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Saturday, May 01 2010 05:32 PM

'True-ups' added to last summer's high PG&E bills

BY JOHN COX, Californian staff writer jcox@bakersfield.com

Some of the high electric bills that hit Bakersfield residents last summer were actually "true-up" charges after Pacific Gas and Electric Co. underestimated usage for months because of communication problems with its first-generation SmartMeters.

Data bottlenecks and technological glitches prevented company computers from receiving usage information from some of PG&E's remote meters. Once the utility finally got readings from the meters, it realized it had in some cases undercharged customers. So PG&E lumped in back charges onto a single bill, except in the cases of customers who called the company and were given extra time to pay.

Related Info

People who have questions about their PG&E bills are advised to call the company's 24-hour, toll-free customer service line: 800-743-5000

QUESTIONS?

The number of Bakersfield residents who received true-up bills last summer because of this particular problem was relatively small -- about 100 customers, according to two people who spoke on condition of anonymity, one a former PG&E manager, the other a company employee who works in Bakersfield. Local PG&E spokesman Denny Boyles said the company has no data indicating how often this occurred here. Some estimations are to be expected with any metering technology, he said.

The estimations and true-up bills are significant partly because PG&E has long insisted that last summer's high bills resulted from a steep rate increase combined with unusually hot weather and people falling out of discounted rate programs. Not until The Californian asked did the company concede that true-up charges stemming from technological failures contributed to the wave of high bills that prompted a customer outcry that still echoes across the electric utility industry.

Why it wasn't mentioned sooner

Opinions differ over why PG&E did not acknowledge the true-ups sooner. Boyles said the company chose not to because it had already begun switching to a better, second-generation technology that has reduced communication problems resulting in estimated bills. And, he said, bill estimations are routine among utilities.

But the company employee who spoke anonymously said PG&E probably kept quiet about true-ups because it might have made the company look bad.

"I just don't think as a company we're gonna admit to a lot of true-ups and just give (PG&E critic, Shafter Democrat and state Senate Majority Leader) Dean Florez or the people ... more ammunition," the employee said.

The Utility Reform Network, a San Francisco-based consumer advocacy group, questioned PG&E's honesty regarding Bakersfield true-ups.

"PG&E kept acting like the customers were crazy and nothing is wrong," TURN spokeswoman Mindy Spatt said, "and now PG&E is admitting that there are some problems here."

Some local customers may not have been aware they received true-up bills, since the company did not point out the underestimations unless customers asked. However, Boyles said company bills clearly state when they are estimations.

PG&E is permitted to estimate bills for up to 90 days. After that, the company said, it usually sends out a meter reader. Customers then have extra time to pay the true-up bill, as long a period as their bills were being estimated.

Boyles said some estimations led to customer refunds because the company overestimated usage.

Like nowhere else

Bakersfield's experience with estimations and true-up bills appears to be unique in some ways. Last year PG&E began switching out its first-generation SmartMeters in favor of more advanced devices. Only in Bakersfield, where the rollout began, is there a significant number of the earlier SmartMeters in California.

Ben Schuman, an energy management technologies research analyst with Portland, Ore.-based Pacific Crest Securities, said it's the first instance he has heard of in which customer advocates have complained about bill corrections instead of meter accuracy problems.

He also said technological missteps should not come as a surprise, given that PG&E was among the first U.S. utilities to incorporate smart meters. But he added that PG&E "probably should've been more open" about its true-up practices.

Information lost and found

The former PG&E manager who spoke anonymously said some meters' information became inaccessible, or "lost," because it was automatically transferred between data collection points. When at last the readings were located, too much information -- as many as 96 readings a day -- had essentially clogged the system.

The former manager added that PG&E's billing system was estimating customers' usage based on historical averages provided by older, traditional meters. In many cases, these pre-SmartMeter devices had been running slowly and were unintentionally lowballing usage. The source said switching out old meters for new ones contributed to the need for estimations.

But in many cases estimations were unnecessary, the former PG&E manager said. Even though the company's first- and second-generation SmartMeters were programmed to transmit readings at regular intervals, usually once an hour, PG&E's system requires only two readings -- one at the start of a period, one at the end -- to generate an accurate bill.

Switching over

Fixing communication glitches was but one of several stated concerns when in early 2009 PG&E won regulators' permission to convert to more advanced SmartMeter technology. The company said it had found a cost-efficient system that could do things the older SmartMeter system could not, such as connect or disconnect electric service remotely and eventually allow customers to manage their appliances from afar.

Switching to the second-generation SmartMeters meant customer's usage data would travel by radio waves rather than over power lines. The new devices also create a relay system in which meters unable to send data directly can forward information to neighboring meters for transmission.

The changeover came at a price. Boyles said the switch cost $37 million, and that regulators allowed the company to charge customers for only about half of this amount. He emphasized that the system is still expected to save customers money over the long run by helping them manage their use of electricity more efficiently.

Starting too early?

Some argue PG&E could have saved customers money by selecting better technology in the first place. They say the company should have tested the first-generation meters more thoroughly.

"We said all along this technology was not ready for prime time," TURN's Spatt said.

The former PG&E manager says the testing of 2,500 meters in Vacaville was too small: Communication problems did not become evident until the company had already installed more than 200,000 first-generation SmartMeters in Bakersfield.

Boyles disputed this, saying the earlier models represented the best available technology when PG&E decided to launch SmartMeters, as many utilities are doing as part of a nationwide shift toward a "smart grid" designed to empower consumers with more usage information.

Moreover, Boyles said that since the adoption of either generation of SmartMeters the rate of bill estimation has decreased by a factor of three to about one-fifth of 1 percent.

Ron Smith, CEO of Esco Technologies Inc., the St. Louis-based company that owns the first-generation SmartMeters' manufacturer, Distribution Control Systems Inc., or DCSI, denied that there is anything wrong with his company's meters.

Nearly 15 million DCSI meters, most of them in North America, work fine, Smith said. He added that some of his utility customer have more than 1.5 million meters that transmit readings on an hourly basis.

"We've not heard some of these issues with them," he said of PG&E's troubles with its first-generation SmartMeters.

An incomplete network

First-generation SmartMeters have become more reliable in Bakersfield, Boyles said, because newer meters have reduced the volume of data carried by earlier meters.

But PG&E has not fully replaced the meter technology that caused the trouble. There remain about 120,000 first-generation meters in Bakersfield along with about 330,000 second-generation meters.

Boyles said the company was unable to swap out all the older SmartMeters here largely because of customer concerns. He said the company quit trying to roll out the second-generation meters in Bakersfield until a state-sponsored inquiry into high bills is finished in late summer.

In the meantime, Boyles said, some customers with older SmartMeters will have to live with perhaps one successful data transmission a day instead of more frequent signals intended to give customers more useful information online.

"It's not going to be an ideal world," he said, "until we get them all switched."

-- Staff writer Lois Henry contributed to this report.

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