3.18.2011

time-of-use energy pricing coming to ontario; is this a good thing or a bad thing?

Beginning May 1, Ontario will begin time-of-use pricing for energy* use.

With time-of-use pricing, electricity use will be billed at three different rates: off-peak (least expensive), mid-peak and peak (most expensive). Mid-peak is a higher rate than current billing, and off-peak is a lower rate. That is, under the new pricing plan, your bill cannot stay the same; it can only go up or go down.

There are also two different time-of-use pricing models, one for May through November, the other from November to May.



Compare this to our current rate of 6.4 cents/kWh.

Ontario has been gradually reducing its dependence on coal-fired electric plants, down from 25% in 2003 to the current 8%. The last coal-fired plant is supposed to be closed by 2030, a big step towards cleaner air and better health. Infrastructure is being upgraded, renewable sources expanded, and all that other stuff that means rates are slated to significantly increase.

So TOU pricing involves a choice between changing habits and escalating costs. With the price of energy expected to rise considerably over the next decade, most people will want to change habits.

There are very home electricity habits that one can reasonably change. Most people are not going to sit in the dark, not watch television or use their computers anytime they want, or cook dinner in the middle of the night. Some people consider air-conditioning a wasteful indulgence; for me it's a necessity. So in my view, the two most common home energy-use habits that one can change are using the dishwasher and doing the laundry, especially using the dryer.

The dishwasher is easy: run it at night. Start it before you go to bed and in the morning your dishes are clean.*

Laundry is a bit trickier. If you do your laundry on the weekends, that's already off-peak. But I'm at work all weekend, and generally do my laundry during normal working hours. I'm experimenting with different strategies of how to get the laundry done without staying up too late or working when I need to be resting.

I've heard it claimed that TOU pricing discriminates against working people, especially working parents who are over-burdened and pressed for time. Naturally I would oppose any scheme that redistributed a burden downward. But I haven't been able to figure out how TOU pricing unfairly burdens one group of people over another.

Overall, lower-income people are being walloped with cost increases from every side, and incomes never keep pace with the ever-escalating cost of living. I'd love to see energy use priced on a sliding scale according to income, but that will require a revolution. Instead, we have a few tax credits and rebates to help working people recover a few costs.

But specifically, how does TOU - as opposed to the current uniform rate - unfairly affect working people?

Weekends and evenings are off-peak, and that's when most working people do their laundry. TOU pricing would certainly unfairly burden working people if off-peak was during normal hours, but it's not. Many low-income people don't own washers and dryers, and if laundromats go to TOU rates, those would also reflect weekend and evening discounts.

If I'm missing some big piece of the puzzle, please fill me in. In general, do you think TOU is A Good Thing? Are you in favour of it? Will you change your habits to adjust?



* Note that in Ontario, many people refer to electricity, regardless of source, as "hydro". I find this ridiculous and will not say it.

** I'm aware that one can also wash dishes by hand. Since Allan and I never had a dishwasher before we moved to Canada, we feel we've paid our dues in that department. What's more, using a dishwasher actually helps us eat more healthfully and save money.

16 comments:

Lorraine said...

I think time-of-use pricing is a lesser evil than option pricing, which is to say, pushing consumers into second-guessing energy prices as commodity prices. I understand that industry ("lock in your prices" as the salescritters say) in Canada pissed off enough people to result in some legislation. Bravo!

It seems a major agenda item for Big Energy is getting the public used to the idea that energy prices are a moving target, and that energy consumers are 'market actors.' These ideas have some merit, but why must the idea of net metering take a back seat to all these market-based changes?

Cid said...

I don't think the thing we should be working towards is saving money on electricity but rather, using less electricity. So, if you are forced by cost to think longer and harder about how often and when you are going to run the dishwasher or dryer then good. We are a family of five with three active boys, laundry is a never ending job but I will try to be more thoughtful it.

laura k said...

I don't think the thing we should be working towards is saving money on electricity but rather, using less electricity.

I think those come down to the same thing, no? Most people don't want to pay higher prices, so they become more thoughtful and less wasteful about energy use.

People who are very frugal usually use less energy than people who are less careful with money. A lot of green practices involve taking longer to do something rather than doing it more quickly but with more energy use.

laura k said...

These ideas have some merit, but why must the idea of net metering take a back seat to all these market-based changes?

Is TOU pricing market-based? I don't see it that way but maybe I'm missing something (hence my post).

Lorraine said...

Maybe it's just load balancing. But it does make price a moving target, begging the question of what's next.

laura k said...

They say it's load balancing. Doesn't mean it's true, obviously.

But I must not understand what you mean. In my experience, prices are always a moving target, have always been. Is your experience otherwise?

At least with TOU pricing, there's the opportunity to reduce your costs.

M@ said...

Recently I cam across some studies that showed that you use less energy, overall, with a dishwasher than when you wash by hand, assuming the dishwasher is always full when you run it. I can find the articles where I read that if you like.

