Smart meters could cost $2.3 billion
All households to have one by 2010
No decisions yet on who will pay
Toronto Star - October 28, 2004
by John Spears
Installing sophisticated electricity meters in every home and small
business in Ontario could cost up to $2.3 billion, according to the
Ontario Energy Board.
The most expensive type of meter carries a price tag of $600, energy board
briefing notes say, and the province must install more than 3.8 million to
reach every customer. Putting the two figures together results in a total
near $2.3 billion.
The cost estimate for so-called "smart meters" is contained in briefing
notes prepared by an energy board working group. The working group doesn't
tackle the question of how new meters will be financed. But if the cost of
a $600 meter were billed over a five-year period, the monthly price tag
excluding financing costs would be $10.
Energy Minister Dwight Duncan says he wants all households and small
businesses to have some form of smart meter by 2010, to encourage
conservation and discourage unnecessary power use at peak periods.
The working group notes say Ontario will need to install 3,846,000 new
meters to meet Duncan's objective, starting with 60,000 in 2005.
Conventional residential meters measure only the total amount of power
that a household uses over a one- or two-month period.
Smart meters record the time of day when the power is used. Utilities can
then charge customers higher rates for power used when demand and prices
are high, and lower rates for power used during off-peak periods.
Smart meters can have varying degrees of sophistication. "Interval meters"
can track usage hour by hour, and match rates charged to customers with
the varying prices on the wholesale electricity market. They may have a
phone or Internet connection with the local utility, which can read the
meter from a central office.
Meters can also transmit information by local radio signal to small local
receivers, or to vans driving through a neighbourhood. Some utilities hope
to use their own power lines to transmit metering data.
Systems with two-way communication can be wired to appliances such as
hot-water heaters, allowing utilities to switch the appliances off for
short periods to curb demand if the power grid is overloaded.
"Time of use" meters are simpler. They generally divide the day into four
to six time periods, and charge different rates during each period. Low
rates might be charged from 11 p.m. to 5 a.m.; the highest rate might
charged from 4 p.m. to 10 p.m. Intermediate rates could be charged during
The rates for each period are set every year, or every few months, rather
than varying with each hourly fluctuation of the market.
Policy makers are still wrestling with the choice of which meter to install.
"The decision would likely be easy if cost wasn't an issue," say the briefing notes.
Interval meters are superior because they are far more flexible, and allow
utilities to charge rates that closely track true market prices.
"Recent information suggests there is at least a three-fold differential
in the installation costs: $600 (for interval meters) vs. $150-$200 (for
time of use meters)," the notes say.
To offset the cost of the meter, a typical customer would have to reduce
consumption by 5 per cent to 10 per cent. Alternatively, customers could
track market prices on the Internet and take advantage of the
opportunities to use power when prices are low.
The energy board is expected to release a discussion paper next month on
the costs and benefits of the meter options.
Who will pay for installing the meters is a big question, as householders
and small business owners may not welcome being forced to pay hundreds of
dollars for a new meter.
Some large electricity users fear that utilities might be ordered to foot
the bill for installing the meters. The utilities would then presumably
apply to the energy board for rate increases to cover the cost — and might
try to spread the rate increase across all customers, large and small.
That would force large users to subsidize the cost of new meters for small customers.
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