"Smart Meter" Update

Our June 2012 newsletter noted that the Michigan Public Service Commission (Commission) was investigating electric utility’s intent to deploy "smart meters." MPSC Case No. U-17000. The Commission ordered all regulated electric utilities to submit information to the Commission by March 16, 2012, on a number of issues, including (1) the utility's existing plans for deployment of smart meters in its service territory, (2) any scientific information known to the utility that bears on the safety of smart meters, and (3) an explanation of the steps that the utility intends to take to safeguard the privacy of the information gathered. Comments were due April 16, 2012. The Commission also required the Commission Staff to file a report summarizing its review of smart meter literature, how other jurisdictions deal with smart meters, and make recommendations for the Commission’s consideration.

After about 400 comments were filed – many of which voiced concerns about health and safety, privacy, and bill impacts - the Commission Staff filed its report on June 29th. In short, the Staff Report states:

1. Smart meters are a critical component of creating a "smart grid." A "smart grid" encompasses technological improvements to the electric grid designed to increase reliability, reduce outage time, accommodate the integration of distributed generation sources, and improve electric vehicle charging capacity.
2. Smart meters are quickly becoming the primary replacement meter to the existing electronic meters because they are more accurate, enhance outage response and offer opportunities for customer energy management. The traditional electronic meter is obsolete and currently not in production.
3. That the health risk from the installation and operation of metering systems using radio transmitters is insignificant. In addition, the appropriate federal health and safety regulations provide assurance that smart meters represent a safe technology.

Based on its findings, Staff made these recommendations:

1. Smart Meter Implementation: Smart meters are part of the larger smart grid initiative that is being pursued by investor-owned and other utilities throughout the world. The smart grid initiative has been endorsed by federal laws, and the technologies have been declared to be safe by accredited national agencies and industry councils. The Staff recommended that Commission-regulated utilities in Michigan continue to assess smart grid technologies as part of their efforts to improve the reliability and efficiency of the grid.
2. Opt-out: Staff understands that some people remain opposed to the installation of smart meters for a number of reasons and should be allowed to opt-out. The Staff believes that ratemaking for the opt-out provision should be based on cost of service principles. If smart meters result in a reduced cost of service, this could be accounted for by either an additional charge for those customers choosing to opt-out or a discount for those customers with a smart meter.

To date, the Commission has not yet issued an Order in Docket U-17000. So there are still unanswered questions, including these:

• whether the Commission will adopt Staff’s recommendations to allow smart meters;
• if smart meters are allowed to go forward, whether the Commission will allow an opt-out program;
• whether customers would have to pay for an opt-out or to remove a previously installed smart meter.

Another unsettled question is whether the smart meter program can move forward at all, given the Court of Appeals’ April 2012 ruling that the Commission erred in letting Detroit Edison increase its rates to pay for the smart meters. Of course, that ruling, too, could be challenged at the Michigan Supreme Court.

If you have questions about the Commission’s smart meter case in U-17000, or the Court of Appeals’ April 2012 ruling on the smart meter program, feel free to contact Anne Seurynck (616.726.2240) of the Foster Swift Municipal Practice Group.

• Read the full August 2012 Municipal Law News