The Smart Meter Entity (SME), which is part of the Independent Electricity System Operator (IESO), has submitted their application to the Ontario Energy Board (OEB) for their rates for the next five years. You will likely not have heard with the SME. Electricity customers do not deal with them directly but their rates are part of the Delivery Charge on your bill. The service the SME provides is known as the MDM/R or Meter Data Management Repository.
All the documents pertaining to this application can be found – HERE.
The SME rates were originally $0.79 per month, in 2017 they reduced to $0.57 per month and now they will be reduced to at least $0.43 per month. That sounds like good news. However, NOTL Hydro does not believe there should be any charge and that the SME is not even needed.
The history of the SME goes back to the introduction of smart meters in Ontario in 2007-2008. At that time, there was uncertainty as to how the whole process of obtaining the reads and ensuring they are correctly matched to each customer would work. The Government’s solution was to establish the SME. Under regulation, all smart meter reads must go to the SME where they are validated.
As is often the case, the electrical utilities (LDCs) and private sector entrepreneurs came up with their own solutions that were less expensive and, more importantly at that time, could be in place to meet the required timelines. We thus now have the situation where the meter reads are being validated by both the LDC processes and the SME. A duplication of efforts. Because the SME exists due to regulation, LDCs have no choice but to obey the regulations and use the service.
This is not to say that the SME does not have some benefits. The second level of validation does catch some errors and the Provincial Government was able to use some of the SME data to monitor how many customers were switching to tiered billing as opposed to the time-of-use billing. However, the question should be not whether something is useful (almost everything has some use) but whether the uses are worth the cost.
NOTL Hydro is on record as to the position of our Board that the SME should be wound up or the charge eliminated. A press release on just this matter was issued in 2017. https://www.notlhydro.com/news/remove-smart-meter-entity-charge-from-consumer-bills-2/. There are two reasons for this position.
The first relates to the cost which, in the opinion of NOTL Hydro, is unnecessary. As has been mentioned above, the services the SME provides are largely redundant and the benefits they do provide could be obtained at a much lower cost. The estimated budget for the SME in their rate application is around $27 million a year. At a monthly charge of $0.43 this is $5.16 a year per customer. Some proponents of the SME have argued that when the scope of the challenges facing the electricity industry in Ontario are in the billions of dollars, this is too small an amount to bother about. NOTL Hydro’s response has been that in managing a business, all costs matter, and the same approach needs to be taken in managing an industry.
The second reason relates to the SME’s efforts to expand its scope. The SME gets only limited information from the LDCs; enough to verify the meter reads. They do not get customer names or addresses. In 2017, the SME received permission to require the LDCs to provide more information such as postal codes and customer class for each meter. The SME hopes that it can sell meter information to third parties. So far, the OEB has only allowed the SME to provide very aggregated information to Canadian government entities. The reality is that aggregated data of any sort has very little value. The only truly valuable information is personalized data. The danger is the SME will keep trying to expand the scope of what they can get from LDCs and then sell. One day it may get to personalized data.
NOTL Hydro will be intervening in this rate application by the SME; as will a number of other organizations. NOTL Hydro also intervened in the 2017 SME application when the rates fell to $0.57. We really cannot take much credit for that reduction as most of it was proposed by the SME and then further reduced as a result of all the intervenors. However, it was a good learning experience for us. We cannot ask the OEB to eliminate the SME. The SME was created by regulation so only the Government has that authority. What we can do is try to throw a spotlight on the costs, and benefits, of the SME.