Revised `smart meter' program may add to costs

Some in industry fault energy board
New design could stifle competition

Toronto Star - Feb 10, 2005
by John Spears

Ontario's energy regulator has changed the draft rules governing its $1 billion plan to install new electricity meters in every home and business in the province by 2010.

Now, some utilities and metering companies say the changes will limit the number of systems that can be used, which could stifle competition from meter suppliers and drive up costs of the program.

Ontario's Liberal government has decreed that all homes and businesses must have a "smart meter" by 2010; at least 800,000 must be installed by 2007.

It asked the Ontario Energy Board to draw up an implementation plan, which the board delivered on Jan. 26 and which now rests with Energy Minister Dwight Duncan for final approval.

"Smart meters" can tell a hydro utility how much power a customer is using every few minutes, or every few hours. That allows utilities to charge more for power that's used during periods of high demand. That should encourage consumers to use less power in peak periods, easing the strain on the province's aging generators.

The Liberals also want utilities to develop systems to flick off customers' non-essential appliances, such as air conditioners or pool pumps, for limited periods to ease stress on the system. That means information has to flow two ways — from the meter to the utility and from the utility back to the customer.

But some industry players say the energy board has proposed overly restrictive conditions on how the information must flow back to the customer.

The energy board says the new "smart meters" themselves should be able to handle two-way signal traffic. But others say there's no reason why everything has to flow through the meter: Many systems exist to send information back to the customer's home or business through a radio, phone or Internet link that bypasses the meter.

Jan Peeters is chief executive of Olameter Inc., a company that uses equipment from a variety of suppliers to build metering systems for utilities. He said he's "disappointed" with the new plan.

"If you want to be able to do load control — to control a thermostat or a pool pump — just say so," said Peeters. "But don't start specifying that the signalling to the pool pump has to go through the meter, because you are way out of your depth. Other things are happening in the communications industry completely outside of anything an energy regulator can specify."

Specifying that meters must handle two-way signals is a reversal for the energy board. In November, it issued a draft policy on smart meters that said one-way communication was adequate.

"The board considered requiring two-way communication, but concluded it eliminated viable systems from contention and could compromise competitive bidding," it said at the time.

But just before Christmas, the board asked for further comment on the issue.

Then on Jan. 26 it advocated two-way meters. It said they would allow water- and gas-meter reading capabilities to be added to the electric meter. And they would also allow add-ons such as "load control" — turning off air conditioners and other appliances from a central office.

William Rupert of the energy board says the change resulted from responses to the original plan.

The board decided the scale of the smart meter plan was so broad that the new equipment should have the maximum capabilities, he said.

"Why would you spend this kind of money and effort to have a system that was incapable of carrying load-control signals?" he said in an interview.

Nonetheless, the decision surprised firms such as Itron Inc., a big Spokane-based meter manufacturer that last year bought the electricity metering business of Schlumberger Ltd. "They went from a very goals-oriented document to a very prescriptive document," Scott Owen, vice-president of Itron Canada, said in an interview. Itron's meters don't by themselves offer two-way communication, but can operate with other systems to allow information to flow both ways. The proposed rules seem to limit prospects for Itron.

Paul Ferguson, president of Newmarket Hydro Ltd., is running pilot projects with meters that have one-way and two-way communication. He's uneasy with the change in specifications because it will limit his options.

"I don't want to be stuck with one supplier," he said.

Toronto Hydro wrote to the energy board last month saying it "does not support mandating a two-way communications network for smart metering in Ontario."

While the utility is opposed to a mandated two-way system, senior vice-president Peter D'Uva said two-way meters do have advantages. "If we're going to put in a system, we want to put in one that looks forward," he said. "The two-way (meter) we know looks forward, and the one-way at this point we're not sure."

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