Application No.: A.08-09-023 Exhibit No.: SCG – Date: May 7, 2009 Witness: Sarah J. Darby, Environmental Change Institute, University of Oxford SOUTHERN CALIFORNIA GAS COMPANY ADVANCED METERING INFRASTRUCTURE REBUTTAL TESTIMONY CHAPTER 5 ESTIMATED CONSERVATION IMPACT OF PROVIDING DAILY GAS INFORMATION TO CUSTOMERS Prepared Rebuttal Testimony of Sarah J. Darby BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA May 7, 2009 TABLE OF CONTENTS I. BACKGROUND ............................................................................................................... 2 II. INTRODUCTION............................................................................................................. 2 III. SOCALGAS HAS PRESENTED STRONG SUPPORT FOR ITS PROPOSED CONSERVATION BENEFITS ....................................................................................... 2 IV. CALIFORNIA REGULATORY SYSTEM IS RECEPTIVE TO CONSERVATION PROGRAMS.................................................................................... 4 V. FEEDBACK PROVIDED BY AMI PROPOSAL WILL ENABLE CUSTOMERS TO CONSERVE MORE EFFECTIVELY..................................................................... 4 VI. INTERVENOR’S ALLEGATION THAT CUSTOMERS MUST CHOOSE BETWEEN CONSERVATION AND COMFORT IS UNSUPPORTED ................... 5 VII. DRA’S CLAIM THAT SOCALGAS’ CONSERVATION BENEFIT IS OVERESTIMATED IS UNSUPPORTED ..................................................................... 6 VIII. THE COMMISSION SHOULD IGNORE DRA’S PROPOSAL TO REDUCE SOCALGAS’ ESTIMATE OF CONSERVATION BENEFITS ASSOCIATED WITH ITS AMI PROPOSAL.......................................................................................... 7 IX. RECENT TRIALS IN NORTH AMERICA SUPPORT SOCALGAS ESTIMATES OF EFFECT.............................................................................................. 8 X. AMI AND ENERGY EFFICIENCY PROGRAMS ARE NOT DIRECTLY COMPARABLE................................................................................................................ 9 XI. CONSERVATION DOES NOT EQUATE TO LOSS OF VALUE TO THE CONSUMER ................................................................................................................... 10 XII. SOCALGAS’ CLAIMED CONSERVATION BENEFIT IS NOT OVERESTIMATED DUE TO DIFFERENCES BETWEEN GAS AND ELECTRICITY............................................................................................................... 10 XIII. GAS CONSERVATION DOES NOT NEED TO INVOLVE DISCOMFORT AND INCONVENIENCE .............................................................................................. 11 XIV. CONSERVATION BENEFITS DO NOT ONLY ACCRUE TO HIGH CONSUMERS................................................................................................................. 13 XV. CONCLUSION ............................................................................................................... 14 1 I. BACKGROUND 2 The purpose of this testimony is to respond to the intervenor testimony submitted on 3 April 23, 2009 by the California Public Utilities Commissions’ (CPUC or Commission) Division 4 of Ratepayer Advocates (DRA), The Utility Reform Network (TURN), and the Utility Workers 5 Union of America (UWUA) intervening parties to the Southern California Gas Company’s 6 (SoCalGas) Advanced Metering Infrastructure (AMI) proceeding, Application (A.) 08-09-023. 7 Specifically, my testimony will address issues raised by the above intervening parties in relation 8 to Chapter V (Estimated Conservation Impact of Providing Daily Gas Information to Customers) 9 of my Errata to Prepared Direct Testimony filed on January 6, 2009. 10 II. INTRODUCTION 11 The aim of this testimony is to discuss the points raised by DRA, TURN and UWUA in 12 relation to the potential conservation impact of improved feedback. I respond to each based on 13 available evidence, acknowledging areas of uncertainty, and conclude that the estimates for 14 participation and for conservation effect presented in my Errata to Prepared Direct Testimony are 15 reasonable. SoCalGas’ assumptions are also supported by research that has been published since 16 the filing of my Errata to Prepared Direct Testimony. 17 18 III. SOCALGAS HAS PRESENTED STRONG SUPPORT FOR ITS PROPOSED CONSERVATION BENEFITS 19 First, all three interveners assert the uncertainty related to estimates of savings resulting 20 directly from improved feedback. There is uncertainty in relation to estimates of how many 21 people will use feedback and also in relation to the level of conservation that will result. Every 22 trial and experiment to date produces different answers, and we can expect this to continue. 