Toronto, ON, Canada --- (METERING.COM) --- June 25, 2008 - In order to better understand current industry practices and perspectives, 53 Ontario electricity distributors have provided input on issues relating to their management of system losses.

The distributors calculate distribution losses by determining the difference between the total kilowatt-hours (kWh) purchased from the Independent Electricity System Operator (IESO) and embedded generators, and the total kWh sold to customers for the same period. As interval metering is not currently available for all retail meters, some estimates need to be made, but all of the distributors believed that the accuracy of loss calculation will improve significantly when smart meters are fully deployed.

Currently, the distributors do not differentiate between technical and non-technical losses and it is deemed impractical to do so, given that certain estimates are involved, such as unbilled revenue and unmetered scattered load. In any event, non-technical losses are typically believed to be a small percentage of total losses. It is also very difficult to measure the amount of technical losses directly due to the composition and scale of the distribution systems and as a result, losses cannot be attributed to root causes. This difficulty does not appear to be confined within Ontario as initial research of several other jurisdictions showed that efforts to accurately measure all aspects of the losses are rare. However, with increasing system capability and the full deployment of smart meters, more accurate measurements may become more feasible.

Most of the distributors have processes in place to ensure that anomalies in losses are identified and investigated on a timely basis. These processes include conducting visual inspections of meters for broken seals, tampered meters and jumped wires, performing random checks of billing multipliers, and auditing customer consumption and comparing it to previous periods.

A review of a sample of 2006 and 2008 rate applications with high loss factors revealed that distributors either had loss optimization projects in progress or had included a loss optimization plan in their rate applications.

However, a majority of distributors indicated that there were insufficient incentives for them to optimize losses. Some of the factors mentioned were that distribution losses are a pass-through cost and distributors do not benefit from achieving efficiency improvements; loss optimization projects tend to be capital intensive and distributors have more important priorities to address, such as safety, security and reliability of service; and while distributors may not undertake capital projects solely for the purpose of loss reduction, it is often viewed as a beneficial by-product and taken into account in capital investment decisions driven by other priorities.

Most of the distributors who received funding for conservation and demand management (CDM) initiatives used some of the money for implementing programs to mitigate system losses. However, this is in conflict with the current CDM guidelines, which indicate that any measures to maximize the efficiency of the infrastructure should be part of prudent asset management practices and will not be considered a CDM initiative.

In 2006 distribution losses in Ontario averaged 4.3 percent, ranging from 1.9 to 8.9 percent, with 16 distributors reporting losses less than 3 percent and 20 distributors losses greater than 5 percent.