Electric meter upgrade efforts at standstill
A disagreement between Connecticut utility regulators and Eversource Energy is delaying the rollout of advanced electric meters to 1.3 million of the company’s customers, as the utility and state regulators debate how best to fund the $766 million project.
Both the utility, which is Connecticut’s largest electric distribution company, and officials with the state’s Public Utilities Regulatory Authority seem to agree that installation of the advanced meters would benefit customers, as existing meters near the end of their operational life.
But the longer the upgrade is delayed, the more the cost of replacing existing meters with advanced ones will escalate, Eversource officials say.
Jared Lawrence, Eversource’s chief customer officer and senior vice president of customer operations and digital strategy, said a new payment mechanism is needed for the efficient rollout of advanced metering.
The existing system used to allow utilities to recover capital investments involves hearings and regulatory decisions that occur well after the improvements are deployed.
Under that system of recovering costs associated with grid improvement, Eversource would be in rate hearings every year across the entire rollout of advanced metering, Lawrence said.
“We just don’t think it’s efficient to conduct rate cases every year for five or six years in a row,” he said, adding that Eversource is proposing a regulatory mechanism known as “an advanced metering cost tracker,” as an alternative.
That would allow Eversource to keep pace with the capital investments required to deploy an advanced metering system, but also “would still apply the same prudent standards of a traditional rate case,” Lawrence said.
Joe Cooper, PURA spokesman, described the cost tracker as “an extraordinary rate mechanism that provides a utility with expedited cost recovery in advance of a utility’s next rate case ... with limited regulatory review.
“Because cost trackers deviate from the normal legal framework for utility cost recovery, they are typically authorized by statute or during a rate case” that includes public hearings.
Cooper noted that Eversource doesn’t need agency approval to start installing advanced meters and urged company officials to push ahead with the project based on the “legal obligation” the company has under state law.
“Eversource can and should implement AMI in a prudent and efficient manner, particularly since Eversource has stated that further delays will increase costs for ratepayers,” he said, adding that Eversource is legally entitled to recover, and to
earn a return on, all “prudently incurred AMI investments through its next rate amendment proceeding.”
But in a Jan. 29 letter to PURA officials, Douglas Horton, Eversource’s vice president in charge of distribution rates and regulatory requirement, told regulators that deferring a decision on the amount that the company can recover until after the advanced metering is installed will only add to “a huge backlog of deferred costs involving Eversource that already exists.”
Those costs include $250 million associated with the state’s COVID-related energy shutoff moratorium and a decision to delay the recovery of $900 million in restoration costs associated with storm outages.
“These large-scale deferrals are impairing the company’s cash flow,” Horton wrote in his letter to PURA. “In this regulatory environment, it is not possible for Eversource to move forward with a new $766 million investment in the absence of a stable regulatory foundation.
“Moreover, the lack of stability, reasonableness or balance in the regulatory environment will continue to preclude the implementation of AMI in Connecticut, as well as other large-scale clean energy and infrastructure investments in the future.”
Eversource is relatively late to advance metering process. Lawrence said electric utilities across the country started implementing advanced metering in the late 2000s.
Eversource delayed its plans for installing advanced metering until now because its existing meters still had a lengthy period of usefulness left, he said, adding that advanced metering is beneficial to both utility customers and the utility.
“The benefits of AMI are extensive, and there’s nothing that benefits consumers that don’t also help Eversource operations by making our service less costly for customers,” Lawrence said.
Advanced metering enables consumers to get detailed information about how they use electricity, on nearly a real-time basis, he said. Utility customers can set alerts when their usage reaches a certain level.
At the same time, advanced metering “allows us to provide a much more efficient response to outages and allows us to give customers a better idea of when we will be able to restore power,” Lawrence said.
“It also allows us to better structure rates that can help the customers save money.”
Eversource had originally estimated the cost of implementing advanced metering, which would also include an upgrade of the utility’s customer information systems, at $532 million, Lawrence said.
The company hasn’t yet selected a specific type of advanced metering device, said Eversource spokeswoman Tricia Modifica.
The United Illuminating Co., Connecticut’s other large electric distribution company, began deploying advanced metering in 2010, according to officials at the Orange-based company. Now, more than 90 percent of UI’s 345,000 customers have access to advanced metering.
PURA launched its efforts to encourage advanced metering in 2019, Cooper said.
With the 2024 legislative session about to start, the co-chairman of the General Assembly’s Energy and Technology Committee, state Sen. Norman Needleman, D-Essex, said while Connecticut lawmakers “all want for advanced metering to be out there,” it must be done in such a way that protects ratepayers.
“I’m assuming what PURA is saying correct,” Needleman said. “This is something that just needs to work itself out.”