BILL ANALYSIS                                                                                                                                                                                                    






                             SENATE JUDICIARY COMMITTEE
                           Senator Ellen M. Corbett, Chair
                              2009-2010 Regular Session


          SB 1476 (Padilla)
          As Amended April 5, 2010
          Hearing Date: April 13, 2010
          Fiscal: Yes
          Urgency: No
          SK:jd
                    

                                        SUBJECT
                                           
                       Public Utilities: Smart Meters: Privacy

                                      DESCRIPTION  

          This bill would require a local publicly owned electric utility  
          or an electrical or gas corporation that uses smart meter  
          technology that allows a customer to monitor his or her electric  
          or gas consumption data to ensure that the customer has an  
          option to access that data without relinquishing personally  
          identifiable information, including consumption data, to a third  
          party.  

          This bill would provide that a customer's electric or gas  
          consumption data shall be securely kept by the local publicly  
          owned electric utility or electrical or gas corporation and  
          shall not be accessible by a third party, unless a customer  
          chooses to access his or her consumption data from a third party  
          using a smart meter, after being given the option not to  
          relinquish his or her data. 

                                      BACKGROUND  

          In 2009, the Legislature passed and the Governor signed SB 17  
          (Padilla, Ch. 327, Stats. 2009) which established California's  
          smart grid policy; smart meters are a component of a smart grid  
          policy.  Smart meters are two-way communication devices that  
          measure electrical, natural gas, or water consumption.  They  
          communicate consumption information via a network back to the  
          utility, eliminating the need for manual meter readings.  Smart  
          meters can record and report energy consumption on an hourly  
          basis and can be linked to appliances.  They also allow a  
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          utility to remotely disable and enable supply and to utilize  
          pricing systems for consumption based on the time of day and  
          season.  New technologies, such as Google's "PowerMeter," allow  
          customers to access and monitor their consumption in real time,  
          allowing them to manage their energy use more effectively.

          In California, the California Public Utilities Commission (CPUC)  
          has authorized the use of smart meters.  Southern California  
          Edison has been authorized to install approximately 5.3 million  
          smart meters and San Diego Gas and Electric Company has received  
          authorization for 1.4 million electric smart meters and 900,000  
          natural gas meters.  Pacific Gas and Electric Company has been  
          authorized to install approximately 9 million electric and  
          natural gas meters. 

          Although smart meters have the potential to help address some of  
          our most pressing energy and environmental needs, the use of  
          this new technology also raises privacy concerns.  In fact, the  
          CPUC has initiated a rulemaking (R.08-12-009) to consider  
          policies for utilities to develop a smarter electric grid.  Part  
          of that rulemaking will investigate the contact between the  
          smart grid and consumers and cyber-security issues including  
          policies to ensure customer privacy.  In comments to the CPUC  
          regarding this rulemaking, several privacy groups raised  
          concerns that smart meter systems could reveal intimate and  
          sensitive personal behavior patterns such as when consumers eat,  
          shower, go to bed, wake up, or leave the house.  The systems  
          could also detect whether an alarm system is engaged.  Related  
          concerns have been raised that smart meter systems could be  
          subject to hacking, leaving consumers vulnerable to identity  
          theft.  Many are also concerned that the information collected  
          using a smart meter could be shared with third-party marketers.   
          This bill is intended to address concerns that have been raised  
          with technologies such as Google's PowerMeter and whether that  
          service sufficiently protects a customer's information.  This  
          bill would attempt to ensure that consumers have a choice when  
          monitoring their electric consumption data.

          This bill was approved by the Senate Energy, Utilities, and  
          Communications Committee on April 6, 2010 by a vote of 10-0. 

                                CHANGES TO EXISTING LAW
           
           Existing law  provides that, among other rights, all people have  
          an inalienable right to pursue and obtain privacy.  (Cal.  
          Const., art. I, Sec. I.)
                                                                      



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           Existing law  requires the CPUC to determine the requirements for  
          a smart grid deployment plan. (Pub. Util. Code Sec. 8360 et  
          seq.)  Current CPUC rules require California's largest  
          investor-owned electrical and gas corporations to replace  
          traditional utility meters with "smart meters."
          
