Ontario’s $2 billion smart meter program for hydro utilities has delivered few benefits for the hefty cost, says Ontario’s Auditor-General Bonnie Lysyk.
In fact, one in six of the 4.8 million meters have not yet transmitted any readings, she found.
And Lysyk took the occasion of her probe of the smart meter program to take a swipe at energy bureaucrats for plunging into the system without proper planning, and making it impossible for consumers to understands their rising hydro bills.
Lysyk took a special jab at Hydro One, which she said incurred about 50 per cent of the cost of the smart meter program — but installed only 25 per cent of the meters. Hydro One is the local distributor in charge of smart meters in Brampton and in much of rural Ontario.
Smart meters allow utilities to charge different prices at different times of day, a function that’s supposed to encourage conservation, especially at peak times when the system is under stress.
But Lysyk said the pricing system has had only “a modest impact on reducing peak demand” among householders and “no impact at all on energy conservation.”
Among her findings:
- Smart meters were supposed to cost $1 billion. In fact, the total cost will be double that amount at $2 billion.
- The Ontario energy ministry grossly over-estimated the benefits of the smart meter program. It figured the benefit would be $600 million over 15 years. But it forgot to include a yearly inflationary increase of $50 million. That reduces the net benefit of the huge project to $88 million over 15 years – $512 million less than original net benefit estimate.
- The cost of smart meters varied wildly among Ontario’s 73 local utilities, which paid from a low of $88 per meter to a high of $544.
- Lysyk said that neither the energy ministry nor the Ontario Energy Board — which is supposed to protect ratepayers — completed any cost-benefit analysis or business case prior to making the decision to mandate the installation of smart meters. In contrast, other jurisdictions, including British Columbia, Germany, Britain and Australia, all assessed the cost-effectiveness and feasibility of their smart-metering programs before proceeding.
- The difference between the On-Peak and Off- Peak rates has not been significant enough to encourage a change in consumption patterns. When Tiime-Of-Use rates were introduced in 2006, the On-Peak rate was three times higher than Off-Peak; by the time of Lysyk’s audit, that differential had fallen to 1.8 times.
- Under Smart Metering, a $249-million provincial data centre run by IBM was established to collect, analyze and store electricity consumption data. However, most local distribution companies used their own systems to process smart-meter data. The costs of this duplication—one system at the provincial level and another locally—are passed on to ratepayers.
“Given the large scale of smart metering and the high risk associated with new technology, the smart meter program implementation should have warranted strong governance and oversight,” Lysyk wrote.
The Ontario Liberal government failed to provide this oversight and all Ontarians are paying for it on their hydro bills!