As part of its conservation strategy, the Ontario provincial government has established targets for the installation of 800,000 smart meters by December 31, 2007 and installation of smart meters for all Ontario customers by December 31, 2010. Smart meters record hourly data for every customer and transfer that data to the distributor and a centralized database that will be made available to customers and other interested parties. The aim of the initiative is to provide customers with the incentive and the ability to control their energy costs by moving usage to off-peak periods and reducing energy use during peak periods.
The framework for this initiative was set out in the Energy Conservation Leadership Act, 2006, which came into force earlier this year. The legislation allows for the creation of a "Smart Metering Entity" with the power to administer and deliver any part of the initiative and to engage in competitive procurement activities. Although details of the Smart Metering Entity have not been finalized, it appears that this entity will be responsible for procuring and operating the equipment necessary for the collection and management of data from the smart meters, while local distributors will provide actual meters. The government has yet to create or designate an agency as the Smart Metering Entity.
Responsibility for the initial stages of the smart metering initiative has been handed to the Independent Electricity System Operator (IESO). The Ministry of Energy has proposed a draft regulation that adds to the IESO’s role the responsibility to "plan, manage and implement" and "oversee, administer and deliver" the smart metering initiative, or any aspect of the initiative. To fulfill these objectives, the draft regulation proposes that the IESO would have the authority to implement a schedule and plan for the initiative, to manage and develop the functional requirements for smart meters and the collection of data, and to prepare and manage competitive procurement processes for the services and systems necessary to operate smart meters. It is not clear whether the provincial government has any plans to eventually designate the IESO as the Smart Metering Entity.
On August 29, 2006, a regulation containing the principles that will govern the procurement of smart metering equipment by distributors came into effect. The regulation identifies authorized discretionary metering activities that can be undertaken by a distributor, notwithstanding the prohibition on such activities contained in the Electricity Act, 1998. The regulation also obligates distributors to ensure that the procurement process for smart meters meets specified criteria, including:
- the procedures used in the process and the selection criteria must be fair, open and accessible to a range of interested bidders;
- the procurement process must be competitive;
- bidders must disclose and implement measures to address any actual or potential conflicts of interest; and
- there must be no unfair advantage in the procurement process.
Regulations concerning the technical specifications and cost recovery for smart meters and the associated technologies also came into effect on August 29, 2006. For residential and small general-service consumers, the prescribed criteria are specified in the Ministry’s publication entitled "Functional Specification for Advanced Metering Infrastructure," dated July 14, 2006. While ultimately subject to approval by the Ontario Energy Board, the regulations allow a distributor to recover costs that relate to the functionality of the smart meters and the associated technologies that meet the minimum criteria specified in the Ministry’s publication. If a distributor’s equipment exceeds the Ministry’s minimum criteria, the distributor must convince the Board that the excess functionality will benefit the distributor’s customers in order to recover any additional costs.
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