Consumers paid more, saw no benefits from smart meters
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Consumers paid more, saw no benefits from smart meters

Ontario’s auditor general produced her annual report this month, which highlighted the inefficiency of hydro smart meters across the province and the lack of savings for customers.
Bonnie Lysyk said in her report the province intended to reduce electricity demand during peak times and delay the province’s need to grow its power-generating capacity. Instead, in the past 10 years since it was announced the peak demand hasn’t changed but the Ministry of Energy has created power surpluses by approving new power generation increases.
“The overall financial impact has been that other jurisdictions are able to buy this surplus power from Ontario at a price considerably lower than what it actually cost Ontario to produce this power,” Lysyk said. “The total cost of producing the exported power was about $2.6 billion more than the revenue Ontario received from exporting that power between 2006 and 2013.”
Hydro One’s Tiziana Baccega Rosa said they’ll examine Lysyk’s findings for opportunities to get the most out of every dollar for their customers.
“Hydro One has made extensive changes to its procurement processes since 2005 when procurement for smart meters was undertaken,” Baccega Rosa said. “Hydro One is committed to constantly improving its business practices.”
She said Hydro One covers 650,000 square kilometres, which equals 60 per cent of Ontario. They’re the largest distributor of electricity in the province, with approximately 1.3 million customers across 120,000 km of distribution lines. The second largest distributor has 10,160 km of distribution lines.
“In addition to smart meters, Hydro One installed 10,427 regional collectors and 38,331 repeaters to build its advance metering infrastructure required to support the smart meter network within its 650,000-sq.-km. service area,” Baccega Rosa added.
Smart metering was introduced in April 2004 followed by the Minister of Energy’s directive to the Ontario Energy Board under the Ontario Energy Board Act, 1998. It required the OEB to develop an plan to achieve the government’s targets of 800,000 smart-meter installations by 2007 and finish coverage for all residential and small-business ratepayers by 2010.
“The ministry did not complete any cost-benefit analysis or business case prior to making the decision to mandate the installation of smart meters,” Lysyk said. “This is in contrast to other jurisdictions, including British Columbia, Germany, Britain and Australia, which all assessed the cost-effectiveness and feasibility of their smart-metering programs.”
She explained the challenge in Ontario is that 73 distribution companies were each responsible to purchase, install, operate and maintain smart meters, as well as to bill the ratepayers.
Baccega Rosa said Hydro One has a number of tools through the smart meters and time of use rates that help customers manage their energy usage. Customers can view their hourly usage online through the new smart metering system.
“Customers can also use an online tool – 10 Smart Meter Lane to see how much it costs to run different house hold appliances during certain times of the day,” Baccega Rosa said. “Again, this tool can help identify potential efficiencies.”
Lysyk outlines in her report that the ministry hasn’t updated the projected costs and benefits of smart metering, or even tracked its actual costs and benefits to determine the net benefits.
“Up to the end of 2013, our analysis shows that total smart metering-related costs incurred only by the distribution com­panies had already reached $1.4 billion – well in excess of the ministry’s initial total projected costs of $1 billion,” Lysyk said.
When you included the costs of the ministry, the OEB and the IESO the total costs to implement smart metering were nearly $2 billion at the time of their audit.
The ministry aimed to reduce peak electricity demand – 1,350MW reduction by 2007, another 1,350MW drop by 2010, and a final 3,600MW reduction by 2025. But Lysyk said the first target was irrelevant because it was supposed to be achieved by 2007, three years before the full installation of smart meters.
“With respect to the second target of an additional 1,350MW reduction by 2010, peak elec­tricity demand did not fall, but actually rose slightly by about 100MW between 2004 and 2010,” Lysyk said.

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