20071123Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DONOVAN E. WALKER
DATE:NOVEMBER 20, 2007
SUBJECT:AVISTA'S APPLICATION TO IMPLEMENT A PILOT PROGRAM FOR
REMOTE DISCONNECTS AND RECONNECTS, CASE NO. A VU-07-
On August 31 , 2007 , A vista Corporation filed an Application seeking approval to
implement a one-year pilot program for the remote disconnection and reconnection of customers
to its system. The Company also requested a limited waiver of Utility Customer Relations Rule
311.03 and 311.04 (IDAP A 31.21.01.03 and .04) related to the final customer notification prior
to disconnection. The Company requested that its Application be processed by Modified
Procedure. IDAP A 31.01.01.201-.204.
On September 19, 2007, the Commission issued a Notice of Application and Notice
of Modified Procedure, establishing a deadline for the submission of comments and/or protests.
Commission Staff filed comments supporting the Company s Application. The American
Association of Retired People, Idaho (AARP) filed comments opposing the Company
Application. Likewise, the Community Action Partnership Association of Idaho (CAP AI) filed
comments opposing approval of the Company s Application as well as the Commission s use of
Modified Procedure. Additionally, CAP AI requested that the Commission convene a technical
hearing and order a workshop regarding the Company s proposal.
This matter is now fully submitted for the Commission s consideration under its
Rules for Modified Procedure. IDAPA 31.01.01.201-.204.
THE COMPANY'S APPLICATION
The Company proposes to install approximately 250 remote disconnect collars which
would utilize Power Line Carrier (PLC) as the communication protocol in rural areas and
approximately 350 wireless meter devices for use in urban areas. The devices would allow for
DECISION MEMORANDUM
the remote enabling and disabling of electric service from A vista s office. Customers selected
for the pilot would include customers with 200 amp services that either: have had multiple
disconnects, are located in rural areas, or otherwise occupy premises where the A vista employee
may be "at risk" for manually performing disconnects and/or reconnects.
The Company states that the anticipated benefits of remote disconnect and reconnect
capability include: (l) reducing operating and maintenance expenses related to multiple
disconnections and reconnections for urban and rural accounts; (2) productivity gains of
employees by eliminating multiple trips to customer homes for collections; (3) enhancing
employee safety; (4) quicker response time to reconnect service leading to increased customer
satisfaction; and (5) recognizing a reduction in bill defaults and write-offs by encouraging
prompt consumer payment over time. A vista proposes to report on the following at the
conclusion of the one-year pilot program: (l) number of disconnect devices installed; (2) reason
for installation; (3) utilization of the disconnect devices after installation; and (4) costs together
with realized savings.
COMMENTS OF AARP IDAHO
AARP comments opposed approval of the pilot program and asked the Commission
to deny it. AARP Comments at 1. AARP stated that the Company s Application is deficient, the
Company has not provided sufficient information regarding the pilot such as costs to the
ratepayers, and that the proposal is poor public policy and increases risks to health and safety.
Id.
AARP urged the Commission to deny the proposed pilot because Avista
Application is deficient. Id. AARP argued that A vista has provided no cost information. Id.
AARP stated that A vista did not disclose how it intends to recover the costs of the devices, and
whether shareholders will cover the costs of the pilot, or if the Company will ask the
Commission for ratepayers to cover the expense through rates, through a surcharge to all
customers, or a surcharge on pilot participants. Id. AARP stated that for this reason alone the
pilot should be denied. Id. Additionally, AARP argued that A vista has not provided adequate
information regarding how pilot participants will be chosen, and that there is no customer
education component to the pilot. Id. at 2.
AARP also urged the Commission to deny the proposed pilot because it is bad public
policy. Id. at 3. AARP argued that maintaining service is a health and safety issue, and that
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remote disconnection may raise the number of disconnections, impacting health and safety. Id.
AARP stated that faster and easier disconnection of service has severe health and safety
implication citing extreme weather, and particularly high temperatures, as putting the health and
safety of more households at risk. Id. AARP stated that there is currently some percentage of
accounts which are slated for disconnection that are not actually disconnected because the
customer makes payment at the time the utility employee comes to the premises to perform the
disconnection, and without this last opportunity more households will lose service and be at risk.
Id. They also argued that elimination of the premise visit prior to shut-off removes the
opportunity for the utility employee to observe signs of a health or safety danger, such as a
customer using a respirator or other medically necessary device requiring electric service. Id.
4. AARP also argued that the terms of the pilot are skewed against the customer because it does
not include a waiver of the reconnection fee, and does not propose any measurement and
evaluation to consider the impact of the program on customers. Id.
