Potential Smart Metering Issues for Ontario Residential Customers
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Transcript of Potential Smart Metering Issues for Ontario Residential Customers
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James StrappAssociate Partner,
IBM Business Consulting Services
Potential Smart Metering Issues for Ontario
Residential Customers
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1. Program Implementation2. TOU Rate Design3. Customer Choice
Customer Issues
Smart metering has a number of benefits for Ontario residential customers, but there are issues in:
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0
1
2
3
4
5
0 2 4 6 8
Years of Installation
800K
Millions of Electric Meters
Ontario
Installation Schedule
Underway
CompleteSources: Chartwell AMR AMR Installations Database 2005 and IBM
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0 200 400 600 800 1,000 1,200
Customers per square kilometre
Least Dense
Most Dense
Installation complete
Underway
Customer Density
Source: IBM
Ontario Average Hydro One
Toronto Hydro
Oth
er
Inst
alla
tions
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>80 distributors Some centralization
- Planning and specifications - Common procurement of systems and
assets- MDM/R
Existing central agency roles to be defined
- OEB, IESO, OPA, Ministry- A new “Smart Metering Entity”
Structural Complexity
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Ontario Situation
One of the world’s most aggressive schedules
Unique customer density challenges
New organizations and roles
Centralization / decentralization mix
Increased likelihood of
Billing errors Higher metering
costs Customer confusion
over responsibility
Issue 1: Program Implementation
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17 programs by 15 utilities in 12 states
Residential programs Northern utilities Larger utilities
>100,000 customers Active and discontinued
programs Comprehensive, but not
exhaustive
TOU Rate Survey
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Time of Day
Summer Winter
Com
ple
xit
y
(3)
(8)
Simple Peak
Seasonal Rates
Split Peak
Shoulder Periods
TOU Rate Profiles (1)
Source: IBM
(3)
(0)
Rat
e
# of Programs
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PGE
Ontario
PEPCO
BGE
6 rates9 periods
6 rates8 periods
6 rates4 periods
3 rates8 periods
TOU Rate Profiles (2)
Source: IBM
Com
ple
xit
y
Summer Winter
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0 5 10 15 20Savings for one kWh between peak and off-peak (US¢)
Active
Discontinued
Bill Impact
Source: IBM
Ontario
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012345678
2 4 6 8 10 12 14Summer Base Rate (US¢ per kWh)
Summer Peak to
Off-Peak Ratio
Ontario Average
Peak to Off-Peak Ratio
Source: IBM
Active
Discontinued
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Ontario Situation
Complex rate structure
- 6 different rates- 9 different periods
Comparatively little absolute consumer benefit to load shifting
No real rate trials and evaluation
Increased likelihood of
Customer confusion Savings not
exceeding the additional metering charge
Issue 2: TOU Rate Design
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Puget Sound Energy April 2001 – 330,000 on TOU Rates By November 2002: 3.6% opted out At cancellation later in November: 8.0% opted
out Strong TOU customer retention over 18
years at PEPCO: 56,199 TOU customers BGE: 81,952 TOU customers
California SPP ~70% chose to stay on TOU/CPP rates even
after the addition of a $3 to $5 monthly metering charge
Low Opt Out Levels for “Mandatory” TOU Rates
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Ontario Situation
Cannot opt out and remain with local distributor
Opt-out option with competitive retail contract
Increased likelihood of
Customer frustration
Retailers actively marketing against TOU rates
Issue 3: Customer Choice
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1. A complex implementation program- Aggressive schedule- Difficult geography- Roles to be clarified
2. Complex TOU rate structure- Small differentiation in peak to off-peak
rates relative to many other programs3. Mandatory program
- With retailers opportunity to market an opt out option
4. Others- Lack of local TOU rate experience - History of political promises of savings
Summary of Residential Customer Issues
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Clarify roles- Coordination of responsibilities deemed
to be central Pragmatic approach to rate design
- Trials and customer surveys Provide an opt out option with the
LDC - Encourage retailers to offer innovative
DR programs, not ‘backwards’ to a flat rate
Going Forward