Time-of-use hydro rates make little impact on energy use
New pricing structure had led to consumption dropping by less than 1 per cent, study finds
Ontario’s time-of-use hydro rates haven’t significantly reduced overall energy use by householders, says a new study.
The time-of-use rates went hand in hand with the installation of smart meters across the province, at a cost of more than a billion dollars
The meters, which measure power use throughout the day, allow utilities to charge higher rates when demand for electricity is high and lower rates on weekends and overnight, when demand falls off.
Currently, householders pay 12.9 cents a kilowatt hour for the energy portion of their hydro bill during peak usage periods, which during winter months run from 7 to 11 a.m. and 5 to 7 p.m. on weekdays.
During mid-peak hours — 11 a.m. to 5 p.m. weekdays — the rate is 10.9 cents a kilowatt hour.
The off-peak rate — charged from 7 p.m. to 7 a.m., and on weekends and holidays — is 7.2 cents a kilowatt hour. (During the summer, the definition of peak, off-peak and mid-peak hours changes).
Householders pay delivery, administration and debt retirement charges in addition to the energy charge.
But the new rate structure has had modest, if any, impact on conservation by householders, says the study, conducted by Navigant Consulting for the Ontario Energy Board.
It used two different ways of measuring how much households cut power use with the introduction of time-of-use rates.
By one measure, consumption dropped 0.2 per cent because of the rates; by the other, it dropped 1 per cent. About 93 per cent of Ontario households are subject to time-of-use rates.
The study found there was a modest reduction in overall power use during the winter that could be attributed to the new rates.
But it found “there is no significant summer conservation impact” from the time-of-use rates.
Still, time-of-use rates have been modestly successful in nudging consumers toward using less power during peak pe- riods. That, too, was one of the goals of time-of-use rates.
Having short, sharp periods of high electricity use forces the power system to build expensive plants that are used for only a few hours a day, and a sometimes for only a few months of the year.
Those plants receive payments whether they’re working or not, and all users bear the cost in their overall rates.
If those short periods of high demand can be shaved back, there’s less need for costly plants that serve only the shortterm peaks. That’s an important effect, and one of the goals the rates addressed.
The study found that during peak summer periods, households trimmed power use as much as 3.3 per cent.
On the flip side, during off-peak periods — when there are plenty of generators with spare capacity — consumption rose as much as 3.5 per cent.
That pattern didn’t hold in the winter, however.
During the colder months, consumers have reacted to the new price structure by cutting back power across the board, although the cutbacks are greater during peak periods.
Smart meters allow utilities to see where customers have lost power almost immediately, so they can respond faster and more efficiently to outages.