(January 8, 2014) The move follows an Ontario Energy Board ruling that stops the utility from billing customers for cost. “Replacing meters while they are still functional simply because there is new technology available is a never-ending cycle,” Energy Probe said in its submission. “There will always be something new tomorrow.”
By Don Butler for the Ottawa Citizen, published on January 6, 2014
OTTAWA — Hydro Ottawa has halted the early replacement of thousands of first-generation smart meters after the Ontario Energy Board turned down a request that would have allowed it to recover the cost from ratepayers.
In a decision last month, the OEB agreed with its own staff and two interveners that replacement of the Rex 1 smart meters was not necessary.
As a result, the board denied Hydro Ottawa’s request to create a new “variance account” to track the cost of replacing the meters and charge it to hydro customers.
It also approved a 1.4-per-cent increase in Hydro Ottawa’s distribution rates effective Jan. 1, adding 69 cents to the average monthly residential hydro bill.
Hydro Ottawa was an early adopter of smart meters, installing 96,000 of the Rex 1 meters in 2006. The meters, which record time-of-use energy consumption, were installed after the Ontario government set a 2010 deadline to replace old analog meters with the new technology.
In 2008, the Rex 1 was replaced by the Rex 2, which is able to retain data 10 times longer and offers “last gasp” functionality, allowing it to use the last available electricity to signal that a power outage has occurred.
In a filing with the OEB, Hydro Ottawa argued that it was a “prudent thing to replace an obsolete technology with one that provides updated functionality for the customer.” The Rex 1 makes up about two-thirds of the 313,000 smart metres installed in Hydro Ottawa’s service area.
Hydro Ottawa had planned to replace nearly 36,000 of the original 96,000 Rex 1 meters between 2013 and 2020. Last year alone, it expected to replace more than 8,000 of the Rex 1 meters, according to documents filed with the OEB.
But after the board’s Dec. 4 decision, Hydro Ottawa “stopped pulling out the older meters,” spokesperson Laura Lauzon said Monday.
Lauzon said the OEB decision will have “no immediate impact” on Hydro Ottawa customers. Replacement costs to date, she said, will be absorbed by the City of Ottawa, which owns the utility. “We are in the process of finding other efficient solutions to collect the necessary data from the older smart meters.”
Hydro Ottawa will try again to get approval to recover the cost of replacing the Rex 1 meters in 2016, when it makes its next major cost of service application to the OEB, Lauzon said. If the board agrees, the utility would then step up replacement of the older meters for the following five years, she said.
Two interveners at the OEB hearing — Energy Probe and the Vulnerable Energy Consumer Coalition (VECC) — argued there was no need to replace the Rex 1 meters at this time.
“Replacing meters while they are still functional simply because there is new technology available is a never-ending cycle,” Energy Probe said in its submission. “There will always be something new tomorrow.
“Ratepayers should not be expected to pay for two meters — one that works fine, and the one with the new gadget.”
In its submission, VECC noted that the average cost of installing the Rex 1 meters was $124. By contrast, the Rex 2s cost nearly $300 on average to install, meaning Hydro Ottawa would have spent $10.6 million between 2013 and 2020 installing the newer meters.
“These costs are significant and it is not clear to VECC, based on the evidence, that they are warranted at this time,” the group said.
OEB staff agreed, observing that the Rex 1’s more limited capabilities “may not pose insurmountable problems” and noting that other utilities continue to use them.
Hydro Ottawa responded that OEB staff and the two interveners had “a naive view” of its asset replacement plan. Their “implied suggestion” that the meters should only be replaced when they fail “is completely unworkable and would be imprudent from a long-term asset management perspective,” the utility said.
In the end, the OEB said it was “not persuaded that the benefits to proceed with the early retirement of the Rex 1 meters justify the cost.”
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