratepayers pick up the tab. Say that the opt-out cost for an individual ends up at $135 up front and $20 per month (these convenient numbers are the least-cost estimates). That would add [about $2 million] to fellow citizens' bills the first year.

"Suppose that Marin, Lake and Mendocino counties-officially part of the CPUC/PG&E case-were to `win.' That's 400,000 people, or, say, 133,000 meters at $375 a pop in the first year. That's $50 million in costs the first year alone. All paid by fellow ratepayers. This back-of-napkin math does not include costs from a system with 133,000 holes in it."

The opt-out issue and cost allocation is also being explored in Maryland and in Vermont, where the governor apparently just barred utilities from charging customers for opting out. That's a pretty clear rejection of accountability, individual responsibility and societal cohesion—not to mention a total rejection of science in favor of fear. Vermont utilities applied to regulators to install advanced meters, regulators approved and now, anyone can do whatever they want and face no consequences. 

In Pennsylvania, however, less pliable minds seem to be at work. Legislators are resisting even an opt-out provision, but are looking at fees if opt-out is allowed.

Should utilities be forced to justify advanced metering infrastructure technically and financially? Of course. Should customers pay for meters that primarily (at this stage) only enhance utility efficiencies? No, not in my opinion. If meters are worth pursuing and they save the utility money through efficiencies, they should pay for themselves. If meters are to be used to implement dynamic rates that will defer additional peak generation plants and lead to less pollution, let's have them. If regulators have examined the actual issues, rather than indulged pockets of citizens with secret agendas and axes to grind and fears to foment, and approved an AMI system for all, then let it be an AMI system for all.  

With nothing but unfounded fears to substantiate their position, those who argue for opt-out provisions are finding some traction in making others pay for their decision to punch holes in a metering system and incur costs for manual meter reading. It isn't just the need to meter and measure the flow of electricity to end customers and establish two-way communication with them for the provision of dynamic rates and demand response that will suffer, it's the fundamental process of building public infrastructure that is eroded. 

That's wrong, plain and simple. 

Phil Carson
Intelligent Utility Daily 



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Opt Out - Pay the Cost

Pay the fee to opt out of AMR?

"'s the fundamental process of building public infrastructure that is eroded.???

First off, the cost of "public infrastructure" is going to be recaptured by rates regardless if someone opts out. In a perfect world then the person who chooses to opt out should not have to pay for the infrastrucure capital improvement of AMI. I predict that usage will go down in the future, and everyone will praise and laud "smart meter icon." When in fact the more efficient washers, dryers, water heaters refrigerators and tighter homes will be the true source of watt reduction.

Opt outs should not have to punished for mechanical meter reading. Literally, millions of rural folk have read their own meters for years, and in todays world, they could email it in at a cost of nothing. The recording of this into the database is no more cumbersome or costly than accepting  the cash at the office rather than having the electric bill deducted from my bank account electronically. I do not get a rate reduction for my electronic bill paying and I know it is much more costly to staff an office 5-6 days a week to accept walk up bill payers.

I subsidize the infrastructure of underground lines in my bills even though I have an overhead service. I suffer weather related, critter related and tree related outages at a much higher rate than underground customers. It is cheaper to maintain and rebuild overhead infrastrucutre, but I do not have an option to underground my neighborhood without paying a fee. I pay the same rate as the URD folks.

Relatedly, I pay extra on my cell phone for rural folks to have perfect cell phone coverage. The Universal Service Fund helps provide affordable telecommunications services for low-income customers and customers in rural areas. This is blatently an unfair subsidy for all rural folks, even though million dollar rural mansions abound.

Phil, cut the hyperbole, it seems you do not want mechanical watt hour luddites to pay more. You and others want them punished because they disagree with your concept that just because someone (utilities and meter companies) repeat incessantly that smart meters will save everyone money later, but spend billions up front. When in their minds they see costs, interest, doubtful benefits, health concerns, proven higher maintenance costs of this new infrastructure and a future bill that will punish them, and enrich the utility by charging them extra for usage at 1800 hrs, the exact time when everyone is using their AC.

Keep it simple

Not sure where the confusion comes in. 

Opting out of a smart meter has become an official option in several states. That's fine. But when the most affluent members of society demand to opt-out, they need to foot the bill. It wouldn't be fair for people who make half as much to pay the cost for those who opt out. 

It's really that simple. 

Regards, Phil Carson