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Summary:

PG&E’s smart meter report creates a sweeping picture of a utility racing to install millions of smart meters in a short period, while facing potential budget overruns, and at the mercy of vendors. The result is a smart meter project that was entirely an infrastructure play.

For fun summer beach reading I don’t recommend the 700 page report that PG&E released this week (as ordered by the state regulator the California Public Utilities Commission). Chock full of endless installation graphs, budget details, risk tables and status reports, the report unveils data about the utility’s smart meter deployments over the past three years. Not exactly Game Change.

But the report does offer a smart-grid-brand of high drama, painting a sweeping picture of a utility racing to install millions of smart meters in a short period of time, while facing potential budget overruns, and at the mercy of its vendors. As PG&E acknowledged in its press conference this week (and also said at our Green:Net conference on April 29), the utility responded to these forces for a long time by looking at its smart meter project entirely as an infrastructure play. It was largely only when the press started to report on negative customer reaction that they substantially beefed up customer outreach efforts.

If you haven’t been following the backlash in select locations over smart meters, basically a handful of customers are complaining that recently installed smart meters are responsible for unfair higher bills. The consternation has even resulted in a lawsuit in Bakersfield (PG&E’s territory) as well as one in Dallas (Oncor’s territory). While specific tech problems can easily be dealt with, the greater issue is a lack of customer outreach and an inability of utilities to adequately explain the benefits of smart meters to customers.

PG&E’s contact center received its first customer complaint related to a meter exchange all the way back in June of 2007 (Page 150 of the report). Just a month prior to that, PG&E decided to cancel “the requirement of sending letters to customers in advance of impending installs,” (Page 134). However, several months later, PG&E took one of the only proactive (albeit it minimal) customer outreach moves in this saga and decided in January 2008 (Page 260): “To minimize incidents in the field the team is going to begin sending out pre-deployment letters to both gas and electric customers.” PG&E estimated at the time that giving customers a heads up in this way would cost $495,000.

In mid-2007 PG&E was only installing around 1,000 smart meters per day. But by the end of 2007, it had ramped up to 2,250 smart meter installations per day (Page 185). And by the middle of 2008 (Page 408) PG&E’s daily average smart meter installs bumped up to 10,000 per day.

Early on in the project, PG&E’s main priorities clearly centered on getting the network and meters installed on time, and avoiding cost increases. At the beginning of 2008, PG&E said its costs could run up to $166 million beyond what the CPUC had authorized for the project before contingency funding would kick in (Page 252). At one point PG&E also said its meters were behind deployment by 11,531 meters (page 283) and that its employees were working “extended hours and Saturdays to make up,” (Page 283). It quickly made up that gap by speeding up deployments even more.

By mid-2008 it also became clear how much PG&E was susceptible to any delays or missteps by its vendors. In July 2008, PG&E said supplies of meters from vendor Aclara had slipped. The utility had given itself a cushion by speeding up installations, but it said that was “being eroded” by Aclara’s delay (Page 350). Soon after, PG&E also made the decision to deploy network and meter technology from Silver Spring Networks in Davis, Oakdale, Roseville and Lincoln, Calif.

By October of 2008, issues with Aclara became far worse, with the finding that there was “Poor read performance on 5 percent of the installed Aclara meters” (Page 383). PG&E acknowledged at this point that problems could potentially arise with customers. At that time PG&E upgraded that risk priority and explained it as:

Implementation of new technology does not perform as intended. Billing errors, customer complaints, inability to meet endpoint deployment. Risk realized due to vendor equipment (Hex Electric meters) failing at higher than anticipated rates. Resolutions for issues related to Hex electric meter performance are being implemented.

By April 2009, the problem with Aclara’s meters was still a high priority for PG&E. But the utility also said that it had contained the deployment of Aclara electric meters to 145,000 and that the new Silver Spring Networks technology was “performing as intended.” (Page 468). By August 2009, PG&E started downgrading the risk priority associated with the 5 percent of the Aclara meters that weren’t working as Silver Spring Networks’ technology was working just fine.

However, despite the fact that Silver Spring Network’s technology was working as advertised, the Silver Spring deployments still hit a few speed bumps from PG&E’s perspective (which isn’t unusual in large scale deployments). One issue was that PG&E was looking for a way to make Silver Spring Networks’ solution provide more coverage where cellular coverage didn’t exist. Another problem was that in a building where a “ground field interrupter,” or GFI (a device that senses current and disconnects it), was placed next to a meter panel, the smart meter technology could, in rare cases, trip the GFI (about 12,000 meters were skipped between March 31 and May 20 2009 due to this problem, page 481). Later in 2009, Silver Spring offered lower power meters to solve that problem.

Seemingly one of the biggest problem for PG&E was that Silver Spring wasn’t delivering as many meters as PG&E wanted: “SSN safety stocks remain below target as SSN is unable to provide a consistent supply. Discussions to resolve production issues are ongoing with SSN,” (Page 434). So as the quality issues with Aclara seemed to get worked out, PG&E was still racing — to the point of urging Silver Spring for more product — to meet its deployment deadlines.

The utility was moving so fast that it didn’t seem to see the looming consumer backlash and PR problem. On October 8, 2009 (Page 553) PG&E first notes: “Negative smart meter press increased in recent weeks. Customer perception of the smart meter program becomes negative increasing potential customer complaints.” In the months after this first mention, PG&E continues to refer to the issue as a negative press issue and tackles the problem by proposing townhall meetings, public education awareness campaigns and establishing more call centers. Clearly those methods didn’t work as well as expected, given it took them until May 2010, to finally issue a convincing public apology.

As of this week, I think PG&E finally understood the error of their ways. As Helen Burt, senior vice president and Chief Customer Officer, PG&E, said in a press conference this week when she released the report, “This is not about statistics. . . I don’t believe we did a good job of seeing the world through the lens of the customer.”

For more research on smart meters and consumers check out GigaOM Pro (subscription required):

Green:Net 2010: Sage Advice for Smart Grid Success

Making Smart Meters the Must-Have Gadget of the Year

Smart Meters: Time for a Customer Service Reboot

By Katie Fehrenbacher

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  3. Katie,

    Excellent reporting. I would like to know why HydroOne in Ontario is not having this problem. They have installed a network developed by the Trilliant (also out of Redwood City)and I have not heard of any meter data issues. Also, is Florida Power and Light having a similar issue. They are Silver Springs other big client.

    Please comment.

    JW

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  5. Very good article. By the way, the “ground field interrupter”
    that is mentioned in the article is actually a “Ground Fault
    Interruptor”. The RF transmissions from the Silver Springs
    network interface could cause “nuisance trips”.

    The last time PG&E changed my meter out it was six months
    before they started billing me again. My meter reader told me
    that my meter wasn’t in his little handheld’s database of
    customers, and that I should contact PG&E about it.

    I’m no luddite, but I’m going to request that they not change
    out my meter just on that basis.

    Additionally, the smart meter doesn’t offer me any benefits.
    I already know how to read my meter, so I can manage my
    energy usage. I already know how to contact pg&e when there
    is a complete or partial power failure, or equipment failure.

    What the smart meter does offer me is susceptibility to Real
    Time Pricing events, and I suspect that these will not work in
    my favor, most of the time. If PG&E has a power alert because
    of hot weather, it will just be a way to charge me a Real Time
    price during that event.

    And I do remember being gamed, hard, by electrical deregulation
    by PG&E and energy traders around the millenium. I haven’t
    forgiven or forgotten that.

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