Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) on Jan. 10 filed with the Kentucky Public Service Commission a joint application seeking certificates of public convenience and necessity (CPCN) for the full deployment of advanced metering systems (AMS) across their Kentucky service territories, including gas operations for LG&E, and to approve their proposed AMS Opt-Out Special Charges.
The companies noted that they first proposed a full AMS deployment in the context of their 2016 Kentucky base-rate cases. In conjunction with their agreement to withdraw their requests for full deployment of AMS in settling those cases, the companies said that they agreed to initiate an AMS Collaborative involving the companies and all interested parties to the rate cases to discuss any concerns about AMS.
Through the AMS Collaborative – which consisted of five day-long monthly meetings consuming about 40 hours held in Lexington, Louisville, or Frankfort – the companies said that they sought to identify and address participants’ interests and concerns regarding AMS and to educate participants on the benefits of AMS deployment.
The companies said that they have determined that now is the appropriate time to invest in full deployment across their territories, with the proposed AMS deployment expected to begin in 3Q18 with certain information-technology items being deployed, followed by the first meters being deployed in 2Q19.
The total AMS deployment is scheduled to be completed in the companies’ Kentucky service territories by the end of January 2021, the companies said.
Assuming a 0.8% opt-out rate, a total of about 413,000 electric meters would be replaced and about 334,000 AMS gas indices would be added in LG&E’s service territory, the companies said.
In KU’s Kentucky service territory, a total of about 531,000 electric meters would be replaced – again assuming a 0.8% opt-out rate, the companies noted.
The AMS meters that the companies propose to deploy would have two-way communication capabilities that would communicate usage and other relevant data to the companies at regular intervals and have the ability to receive information from the companies, such as software upgrades. The companies added that nearly 900,000 of the AMS electric meters would also have remote service switching capabilities; AMS equipment planned for gas service would not have such capabilities.
The estimated capital cost of the proposed AMS deployment – i.e., during the deployment phase – for LG&E is $103.7m for LG&E electric and $61.5m for LG&E gas, the companies said. For KU in its Kentucky service territory, the estimated capital cost of the proposed deployment – during the deployment phase – is $146.7m.
The companies added that the full AMS deployment would also result in incremental O&M cost during the deployment phase of $10.6m for LG&E electric, $2.7m for LG&E gas, and $15.2m for KU in Kentucky.
According to the companies, the proposed AMS deployment would achieve operational efficiencies, as well as enhance the present quality of service and provide additional benefits to – and options for – LG&E and KU customers.
The companies estimate that the full deployment and operation of AMS across their Kentucky and Virginia service territories from 2018 through 2040 would provide net benefits of nearly $483m nominal ($28.5m net present value to 2018).
The proposed deployment would enable customers to access, through a web portal, information about their usage at any time, download consumption patterns to better understand how they use energy, as well as explore different products and programs that may align to their needs, the companies added.
Also, the proposed deployment would further enable the companies to develop time-of-day or more dynamic rate structures that may assist customers to reduce their bills, the companies said. Among other things, the companies said that the proposed deployment would enhance their ability to localize and resolve power outages, and thus reduce customer outage times.
Discussing the AMS Opt-Out Special Charges, the companies said that they propose an opt-out charge structure consisting of an opt-out set-up charge and a recurring monthly fee based on the ongoing costs created by opt-outs, particularly meter-reading and billing costs caused by retaining in service a small number of meters that the companies cannot read remotely.
The companies said that they would bill the opt-out set-up fee and the recurring monthly fee per each meter opted out.
The proposed opt-out set-up fee for KU is $72.71; $57.86 for LG&E electric; and $57.86 for LG&E gas. The companies added that the proposed recurring monthly opt-out fee for KU is $32.45; $22.70 for LG&E electric; and $21.80 for LG&E gas.
The companies asked the commission to issue a final order in the proceeding by June 1.