FortisBC Inc. (FortisBC) Application for a Certificate of Public ...

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
Response:
FortisBC Inc. (FortisBC or the Company)
Application for a Certificate of Public Convenience and Necessity
for the Advanced Metering Infrastructure Project
Response to British Columbia Utilities Commission (BCUC or the Commission)
Information Request (IR) No. 1
Submission Date:
October 5, 2012
Page 250
“The cost-benefit study behind the AMI decision was flawed and failed to offer a
comprehensive view of the economic case for the project.” (page ix)
“... the approach used to identify the benefits from demand management relied on two
significant assumptions that appear to be optimistic:
• The assumed difference in the peak price of electricity and the pre-existing ‘any
time’ average price of electricity, known as the peak-to-average price ratio, was much
higher than could have reasonably been expected to eventuate in the retail market
• It was assumed that all consumers would respond to price signals as soon as the
new meters were installed.” (page 26)
“The IMRO 2004 study’s tariff assumptions were inappropriate because they were based
on wholesale price data that reflected extreme conditions. This assumption translated
into a peak-to-average price ratio of three (i.e., in that month, peak prices were three
times the average) that in turn led to a substantially higher than reasonable estimate of
demand benefits.” (page 27)
“... the AIMRO 2005 study used the same tariff assumption from the IMRO 2004 study to
estimate demand reduction benefits, which by then would have been demonstrated as
clearly not realistic, based on the available historical data.” (page 28)
107.1 Please describe the drivers which are leading FortisBC to consider time-varying
rate structures for residential customers as a future AMI benefit (for example,
avoid the need for new generating/network capacity, reduce the use of fossil fuel
peaking plants, address generation/network reliability concerns etc).
The Company considers that the implementation of time-varying rate structures provides direct
customer benefits and resulting operational/cost advantages to the utility.
Customer benefits resulting from the implementation of time-based rate structures are
discussed under the Conservation Rate Structures heading in Section 3.2.5 of the Application.
These customer benefits are in and of themselves of considerable value as justification for AMIenabled
innovative rate structures.
The types of utility operational and cost benefits noted in the information request (avoid the
need for new generating/network capacity, reduce the use of fossil fuel peaking plants, address
generation/network reliability concerns etc.), are a result of the changes in customer
consumption behaviour and timing that the new rate structures are designed to elicit.
Given that the electric system is designed and built to accommodate the peak aggregate load of
the Company’s customers, FortisBC considers that successfully reducing customers’ total
demand and shifting usage to off-peak hours will provide such benefits as: