potential smart metering issues for ontario residential customers
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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. - PowerPoint PPT PresentationTRANSCRIPT
James StrappAssociate Partner,
IBM Business Consulting Services
Potential Smart Metering Issues for Ontario
Residential Customers
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:
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
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
>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
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
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
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
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
0 5 10 15 20Savings for one kWh between peak and off-peak (US¢)
Active
Discontinued
Bill Impact
Source: IBM
Ontario
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
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
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
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
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
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