I think TOU is a good idea. We can't store electricity, so the maximum amount we are forced to produce is the amount at the peak time (and that amount of course is always growing). If we reduce peak usage (through TOU incentives) we can reduce or at least slow the growth of peak usage, meaning that we need less energy-producing infrastructure. It's a good idea, to me.

About working people -- this seems like complete bullshit to me, just pandering. On that note, every time I hear MPPs talking, they talk about "Ontario families" (single people: you don't count, sorry). It's their mantra now, in all the parties; more disgusting pandering. When will people start demanding that politicians treat them like adults?

Lorraine said...

There's generally a process for a utility to go through for a utility to get approval for rate increases, but deregulation may be changing that. But yes, utility rates, like the prices of anything, have always been a moving target. I suspect in the future they may be a rapidly moving target, maybe to the point where you will look at the ticker tape for the up-to-the-minute going rate before turning on an appliance.

laura k said...

Recently I cam across some studies that showed that you use less energy, overall, with a dishwasher than when you wash by hand, assuming the dishwasher is always full when you run it. I can find the articles where I read that if you like.

I've read that you use less water - I'm kind of up on water use these days! unfortunately - but more electricity. Less overall would be great.

Either way, it makes sense to run the dishwasher off-peak.

Your thoughts on TOU make a lot of sense. The stuff re working people wasn't said by a politician - it was by regular working people, albeit not very smart ones. :)

Re "families", I hear you. How about just PEOPLE? Imp Strump has written about the stupidly named Family Day holiday.

laura k said...

There's generally a process for a utility to go through for a utility to get approval for rate increases, but deregulation may be changing that.

Dereg = good for corps, bad for people. Always.

impudent strumpet said...

Things They Should Invent: timers for appliances where you can load up the washer/dryer/dishwasher and tell it to start running when the off-peak hours start. They could also do similar with heating/air conditioning - you could tell it not to run during peak hours, or tell the air conditioning to kick in at 24 degrees for off-peak hours but 30 for peak hours.

It would also be interesting to do this based on actual real-life current demand rather than theoretical current demand. If it's noon on a July weekday, but it's only 18 degrees out so no one is using their air conditioner, there's no reason for peak rates to apply. To do this, they'd need a way to constantly communicate the province's current power load to everyone in real time, which is probably possible now and should be practicable within not too many years. And it would be doubly cool if they could make timers for appliances that could be triggered by real-time low power usage.

It will also be interesting to see if this will cause any businesses to switch their operations to off-peak times.

I've done some math with my own utility bill, and it looks like this is more of a disincentive than an incentive. If I managed to get literally all my electricity use into off-peak hours, I'd save $2.50 a month. If literally all my electricity use was in peak hours, I'd spend an extra $7 a month.

Of course, all this is weakened by the fact that my metered electricity usage is only about a third of my total bill. If this is actually a good and beneficial idea, all the delivery charges and regulatory charges and debt retirement charges should be pro-rated as well.

laura k said...

Things They Should Invent: timers for appliances where you can load up the washer/dryer/dishwasher and tell it to start running when the off-peak hours start.

I'm pretty sure this exists, but you have to program in the start time - the same way you can with a coffee-maker or air-conditioner. Or maybe you mean the appliance "knows" when it's off-peak time and you don't have to program it.

It would also be interesting to do this based on actual real-life current demand rather than theoretical current demand.

We had a crude version of this very briefly, part of a pilot program in Mississauga. It was supposed to adjust our rates according to demand - but unfortunately it also controlled our thermostat, thereby controlling our A/C. For a person who is always overheated - living in a hard-to-cool house - this was Not Good. We dumped the program almost immediately.

But assuming they continued to develop it, what you're imagining is on the way.

If I managed to get literally all my electricity use into off-peak hours, I'd save $2.50 a month. If literally all my electricity use was in peak hours, I'd spend an extra $7 a month.

That's it?! Geez, hardly worth a change of habits. Do you do laundry in your apartment?

M@ said...

They could also do similar with heating/air conditioning - you could tell it not to run during peak hours, or tell the air conditioning to kick in at 24 degrees for off-peak hours but 30 for peak hours.

This is already very common -- we've had a digital home thermostat for over a decade. They're fantastic, and they really do save on heating and cooling costs; they'll save us even more in the summer with TOU pricing.

And my dishwasher has a delay button for 2 or 4 hours, and it's not a new dishwasher by any means. Laundry remains, as Laura pointed out, a bit more difficult.

Lorraine said...

Is TOU a summertime thing, or slated for rollout come summer? DTE Energy has a deal called interruptible service for folkx w. central air. They have their central air on a separate meter, which is billable at lower rates, the catch being that DTE can turn off the air during times of peak demand up to a certain number of times during the summer season.

laura k said...

It's year-round (note pricing charts for winter months), beginning May 1.

The plan you describe is similar to the pilot program I mentioned in comments, but that's voluntary. TOU pricing is not.

impudent strumpet said...

In that case, I feel cheated by the appliances and thermostat in my apartment. The building made a big deal about how green everything is, and there are environmental features, but we can't control it with nearly as much nuance as we should be able to.