DPU rules against smart meters in a win-win for Eversource

June 9, 2018

The DPU decided that Eversource isn't required to install smart meters because communities are increasingly going with Community Choice / Municipal Aggregation. Yes, you read that right. 

For those of you not following the success of the Community Choice Aggregation programs in Massachusetts, there are now over 100 communities that have implemented a Community Choice program. Boston has voted to approve a Community Choice program, but has not yet brought their program online. 

I’m referring to the DPU's recent Order in its Grid Modernization docket.  In the order, the DPU refused to approve further investments in smart meters.  The DPU reasoned that the primary benefit of smart meters comes from reduced peak usage when customers respond to price signals.  If all customers were on basic service, the utilities/DPU could ensure that customers got hourly price signals.  But, a large percentage of customers are now on competitive supply or municipal aggregation, and the DPU can't control the pricing for those customers.  As a result, there is a risk that customers won't get hourly price signals, and therefore the benefits of advanced metering would not be realized.  The DPU declined to approve expenditures on advanced meters in light of the uncertainty regarding the benefits.

The DPU order misses 2 important points:

First, while it is true that competitive suppliers and aggregators are not currently providing hourly pricing to most customers, they can't provide such pricing as long as the customers don't have smart meters.  So, the DPU created a Catch 22:  they won't approve smart meters until there is hourly pricing, but there won't be hourly pricing until there are smart meters.

Second, the pricing offered by competitive suppliers and aggregators tends to mirror basic service pricing.  This is because basic service is the benchmark.  In order for competitive suppliers/aggregators to be able to show customers how their offer compares to the benchmark, they need to offer a rate designed like the benchmark.  There is a good chance that if the DPU moved basic service prices to hourly, competitive supply and aggregation prices would follow.

Of course, there are other quite viable solutions that allow for the deployment. 

One simple case: If ratepayers are charged a non-differentiated generation rate (basic service or competitive supplier or aggregator), the utility could add a charge/credit arrangement for TOU. As one example, the TOU adder could be  +2 cents 7 AM to 7 PM M-F, -2 cents 7 PM to 7 AM. (The actual differentials would be set to be revenue neutral.) At critical peaks (when the ISO is short on capacity, for example), the adder could be higher. The utility reconciles the over- or under-collection, so that the result is revenue-neutral.

If you wanted to make adoption of the critical-peak tariff easier, you could give a rebate to customers who reduce use at those times, compared to a reference period. The Maryland utilities do this (BGE, PEPCo, Delmarva) and it seems to work pretty well.

Want to know more?

MassSolar first heard about this issue from Joe LaRusso's excellent tweet storm on the DPU's ruling.  Joe LaRusso points out that this ruling is a win-win for Eversource. They have already gotten the DPU to approve the MMRC that will discourage adoption of solar.  Now they can use this ruling to say that they aren't allowed to install smart meters that might allow customers to respond to the MMRC demand charges. 

And this discussion also includes some thoughts, ideas and suggestions from Paul Gromer and Paul Chernick.