EUB lawyer clashes with NB Power over apparent rosy assumptions for smart meters

Lawyers for NB Power and the Energy and Utilities Board clashed Tuesday as the utility's application to buy and deploy smart meters continues to face intense scrutiny at hearings in Saint John.

Board lawyer Ellen Desmond posed a number of questions to NB Power executives about assumptions used in the utility's business case. She eventually asked them to recalculate one of the financial benefits NB Power is claiming smart meters will provide, using less generous assumptions than the utility has chosen.

"Just to see what the combined impact would be on that benefit," said Desmond.

That triggered a sharp response from NB Power lawyer John Furey, who said the utility would comply only if it could also do the opposite and recalculate the benefit using a more generous assumption as well.

"I don't think board counsel gets to pick and choose," said Furey about Desmond's request to have certain items recalculated.  

"It would be fair and reasonable for the board to see all potential sensitivities.

"I don't know why board counsel, of all interveners, who is here to complete the record and to assist the board would object to inclusion of a sensitivity around all of the assumptions." 

Desmond did not object to NB Power adding what it wanted to the specific information she was requesting and sounded surprised by Furey's claim she was being unfair.

"I'm sorry, Mr. Furey, I was not trying to take issue with your sensitivity analysis. I very clearly say I have no objection to that," she said.

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.  

It has claimed the meters will generate a net benefit to the utility of $31.1 million over 15 years, but the hearing has already exposed weaknesses in that number.

Error uncovered

On Monday, NB Power finance executive Stephanie Langlais conceded to public intervener Heather Black that the net benefit calculation includes $3.2 million that should be removed, due to an error made by the utility.

"Does NB Power accept that this should revise its business case you are submitting to the board be reduced in terms of those benefits by $3.2 million?" asked pubic intervener Heather Black.

"Yes, we do," replied Langlais.

On Tuesday, Desmond was exploring the possibility that additional problems might be undermining the business case. 

She questioned Langlais about NB Power's updated 10-year rate projections, which are lower than when the smart meter plan was first put together last summer.

Langlais acknowledged those new projections lower the benefit of switching to smart meters by $700,000 over the 15-year period

Desmond also questioned whether NB Power wasn't exaggerating its business case a further $604,000 by the way it has been projecting 12 months of benefits from every smart meter installed in a given year — even from those deployed in the middle or end of the year.  

"Do you agree that there is perhaps a more conservative way to calculate that benefit," asked Desmond.

'Very small numbers'

NB Power senior vice-president Lori Clark dismissed those issues as "noise" and told Desmond the utility had used conservative assumptions to calculate more significant benefits of smart meters that more than compensated for the "very small numbers" she was raising.

"The fact that we've erred on the very conservative side of this [larger] benefit accounts for that noise we're talking about," said Clark.

That's when Desmond asked if the utility would undertake to recalculate some of the numbers she had been asking about.

Furey said the utility would only do that for Desmond if it could also show what would happen if it used a less conservative assumption for the benefit Clark had raised.

"If counsel wishes to provide that separately, that's fine," said Desmond. "If they want to do a sensitivity in addition to our ask, then I have no issue with that."