Smart Energy International polled executives from the Canadian Electricity Association and Measurement Canada, to get their views on the state of play in the industry in that country. In this issue we cover the responses from the CEA; we will feature those from Measurement Canada in the June 2003 issue.
MI: Please give us a brief overview of the Canadian ESI.
Earl Ludlow: The installed generating capacity in Canada, based on the Energy Statistics Yearbook (1996) is 113 GW. Canada ranked second in the world in terms of hydro generation and sixth in the world based on total generating capacity. The number of customers (defined by meter) in 2001 was 12,618,546.
Within Canada, as throughout the world, competitive markets are being created. The forces for change are permeating throughout the Canadian electrical sector. In every province and territory, utilities are constantly challenged by increased competition, intense pressure on costs, restructuring, growing environmental concerns, rapidly changing technology and expanding customer expectations. In response to these challenges, the Canadian electrical sector reflects varying structural compositions regarding the regulation of transmission and wholesale markets in Canada.
At present a mix of federal and provincial regulation governs the Canadian electrical industry. Canada has federal regulations with uniform requirements for approval and verification of electricity meters. The Electricity and Gas Inspection Act & Regulations (EGIA) and Weights and Measures Act & Regulation (W&M) are two federal regulations governing electricity metering. Although nation-wide uniform requirements simplify entry of new meters into Canada, the governmental bodies associated with each of its ten provinces and three territories have jurisdiction over the form of the electricity market within their borders. Furthermore, the role of independent regulators within the industry has increased as provinces have moved toward competition or have privatised. So while provinces may have the same metering regulations, each has its own regulatory mechanism and approach to utility management.
The Canadian electricity industry was made up of integrated companies encompassing functions from generation through to the customer, although this is now changing in several jurisdictions. Different approaches to electricity markets have developed among the provinces. This has resulted in a mix of public and private entities and a wide diversity of approaches to restructuring. In many cases integrated companies are increasingly functionally unbundled to accommodate wholesale competition and the differing market demands. This is most notable in two provinces that have moved to full retail competition (Ontario and Alberta).
MI: Please describe the current situation as regards metering in Canada.
EL: Competition, general globalisation of the marketplace, environmental expectations and expanding customer expectations are increasing pressures to implement innovative metering technology to enhance efficiencies and to provide new services. While deregulation and competition are pushing utilities to use innovative technology, the greatest barriers to electronic metering in Canada continue to be the costs associated with implementation, testing, and maintenance.
The following is a summary of the types of meters currently installed:
- Electronic polyphase meters – These have moderate penetration of 30-40% with commercial/industrial (C/I) customers. In deregulated market jurisdictions, full use of electronic interval metering is required. All new meters are electronic. Interval metering is prevalent in deregulated markets.
- Electronic network meters – Electronic network meters also have a moderate penetration of 30- 40%. All demand meters purchased are electronic. Substantially, all kWh meters are electro- mechanical.
- Single phase kWh – Substantially, all existing and new purchases are electromechanical.
In a country with one of the world's lowest population densities, automated meter reading (AMR) holds much promise for improved efficiencies and great potential for new service offerings. Currently, there is extensive use of AMR for large C/I customers, primarily monitored through MV-90 software using dial-up connections. There are also a variety of small AMR pilot projects for residential customers. Various communication media are being used, the most common being drive-by radio communications and power line carrier applications.
Challenges such as Canada's geography, climate, regulation, and the cost of implementing new metering technology continue to limit the use of enhanced service options such as prepayment and time-of-use metering. The interest in additional service options through metering technology, however, is growing. For example, one utility is piloting pricing and metering based on temperature due to its high penetration of electric heat. Other examples are increasing pressure from C/I customers for interval metering data to enable them to control usage. Competition and resulting cost pressures will continue to present significant opportunities for metering in Canada.
MI: What about the influence of tariff policies?
EL: All cross-border trade between the United States and Canada is governed by the rules within the energy chapter of the North American Free Trade Agreement (NAFTA). Tariff policy within Canada is regulated under the authority of ten provincial governments and three territorial governments. Tariff policies vary considerably from policies that are traditionally associated with fully regulated utilities (i.e. simple kWh and peak demand billing) to those operating in deregulated markets (which has extensive use of C/I interval metering and load profiling for settling billing for residential customers).
Substantial trade in electricity exists with the United States. As a result much of the inter-provincial and international trade is subject to reciprocity agreements with the United States requiring conformity with the policies as developed by FERC (Federal Energy Regulator Commission) in the United States. Across Canada, many forms of tariffs do exist such as time-of-use, surplus energy, interruptible load rates, spot market pricing and so on.
