Pacific Gas and Electric Company, based in northern California, has applied for regulatory approval to begin a five-year effort to install 9.3 million advanced meters for all its gas and electricity customers. These advanced meters will be read remotely, and will also allow customers to take advantage of prices that vary by time of day - potentially realising cost savings by shifting use from peak to off-peak hours. The utility plans to offer financial incentives to customers who agree to TOU rates.

The application stems from a 2002 California Public Utilities Commission order for utilities to consider programmes and tools that offer customers improved options to reduce their electricity usage during high-demand situations. California's investor-owned utilities were directed to explore AMI technologies and conduct a two-year statewide pilot programme to gauge customer interest in dynamic pricing options. For the past year and a half, PG&E has been exploring AMI technology and deployment at other utilities, and evaluating vendor proposals.

If the CPUC approves PG&E's filing by early 2006, the utility expects to begin deploying advanced meters as early as spring of that year and to offer dynamic rates to AMI-enabled customers that summer. Conversion of all electricity and gas meters could be completed by 2011. The deployment cost is estimated to be $1.46 billion, consisting of a capital cost of $1.25 billion and an estimated expense of $213 million. To fund this cost, PG&E is seeking slight rate increases. The increase for residential customers with average gas and electric use would total about 69 cents per month.

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