Ontario’S smart meter initiative Lessons learned from the opening of the electricity market

Electricity jurisdictions in the United States and abroad are watching the province of Ontario, Canada with interest. In April 2004, the Ontario government announced a bold initiative that would see the installation of smart meters in every home by 2010. Ontario has a population of approximately 12 million and some 90 electricity utilities. The province is also among the highest per capita consumers of energy in the world. Smart meters are key to Ontario’s plans to create a conservation culture in the province.

The Ontario Smart Metering Initiative (SMI) is the greatest challenge the province’s electricity industry has faced since the retail electricity market opened to competition in 2002. The deployment of smart meters in every Ontario home is a massive undertaking and one that does not end with the installation of a new meter. Market standards, back-office systems, communications infrastructures and meter data management systems have to be adapted or designed from the ground up to support interval meter readings.

Ontario market opening

The restructuring of the government-owned utility, Ontario Hydro, and the opening of a new competitive market was the culmination of over five years of work by the electricity industry, government, the Ontario Energy Board (OEB), the Independent Electricity System Operator (IESO) and solution providers.

The restructuring of the Ontario electricity industry required the design of the new market and its standards, as well as the establishment of a reliable retail market infrastructure through which local distribution companies (LDCs) and retailers could communicate. Originally scheduled for November 2000, the new market did not open until 1 May 2002, due mainly to implementation and integration overruns. If similar delays are to be avoided for the smart metering initiative, the government and market participants must work together to address the technical and implementation challenges facing Ontario’s LDCs and retailers.

Smart metering challenges

As of September 2006, the automated meter reading (AMI) specifications were moving toward legislation, and an RFP has been issued by the IESO to provide a province-wide meter data management/repository (MDM/R). This RFP describes a single, centralised system that captures and stores all meter data, and that provides validation, estimation and editing (VEE) and billing determinant delivery capabilities to the LDCs.

While the government’s detailed smart meter implementation plan has yet to be released, and the specific responsibilities of the government’s smart meter entity await further clarification, LDCs have already begun to install smart meters and initiate pilots to test smart metering technologies.

The successes, lessons learned and roadblocks encountered during these pilots should be freely shared with all market participants in order to develop best practices for minimizing market implementation hurdles and delays. The technical and implementation challenges created by the smart meter implementation are significant. The technical and implementation challenges created by the smart meter implementation are significant and can be categorised as follows.

Information technology

Today, meter data is transported from manual or automatic reading systems on a monthly or bi-monthly basis for typical consumption meters and monthly or weekly for interval meters. With the advent of smart meters, market participants and the operator of the MDM/R will be responsible for transporting, tracking, storing, securing and providing access to meter data for billing and analysis purposes on a daily basis. This high level of data activity demands a robust communications infrastructure capable of moving data between data repositories and processing systems on a much more frequent basis than is the case today.

To provide some idea of the potential scale of the SMI transaction and data volumes, according to the government’s implementation plans, there will be approximately 512,000 commercial and residential smart meters installed by mid-tolate- 2007. These meters alone may generate upwards of 8 billion interval values per year.

Once the majority of the smart meters are installed in 2010, there will be close to 50 billion interval values entering the system each year. These values represent only the raw interval data that the AMI systems will generate – the downstream transactions resulting from the VEE and billing determinant calculations that must be performed on the interval data will add considerably to these volumes.


Ontario is one of the most complex electricity markets in the world with over 90 LDCs (down from 200 in 2000). By contrast, many other jurisdictions have at most four or five distributors. Each of Ontario’s LDCs has its own mix of legacy back-office applications, proprietary databases and customer information systems – over 20 different CISs in all. Virtually all of the systems deployed by Ontario’s market participants will be affected by the smart metering initiative:

  • Smart meter data must flow seamlessly between the LDCs’ AMI systems and the MDM/R, and then back to the LDCs in aggregated form for consumer billing and other purposes.
  •  Retailers may need access to the raw interval data, as will web-presentment service providers or demand management companies.
  • Government agencies will require summary information from the MDM/R to indicate how well conservation goals are being met.

Market participants will need to implement a common set of standards and protocols to allow their various systems to communicate with the MDM/R and with each other.

