Time-of-use electricity pricing not significantly reducing Ontario’s demand

WATERLOO, Ont.—Smart meters and time-of-use electricity pricing have only modestly reduced Ontario’s residential energy demand during the most expensive peak periods, according to a new study from the University of Waterloo.

University researchers compared data for nine months before and nine months after time-of-use rates were introduced in November 2011 by an unidentified distribution company with more than 20,000 household customers in southwestern Ontario.

Factoring out the impact of weather differences, their analysis showed residential demand for electricity dropped just 2.6 per cent during on-peak periods and 2.4 per cent during mid-peak periods following the change.

“There is a gain, but the gain is very small,” said Lukasz Golab, a management sciences professor and Canada Research Chair at Waterloo.

The University of Waterloo says smart meters to enable time-of-use pricing were installed by hydro utilities across Ontario at a cost of about $1 billion, with the goal of shifting demand away from peak periods—reducing maximum capacity requirements and saving money on infrastructure.

According to the University, the study did not attempt to assess if the cost of the switch to time-of-use pricing has been justified by modest changes in the behaviour of residential customers.

“Is it enough? Of that I’m not sure. We don’t have the data to decide if these kinds of savings warrant the use of smart meters,” said Catherine Rosenberg, a professor of electrical and computer engineering and also a Canada Research Chair at Waterloo.

The study also suggests that time parameters used to set rates may not be aligned properly with actual usage, at least for residential customers.

The summer on-peak period on weekdays in Ontario is noon to 5 p.m., but demand actually hit its highest point at 6 p.m. in the utility examined in the study.