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CIC Smart Meter Review Makes Recommendations to Improve Crown Procurement

Released on October 27, 2014

Review Finds Customer Safety Was Not Given Enough Priority

An investigation into the causes of fires and the procurement practices surrounding SaskPower’s smart meter program has concluded that customer safety was not given a high enough priority by SaskPower.  This and other findings have led to a series of recommendations aimed at preventing such problems in the future.

“Customer safety does not appear to have been a consideration until after reports of smart meter fires involving Philadelphia Electric Company (PECO) arose,” independent experts at the law firm Robertston Stromberg found.  “It did not become a matter of central importance until June of 2014.”

During June and July of 2014, there were eight different cases where smart meters caught fire, prompting the suspension of the installation program and a later cabinet order to remove the meters.

Crown Investments Corporation (CIC) was directed to conduct a review and commissioned a number of independent experts to examine different aspects of the issue. 

PwC was asked to review procurement and contract management.  Consulting engineers Ritenburg and Associates of Regina was asked to examine the technical and safety issues and the law firm Robertson Stromberg was commissioned to look at legal and product liability issues.

An initial study of the causes of the fires shows that rainwater and contaminants getting into the meters appear to be a major contributing factor in the failures, not issues related to their installation.

That portion of the CIC review, conducted by Regina’s Ritenburg and Associates, shows that some of the Sensus meters used in Saskatchewan have a tendency to leak.  The eight meters in question were completely destroyed and impossible to analyze.  However, others that quit because of other problems and were removed have shown signs of moisture and conductive contaminants getting in.

This will have to be confirmed by other testing now underway by consultants for SaskPower, but Ritenburg found no evidence that the failures were related to “hot sockets” or installation problems.

The review also identified a number of problems in the procurement and project management processes.

Overall, the company’s risk management process was found to be lacking.  While SaskPower did identify a number of risks, the possibility the meters could actually short out and catch fire was not considered until similar fires at the PECO became public.

While contractor and employee safety were considered, customer safety was not given enough priority, the review found.

SaskPower had also received advice that it should buy small batches of smart meters through a “stepped procurement” process, install them gradually and watch for problems. 

The company did not do that.  After some smaller initial purchases, it went on to buy more than 100,000 meters in a three week period and initiated a full-scale installation program.  This was done because they had the budget available for it in 2013.

Both PwC and Robertson Stromberg found that there was no single point of control overseeing the smart meter project, making it easier for warning signals to go unheeded.

There were several such warnings:
  • A suit filed in Alabama in May of 2010 alleged Sensus meters were catching fire;
  • After losing the SaskPower contract to Sensus in December of 2011, a meter manufacturer warned SaskPower of past problems with Sensus; and
  • Fires in Philadelphia forced the PECO to remove Sensus meters in October of 2012.
While SaskPower did respond to the PECO fires with changes to the smart meter program, the review questions whether enough was done.

SaskPower did increase its efforts to detect faulty sockets, enabling an extra temperature sensor and seeking assurances from Sensus that the meters were safe. 

However, the remote reading function never did work properly and there were so many false alarms for overheating, SaskPower could not investigate them all.  Even after 100,000 installations, SaskPower had to read all of the smart meters manually.

Ritenburg made several recommendations including:
  • Given the potential fire hazard, all of the existing Sensus meters should be removed before next spring and potentially rainy weather;
  • Those meters should be examined for arcing or other problems when they come out, to establish more information;
  • When installing meters, more site photos should be taken in case the scene has to be analyzed after any future failures; and
  • All meter incidents should be reported and a data base created.
 PwC made the following recommendations:
  • SaskPower should have specific guidelines on identifying and operating high-risk procurement projects;
  • SaskPower needs a more formal “process safety management” program to ensure customer safety is paramount;
  • There should be a single “contract owner” for such important, complex projects with a specific risk management process built in; and
  • Clearly identify the roles and responsibilities for the management of enterprise risks relevant to procurement.
Robertson Stromberg also concluded that in large scale procurements of this kind, the vendor should consider buying product liability insurance to cover the buyer, in case of problems.

CIC Minister Don McMorris said the provincial cabinet has reviewed a summary of the findings and the government has directed CIC to:
  • Ensure that SaskPower removes all Sensus meters by March 15, 2015 at the latest;
  • Ensure that SaskPower implements all of the consultants’ recommendations; and
  • Work with all the Crowns to ensure they are applying the lessons from this incident across the Crown sector.
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For more information, contact:

Randy Burton
CIC
Regina
Phone: 306-787-5889
Email: rburton@cicorp.sk.ca

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