(Apr. 29, 2010) When Ontario’s new time-of-use electricity pricing starts in Owen Sound in the coming weeks, most residential customers’ hydro bills likely won’t increase.

That’s the view of the Ontario Ministry of Energy and Infrastructure, whether residential customers change their consumption patterns or not.

Under current pricing, customers pay the same price no matter the hour of the day. Soon consumers will have more control over their bills.

They could shift their power use to lower-cost time — something that could be important as electricity prices rise at peak times.

The Ontario government is introducing time-of-use pricing to promote a culture of energy conservation and reduce peak electricity demand, said Hydro One’s Daniele Gauvin on Wednesday.

It will “help customers to manage their electricity use, reduce strain on the electricity system and help the environment,” she said.

Hydro One is rolling out the new provincial government pricing initiative in the Owen Sound area by early June. Notices 30 days in advance of implementation have been sent out to 12,000 in an area roughly from Hepworth to Tara and Leith to Chatsworth.

The rest of its Grey-Bruce customers will make the move through the summer and into early 2011.

Westario Power Inc., which serves 17,000 customers in Southampton, Port Elgin, Kincardine, Ripley, Lucknow, Teeswater, Elmwood, Walkerton, Hanover, Neustadt and Mildmay, will start the switch in the first half of 2011.

The Energy Ministry says given that there are three times as many cheaper off-peak hours than more costly peak hours every day, residential bills shouldn’t go up.

A study completed this month for Newmarket-Tay Power Distribution Ltd. also found no significant difference in the power bills of residents under the new pricing scheme.

Newmarket was an early adopter of the new system, starting it in 2008. Small businesses aren’t using the new system there yet.

“This is not a savings program,” Newmarket distribution director Larry Harod said. “You now have a tool for the opportunity to save. It all depends on your lifestyle.”

So instead of paying almost 10 cents per kilowatt hour in peak demand times, you’ll pay about five cents under the rates set by the Ontario Energy Board for the next six months.

Indeed, Norm Rubin, of power industry watchdog Energy Probe, said the price signals of the government’s new system aren’t clear enough to reduce peak demand.

When peak demand is soaring in the middle of summer, the price people pay will be fixed at about 10 cents per kWh, even if the market price may be far higher, he said.

“The demand for electricity goes on completely unconscious of the cost of producing,” he said.

If instead, customers, at least major ones, had access to real-time pricing and there was a system that let them pay that price, significant shifts could occur, he said.

As it is, the savings of shifting costs won’t be significant, and worse, costs borne by customers for the metres and information gathering technologies will outweigh savings, he said.

He studied this while on a working group of the Ontario Energy Board, he said. The OEB allows a charge of $1.65 per month for the meters and related costs, a rate that may change soon.

“I think on balance this smart-meter plan was not worth doing,” Rubin said. “I think given the way we’re doing it, we’d be better off if we hadn’t started.”

The Newmarket study showed peak-period demand fell modestly, by almost 3%, while mid-peak demand fell by about 1.4%. Mostly that consumption shifted to the weekend when it’s cheaper.

Overall, consumption didn’t fall.

It’s too early to say how much more demand shifting is possible, let alone reductions in consumption, he said.

“If power generation costs continue to increase with the addition of new generation, whether it’s renewable, which I think is a phenomenal path to go down, but those generations are not cheap.”

Rubin said it’s not green power that is the main driver of the market price of electricity, it’s such factors as the spikes in demand.

So the option to shift power use to cheaper times will be increasingly important, he said.

The cheapest hours weekdays will be from 9 p.m. to 7 a.m. and weekends and holidays. That’s when the off-peak rate is 5.3 cents per kilowatt hour.

The price jumps to 9.9 cents per kWh during peak demand, 11 a.m. to 5 p.m.

Mid-peak pricing is slightly less, eight cents per kWh, between 7 a.m. to 11 a.m. and 5 p.m. to 9 p.m.

The meters are “smart” because they record power consumption hourly, and transmit that information to the utility. Customer will be able to see their power-usage profile online.

Some customers will be more or less vulnerable to increased bills under the new plan, said Westario Power president and chief executive officer Lisa Milne.

Those who heat with electricity, like in Kincardine which has no access to natural gas, and small businesses, whose operating hours are fixed, could pay more, she said. Shift workers may see benefits, she added.

The Energy Ministry’s only assurance to small business and agricultural operations is that if they shift power use to off-peak hours, they’ll save money.

Herod, in Newmarket, said some businesses, like pizza shops, which tend to be busier at night, could really benefit.

There are 4.3 million Ontario residential and small business power customers and at last count, 3.5 million meters have been installed.

About 350,000 customers are on time-of-use pricing to date, said Paul Crawford, spokesman for the Ontario Energy Board, which regulates the electricity and natural gas markets.