CUB Expert Testimony Says Ameren Smart Grid Plan Has Holes, Recommends Company Be Forced To Prove Customer Savings

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Apr 20, 2012, 11:42 ET

CHICAGO, April 20, 2012 /PRNewswire-USNewswire/ -- A week after calling for a $42.8 million electric rate cut for Ameren Illinois customers, the Citizens Utility Board (CUB) filed more expert testimony, arguing that the utility's plan for "smart grid" upgrades is full of holes. State regulators should require Ameren to give more details that back up its claims of $275 million in potential customer savings over the next 20 years, CUB said.

The testimony, filed late Tuesday before the Illinois Commerce Commission (ICC), was presented by Miriam Horn, the New York City-based director of the Environmental Defense Fund's Smart Grid Initiative. Horn, a witness for CUB and the Environmental Law and Policy Center (ELPC), critiqued the Advanced Metering Infrastructure (AMI) Plan, proposed by Ameren.

The plan "provides a start in the right direction, but not enough detail for the ICC to find that Ameren's proposed deployment of AMI will result in benefits for Ameren's customers," Horn testified.

Horn recommended that the ICC conditionally reject the plan and require Ameren to improve it over a six-month period after the final order is given, and then formally review whether Ameren's improvements were adequate.

Late last year, Ameren pushed state legislators to pass the "Energy Infrastructure and Modernization Act," also called the "smart-grid bill." The legislation is designed to help Ameren pay for $625 million in upgrades to the power grid, including the installation of digital smart meters. These smart meters can send—automatically and almost instantly—a customer's power usage to Ameren. The devices open the door for new, money-saving power pricing programs and have the potential to make homes and the utility itself much more cost-efficient.

CUB is cautiously optimistic that these upgrades can cut future electric bills and improve reliability—but this week's expert testimony reflects the consumer group's mission to make sure the utilities do the smart grid right.

In its smart-grid proposal, Ameren claims $275 million in potential customer savings over the next 20 years. That includes an estimated $171 million in "demand-response" savings from special pricing programs and greater efficiency in customer homes. Another $90 million in savings would come from reducing bad debt from customers who don't pay their bills, and $14 million in operational savings would come from turning meters off at homes and businesses that are not occupied.

The smart grid law mandated that the utilities' AMI plans include these five elements: a vision statement; a solid strategy for evaluating and prioritizing upgrades to "create customer value;" a schedule and plan for deploying smart-grid improvements; annual milestones and metrics for measuring the plan's success; and details on educating customers about the smart-grid upgrades.

"Ameren's plan falls short on several of the elements described in the EIMA (Energy Infrastructure and Modernization Act), with the result in my opinion that the benefits claimed are not likely to accrue to customers," Horn testified. Among her findings:

*Ameren admitted that it has yet to determine many key technology issues, including what companies will supply meter components, and installation of a new system to manage data flowing from the new meters. "Ameren customers must be able to take advantage, easily, of all the data to be available with the Smart Grid," Horn testified.

*Ameren did not present a plan that would deploy a smart meter to each customer within 10 years—and the company has yet to present a detailed plan as to what areas will get the meters and when.

*Ameren has not determined the anticipated number of customers who would sign up for special pricing programs that could save them money, what Horn's testimony called a "troubling lack of detail."

She added that because of the lack of detail, Ameren's plan "also falls short of the cost-benefit standard because it does not contain enough evidence that the projected benefits will realize for electricity consumers in Illinois or for Ameren itself."

It was the second time in a week that CUB has filed expert testimony about Ameren. Last week, CUB filed testimony arguing that Ameren should give its customers an upfront $42.8 million rate cut, in connection with the company's proposed "formula rate" plan that will help it pay for smart-grid upgrades. CUB argued that the company should not try to charge customers for costs associated with such things as holiday decorations, corporate sponsorships, and sporting events.

A final order on Ameren's plan is due May 29. The consumer group suggested that Ameren give customers a revised plan by Jan. 1, about six months after the final order.

CUB is Illinois' leading nonprofit utility watchdog organization. Created by the Illinois Legislature, CUB opened its doors in 1984 to represent the interests of residential and small-business utility customers. Since then, CUB has helped save consumers more than $10 billion by blocking rate hikes and securing refunds. For more information, call CUB's Consumer Hotline at 1-800-669-5556, or visit www.CitizensUtilityBoard.org.

SOURCE Citizens Utility Board