John Spears
Toronto Star
September 22, 2002

With interval hydro meters, consumers can buy power when the price is right

Ontario’s new electricity marketplace has been spitting out power prices that vary from hour to hour – sometimes wildly – since May 1.

But frustrated householders who want to take advantage of the low-priced periods and avoid the high-priced ones have mostly been shut out.

Consumers pay exactly the same for a kilowatt hour of power burned at 2 a.m., when prices are generally low, as they do at 5 p.m. on a hot day, when prices are often soaring due to high demand.

The devices needed to record when power is used, so that utilities can match the time of use with the corresponding price of electricity, haven’t been made widely available, except to big industrial power users.

That’s about to change for the future owners of 28 houses under construction on the site of the old Greenwood racetrack near Queen St. E. and Woodbine Ave.

Their electricity will flow through a device called an interval meter that records the time of day that each kilowatt hour of electricity is used. Toronto Hydro can then match the time of use with the market price at the time, charging perhaps as little as 2 cents a kilowatt hour for power used at 3 a.m., and as much as $1 or more during a price spike at 5 p.m. on a sweltering summer day.

Interval meters are also available to a select few customers in Milton, including Debora Harrold, who says she’s not sure whether she’ll save money – but she’s curious enough to give interval meters a try.

An employee of Milton Hydro, she was one of the utility’s first customers to sign up for the new kind of meter.

Harrold will come out ahead of the game if she plays the market right. But she could lose out if she’s not careful. That’s partly because she might misread the market, and partly because she pays an extra $5.50 a month for the interval meter service – soon to rise to $6.50 if Milton Hydro gets approval from the Ontario Energy Board.

“I was willing to take a chance,” she says. “It’s a hard call, because you never know which way the market’s going to go.” After only four months, she says it’s too early to decide whether her gamble paid off.

May and June saw generally low power prices, and she figures she lost out. But the hot weather and high daytime prices during July and August gave her a chance to save.

Since she and her husband work during the day, they let the house warm up when they were out and cooled it at night.

That seems to have produced some savings, but Harrold isn’t set to declare the experiment a success until she has results from a full year.

Energy Probe executive-director Tom Adams has seen figures from Milton through the first half of August and says they show interval meters have cut the energy portion of the average bill by about 8 per cent.

Milton Hydro has about 30 customers on interval meters and has held information sessions to attract more consumers.

“We have about 70 customers who have expressed interest,” says chief executive Don Thorne. More efforts are planned to spread the word.

Milton Hydro has contracted with Ozz Corporation, based in Concord, to provide the meters. The Ozz system connects the meter via modem with Milton Hydro’s billing system. Information is downloaded daily at 2 a.m.

Because Milton is growing rapidly – adding about 2,500 housing units a year – Thorne thinks there’s an opportunity to boost interval meter use through new developments.

That’s the approach Ozz and Toronto Hydro are taking in their pilot project in Boardwalk Residences at the Greenwood track site.

Ozz pitched the idea to developer Tom Albani, and he decided to install the meters in the still unsold homes.

“We see it as an advantage” in marketing the homes, Albani says.

Toronto Hydro owns the meters but Ozz will be responsible for tracking the readings, which are to be transmitted by modem daily at 2 a.m. Ozz will then hand the time-of-use information to Toronto Hydro, which will correlate it with market prices and bill the customers.

Toronto Hydro has applied to the Ontario Energy Board for an $8 monthly fee to operate the system. That means customers would have to transfer some of their electricity use to off-peak hours such as nights and weekends to break even.

Alternatively, they could install devices that effectively store power. Adams says some firms make heaters that consist of ceramic blocks with electric heating coils embedded in them. The blocks are heated overnight when prices are low. They store the heat until the house cools, when a thermostat switches on a fan that blows the stored heat into the house.

While Toronto and Milton are forging ahead with interval meters, there are still some bumps in the road.

Ingrid Mayrhofer, for example, was startled a few months ago when a Toronto Hydro technician disconnected the old time-of-use meter that she’d had for many years in her west-end Toronto home.

The old meters allowed users to buy power at one fixed low price overnight and a fixed higher price during the daytime.

Mayrhofer had a switch on her hot water heater that turned it on late in the evening and off early in the morning. That meant she had hot water for a shower in the morning, which was when she used most of the hot water. She’d run her washer in the morning on weekends.

Toronto Hydro’s Blair Peberdy says that the old time-of-use meters weren’t compatible with the new market system that kicked in on May 1, so they had to be removed.

Why not install interval meters in those homes?

Toronto Hydro will do so now on request. But Peberdy says there are still some regulatory issues to sort out – among them the rate that Toronto Hydro can charge for them.

It’s also unclear how the cost of installing and monitoring the meters should be spread among a utility’s customers.

Obviously, customers who have the meters benefit from being able to capture low-price periods and avoid high prices – although at the moment the only way they have to monitor hour-by-hour price changes is by logging on to the Internet.

But Adams argues there are more general benefits to all ratepayers.

Consumers who can and do respond to price signals from the marketplace reduce the strain on the power grid during peak demand periods by cutting their consumption.

Lowering overall demand reduces upward price pressure, so that all consumers pay less for power. If peak demand is lessened, it also cuts the need for expensive new generating stations.

Steven Muzzo, chief executive of Ozz, says when demand peaks, Ontario’s dirty coal generating stations generally run full tilt, so taking the edge off peak demand has an environmental benefit.

Adams says the meters also gives local utilities more accurate information about power-usage patterns so they can spot local stress points in their systems and fix potential problems before they happen. That improves reliability for everyone. As yet there are no regulatory guidelines in place that would allow utilities to adjust rates to recognize the overall benefit of interval meters to the power system as a whole.

Meanwhile, there are also skeptics who question whether the meters will benefit a typical consumer.

Alien Stanbury of Alien Stanbury and Associates, a Barrie-area consulting firm, says consumers aren’t necessarily further ahead with an interval meter.

He has run market simulations of typical consumer behaviour, using price data from the deregulated Pennsylvania market.

Stanbury notes that when utilities bill customers who don’t have fixed price contracts, they bill according to a typical pattern of use. The utility assumes that the customer uses relatively little power in the middle of the night, and much more during later afternoon and evening hours, and adjusts its rates accordingly.

A customer with an interval meter who follows the normal-use pattern will simply mimic what the utility is doing already, Stanbury says.

“In fact, it will probably put your bill up,” he says, when the metering cost is included as well.

A more promising avenue than trying to time power-market purchases, says Stanbury, is for utilities to try to curb demand in peak periods when prices can skyrocket.

One utility in Florida has installed devices in thousands of air conditioners that allow the utility to shut them off, for a maximum of one hour a day. The shut-off signal travels over the power lines themselves.

By shutting off the air conditioners, the utility can reduce demand by as much as 600 megawatts – equal to the output of a moderately sized generating unit. That’s often enough to keep prices in check during peak demand periods, Stanbury says.

But Peter D’Uva, a spokesperson for Toronto Hydro-Electric System, says utilities have to give customers the opportunity to react to price signals in the new system, and interval meters are the best tool for that.

“I don’t believe you can have a true deregulated market without interval meters,” he says.