           This bill  would require a local publicly owned electric utility  
          or an electrical or gas corporation that uses smart meter  
          technology that allows a customer to monitor his or her electric  
          or gas consumption data to ensure that the customer has an  
          option to access that data without relinquishing personally  
          identifiable information, including consumption data, to a third  
          party. 

           This bill  would provide that a customer's electric or gas  
          consumption data shall be securely kept by the local publicly  
          owned electric utility or electrical or gas corporation and  
          shall not be accessible by a third party, unless a customer  
          chooses to access his or her consumption data from a third party  
          using a smart meter, after being given the option not to  
          relinquish his or her data. 

                                        COMMENT
           
          1.  Stated need for the bill  
          
          The author writes:
          
            Sempra (San Diego Gas & Electric) is the only California  
            utility of which we are aware that has a meter interface  
            allowing the customer to access their electrical use data.   
            Sempra confirms that the customer cannot use this tool unless  
            the customer relinquishing control of the data through the  
            standard website "I agree" which the consumer clicks and in  
            doing so allows Google to use consumption data for a  
            commercial purpose.  Sempra confirms they have no other tool  
            available to the customer for data interaction. 
          
          The author has indicated that it is not his intent to disrupt  
          the arrangement between Sempra and Google.  Instead, this bill  
          is intended to provide a customer with an "additional means of  
          accessing consumption data without allowing a third party to  
          collect, retain, share or reuse their electric or gas  
          consumption information."

                                                                      



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          2.  Requirement that customers be given a choice  

          This bill would require a local publicly owned electric utility  
          or an electrical or gas corporation that uses smart meter  
          technology that allows a customer to monitor his or her electric  
          or gas consumption data to ensure that the customer has an  
          option to access that data without relinquishing personally  
          identifiable information, including consumption data, to a third  
          party.  The author has indicated that it is his intent to ensure  
          that consumers are given an option to monitor their electric or  
          gas consumption data without having to agree to the sharing of  
          that data with third parties.  In order to better carry out this  
          intent, the Committee may wish to consider amending the bill as  
          follows: 

             Suggested amendments: 
             
             1.   On page 2, delete lines 7-8 and insert "being required  
               to agree to the sharing of his or her personally  
               identifiable information, including electric consumption  
               data, with a third party." 

             2.   On page 3, delete lines 23-24 and insert "being required  
               to agree to the sharing of his or her personally  
               identifiable information, including electric consumption  
               data, with a third party."

          3.  Potential for discriminatory pricing based on privacy choice  

          This bill would require a local publicly owned electric utility  
          or an electrical or gas corporation that uses smart meter  
          technology that allows a customer to monitor his or her electric  
          or gas consumption data to ensure that the customer has an  
          option to access that data without relinquishing personally  
          identifiable information, including consumption data, to a third  
          party.  There is nothing in the bill, however, which would  
          protect consumers against being charged more for exercising  
          their right to choose not to share their personally identifiable  
          information.  In order to address these concerns that consumers  
          might face discriminatory pricing because they had exercised  
          their right to protect their privacy under this bill, the  
          Committee may wish to consider amending the bill to provide that  
          an electrical or gas corporation, or demand response provider,  
          may not offer incentives or discounts to solicit a particular  
          response by the customer regarding his or her right to control  
          his or her information.  
                                                                      



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             Suggested amendment:
           
            On page 2, line 8, after the period insert "The local publicly  
            owned electric utility shall not partner with any third party  
            that facilitates access to consumption data that provides an  
            incentive or discount to the customer for accessing their  
            consumption data."  

            On page 3, line 24, after the period insert "The electric or  
            gas corporation shall not partner with any third party that  
            facilitates access to consumption data that provides an  
            incentive or discount to the customer for accessing their  
            consumption data."  

          4. Restrictions on third-party sharing and security of  
            consumption data  

          This bill would provide that a customer's electric or gas  
          consumption data shall be securely kept by the local publicly  
          owned electric utility or electrical or gas corporation and  
          shall not be accessible by a third party, unless a customer  
          chooses to access his or her consumption data from a third party  
          using a smart meter, after being given the option not to  
          relinquish his or her data. 