Extensive technical and market expertise will be needed to address these integration challenges and mitigate the implementation costs and risks. Each affected system will need to be tested and certified prior to the implementation of smart meters to ensure that they can support interval metering and comply with Ontario’s market standards.

Data tracking, auditing and reporting

Proper tracking and auditing of smart meter data will be needed to ensure that information sent to each market participant is received in a timely manner. In some other jurisdictions, the lack of data auditing capabilities, coupled with potential and actual losses of data, has led to increased operational costs, settlement disputes and undue stress on market participants.

Because market data is passed electronically from system to system with little or no human intervention, the ability to effectively track and audit vast amounts of smart meter data will be a major issue throughout the smart meter rollout. Data tracking and audit capabilities should be put in place early to minimise disputes and potential data losses during the initial stages of the implementation.

Lessons learned from retail market opening

The lessons learned during the retail market opening process provide unique insights into what the industry in Ontario can expect to face during the implementation of smart meters.

The importance of standards

A market design based on open standards is essential to the success of any industry-wide technology initiative. Experience shows that it takes approximately 12-18 months to develop the initial set of standards upon which a market can operate. Once the market is operational, a sustainable pace of change is approximately one major market standards upgrade per year, as witnessed in Ontario.

Unlike some other market jurisdictions in North America, Ontario has robust market standards in place that facilitate the retailing of electricity. Developed cooperatively by market participants under the auspices of the OEB, these open standards allow any market participant or technology vendor to participate in the market with minimal barriers to entry.

Today approximately 20 industry parties meet weekly to discuss ongoing improvements to the market standards. This high level of activity has been ongoing since 2001. The establishment of open standards for smart metering that closely mirror those in place in the retail electricity market will minimise barriers to market entry, reduce implementation and market evolution costs, and help to mitigate risks for all parties. The retail electricity market standards are now mature and widely accepted, and should provide a foundation for the new smart metering standards.

Integration with existing systems

Possibly the greatest challenge of market opening was the integration and testing of the electronic business transaction (EBT) communications network with multiple back-office systems used by retailers and LDCs. The time and effort required to integrate systems for the SMI market implementation should not be underestimated, as connections to all CIS systems are necessary to ensure proper consumer billing, and legacy implementations of these systems are often difficult and expensive to adapt.

Vendor readiness

The smart meter implementation will require that market participants bring all their affected systems into compliance with the new market standards and rules. Experience with the retail electricity market shows that high costs and delays are incurred during a market’s readiness testing phase. Prior to market opening, all systems used by market participants needed to be tested and self-certified to ensure effective communication between parties. Managed by the OEB, this pre-market testing and certification effort was one of the largest undertaken by any electricity market in the world.

During this process, it became evident that CIS vendors had widely differing abilities to help their LDC clients modify and configure their systems for market opening. Once tested, some systems required significant upgrades in order to handle data volumes for the new market, and the different vendors had varying degrees of success in meeting market opening timelines, which affected the ability of their LDC clients to participate in the market in the period just after market opening.

To ensure the success of the SMI, it is crucial to set realistic timelines and readiness guidelines for system vendors as well as market participants. The market testing and certification solutions and methodologies that have been put in place to support Ontario’s evolving EBT standards should prove useful in helping market participants prepare for smart metering.

Ability to manage large volumes of data

As the Ontario electricity market opened, it became clear that the new data volumes were putting a strain on several market participants’ back-office systems. The CIS systems used by some participants were already reaching their maximum load capacity at the peak of the retail market when nearly one million customers had signed on to purchase power through the retail market.

This limited capacity may well prove to be a hurdle in the coming years as the SMI will generate enormous amounts of data that some back-office systems are not designed to handle. This should be considered a high priority issue and can be addressed either through market design or by including volume-testing and scalability guidelines and certification as part of the SMI implementation.

Summing up

Despite the issues and delays encountered, the opening of the competitive electricity market in Ontario in 2002 still stands as a model for how to effectively orchestrate a market-wide change. Undoubtedly, market participants and solution providers will encounter issues during the early stages of the SMI.

However, experience in the opening and subsequent evolution of the retail electricity market demonstrates that these issues can be addressed both tactically by implementing fixes or workarounds to systems and processes, and strategically by updating and improving the market standards over time. With planning, diligence and the support of market participants and vendors, the task of implementing the SMI can and will succeed, making Ontario a pioneer in electricity conservation.