2 U.S. experts doubt NB Power's business case for smart meters

NB Power's slow-moving rate hearing in front of the Energy and Utilities Board reconvened temporarily in Fredericton on Monday with more criticism of the utility's plan to buy and install smart meters throughout the province.

Edmund Finamore, an energy expert from Pennsylvania who has been critical of the business case developed by NB Power to deploy the meters, called for the EUB to withhold full approval of the initiative until the utility provides more detailed information about the benefits it will generate.

"I think that the benefits that have been laid out in the investment rationale, those are legitimate benefits (but) they have been I would say maybe more aggressively calculated than what they should have been," Finamore said Monday.

Finamore was hired to review the $122.7-million smart meter plan by public intervener Heather Black and was the second expert in a row to find fault with it.

Massachusetts expert Tim Woolf delivered blistering criticisms of the plan late last week.

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Woolf was hired to review the plan by the EUB itself and on Thursday and Friday said he found NB Power's accounting of the costs and benefits of installing smart meters in New Brunswick superficial and unconvincing.

"The evidence doesn't meet a standard that I would apply to such an important investment in terms of the depth and the extent of it," Woolf said under questioning by Scott Stoll, a lawyer representing New Brunswick's municipal utilities.

"And if one were to draw conclusions from this evidence, my conclusion would be that the costs could very easily exceed the benefits, most likely exceed the benefits."

Expense justification needed

Woolf, who is-vice president of Synapse Energy Economics Inc. in Cambridge, Mass., recommended the EUB reject NB Power's smart meter proposal outright until the utility produces more convincing evidence to justify the expense. 

He also said the utility should explain why other lower-cost options to achieve the same energy-saving objectives have been passed over.

"I know of states, other jurisdictions that run energy efficiency programs that save two, three, four, five times the amount of energy that this company is saving with no (smart meters). None. So if energy saving is the goal here, there are much better ways to spend the money than on a $120 million commitment to a very uncertain and a risky investment."

Woolf suggested some of the savings NB Power has been claiming smart meters will generate, like replacing current meters with years of usable service still left on them, with new meters is actually a cost. 

And he claimed other listed savings are overblown — even fake — since they could be achieved whether smart meters are installed or not.

Phantom cost

For example, NB Power has been mailing home energy reports to large numbers of residential customers separately from their monthly bills and suggested that could stop, with considerable postage savings, if every household had a smart meter.

Woolf said mid-month mail-outs can stop anytime, smart meters or not.

"It's more expensive than necessary to send paper bills out in the middle of the month, and then you come along and say, 'Oh well, with (smart meters) we can reduce that cost.' But that cost wasn't necessary in the first place. You are creating a phantom cost and then you are taking it out."

Woolf held out the possibility smart meters could be a good investment for NB Power, especially if it introduces aggressive time-of-day rates but said the utility has not made a convincing case for that in its current hearing and recommended it try again with more in depth analysis next year.

"The main point is that if they want to get approval for this capital project that exceeds the $50 million threshold, they have no choice but to provide a robust analysis of the cost and the benefits and a robust justification," Woolf said.

Rate hearings extended 

The rate hearing, which has taken so long looking at NB Power's smart meter and energy efficiency plans, it has fallen weeks behind schedule.

It will hear final arguments from all parties on those two specific issues Tuesday before moving on to the main matter, the utility's request for a two per cent rate hike.

That part of the hearing has been moved to March 19 back in Saint John and could last into April.