Finally, AARP stated that if the Commission were to approve the pilot it should place
a number of conditions that are in the public interest upon the pilot prior to proceeding. Id.
Those conditions are: Shareholders should be required to cover the costs of the pilot; costs ofthe
meters and installation should be disclosed; criteria for selecting customers for the pilot should
be more detailed and disclosed; vulnerable customers, including low-income, seniors, ill and
. .
disable, and families with young children should not be included; all pilot participants should
have telephones; the pilot should use representative sampling; reconnection fees should be
waived, and reconnection should occur within one hour of payment; a customer education
program should be required; notices should emphasize that disconnection will be done remotely;
telephone notice should be done by a live operator able to take electronic payment and offer bill
payment plans; measurement and evaluation should include impact on customers. Id. at 4-
COMMENTS OF CAP AI
CAP AI opposed the approval of the Company s Application, objected to the
Commission s use of Modified Procedure, and requested that the Commission "conduct a brief
technical hearing in this matter." CAP AI Comments at 1. CAP AI stated that the Company was
clearly proposing the program because it believed it would benefit shareholders. Id. CAP AI
stated that while not sending a representative to personally attempt collection from the customer
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could decrease costs for the Company, the proposed pilot not only fails to offer a quid pro quo to
customers, but also diminishes the level of service currently being provided. Id.
CAP AI contends that the number of disconnects will "increase dramatically" if the
pilot is approved, as the Company will no longer be limited by the number of available field staff
and vehicles. Id. CAP AI stated that by losing the "premise visits" the customers lose the benefit
of a "health and human safety check that the company field representatives frequently provide.
Id.CAP AI also expressed concern for the "very low-income customers residing in the
Company service territory who might not have the benefit of either a telephone or
transportation.Id. CAP AI stated that currently 15% of potential disconnections avoid being
disconnected by paying at the door when the Company is there to disconnect them, and that
presumably" this is at least partially due to an inability to arrange transportation to the nearest
pay station making it more difficult for them to avoid disconnection or get reconnected. Id. at 1-
2. CAP AI recommended that the existing notice requirement remain unchanged. Id. at 2.
CAP AI stated that it was "disturbed" that remote disconnections and even reconnections takes
away a vital communication connection between low-income customers and the Company. Id.
CAP AI also stated that it was "concerned" about: (l) the precedent that the program
would set for other utilities that do not have the same customer service record that A vista has; (2)
that approval of the program "could easily lead to time-of-use issued and their disproportionate
affect on low-income customers ; and (3) it is concerned about the cost of the program and how
those costs will be allocated, and ultimately if the program is to reduce costs, why should there
be cost recovery at all. Id.
CAP AI closed its comments by stating that as an alternative to conducting a full
technical hearing that the Commission defer approval of the program "for a limited, reasonable
period of time for all interested persons to express their concerns and attempt to work out
reasonable solutions with the company.Id. CAP AI suggested that the Commission also order a
workshop, "to include any interested person and possibly avoid regretting mistakes that could
have been corrected at the commencement of the pilot period.Id.
COMMENTS OF COMMISSION STAFF
Staff supported approval of the Company s Application with certain conditions.
Staff Comments at 2. Staff stated generally that the Commission has encouraged utilities to
implement "smart meter" technology, and as with any new technology, evaluation and
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adjustments are necessary. Id. Staff stated that the proposed pilot would provide an opportunity
to determine the costs and benefits of remote connection and disconnection, test the equipment
and perhaps more importantly, allow all interested parties to evaluate the impact of such a
program on customers. Id.
Staff was concerned with the Company s selection criteria for inclusion of customers
in the pilot program. The selection criteria was stated as customers with multiple disconnections
location in a rural area, or the customer occupies a premise where an A vista employee may be at
risk. Staff worked with the Company on its definitions of "multiple disconnections
" "
rural
area " and "at risk." Id.
Staff supports the Company s request for a limited waIver of Utility Customer
Relations Rule 311.03 and 311.04 relating to an actual visit by a company representative to the
premises prior to disconnection, and that would no longer take place with remote disconnections.
Id. at 4. Currently, the first disconnection notice is sent to the customer at least seven calendar
days before the proposed date of disconnection (Rule 304., Utility Customer Relations Rules
(UCRR)). Id. at 3. A final (second) notice is sent at least three days before the proposed date of
disconnection.Id.A call must be made to the customer at least 24 hours before actual
disconnection (Rule 304., UCRR). Id. at 3-4. All notices must provide information on steps
the customer may take to avoid disconnection. Id. at 4. Under the pilot, the Company intends to
continue providing these written and oral notices. Id. The day service is disconnected, the utility
is required to knock on the door to give the customer a final opportunity to pay the amount
required to prevent disconnection (Rule 311., UCRR). Id. If no one is at the premises at that
time, the employee must leave a notice advising the customer that service has been disconnected
and what steps must be taken to get service reconnected (Rule 311., UCRR). Id.
