BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 837|
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THIRD READING
Bill No: SB 837
Author: Florez (D)
Amended: 6/1/10
Vote: 21
SENATE JUDICIARY COMMITTEE : 3-1, 4/13/10
AYES: Corbett, Hancock, Leno
NOES: Walters
NO VOTE RECORDED: Harman
SENATE ENERGY, U.&C. COMMITTEE : 8-2, 4/20/10
AYES: Padilla, Corbett, Florez, Kehoe, Lowenthal, Oropeza,
Simitian, Wright
NOES: Dutton, Strickland
NO VOTE RECORDED: Cox
SENATE APPROPRIATIONS COMMITTEE : 7-3, 5/27/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Denham, Walters, Wyland
NO VOTE RECORDED: Cox
SUBJECT : Utility service: disconnection: smart meters:
privacy
SOURCE : Author
DIGEST : This bill requires the Public Utilities
Commission (PUC) to ensure each smart grid development plan
authorized by the PUC, after January 1, 2012, includes
specified testing and technology standards.
CONTINUED
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ANALYSIS : The federal Energy Independence and Security
Act of 2007 states that it is the policy of the United
States to maintain a reliable and secure electricity
structure that achieves certain objectives that
characterize a smart grid. Existing federal law requires
each state regulatory authority, with respect to each
electric utility for which it has ratemaking authority, and
each nonregulated electric utility, to consider certain
standards and to determine whether or not it is appropriate
to implement those standards to carry out the purposes of
the Public Utility Regulatory Policies Act. The existing
standards include time-based metering and communications,
consideration of smart grid investments, and providing
purchases with smart grid information, as specified.
Under existing law, the PUC has regulatory authority over
public utilities, including electrical corporations and gas
corporations, as defined. Existing law requires the PUC,
by July 1, 2010, and in consultation with the State Energy
Resources Conservation and Development Commission, the
Independent System Operator, and other key stakeholders, to
determine the requirements for a smart grid deployment plan
consistent with certain policies set forth in state and
federal law. Existing law requires that the smart grid
improve overall efficiency, reliability, and
cost-effectiveness of electrical system operations,
planning, and maintenance. Existing law requires each
electrical corporation, by July 1, 2011, to develop and
submit a smart grid deployment plan to the PUC for
approval.
This bill requires the PUC to ensure that each smart grid
deployment plan authorized by the PUC after January 1,
2012, includes testing and technology standards, as
specified.
Testing standards shall include all of the following:
1. A requirement that the smart metering technology have a
comprehensive security audit. The security auditing
plan and the results of the security audit shall be made
publicly available upon approval by the PUC.
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2. A requirement that the manufacturer disclose whether it
created a cryptographic protocol for data encryption and
specify the protocol used.
3. A requirement that the manufacturer submit security
audit results as part of a direct access meter project
self-certification program.
Technology standards shall do both of the following:
1. Ensure that the particular smart metering technology is
compatible with other smart technologies.
2. Ensure that the particular smart metering technology is
compatible with the electrical corporation's energy
usage data collection and billing system.
This bill requires each electrical corporation ensure that
each metering technology works properly in a field test in
a real home setting.
This bill states that the Legislature finds and declares
that, due to the importance of having electrical service to
one's residence, the issue of utility service
disconnections requires careful scrutiny by the PUC. The
PUC shall evaluate the impact of advanced metering
infrastructure technology on the frequency of energy
utility disconnections and adopt policies to minimize any
adverse impacts. The PUC shall also consider requiring
electrical corporations and gas corporations to evaluate
their customer communication policies relative to
disconnections of service and share unsuccessful and
successful practices in their creation of best practices.
Background
Smart Meters . The smart meter is a two-way communcation
device which transmits data back to a utility and negates
the need for manual meter readings. It also allows the
utility to remotely read the meter and disable and enable
supply and is the foundation for demand response programs
such as critical peak pricing which is designed to reduce
electrical consumption during times of peak demand. With
additional software smart meters open the door for a
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consumer to access consumption data in real time and to
manage their energy use and pricing more proactively.
Smart meters are the first remote communication device
designed for smart grid applications. In general, smart
meters will provide customers granular (i.e. hourly usage,
specific appliance usage) information regarding their
electricity usage. The transparency for the customer
associated with their energy consumption is expected to
improve efforts for demand response and energy efficiency
at a local, state, and regional level.
Current estimates project installation of over 11 million
smart meters in California by 2011. Specifically, the PUC
has authorized the following installations for the state's
IOUs:
Southern California Edison - 5.3 million
San Diego Gas & Electric - 1.4 million electric/900,000
gas
Pacific Gas & Electric - 5 million electric/4.2 million
gas
Deployment Problems . Although millions of smart meters
have been installed by the three IOUs without incident,
last summer PG&E began receiving an extraordinarily high
number of customer complaints from customers in the San
Joaquin Valley who experienced excessively high billing
statements. These complaints coincided with the
installation of smart meters in the region by PG&E and very
high summer temperatures. At the same time the PUC also
received several hundred customer complaints from the same
region concerning billing statements and questioning the
accuracy of smart meters.
In response to those complaints and communications from
Senator Dean Florez, the PUC contracted for a third party
evaluation of PG&E's smart meters the results of which are
due in approximately four months. The evaluator will
address the following issues:
1. Whether PG&E smart meter system is measuring and billing
electric usage accurately, both now and since meter
deployment began.
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2. Independent analysis of high bill customer complaints.
3. Analysis of PG&E's smart meter Program's past and
current operational and deployment processes, policies,
and procedures.
In addition, the PUC is planning to review consumer
complaints and the overall accuracy of smart meters. The
review will focus first on complaints from the San Joaquin
Valley area and cover deployment policies and procedures
and broader issues depending on findings.
Comments
The author held two district meetings on the issue of smart
meters in the fall of 2009. The major issues of concern to
his constituents were the ability of PG&E to remotely
disconnect service, the testing and accuracy of smart
meters, and the privacy and security of the data created by
smart meters. The author notes that "due to the increased
amount of data collection with the implementation of Smart
Meters, there is a significant risk regarding the loss of
privacy. This bill creates privacy standards and allows
customers to have greater control over the collection and
sharing of their information. Due to the complaints
regarding the accuracy of Smart Meters in Bakersfield, this
bill requires additional testing of smart meter
technologies prior to their installation. These tests
include ensuring that the smart meter technology is
compatible with other smart technologies and corporations
billing and data collection systems."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
PUC oversight of smart Absorbable within existing
resources Special*
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meter standards
* Public Utilities Commission Utilities Reimbursement
Account
SUPPORT : (Verified 6/1/10)
Sacramento Municipal Utility District
RJG:mw 5/28/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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