$761.3 million for a Billing System?

Would you approve this proposal from PG&E?

PG&E is asking the California PUC to approve an upgrade of their billing system for … $761.3 million. Yep, $761.3M for a billing system. PG&E is sending this note to their customers:

I only recently became aware of this request. We are an online-only customer and I had not seen anything but a neighbor, who still gets paper bills, mentioned they got the notification in their USPS mail, so I went looking.

This note shares the basics of what I know. Check it out, and, if you want to take action, check the details at the end on how to provide feedback.

Why A New System?

The existing systems used by PG&E are really old (COBOL-based!). Maintenance and evolution is problematic - most COBOL developers are, at best, retired by now - and the current system is barely holding together.

Some issues in the current systems

As a ratepayer I experience the limitations of the system every pay period as our bills are very delayed. The daily consumption data also lags by more than a day - as I am typing this on a Wed at noon, the data from Tuesday is not yet available. This is in contrast with a modern system like Emporia where I get almost real-time data. Implementation delays were particularly noticeable when we installed Solar Panels in our household and switched to NEM 2.0; the data changes took several months to complete.

We, the ratepayers, paid for the installation of Smart Meters ($2B between 2007 and 2013) under the premise of better service, improved flexibility, and new features, but their applicability is limited by the PG&E infrastructure.

PG&E also has trouble creating new tariffs as requested by the regulator, and I would not be surprised if there are policy decisions that are being made due to implementation constraints; in particular, it seems that a two-way tariff cannot be implemented because the PG&E system cannot accept a negative export rate (surely sounds like a COBOL field issue).

Billing Touches Many Areas

The documents submitted by PG&E show the multiple systems involved, starting with the data flowing from the Smart Meters. Since everything is connected, I presume this also has direct impact on the visibility and manageability of the distribution grid but my understanding of the existing system is limited; I need to find time to read the submission.

Questions

So, yes, the system needs to be updated but, $761.3 million? How does PG&E come with that number, and how did it go from the original $176.8M in 2023 to $761.3M?

Who should pay for this, us ratepayers or the shareholders? The technical debt on these systems has been accumulating for decades. Addressing this issue would have been a top priority in any normal company, but PG&E has let this drag for years / decades.

And, at the end, would the result be a modern system capable of the needs imposed by our Energy Transition? From the submitted documents the result will be a collection of virtual machines running on a PG&E owned data center. This seems problematic at multiple levels, in cost, expandability, disaster resilience, modularity, and more.

CPUC Proceeding Info

The proceeding is A.24-10-014 and the CPUC page has some, but not all, documents. For a full, up-to-date, list, follow these directions:

• Visit https://pgera.azurewebsites.net/Regulation/search

• Select “Billing Modernization” from the “Case” dropdown menu

• Click Search.

This will return 13 documents and you can browse through the submissions from PG&E and the responses. If you want to only see the PG&E submissions

• Filter on the “Party” dropdown by selecting “PGE” (not PG&E) before the search

There are 6 submissions from PG&E as I am writing this note.

Key Documents

. The two most useful PG&E docs are

• Prepared Testimony, (253 pages), structured in multiple chapters, and

• Workpapers (415 pages) supporting each of the chapters in the testimony.

There is a LOT of material in these documents; check the Design Roadmap figure below to get an idea of the scope covered.

This is the architectural diagram for today’s system:

And a diagram of the components of a Customer Information System:

I hope to have a chance to at least attempt a full skim of the material later this month; I’ll write a follow-up post if/when I do so.

Reactions

Below is a summary of the responses from 5 stakeholders. The responses are pretty short; most of the commenters point out they had limited time to examine the submission.

• Cal Advocates (CPUC Public Advocates Office) submitted a PROTEST and a RESPONSE

  • In the PROTEST, Cal Advocates argues that the submission lacks details and does not explain its benefits nor cost.

  • In the RESPONSE, Cal Advocates objects on the recovery date as it would be retroactive and it was not originally approved.

• DACC (Direct Access Customer Coalition) submitted a RESPONSE

  • DACC questions the impact of the rate recovery changes on educational, governmental, commercial and industrial customers. DACC asks for cost recovery to be examined in detail. DACC wants more details and hearings.

• Peninsula Clean Energy (PCE) submitted a PROTEST

  • PCE raises multiple issues. PCE cannot assess whether its proposed upgrades will serve bundled and unbundled customers in an equitable manner, argues that the Commission must consider reasonableness and impact on ratepayers. PCE argues that the Commission should ensure that the upgrades approved support billing presentation that facilitate principles of fair competition between PG&E and CCAs.

• SBUA (Small Business Utility Advocates) submitted a PROTEST

  • SBUA PROTEST raises multiple issues. SBUA says that the increase of cost is not explained. That the team overseeing the efforts at PG&E are not clearly experts in the domain. That the submission should include a range of options and alternatives. That the submission does not explain how it compares to upgrade plans by other utilities. That the submission does not explain how “sunk costs” will be handled if the request is denied. That the submission does not explain how to handle project overrun costs (there are precedents for very significant cost overruns). That affordability metrics do not take into consideration cost overruns. And that the impact on Small Business is not discussed.

  • SBUA makes the extra point that they have only engaged in an initial review and anticipates identifying and presenting further issues. SBUA agrees that hearings are likely necessary.

• TURN (The Utility Reform Network) submitted a RESPONSE and a PROTEST

  • In the RESPONSE, TURN takes an argument similar to that of Cal Advocates and advocates for the Commission to not allow PG&E to recover costs before October 2024 on grounds of retroactive ratemaking.

  • In the PROTEST, TURN argues that the application does not properly explain and support the cost increase from $176.8M to $761.3M. TURN also discusses retroactive ratemaking in the PROTEST. TURN agrees that evidentiary hearings are appropriate. TURN points out that the schedule proposed by PG&E is unreasonable and unrealistic.

The Deadline Has Past

Turns out that interested parties only have 30 days to raise reactions. The submission was posted on the October 25, 2024 daily calendar, and the thirty days ran until Sunday, November 24th. That is a very short time, and in the middle of the USA election, to read and respond to a $760M request that includes two very large documents.

Since we have past the deadline for submissions, the list above includes all the official responses. But you, ratepayer and otherwise, can still reach out to the CPUC, see below.

Why You Should Care

My main concern is that I see no evidence that this system will be a modern system, capable of meeting the challenges needed by the energy transition. I think it is telling that the comparators in the Worksp are with existing plans of existing incumbent energy companies. I’d like a discussion with a modern energy company, not an old one. And a discussion with their future plans, not with the current plans. This is a point also made in the SBUA PROTEST.

Like most of the official responses, I also have concerns about the cost, including overruns.

Like PCE, I am concerned about whether this new system will work well with CCAs, which, as designed by the legislature, provide customer choice to PG&E.

How to Engage

There are different ways to provide feedback.

Through the CPUC web site

1. Visit http://apps.cpuc.ca.gov/c/A2410014
   NOTE! CPUC requests you to use Microsoft Edge. In my experience, a Chrome will also work, and it looks like even Safari will work too, but if you want to be super-sure, stick with Edge.

2. Click on Public Comment

3. Fill in the form

4. As of this writing there are only 18 submissions; go and add your voice.

Through Cal Advocates

The Public Advocate Office (also known as Cal Advocates) is the independent consumer advocate of the California PUC. Their email is PublicAdvocatesOffice@CPUC.ca.gov.

Through Other Groups

You can also reach out to one of the groups above, in my case, I’ll reach out to PCE, my CCA. TURN actively engages with the CPUC, but I don’t have a great contact there.