BPU Edges Closer to Smart Meters, Asks Utilities for Cost-Benefit Analyses

Tom Johnson | November 1, 2018 | Energy & Environment
Advanced metering infrastructure could help power companies respond more efficiently to nor’easters and other storms, restore service more quickly

Energy Cloud PSEG
Most of the country has embraced smart meters, but not New Jersey. With the state charting a green energy future, along with pressure to reduce power outages and their duration, some are saying: Why not now?

More than 70 million Americans have smart meters — a two-way communications network between a utility and its customers. The systems, also known as advanced metering infrastructure (AMI), help ratepayers better manage energy use and reduce monthly bills, according to advocates.

AMI also may help utilities pinpoint power outages, respond more quickly when they occur, and restore electricity more rapidly. After years of punting on the issue, state regulators are taking a new look at the benefits, upsides, and costs of smart meters, asking utilities to submit cost-benefit analyses on whether AMI can improve storm responses following a series of nor’easters this spring that left hundreds of thousands without power.

BPU gets smarter

That was a significant shift for the state Board of Public Utilities, which imposed a moratorium on implementing smart meters last fall after approving a pilot program for Rockland Electric’s 74,000 customers. The agency wanted to determine how well that pilot worked and whether it delivered the touted benefits.

Public Service Electric & Gas says there is no need to wait. The state’s largest utility submitted a filing, dubbed Energy Cloud, last month seeking to spend $794 million over the next six years to transform it “into a smart energy services company.” The core of the program would convert its 2.2 million electric meters to smart meters by the end of 2024.

Ralph Izzo, president, CEO, and chairman of PSEG, the utility’s parent, told analysts yesterday on a quarterly earnings call that the filing is not premature. It is spurred, in part, by Gov. Phil Murphy’s green energy agenda, which seeks to have 100 percent of New Jersey’s electricity come from clean energy by 2050.

“The value of the information that one can extract from advanced metering infrastructure to help their customers use energy more intelligently to reduce their energy consumption is, I think, an important consideration for policymakers in achieving what the governor is outlined as priorities,’’ Izzo said.

Rate counsel disagrees

But Stefanie Brand, director of the New Jersey Division of Rate Counsel, argued there is nothing in the governor’s agenda that requires the kind of expenditures envisioned by PSE&G. “It’s a huge moneymaker for the company,’’ she said. “That’s why they want to do it.’’

The reason why smart meters have not been widely adopted in New Jersey is because utilities have failed to justify the expenditures in cost-benefit studies, Brand said. Most of the alleged savings primarily result from lost jobs — the utility eliminating meter readers, Brand said.

If its Energy Cloud program is implemented, however, PSE&G said it would produce an estimated $1.7 billion in customer savings over 20 years — more than $2 saved for every dollar invested. The company also said the network of smart meters will help pave the way for broader adoption of clean energy.

Paul Patterson, an energy analyst at Glenrock Associates, agreed. “You need a higher degree of intelligence because it’s less predictable,’’ he said, referring to the intermittent nature of renewable energy, like solar and wind power. “There is a rationale as you increasingly rely on renewables, you need more real-time information about what’s going on.’’

Unanswered questions

Others, however, said there are still many unanswered questions about smart meters, including how they link into renewable energy and energy efficiency initiatives, as well as impacting rates.

“There are a lot of potential benefits, but there also are a lot of expenses,’’ said Frank Felder, director of the Center for Economic, Energy and Environmental Policy and the Rutgers Energy Initiative. “If the utility saves money (by eliminating jobs), why charge the customers?’’

Still, others argued smart meters are the wave of the future. “To create a 21st century grid, we need smart meters. We need to start this transition,’’ said Doug O’Malley, director of Environment New Jersey. “The BPU should not hand out a blank check; the board needs to do due diligence on smart meters.’’