MI: Please give us an outline of the various changes made to measurement practices im Canada in recent years.
EL: The extent of changes to measurement practices has varied in Canada between provincial and territorial jurisdictions. With the onset of deregulation, open access of transmission lines and restructuring of vertically integrated utilities, the number of locations for wholesale metering has substantially increased. Terms such as interval metering and spot market pricing are now common in Canada. In the deregulated markets, metering requirements are specified by provincial regulatory bodies that have been set up to ensure the proper operation of the market.
On the regulatory front, the requirements for ensuring metering accuracy are going through substantial change.
1. In the fall of 1999, Measurement Canada initiated a review of the electrical trade sector. This review involved a multi-stakeholder, consensus-based process to determine the level of intervention required to ensure measurement accuracy and equity in the electricity trade. It also determined how best to meet the required levels of intervention.
2. By February 2002, recommendations were made in 16 areas. These recommendations provide opportunities to reduce the cost of metering within Canada and provide a foundation for the introduction of new, innovative metering technologies.
3. The implementation of these recommendations is ongoing. Benefits to the industry are being realised through the piloting of initiatives such as the sampling of polyphase electric meters for re-verification of metering accuracy. As these savings accrue, the cost reductions will be passed on to consumers.
MI: What was the reason for these changes?
EL: There were several reasons.
1. To reduce the cost of regulation while maintaining accurate and fair trade in electricity.
2. To reduce any regulatory burden that is limiting the use of new metering technology.
3. To meet the needs of industry, consumers and society to provide accurate, fair-trade measurement and to facilitate the innovations necessary to ensure the on-going competitive- ness of the industry. Initiatives to support societal goals, such as the need for sustain- able environmental development of the electrical energy sector of the economy, were also considered important.
MI: What benefits have these changes had for customers (both C&I and residential) and for utilities?
EL: The initial benefits are associated with reduced cost. As the cost of electronic metering decreases, the feasibility of innovative metering such as prepayment meters, interval metering and automated meter reading improves. These in turn improve the feasibility of a variety of service and rate options. This is important to the efforts of individuals and utilities to minimise costs and environmental impacts. For example, we can see a future where a residential customer can choose whether to operate his dishwasher at 5:00 p.m., when electricity demand is at peak load and prime cost, or select another time when the cost is lower. This will allow customers to reduce their electricity bill and make a contribution to improving the environment.
MI: How do the Canadian Electricity Association and Measurement Canada work together?
EL: Measurement Canada's mandate is to ensure the accuracy of electricity measurement as outlined in the federal Electricity and Gas Inspection Act. It accomplishes this by setting and monitoring metering accuracy to ensure electricity meters meet minimum accuracy standards.
The CEA is the national forum and voice of the electrical business in Canada. Its mission is to contribute to the regional, national, and international success of its members. At the heart of the CEA is a core of corporate utility member companies accounting for about 95% of Canada's installed generating capacity. In addition, major electrical manufacturers and corporate consulting companies are members. The CEA identifies and analyses business issues of national and international concern, develops policy positions to address these issues and provides a strong voice in advocating industry views.
Building coalitions of stakeholders to address the critical issues and challenges facing Canadian electricity, and seeking policy solutions, is at the heart of the CEA. One such example is its co-operation with Measurement Canada to achieve a high level of consumer confidence in electricity metering. This achievement represents a significant contribution to the success of the electricity markets in Canada.
MI: There were some upsets regarding deregulation in Ontario last year. What is the present situation as regards deregulation (both in Ontario and in the country as a whole) and is it likely to affect metering in any way?
EL: The upset in Ontario has resulted in retail price caps (primarily for residential customers) for a number of years into the future. It has not yet impacted on the overall operation of the market. With domestic metering based on load profiling, this upset is not expected to have an immediate impact on metering.
MI: What changes do you see taking place in metering in the next few years?
EL: The most significant change that is anticipated is an increase in demand for residential electronic metering and increased use of innovative metering options in the residential and small C/I (< 50 KVA) metering sector.
Also, we anticipate increased innovation in metering for large C/I customers (> 3 MW) where there are reduced requirements for meter sealing and increased reliance on contracts to resolve disputes and to specify metering requirements. One example is the remote reprogramming of certain non-metrological functions within the meter to provide customers with additional services and pricing options.
MI: Thank you for your input.