Ontarians to pay $1B for hydro meters

Worth A Look, Energy, Frontier Centre

Toronto: Ontario electricity users will pay more than $1 billion on their power bills over the next six years to cover the cost of smart meters that the government wants installed in homes and businesses provincewide. The smart-meter initiative, which will make Ontario the first North American jurisdiction to record residential power consumption data on an hourly basis, will add $3 to $4 in ongoing capital and operating costs to each monthly bill when the system is fully installed in 2010.

The draft plan for introducing the meter system, released yesterday by the Ontario Energy Board, is the second major element of an all-new, power-pricing regime being introduced by Premier Dalton McGuinty’s Liberal government.

Beginning April 1, electricity prices will vary according to when power is used during the day with the highest costs during periods of peak demand. Together, the new meters and the variable power costs will enable consumers to tailor their electricity use to low-cost periods.

“Customers will pay according to what they use and when they use it,” the energy board said in its report. “Those who conserve will not subsidize those who do not.”

The smart-meter proposal comes at a time when Ontario is desperately searching for ways to avert major electricity shortages over the next few years.

Right now, there is little incentive to conserve because consumers pay a flat rate of 4.7 cents per kilowatt hour for the first 750 kilowatt hours each month and 5.5 cents per kilowatt hour thereafter.

The introduction of smart meters would put Ontario in the company of Italy, which is currently installing 30 million of the devices nationwide, and Australia, which is installing a similar system over the next five years.

“This is progress,” Tom Adams, executive director of the electricity watchdog group Energy Probe, said of the Ontario proposal. “It is going to provide us with the information and infrastructure fundamental to a smarter electricity system – a power system that better connects the customers’ electricity bill with the reality of what power costs to produce.”

Mr. Adams also praised a new provision that will see the energy board alert consumers 24 hours in advance of “critical” days when the electricity system is at capacity and power prices are extremely high.

“These are usually hot summer days when air conditioners are running on full or evenings during cold snaps when heaters, ovens and lights are all in use,” the energy board report said. “While there are usually no more than 15 events like this each year, electricity at these times can be very expensive. Customers with smart meters will be able to save by cutting back their use during those critical days.”

The Liberals have pledged to install 800,000 smart meters by the end of 2007 and to ensure 4.3 million customers in the province have the devices by 2010. It will, however, be some time before everyone can take advantage of the savings offered by the new system because large customers with peak demands of more than 200 kilowatts will get the new meters first.

Beginning in 2006, they will be installed in all new buildings as well as in industrial and commercial operations with peak loads of 50 to 200 kilowatts.

Municipal power distributors will be responsible for selecting the meter system they want and for introducing it. They will also start charging everyone in their area an additional fee for overall capital and operating costs as soon as the first of the meters are installed.

“Because it will take several years to complete the installation of smart meters in a distributor’s territory, the impact on customer bills will be small initially,” the energy board said in its draft plan. “It will rise as the implementation program progresses.”

The energy board will outline minimum technical standards for the meters, including a requirement the system allow consumers to obtain information on their previous day’s electricity consumption via Internet or telephone.

“A cheaper system would be one where you find out about usage at the end of the month,” said Mr. Adams. “That would be a lower-cost system but it wouldn’t be as valuable in terms of conservation because you are not as able to adjust your usage when you have to wait 30 days to find out what it was.

“The shorter the feedback period, the more chance the customer has to manage their usage.”

Conservative energy critic John O’Toole said the government has been too quick to adopt the smart-meter option when other alternatives are available. In New Brunswick, he noted, consumers are going to be able to buy cards credited with $100 worth of power that can be inserted in their meters.

Mr. O’Toole also predicted the installation of smart meters will allow the Liberals to blame higher electricity bills on consumers who do not do not conserve aggressively.

“The government is going to say: ‘If your bill is up, don’t blame me, you have a smart meter’,” he said, noting that couples who come home from work each day don’t have much choice but to turn on the stove to cook during the peak demand evening hours.

The energy board is expected to submit a final report on issue to Energy Minister Dwight Duncan in mid-February after receiving public comments this month.