The Ministry of Energy of Ontario has indicated that the pending retirement of coal plants combined with the natural overall growth in the demand for electricity has created an urgency to build a conservation culture in the Province of Ontario and to make it a North American leader in energy efficiency. Key elements forming part of the Ontario government's program include:

• Introduction of flexible time-of-use (TOU) pricing for electricity

• Targeted 5% reduction in Ontario's energy consumption by 2007

• Commitment to install smart electricity meters in 800,000 homes by 2007 and in every home in Ontario by 2010.

“Currently, consumers have limited price incentive to manage their use of electricity as there is no price differential or way to measure consumption at different time periods,” says Peter D'Uva, vice president in charge of smart metering at Toronto Hydro (Toronto, Ontario, Canada). “Working alongside the Independent Electricity System Operator, the Ontario Energy Board is assessing the best cost breaks for the consumer through a regulated price plan for residential and other eligible users. This will incorporate pricing for smart meters, whereby electricity prices will vary depending upon when power is used. Customers will now know when the cost of running appliances works to the advantage of their pocketbook.”

On March 28, 2006, the Energy Conservation Responsibility Act, 2005 (Bill 21) received royal assent in the Ontario legislature. The legislation will centralize meter data management and repository (MDM/R) functions related to the collection, storage, management and transfer of consumers' consumption information and data within a smart meter entity. The bill also oversees regulatory and rate-setting activities as well as provides broad powers to regulate local distribution company (LDC) procurement of advanced metering infrastructure (AMI) systems.

The ministry is proceeding with a dual approach in the implementation of smart metering:

Decentralized responsibilities of LDCs:

• Responsibility for purchasing, owning, installing, operating and maintaining smart electricity meters as they are rolled out across the Province

• Continued responsibility for the customer interface, including billing and access to smart meter information and data (together with third parties)

• Responsibility for selecting their AMI with the understanding that the vendor's product must also be able to read commonly available water and gas meters for future consideration.

Centralized responsibilities of LDCs:

• Overseeing the implementation of the initiative

• Developing specifications and standards for all elements of the initiative

• Developing MDM/R functions

• Designing and establishing a smart metering entity.

To meet the target of 800,000 customers by 2007, users with peak demand over 200 kW will get interval meters, and residential and small commercial consumers will get smart meters. In the near future, consumers may be able to choose enhanced services such as remotely controlled energy consumption or in-home display from a distributor or retailer on a cost-plus basis.

SIX CITIES LEAD THE WAY

Six urban LDCs in Ontario have been selected to install and operate the first smart meters, which will perform to specifications based on density, growth rates, customer mix, terrain, weather, vegetation, congestion, and natural and man-made structures. Serving some 1.7 million customers in total, Enersource Hydro Mississauga, PowerStream Inc., Hydro Ottawa, Veridian Connections Inc., Horizon Utilities Corp. and Toronto Hydro-Electric System Ltd. have all proven they are capable of performing the functional specifications at the highest levels as set forth by the government.

SMART-METERING PRIMER

The AMI system includes meters, advanced metering communication device, local area network, advanced metering regional collectors, connections to the wide area network and advanced metering controlled computer (AMCC). The infrastructure will collect hourly meter reads remotely, or grouped into TOU or critical peak pricing (CPP), and transmitted daily, or more frequently, to an AMCC. In tandem, the same information will be sent to one or more MDM/Rs for verification, editing and estimating, billing and storage. Individual consumers will be able to access their specific consumption data by telephone or Internet the day after the reading. The system also will allow entities to manage, at the request of consumers, in-home power-hungry appliances such as air conditioners, hot water tanks and pool pumps at specific times of the day or week depending on the price of electricity or demand on the system.

The MDM/R functions include collecting and storing data, processing it for TOU and CPP billing, and making it accessible to consumers and to LDCs to match their billing cycles. This data will also be made available to retailers, energy-service companies and other interested parties in a manner that fully protects the privacy of consumers. Centralization of the MDM/R functions will standardize the verification and billing processes across the province and ensure the processes operate in the most efficient, cost-effective manner possible.

The deployment of AMI systems and the initialization of MDM/R functions will occur in parallel, and operations within the two will be integrated once each has proven capable of delivering the required level of performance.

In the future, the data repository will provide access to a number of years of archived data so that retailers and utilities will be able to accurately measure current electricity conservation efforts in their areas against past performance.

AMI CHARACTERISTICS

In addition to enabling TOU pricing and allowing consumers to manage their consumption, the functionality of AMI will:

• Acquire accurate meter reads on a regular basis to eliminate estimating

• Enhance customer services including special meter reads

• Reduce the number of field visits by LDC employees

• Enable proactive user service practices (such as when a customer moves)

• Reduce tampering and theft of service and unaccounted-for electricity

• Provide useful data to LDCs for forecasting, outage detection, distribution optimization and facilities planning, system monitoring and rate setting.

COST RECOVERY

Capital and operating costs associated with the initiative will be included in the LDC's distribution rates, including those costs related to any existing meters made obsolete by the introduction of AMI. The price will be determined by the Ontario Energy Board through a full and public rates process. The incentive to save money is a sure-fire way for people to save Ontario's resources.