The Company has proposed a special notice that would be given to customers or left
at the premises when the remote connect/disconnect equipment is initially installed. Id. The
notice will advise the customer that the device has been installed and explain how that will
change the disconnection and reconnection procedure from that point forward. Id. The notice
also requests updated customer contact information so that the Company can call the customer
immediately prior to disconnection.Id.The notice provided to the customer includes
information on action the customer needs to take after the Company restores service, i., push
the reset button on the meter. Id. at 4-5. The customer will be given the same information when
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the customer contacts the Company to request reconnection. Id. at 5. Staff supports this special
notice, but believes the text of the draft/special notice could be rewritten to provide greater
assistance to program participants. Id. Staff recommended that the Company work with Staff in
preparing this special notice for customers selected for the pilot program. Id. In particular, Staff
believes the notice should encourage customers to contact the Company if there are any
questions or concerns or if there are reasons why the customer would not be able to reset the
meter. Id.
Staff reported that the evaluation effort identified by the Company in its Application
focuses on the hardware used in the pilot program and a financial costlbenefit analysis. Id. at 6.
The Company does not mention any effort to evaluate the impact upon customers and customer
payment behavior. Id. A vista has expressed a willingness to work with Staff and other
interested parties to develop an evaluation plan designed to make meaningful analysis of
customer impacts possible. Id.
Staff reported that an advantage of the pilot program is the ability of the Company to
restore service within minutes, 7 days a week, 24 hours a day, once the customer has satisfied all
the conditions required to restore service. Id. Normally, it can take up to several hours to restore
service, taking into account scheduling and drive time to the customer s premise. Id. Customers
who request reconnection outside of Avista s normal business hours (8 a.m. to 7 p.m. weekdays
and 8 a.m. to 4 p.m. on weekends and holidays) must wait until the following day to be
reconnected. Id. For these customers, remote reconnection will be a major benefit, since service
will be restored much more quickly. Id.
Staff stated that the Company estimates the cost of the pilot to be $104 000. Id.
Staff noted that A vista is already in the process of installing metering equipment under its
Advanced Meter Reading (AMR) program to enable the Company to read meters remotely. Id.
The same technology used to read meters remotely can be used to connect and disconnect service
remotely. !d. Therefore, the Company anticipates that it will not necessarily incur additional
equipment cost for every customer selected for the pilot. !d. To the extent that is true, it will
reduce the overall cost of the pilot program. Id.
Staff recommended that the Commission approve the proposed pilot and grant
limited waiver of Rule 311.03 and 311.04 (IDAP A 31.21.01.311.03 and .04) with respect to
customers selected for the pilot under the following conditions: (l) the Company modify its
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selection criteria to define "multiple disconnections" as two or more disconnections within the
past 12 months and change its location focus to customers whose premises are in remote areas;
(2) direct the Company to work with Staff on preparing its special notice for customers selected
for participation in the pilot program; and (3) direct the Company to work with Staff and other
interested parties to prepare a plan for evaluation that includes the pilot's impact on customers
and customer behavior as well as the technological and financial aspects of the program.
COMMISSION DECISION
Under Modified Procedure, if protests, supports, or comments are filed within the
deadline, the Commission must consider them and may set the matter for hearing or may decide
the matter and issue its Order on the basis of the written positions before it.IDAPA
31.01.01.204. Persons desiring a hearing must specifically request a hearing in their written
protests or comments. IDAPA 31.01.01.203.
CAP AI filed a protest to the use of Modified Procedure and specifically requested a
hearing in its comments. CAP AI Comments at 1. CAP AI also proposed as an alterative to defer
approval of the program, order a workshop and a reasonable period of time for all interested to
attempt to work out an agreement. Id. at 2.
1. Does the Commission wish to set this matter for hearing, or does it desire to
decide this case based upon the written record before it?
2. Does the Commission wish to approve the Company s Application?
3. Does the Commission wish to direct that any workshops be conducted?
4. Does the Commission wish to order any of the conditions recommended by
AARP or Commission Staff?
5. Does the Commission wish to order any other procedure or conditions, etc...
L2 rvfJ--
DONOVAN E. WALKER
M:A VU-O7-09 dw2
DECISION MEMORANDUM