Smart meter phase-in sparks cost fears

TORONTO, ONTARIO - Hey big spender, want to become part of Toronto's power elite? Do your laundry and run the dishwasher in the late afternoon.

About 250,000 households in the city are now on time-of-use rates, meaning they will be charged a premium when using electricity during weekday peak periods and get a discount when power is consumed overnight.

"By January we should have pretty well all residential customers on time-of-use pricing," said Blair Peberdy, vice-president of marketing and chief conservation officer at Toronto Hydro Corp.

The introduction of time-of-use billing follows the province-wide deployment of digital smart meters, which track how much electricity individual households consume throughout the day. That information is then transmitted wirelessly to the utility. Toronto Hydro and utilities across the province are introducing time-of-use rates to make consumers more aware of when and how they use electricity.

The idea is to shift use from periods of high demand, when wholesale electricity prices are higher and power is often supplied by fossil fuels, to periods of lower demand, when electricity tends to come from cheaper and cleaner hydroelectric, nuclear and wind.

A total of 500,000 residential customers in Toronto will eventually be switched to the new rates. Those signed up with electricity retailers such as Direct Energy, Just Energy or Bullfrog Power Inc., will continue to pay the rates in their contracts.

Peberdy said most households, based on early analysis of bills, are expected to cope easily with the new rates by adjusting their electricity use. About half now on time-of-use rates are seeing their bills increase or decrease by 2 per cent, but some are seeing larger swings.

"For most there will be a slight increase (in monthly bills) if you don't do anything differently," Peberdy said. He said the hope is that more households will do laundry and run dishwashers during off-peak hours or on weekends, be more attentive to lighting and unplug electronics that consume electricity when not in use.

But many small businesses, seniors and others on fixed incomes are worried that their dependence on electricity during the day could unfairly penalize them. Such groups have less flexibility with their energy use.

Critics of the smart meter program doubt the technology will encourage the kind of conservation and behavioural changes utilities are expecting, at least not enough to justify its $1-billion-plus price tag.

Clive Holloway, professor of chemistry at York University and a self-described "senior," has crunched some numbers and is not comforted by the results.

Under new winter pricing effective November 1, peak hours are between 7 and 11 a.m. and again between 5 and 9 p.m., representing eight hours when 9.3 cents per kilowatt-hour will be charged.

The six hours between 11 a.m. and 5 p.m. are considered mid-peak and cost 8 cents per kilowatt-hour. Off-peak prices are 4.4 cents per kilowatt-hour, during the 10 hours from 9 p.m. to 7 a.m.

Holloway said peak and mid-peak hours total 14, and the cost of both represent a hike of 33 to 50 per cent over the current rate of about 6 cents per kilowatt-hour. During the 10 off-peak hours electricity is about 25 per cent less.

"My estimations show that one can expect at least a 5-per-cent increase, but it is more likely to be 10 per cent or higher unless you restrict your activities considerably," said Holloway. "It would be very difficult for any normal, healthy person, let alone a dependent senior with special needs, to rearrange their total schedule to neutralize that (higher-cost hours) and break even."

The wild card will be the weekend, when off-peak rates of 4.4 cents will apply all day and night, providing many households the opportunity to offset higher weekday prices.

Toronto Hydro and other utilities in southern Ontario will want to avoid what's happening in California, where utility Pacific Gas & Electric Co. has installed about three million smart meters and plans to reach 10 million by the end of 2011. Some of its customers already on time-of-use pricing have seen their bills double or triple.

Accusations are already flying that the meters are faulty and politicians have been taking cover. But Pacific Gas blames the higher bills on warmer weather that has driven up air conditioning use.

Peberdy said Toronto Hydro has been reading all its smart meters remotely for months and there have been no problems with accuracy. But he agreed some consumers will be more vulnerable to time-of-use rates and said programs will be introduced to help them better manage their energy costs.

He said Toronto Hydro will closely monitor demand to get a sense of how customers are adapting.