Hydro’s new meters aren’t as smart as they could be

At their outset, public hearings that opened this week on Hydro-québec’s proposed implementation of “smart meters” were framed in terms of largely anecdotal health concerns over radio-frequency radiation associated with wireless transmission of data about

It is to be hoped that the hearings will help demonstrate once and for all that the overwhelming weight of scientific evidence suggests that radiation levels associated with these meters are safe. Even so, it’s good to see that Hydro has decided to offer customers an opt-out right, although at a cost of $17 a month to have their existing meters continued to be read manually.

It’s unfortunate that the radiation question has consumed so much public attention, because the more important policy question that the hearings need to address is why Hydro has chosen to install smart meters that will not be programmed to track consumption according to time of use, and hence offer discounts for electricity consumed during off-peak periods – in contrast to the case in neighbouring Ontario.

Quebec customers of Hydro who want to wash their clothing using hot water during non-peak consumption periods, such as early afternoon or late evening, should be able to do so at a discount of up to 30 per cent off normal base rates, as has been the case in Ontario since last November for Hydro One customers who have smart meters.

New technological advances in measurement systems all over the world have allowed the public and private sectors to introduce “smart” pricing intended to provoke changes in consumer behaviour. In the transport field, for instance, different toll prices for road or bridge use according to time of use tend to spread out traffic during rush-hour periods and reduce commuter congestion.

Hydro-québec says it looked at the possibility of time-of-use pricing and came to the conclusion that Quebecers aren’t sufficiently interested in the concept. As a result, the meters that Hydro is now proposing to install in 3.8 million residential and non-residential locations will not have their time-of-use functionality activated.

Hydro says its rejection of the time-of- use option was based on a pilot study that it conducted in 2,200 homes in Trois Rivières, Val d’or, Sept Îles and St. Jean sur Richelieu from December 2008 to March 2010.

That pilot project was carried out only after the Régie de l’énergie, the provincial oversight body that is hosting the public hearings that opened this week, ordered Hydro to test time-of-use consumption billing before deciding how to proceed with new metering across Quebec.

The 2,200 customers were charged a variable rate for their electricity consumption, according to time of day and season of use. Based on the results, Hydro concluded there is “no real interest” in time-of-use pricing in Quebec.

Only four per cent of the 2,200 customers expressed any interest in time-of-use billing, and results showed that time-of-use billing had reduced overall electricity bills by only one per cent.

This study was problematic on a number of fronts. First, it is contradicted by studies outside Quebec that suggest people generally like the idea of time-of-use billing, and can save money because of it. Secondly, it contradicts everything that Quebecers have been led to believe about themselves with respect to their progressive values about conservation and the environment. Thirdly, 2,200 customers wasn’t a very big sample size from which to draw conclusions.

Installation of smart meters that send consumption information wirelessly will allow Hydro to shed the labour costs of as many as 800 meter readers. Those labour savings, in turn, should help Hydro deliver a larger dividend to the provincial treasury – especially as Quebec prepares to move progressively toward charging rates closer to market price for electricity. It would be nice, as prices rise, if customers had the option of varying their pattern of consumption and being rewarded accordingly – like in Ontario.

But that’s not going to happen if the Régie doesn’t push harder for time-of-use metering and billing.

In its defence, Hydro says the Quebec and Ontario situations can’t be fairly compared because pricing levels (currently much lower in Quebec) and pricing categories in the two provinces are very different. But this sounds like a lame excuse. The public hearings that opened this week need to really challenge Hydro’s conclusions about time-of-use pricing and look at what’s best not just for the provincial treasury but for its customers, too.