On April 6, 2007 the Department of Public Service (PSD) petitioned the Public Utility Commission (PUC, or Commission) to open an investigation for the purpose of considering the costs and benefits of "smart metering" and increased use of dynamic pricing that could encourage energy efficiency and the potential promulgation of standards and requirements with respect to the same. On April 18, 2007, in response to the petition, the Commission opened an investigation into Vermont electric utilities' current and future use of smart metering, time-based rates and inclining block rates. Subsequent to the Commission's order opening this investigation (as well as the initial stages of the investigation), the Vermont General Assembly enacted Act 92 (2007 Adj. Sess.), which ordered the PUC to investigate the implementation of Smart Meters capable of sending two-way signals that would allow for innovative, dynamic rate designs for every rate class and to develop a report and implementation plan by December 31, 2008, for implementation of Advanced Metering Infrastructure (AMI) and alternative rate designs. This mandate coincided with the scope of the investigation already under way.
The first phase of this investigation involved a high-level review of the potential benefits of AMI. The Department employed a consultant, Freeman, Sullivan & Co., who analyzed those benefits for each of the Vermont utilities in a report, "Benefit-Cost Analysis for Advanced Metering and Time-Based Pricing: Final Report (March 26, 2008). This analysis showed that, in general, smart-metering technology could lead to net savings for the electric utilities. The analysis also suggested that for all but Green Mountain Power Corporation (GMP) and the smaller municipally owned utilities, implementation of smart-metering technology may be cost-effective immediately. The report also concluded, however, that if sufficient demand-response savings could be achieved, AMI deployment may produce benefits even for GMP and the smaller municipals. As a result of the study, the Commission opened Docket 7307.
The positive results for a large number of Vermont utilities showed the need to conduct a more detailed assessment of the cost-effectiveness of the deployment of some level of AMI infrastructure within those utilities. To examine these (and other) issues relating to AMI infrastructure, Vermont's eleven distribution utilities, the PSD, Conservation Law Foundation, and Vermont Electric Power Company, Inc. and Vermont Transco LLC, entered into a collaborative process and set general guidelines for the implementation of AMI, also referred to as "Smart Metering," along with recommendations for policies associated with AMI-enabled alternative rate designs. The parties also established a process for further evaluation and study of necessary backbone communications facilities. The result of that collaboration was a Memorandum of Understanding which was approved by the PUC in its order dated August 3, 2009 (with clarifications in an order dated November 16, 2009), which established a threshold set of minimum functional technical requirements and outlined a voluntary process for incorporating smart metering technology into Vermont utility operations.