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Potential Smart Metering Issues for Ontario Residential Customers

Potential Smart Metering Issues for Ontario Residential Customers. James Strapp Associate Partner, IBM Business Consulting Services. Customer Issues. Program Implementation TOU Rate Design Customer Choice.

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Potential Smart Metering Issues for Ontario Residential Customers

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  1. Potential Smart Metering Issues for Ontario Residential Customers James Strapp Associate Partner, IBM Business Consulting Services

  2. Customer Issues • Program Implementation • TOU Rate Design • Customer Choice Smart metering has a number of benefits for Ontario residential customers, but there are issues in:

  3. Installation Schedule Millions of Electric Meters Ontario 800K Underway Sources: Chartwell AMR AMR Installations Database 2005 and IBM Complete

  4. Other Installations Installation complete Underway Customer Density Hydro One Least Dense Ontario Average Most Dense Toronto Hydro Source: IBM

  5. Structural Complexity • >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”

  6. 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

  7. TOU Rate Survey • 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

  8. Complexity TOU Rate Profiles (1) # of Programs Shoulder Periods (0) Split Peak (3) Seasonal Rates (8) Summer Winter Simple Peak (3) Rate Time of Day Source: IBM

  9. Complexity TOU Rate Profiles (2) 6 rates 9 periods Ontario 6 rates 8 periods BGE 3 rates 8 periods PGE 6 rates 4 periods PEPCO Summer Winter Source: IBM

  10. Active Discontinued Bill Impact Ontario Source: IBM

  11. Peak to Off-Peak Ratio Summer Peak to Off-Peak Ratio Average Ontario Active Discontinued Source: IBM

  12. 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

  13. Low Opt Out Levels for “Mandatory” TOU Rates • 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

  14. 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

  15. Summary of Residential Customer Issues • A complex implementation program • Aggressive schedule • Difficult geography • Roles to be clarified • Complex TOU rate structure • Small differentiation in peak to off-peak rates relative to many other programs • Mandatory program • With retailers opportunity to market an opt out option • Others • Lack of local TOU rate experience • History of political promises of savings

  16. Going Forward • 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

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