You asked for background information on the advanced electric billing program mandated by PA 07-242. You were specifically interested in the program's anticipated costs, the names of individuals involved in implementing the program, and its potential advantages and disadvantages.

ADVANCED METERING

State law does not define advanced metering. But the Federal Energy Regulatory Commission has defined it as a system that records customer consumption and possibly other data hourly or more frequently and that provides daily or more frequent transmittal of the measurements over a communication network to a central collection point. Advanced metering includes advanced meters, communications networks, and data management systems. Further information about advanced metering technologies is available at http: //www. ferc. gov/legal/staff-reports/09-07-demand-response. pdf.

PA 07-242

PA 07-242 requires each electric company to submit a plan to the Department of Public Utility Control (DPUC) by July 1, 2007, to deploy a system to support advanced metering. The system must support net metering, under which electric companies pay residential customers for the power the customers produce from renewable resources. The system must also be capable of tracking hourly changes in a customer's power use to support innovative rates such as real-time pricing.

The plan must allow for deployment of these meters, together with the systems needed to support them, by January 1, 2009. Instead of this plan, an electric company can seek a determination from DPUC that its existing system already meets these requirements. Starting January 1, 2009, the act allows any customer to obtain a meter on demand. The companies must pay for the cost of the system, including the meters and supporting network, and recover the costs through their rates. They can continue to recover the costs of the existing meters through rates.

The act also requires electric companies, competitive suppliers, and aggregators (entities that gather customers together for suppliers) to provide time-of-use rate options, including hourly and real-time options, to all customer classes. These options must be available by December 2, 2007.

The DPUC has begun two proceedings to implement the advanced metering provisions of the act, docket 05-10-03 RE01 for Connecticut Light & Power (CL&P) and docket 05-06-04 RE04 for United Illuminating (UI). Draft decisions in both dockets are due to be released shortly. Further information about the dockets is available at http: //www. state. ct. us/dpuc/database. htm.

COSTS AND CONTACT PEOPLE

CL&P has estimated that the total cost of complying with the advanced metering requirements of the act, primarily purchasing new meters, would be $ 274 to $ 294 million, spread over four to five years.

UI's meters would not need to be replaced to meet the act's requirements, since they already can transmit consumption data on an hourly or more frequent basis. Instead, the company would need to expand its data collection infrastructure and make other related changes, at a cost of approximately $ 8 million.

The lead DPUC staff person is Art Marcelynas. The contact person for CL&P is David Scott, director of meter engineering; the contact for UI Joseph Thomas, vice president of customer fulfillment.

POTENTIAL ADVANTAGES AND DISADVANTAGES

Proponents of advanced metering believe it offers two types of advantages. They state that it can provide operational efficiencies and cost savings by supporting automated remote meter readings and remote outage detection, diagnosis, and restoration. Advanced meters can also

allow utilities to monitor electric use by individual customers and groups of customers, and to perform automated or manual load control and distribution system operations and maintenance.

Proponents note that advanced meters can provide the hourly or shorter-term interval data readings needed to support time-based rates. Time-based rates, such as real-time pricing, allow customers to be charged rates that vary over time, e. g. , hourly, based on the underlying wholesale cost of electricity in the day-ahead or real-time markets. Advanced meters can also allow customers to see their usage and the corresponding price and modify their usage in response to the price. This can reduce peak demand, which can reduce costs to the customer and demands on the system as a whole. As a result, electric costs for utility customers who do not install advanced meters can also be reduced. In addition, the availability of more precise consumption data can reduce the risk for the wholesale and retail suppliers selling in the Connecticut market, which potentially can reduce rates for all customers.

We are not aware of any potential disadvantages to advanced metering per se. But the Office of Consumer Counsel (OCC) has argued that the metering equipment currently in use is sufficient to meet the requirements of PA 07-242. It notes that CL&P's metering system has recently been updated at a cost of $ 112 million, which will be borne by ratepayers. OCC questions the level of customer acceptance and participation in time of use rates and doubts that the benefits of the new metering system would exceed its costs. Because advanced meters are more sophisticated, there will also be higher on-going costs for testing their accuracy.

Advanced meters may have shorter expected lives than traditional meters, increasing their life-cycle costs. In part this may result from the potential technical obsolescence of the meters as well as the software needed to communicate with the meters and to interface with the customer billing systems. One potential liability issue will arise if advanced meters are used in conjunction with energy management systems. For example, some customers may use advanced meters to signal when refrigeration equipment may be cycled off, in order to reduce peak demand and energy costs. If the metering equipment fails and there is damage to the customer's goods, it is not clear who will be liable.

KM: dw