Arizona Assents to AMI Opt-Out Fees

Addressing an issue reserved from an electric utility's most recent rate case, the Arizona Corporation Commission has adopted a proposed settlement agreement under which the utility, Arizona Public Service Company (APS), may add a surcharge to the monthly bill of any customer that declines to have new smart meter equipment installed at their premises.

The commission acknowledged that some customers had been wary of the utility's plan to deploy automated metering infrastructure (AMI) throughout its service area, in the belief that such technology would expose them to certain public health and safety risks. But after reviewing the scientific literature and data on AMI, the commission ruled that there was no definitive evidence to support such claims. Neither was the commission persuaded that AMI would present a heightened risk of fire or cyber intrusions that would jeopardize a customer's privacy.

In the underlying rate docket, the company had sought close to $166 million in rate relief. In authorizing an increase of $94.62 million instead, the commission had predicated the additional revenues on certain efficiencies in operation, including expanded time-of-use rate options for residential customers, enhanced demand reduction offerings, further commitments to distributed generation, and development of incentives for such forward-looking technologies as battery storage. The utility had attested, and the commission concurred, that some of those tasks would be made easier by having AMI in place.

While there was general agreement among many groups as to the benefits of smart metering systems, both operationally and cost-wise, some consumers had raised objections, alleging that the radio-frequency waves associated with AMI posed an unreasonable health risk. Although the utility refuted those claims, it said that it was willing to permit concerned customers to retain their conventional analog meters, provided that the customer pay both a nonrecurring sign-up fee and ongoing monthly surcharges. That is, the company disclosed that customers would be given the choice to opt out of AMI if so desired.

But, APS stated, because smart meters would now be treated as "standard" metering equipment, it would incur certain expenses to maintain scattered nonstandard analog meters going forward. Among the costs cited by the utility were manual meter reading expenses and administrative costs associated with enrollment and tracking of opt-out customer accounts. It thus argued that it should be permitted to levy a charge on opt-out customers to cover such costs.

After numerous discussions and negotiation sessions, the utility and other interested parties came to a consensus on opt-out fees. Their proposed settlement stipulated to a one-time set-up fee of $50 for a customer choosing to opt out of AMI. The customer also will be assessed another charge of $5.00 per month to cover meter reading costs. However, the agreement states that such fees and charges will be waived if a customer is located in an area that does not have wireless technology. Upon examining the proffered agreement, the commission deemed it equitable and appropriate.

In particular, the commission commended the utility for developing a voluntary AMI opt-out program, and it praised the settling parties for devising a schedule of opt-out charges reasonably calculated to reflect the utility's costs of accommodating optout requests. Re Arizona Public Service Co., Docket Nos. E-01345A- 16-0036, E-01345A-16-0123, Decision No. 76374, Sept. 19, 2017 (Ariz.C.C.).