Expert says true smart meter value won't emerge until after they're approved

NB Power's application to buy and deploy advanced metering infrastructure (AMI) has been handicapped into presenting only a fraction of the benefits the devices can deliver, a hearing was told Wednesday.

An expert said the Energy and Utilities Board should look beyond NB Power's limited business case in deciding on the technology, which includes smart meters. 

"One of the challenges inherent in assessing the value of AMI metering infrastructure is that only a portion of future benefits may be known at the time of initial investment," said Philippe Dunsky, a Montreal based energy expert hired by NB Power to testify about potential "unquantified benefits" of smart meters.

"Many of those (AMI) services and capabilities are difficult to quantify" he added. "Some are not yet even known and I would argue probably most are not yet known."

As an example Dunsky said if NB Power uses smart meters in the future to introduce different prices for electricity at different times of the day it could nudge enough power consumption away from expensive peak hours in the winter to save itself $52 million over 15 years.

But that potential saving is not included in NB Power's business case for smart meters because so called "time-varying rates" have not yet been approved in New Brunswick.

"This is a classic catch 22," said Dunsky.   

"NB Power cannot propose a specific rate design until it knows what metering infrastructure it is working with and the EUB is reluctant to account for benefits for a rate design not yet proposed."

"While valued at zero in the business case I would encourage the EUB to give this benefit - with $52 million in potential rate payer savings in play, due consideration."

NB Power is in front of the Energy and Utilities Board seeking permission to spend $92 million to buy 360,000 smart meters and deploy them with most of its customer base.

But it has been limited to presenting "quantified benefits" of the switch in its business case to try and win approval, like money it will save on meter reading and other efficiencies.

On that narrow basis it has claimed the meters will generate a net benefit to the utility of $31.1 million over 15 years but the hearing has been chipping away at that number.

Dunsky prepared a report suggesting there are at least 13 lucrative but currently unquantified benefits - like time varying rates - NB Power is prevented from counting.  He said that is making the case for smart meters seem less financially attractive than it really is.

Two years ago in its decision to reject NB Power's first application for smart meters the EUB explained it had decided against including possible future benefits of smart meters in its evaluation.

"The Board acknowledges that there may be a number of non-quantifiable benefits that AMI would accrue to ratepayers and the utility," read the decision.

"For the purposes of this application, however, the Board does not consider non-quantifiable benefits as a factor that would overcome a negative business case." 

Under questioning from EUB lawyer Ellen Desmond, Dunsky acknowledged some of his examples were being given without evidence the hearing could look at and evaluate including a claim that a combination of time varying rates and expanding electric vehicle sales and charging would save NB Power another $51 million if smart meters were approved.

"Is there anything on the record that would allow interveners to test that ($51 million) evaluation," asked Desmond

"Could you point us to something where we could look at the details of that calculation, or anything of that nature?"

"I can't point to something that's currently in the record," said Dunsky, "I apologise. I put it in there.  I probably shouldn't have."

Despite the EUB's ruling two years ago that unquantified benefits did not count in its decision on smart meters the issue has again become a significant matter of discussion.

Scott Stoll, a lawyer representing New Brunswick's municipal utilities has been asking witnesses whether, in a close call, the EUB should take potential but unquantified benefits into consideration.  

And in its opening statement of the hearing NB Power made it a point to mention them prominently.

"Our business case is built on quantified benefits;" said senior NB Power vice president Lori Clark.

"However, we also noted the many non-quantified benefits that make AMI a worthy investment."