System development projects get started for a variety of reasons. Often, they are intended to support a company's strategic plans. Other times they are launched out of necessity, such as to comply with government mandates. London Hydro (LH), the electricity provider of London, Ontario, and surrounding areas, is wrapping up a lengthy and costly system upgrade that was sparked by government regulations. Ontario prides itself on using the latest technologies to conserve electricity. In 1998 it passed two regulations that paved the way for smart-metering: the Electricity Act, 1998 and the Ontario Energy Board Act, 1998. Smart-metering uses computerized electric meters on homes and small businesses that can record electricity use on an hourly basis. So rather than totaling up kilowatt-hours on a monthly basis, as traditional meters do, smart meters provide a record of electricity use every hour. Smart meters are able to report usage directly to the utilities companies over phone lines or Internet. The benefit of smart meters, in addition to saving the electric company the cost of sending an employee to read meters, is setting time-of-use pricing. Time-of-use pricing charges customers more for electricity during peak hours (11 a.m.- 5 p.m.), less during mid-peak hours (7 a.m.-11 a.m. and 5 p.m.-10 p.m.), and even less during off-peak hours (10 p.m.- 7 a.m.). Time-of-use pricing should encourage consumers to consume less during peak hours, adding up to big savings for Ontario, its citizens, and the environment. Toronto has pledged to install smart meters in every home and small business in Ontario by 2010 (which covers 13 million citizens spread out over a million square kilometers). The province is requiring all power companies to support smart meters and has provided standards and specifications so the power companies can prepare. Ontario's smart metering initiatives have power companies across the province scrambling to meet specifications and deadlines. Software and hardware must be purchased and installed to prepare for the arrival of a tidal wave of customer consumption data. London Hydro started to prepare early in hopes of getting a jump on the competition. Rather than adding a new system to accommodate smart metering, London Hydro decided it was time to upgrade all of its systems. London Hydro's old custom-built system could barely keep up with current usage. The company decided to shop around for a new system that could not only accommodate smart metering but could tie that data in with core business systems. Mridula Sharma, London Hydro's director of information services, stated that LH was in need of "a more integratable solution that was scalable and flexible." The company needed to "prepare for future growth as well as enhance business process workflow," Sharma said. Sharma and her team set to work outlining the details of the new system based on government mandates and internal needs. With a systems analysis report in hand, Sharma began searching for a company that could design and implement the system. Soon she narrowed the field to three candidates: SPL Solutions (Oracle), another customer-built solution, and SAP for utilities. Sharma chose SAP primarily because the system was designed for use by a utility company and required little customization. London Hydro selected another outside firm, Wipro Technologies, to implement the system because Wipro had extensive experience implementing utility software. The resulting system provides powerful management of smart metering data flowing from the government's central smart metering data repository. The task of assigning time-of-use prices based on customer consumption is fully automated and will cause London Hydro no additional overhead. Now that it is ready for smart-metering in 2010 and beyond, London Hydro is investigating the integration of smart metering with geographic information systems and outage management systems. Ultimately all systems will be integrated into one centralized ERP platform.
Discussion Questions
1. Why did London Hydro initiate its smart-metering information system development project?
2. Who provided information for the systems analysis report for the new system?
Critical Thinking Questions
1. What benefits did London Hydro enjoy by purchasing an off-the-shelf system and outsourcing the implementation?
2. Who benefits from Ontario's mandate and how? What is the cost of those benefits?