SDG&E’s New Computer System Would Cost Almost $1B Over Its Lifespan

San Diego Gas & Electric wants the California Public Utilities Commission (CPUC) to approve $253 million to install a new computer system it says will be more efficient and save ratepayers money in the long run.

But spread out over the expected lifetime of the system, what is called the “total revenue requirement” that would be picked up by customers comes close to $1 billion — $996.6 million, to be exact.

“In plain English, what this means is the total costs of what it will take for us to own and operate the system over a period of 20 years,” said Scott Crider, SDGE’s vice president of customer services, said. “The $253 million is the cost to install and get the program up and running. And the remainder is how much it would cost to run the system in totality for the next 20 years.”

Crider was quick to point out that, should the CPUC give SDG&E the go-ahead, the utility projects it will save ratepayers $293 million during the course of the new system’s expected lifespan.

The current system — called the Customer Information System (CIS) — has been in place since 1997 and SDG&E officials say it has become outdated in an energy landscape that has changed dramatically in recent years to include features such as smart meters, time-of-use rates and more complex regulatory initiatives.

For well over a year, some SDG&E customers have not received timely monthly bills and the utility has blamed the current CIS for the problems, saying its programming language forces SDG&E technicians to often resort to laborious custom-coding.

At its height, the billing delays affected almost 3 percent of SDG&E customers, or about 40,000 ratepayers. Earlier this month, the number had been reduced to 500.

“Our customers are really asking us to be more like Amazon and Google,” Crider said. “So we need this modern platform to serve them and allow them to communicate and interact with us 24 hours a day, seven days a week.”

But two consumer groups have filed protests to the CPUC, challenging SDG&E’s request.

The Utility Reform Network (TURN), based in San Francisco, said SDG&E as late as 2015 “gave no indication” that its CIS “had reached a point at which there might be cause to consider its wholesale replacement.”

“It adds insult to injury when customers who have experienced a series of billing problems, as many of SDG&E’s customers have, are told they will have to pay extra for SDG&E to get it right,” said Mindy Spatt, communications director at TURN.

TURN also said SDG&E has to prove the costs it is asking ratepayers to shoulder is just and reasonable and questioned whether the CIS request is “the product of imprudent past management of the utility’s customer service facilities and spending.”

Crider said, “We completely disagree with their assertion” and said SDG&E’s cost estimates were developed “using some of the foremost experts” in the energy sector.

Two years ago, SDG&E hired Ernst & Young Consulting to evaluate its CIS and after a nine-month study, Ernst & Young recommended a replacement system.

“We think this is a prudent investment for our customers because, frankly, the cost of doing nothing is significantly more and that’s just not an option for us,” Crider said.

The San Diego-based Utility Consumers’ Action Network (UCAN) has also filed a protest, focusing on the costs of the SDG&E request.

“We want to make sure that what is done is economical and will not cost ratepayers more than it should,” said Donald Kelly, UCAN’s executive director.

UCAN’s protest said SDG&E’s proposed CIS is “significantly more expensive, on a per meter basis,” than a recent CIS request by Southern California Edison.

While filing as part of its general rate case, Edison filed with the CPUC for expenditures of $208.7 million to replace its customer service technology portfolio that included its customer service mainframe billing system.

“Every utility has varying circumstances and we all think the cost per meter is not a good apples-to-apples comparison,” Crider said.

Crider said SDG&E differs from Edison in that SDG&E supplies natural gas and electricity to customers while Edison delivers only electricity.

The Office of Ratepayer Advocates (ORA), the independent consumer advocate within the CPUC, has also weighed in on the SDG&E case.

ORA analysts recommended adoption of SDG&E’s revenue requirement but called for a $1.4 million reduction in contingency costs and opposed the utility’s request for $27.2 million in up-front ratepayer funding to hire staff on a transitional basis.

It also disputed the risk scores the utility presented to determine ratepayer expense but the ORA accepted SDG&E’s projections on costs and benefits of the new computer system.

“ORA does not oppose SDG&E’s proposal to proceed with implementing the new CIS Replacement Program,” the report said.

The CPUC’s five commissioners will ultimately make the decision whether to approve or reject SDG&E’s application. A final vote is expected by the middle of next year.

The next step in the process is rebuttal testimony from SDG&E, which is scheduled for Nov. 13