Ontario Energy Board rules on smart meter costs


Toronto, ON, Canada — (METERING.COM) — August 10, 2007 – The Ontario Energy Board (OEB) has issued a decision approving costs associated with smart metering activities incurred by 13 utilities authorized by government regulation to undertake these activities.

The 13 utilities are Chatham-Kent Hydro Inc., Enersource Hydro Mississauga Inc., Horizon Utilities Corporation, Hydro One Brampton Networks Inc., Hydro One Networks Inc., Hydro Ottawa Limited, Middlesex Power Distribution Corporation, Milton Hydro Distribution Inc., PowerStream Inc., Tay Hydro Electric Distribution Co. Inc., Toronto Hydro-Electric System Limited, Veridian Connections Inc. and Newmarket Hydro Limited.

The issues considered in the case included cost recovery related to minimum functionality, the prudence of costs incurred, the mechanism to reset rates to recover costs found to be prudent, and the regulatory treatment of stranded meter costs. In addition certain accounting procedures such as the mechanism to clear variance accounts and the mechanism to reset smart meter costs on a go-forward basis were also considered.

In its decision, the Board found the processes used by the 13 utilities to purchase smart meters, related equipment, and services were carried out in a professional and diligent manner. It also found the costs incurred by the utilities relating to installed meters met the definition of minimum functionality.

Noting that the cost per installation will vary between utilities depending on the geographical nature of their service area and the extent to which meters have been deployed, the Board concluded the costs claimed by the 13 utilities were prudently incurred. In the case of Hydro One Networks, whose costs were high compared to the others, the Board allowed half of the project management costs applied for, and invited the utility to apply for the remaining amount at the time of its 2008 rate application when it could provide further evidence regarding the prudence of these costs.

The only utilities that applied for rate orders as a result of their cost claims were Toronto Hydro, Chatham-Kent, and Middlesex, and these were directed to file draft rate orders reflecting the Board’s decision within 15 days.

The Board also decided, based on motions from several parties and that bidding and tendering processes by these and other utilities are on going, that the prices of the equipment purchased should be kept confidential and that the public interest could be met by disclosing only the bundled costs on a cost per smart meter installed basis.

According to the evidence submitted by the 13 utilities, 1.16 million smart meters will be installed across Ontario by the end of 2007. For the nine utilities that had already started deploying smart meters in 2007 the smart meter unit costs range from CA$123 to $190 (US$117 to $180), with the exception of Hydro One Networks’ unit cost of CA$479 (US$454). In its testimony Hydro One Networks said this reflects the rural nature of its territory, high upfront costs and the fact that relatively few meters had been installed.  

The Ontario Energy Board is the regulator of the province’s electricity and natural gas sectors.