NB Power's smart meter program among plans under microscope at EUB hearing

NB Power makes its annual appearance in front of the Energy and Utilities Board on Wednesday morning to seek permission to raise electricity rates in April, but other large issues promise to dominate what is expected to be an extended 12-day hearing.

A pricey plan to install smart meters provincewide and a proposal to enact new surcharges to help NB Power pay for unexpected events, like storm damage, are likely to be more contentious and time consuming than the utility's request for an average two per cent increase in rates.

"This hearing has resulted in one of the largest volumes of evidence filed before this Board on an NB Power matter," NB Power notes in an opening statement it pre-filed with the utilities board.

"Evidence has moved well beyond the merits of (our) revenue requirement."

Thousands of pages of evidence have been filed on issues connected to the hearing since October and some of that has come from experts pushing back against NB Power's various plans.

Smart meters

More than the rate increase, NB Power`s top priority has become winning approval for a $122.7-million plan to deploy Advanced Metering Infrastructure (AMI), including smart meters, around New Brunswick over the next three years.

The meters, one for each of NB Power`s 350,000 customers, are designed to connect directly to the utility`s computers and will open up opportunities to establish high and low rates during the day to try and steer electricity consumption away from peak hours.  

The meters also allow for homeowners to install their own generation, like solar panels, or invest in large battery storage units to load up on low-cost nighttime power and sell what they don't need back to the utility.

NB Power said the meters, and an aggressive new package of consumer energy conservation initiatives, will help flatten out expensive wintertime consumption peaks on its system and is the key to lowering costs and avoiding the construction of new power plants.

"NB Power believes AMI and energy smart investments are essential for its customers and should be approved by the board," it said in its opening statement.

"Delay in making these investments, particularly in AMI delays progress in reaching all of the targets for reduction of energy and peak demand."

'It will be fully debated'

But at least two outside experts hired to evaluate NB Power's smart meter plan — and who will testify during the hearing — question the economics of the proposal.  

With increased likelihood that NB Power will be able to recover all costs associated with extraordinary events, there is less pressure on the Company to control those costs.- US energy consultant Synapse Energy

That means there will be an intense examination of the smart meter issue in front of the board, according to Public Intervener Heather Black.

"It will be fully debated," said Black. "When there's such a big project at hand, questions come up. Has it been properly planned for are the costs and benefits properly and accurately estimated?"

Also drawing criticism is a proposal to allow NB Power to levy special surcharges when it is hit with unexpected expenses like storm damage — a so-called rate adjustment mechanism.

NB Power has missed profit targets by wide margins in five of the last six years in part because of an unprecedented series of weather events.

The utility estimates it paid $63.8 million to restore power and clean up after ice storms in December 2013, post-tropical storm Arthur in July 2014 and more ice storms in January 2017.

It is seeking approval for a mechanism to isolate and charge customers extra for costs caused by "an extraordinary event or circumstance beyond the control of the company". But opposing experts who worry that could develop into a blank cheque for the utility are lined up against that idea as well.

"With increased likelihood that NB Power will be able to recover all costs associated with extraordinary events, there is less pressure on the Company to control those costs," wrote US energy consultant Synapse Energy who was hired by the utilities board to evaluate NB Power's application.

"It will be a focus of the hearing certainly,"  Black said of the rate adjustment mechanism idea. "I think we'll have a healthy discussion about that."

The hearing begins Wednesday morning in Saint John.