Claims made by NB Power about the financial benefits of installing smart meters for its entire customer base as part of a $92 million advanced metering infrastructure, or AMI, project were quickly under scrutiny at hearings in front of the Energy and Utilities Board on Monday.

But the utility is holding firm in its argument the switch is required and will save it and ratepayers millions of dollars.

"AMI will help us operate more efficiently and reduce costs while offering important direct benefits for our customers," said Senior NB Power Vice president Lori Clark in an opening statement for what is expected to be an eight day examination of the proposal by NB Power's regulator.

"We hope you will agree that we need to invest in AMI now," Clark told the three member panel hearing the proposal. "There is no "do nothing" option."

Lori Clark, NB Power's senior vice president of operations, says the utility can prove smart meters can save ratepayers $31 million. (CBC)

A similar application by the utility in 2017 was eventually rejected by the EUB at hearings in 2018 because it failed to convince the board the investment would generate a net financial gain — a key issue again this time.

"The demonstrated benefits to ratepayers must outweigh the expected costs that ratepayers will bear," the EUB ruled in rejecting NB Power's first application

This time, however, NB Power claims it has improved the application enough so that the "net present value" of benefits from adopting smart meters over 15 years will be $31.1 million more than costs.

"We took the feedback we received from this Board during the AMI hearing in 2018 and worked with a number of industry experts to explore potential savings and costs that we had not previously considered," said Clark in explaining the improved numbers.

Interveners scrutinized NB Power's new smart meter plan on the first day of hearings in front of the EUB. (CBC)

But shortly after Clark's opening statement, the lawyer for J.D. Irving Ltd. began questioning NB Power's calculation of benefits and whether they might be exaggerated.

Drawing on two expert evaluations of NB Power's plan commissioned by the EUB and public intervener Heather Black, Christopher Stewart raised questions about whether NB Power was underestimating the cost of disposing of existing non-smart meters before their useful life is over and overestimating its own ability to keep the project on budget.

He also questioned whether some of the benefits of switching out old analog meters that are suspected of undercounting electricity consumption by homeowners as they age might be solved by adopting cheaper non smart digital meters.

"What's your position with respect to that?" asked Stewart.

Stephanie Langlais, a finance executive with NB Power, rejected the validity of some of Stewart's questions but did acknowledge the benefits of smart meters might be over stated in the business case by not comparing them to the installation of non-smart digital meters.

"The result is a reduction in the net present value of this benefit by $3.2 million," said Langlais.

Stephanie Langlais, a finance executive with NB Power, speaks before the three-member EUB panel Monday. (CBC)

NB Power executives told the hearing they know a number of people are wary of smart meters and said a switch will not be mandatory but customers will likely have to pay a $4 per month penalty to cover the cost of having their meter read.

"A very small minority of customers will remain unconvinced, and that is why we have proposed an opt-out process," said Clark.

"Although this small minority can be very vocal, they do not represent the views of the silent majority. NB Power has a responsibility to act in the best interests of all its customers."

Gerald Bourque, a private citizen and smart meter opponent who registered to participate in the hearing, asked specifically if the units are a fire hazard, based on the recall of 105,000 smart meters in Saskatchewan in 2014.

NB Power's Jill Doucett told Bourque the fires that triggered the Saskatchewan recall are now well understood and have been addressed with new safety features in current models.

"We have reviewed the experience of Saskatchewan and the investigation that was conducted post the installation of the meters and the fires that resulted and in that report there were a number of recommendations we have adhered to," said Doucett.