          This language is intended to be a restriction on third-party  
          sharing and also to ensure that a customer's consumption data is  
          secure.  In order to more closely track existing privacy  
          protections and ensure that a customer's consumption data is  
          secure, the Committee may wish to consider amending the bill to  
          provide that a local publicly owned electric utility or gas or  
          electric corporation should use reasonable security procedures  
          and practices to protect a customer's consumption data from  
          unauthorized access, destruction, use, modification, or  
          disclosure.

          In addition, the Committee may also wish to consider amending  
          the third-party sharing restriction to ensure that it  
          sufficiently protects consumers.  Exceptions should be included  
          to allow for disclosure of aggregated data and disclosure for  
          billing purposes.
             Suggested amendments:
             
            1.  On page 2, delete lines 9-14 and insert: 

                                                                      



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            (b) A local publicly owned electric utility shall not share,  
            sell, disclose, or otherwise make accessible to any third  
            party a customer's electric consumption data.  A local  
            publicly owned electric utility may make a customer's electric  
            consumption data accessible to a third party, however, in  
            either of the following circumstances: 

               (1) the customer has first been given the option described  
               in subdivision (a), the customer has declined that option,  
               and the customer chooses to access his or her electric  
               consumption data from that third party; or 

               (2) the data is accessed or shared by a third party or  
               utility with the customer's express written prior consent  
               for a demand response program which manages customer  
               consumption of electricity in response to supply  
               conditions. 

            (c) A local publicly owned electric utility shall use  
            reasonable security procedures and practices to protect a  
            customer's electric consumption data from unauthorized access,  
            destruction, use, modification, or disclosure. 

            (d)  Nothing in this section shall preclude a local publicly  
            owned electric utility from using customer aggregate  
            consumption data for analysis, reporting, or program  
            management if all information has been removed regarding the  
            individual identity of a customer.

            (e) Nothing in this section shall preclude a local publicly  
            owned electric utility from disclosing a customer's electric  
            consumption data to a third party for billing purposes. 

            (f) For purposes of this section, "electric consumption data"  
            means data that is made available as part of an advanced  
            metering infrastructure.


            2.  On page 3, delete lines 25-30 and insert: 

            (b) An electrical or gas corporation shall not share, sell,  
            disclose, or otherwise make accessible to any third party a  
            customer's electric or gas consumption data.  An electrical or  
            gas corporation may make a customer's electric or gas  
            consumption data accessible to a third party, however, in  
            either of the following circumstances:  
                                                                      



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               (1) the customer has first been given the option described  
               in subdivision (a), the customer has declined that option,  
               and the customer chooses to access his or her electric or  
               gas consumption data from that third party; or 

               (2) the data is accessed or shared by a third party or  
               utility with the customer's express prior written consent  
               for a demand response program which manages customer  
               consumption of electricity in response to supply  
               conditions.

            (c) An electrical or gas corporation shall use reasonable  
            security procedures and practices to protect a customer's  
            electric or gas consumption data from unauthorized access,  
            destruction, use, modification, or disclosure. 

            (d)  Nothing in this section shall preclude an electrical or  
            gas corporation from using customer aggregate consumption data  
            for analysis, reporting, or program management if all  
            information has been removed regarding the individual identity  
            of a customer.

            (e) Nothing in this section shall preclude an electrical or  
            gas corporation from disclosing a customer's electric  
            consumption data to a third party for billing purposes. 

            (f) For purposes of this section, "electric or gas consumption  
            data" means data that is made available as part of an advanced  
            metering infrastructure.


           Support  :  None Known

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Author

           Related Pending Legislation  :  SB 837 (Florez) also contains  
          privacy protections related to electrical and gas corporations  
          and "third-party demand service providers."  This bill is also  
          scheduled to be heard by the Committee on April 13, 2010. 

           Prior Legislation  :  None Known
                                                                      



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           Prior Vote  :  Senate Energy, Utilities, and Communications  
          Committee (Ayes 10, Noes 0)

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