23 Each trial involves different people in different buildings at different times, in varying climates 24 and in different social, economic and political conditions. None of this should detract from the 25 main lesson, which is that improved feedback on energy usage normally has a conservation 26 27 28 2 1 impact. It does so by making energy usage more visible and understandable, and by 2 demonstrating the effectiveness or otherwise of physical or behavioral changes. 3 The question then arises as to how much effort needs to be expended into improving 4 feedback, who should make such an effort, and the level of technology required. If everyone 5 simply checked their meters and bills more often, would that be adequate to kick-start major 6 improvements in energy literacy? The evidence is that bills are too infrequent and not specific 7 enough about end-uses to be much help, while meters are normally neither user-friendly nor 8 easily accessible. A minority of motivated people can make substantial savings through 9 changing their patterns of usage and investing in efficiency, using bills and meter readings to 10 judge the effectiveness of these changes; but AMI does have the potential to offer higher quality, 11 more frequent, and more accessible feedback across the whole population. DRA states that: 12 “DRA agrees in concept with attributing a conservation benefit to gas AMI based 13 on day-late or near real-time customer usage information feedback.”1 14 15 The challenge is to optimize this benefit, using appropriate technology and customer 16 information initiatives, in a cost-effective manner. 17 The regulatory issues posed by gas AMI in general and gas usage information feedback 18 are of course somewhat different from those posed by electricity. Gas is a fuel, not an 19 instantaneous process; it has fewer end-uses than electricity; it can be stored and there is far less 20 need to control peak load than there is with electricity. The familiar ‘demand response’ 21 arguments for electricity feedback do not apply to gas, but the ‘invisibility’ problem is the same 22 and the need for conservation is the same. Most of the studies I reviewed up until 2006 are 23 related to conservation, not demand response. These conservation studies were the source of the 24 figures for the conservation impact that are given in Chapter V of my Errata to Prepared Direct 25 Testimony. In recent years, the volume of peak-reduction trials using some form of feedback has 26 1 Division of Ratepayer Advocates, Report on The Application of Southern California Gas Company on Advanced 27 Metering Infrastructure, A.08-09-023, Executive Summary, Section V, p. 4, lines 11-12 28 3 1 grown and it is clear that, even when the aim is for peak reductions, there is usually a 2 conservation effect. Where the aim is for overall conservation, the conservation effect is 2 3 typically higher. 4 IV. CALIFORNIA REGULATORY SYSTEM IS RECEPTIVE TO CONSERVATION PROGRAMS 5 6 In the California regulatory system, where profits are decoupled from volume sales, the 7 possibilities for substantial cuts in gas usage are greater than in most parts of the world. This 8 decoupling allows utilities to implement conservation programs without having conflicting 9 objectives. 10 This proceeding occurs at a time when energy policy is being examined with a new 11 intensity in the USA and when the need for reducing the use of fossil fuel has never been greater. 12 Whether for reasons of climate change mitigation, energy security of supply or household 13 economy, the conservation figures being discussed in policy documents at local, state and federal 14 level are far in excess of the estimates made by SoCalGas in its application. In order to achieve a 15 40% reduction in emissions from existing homes by 2020, as envisioned in the California Energy 16 Efficiency Strategic Plan, a whole suite of initiatives will have to be employed and households 17 will have to make many changes in equipment and practices. This is a new policy environment 18 and a favorable background for any rollout of AMI and associated feedback programs. As noted 19 by everyone in this debate, the context for feedback programs has an important part to play in 20 their success. 21 V. FEEDBACK PROVIDED BY AMI PROPOSAL WILL ENABLE CUSTOMERS TO CONSERVE MORE EFFECTIVELY 22 23 Conservation gains from making energy use more visible and understandable, through the 24 provision of clear feedback, are complementary to conservation gains from installation of energy 25 26 2 King C and Delurey D (2005) Twins, siblings or cousins? Analyzing the conservation effects of demand response programs. Public Utilities fortnightly March 2005. 27 28 4 1 efficiency measures. They are also complementary to education or marketing initiatives. The 2 estimated savings put forward by SoCalGas do not stem from physical