Who benefits? The impacts of time-of-use electricity pricing on demographic groups in Ontario, Canada

Jennifer Robinson and Ian H. Rowlands, University of Waterloo, CANADA

Keywords

smart meters, electricity, time-of-use rates, residential, pricing policy, cost impact, demographic groups

Abstract

In an effort to address its current electricity supply crisis by encouraging conservation, the Canadian province of Ontario has committed to installing interval metering infrastructure and implementing time-of-use pricing for all of its 4.2 million residential households by 2010. This ‘smart metering’ strategy is a departure from current electricity pricing policy, in which residents essentially pay a flat rate. While much of the debate surrounding the move relates to the energy and economic benefits that could accrue to the province as a whole through load-shifting, little attention has been paid to how individual households might stand to ‘win’ or ‘lose’ from this pricing shift. To begin to explore this critical issue, this paper analyses consumption, demographic, and behavioural data from 225 households located in a south-western Ontario community. The households’ electricity bills were calculated in two ways: by means of the conventional flat rate (which was still in effect during the six-month period under investigation) and by means of ‘time-of-use’ pricing (given that ‘smart meters’ were installed on all of these households). While the average electricity cost for these 225 households remained virtually unchanged, there were significant differences at the margins: under time-of-use pricing, one household would have experienced a cost increase of 14 %, while another, a cost decrease of 18 %. While the correlations were found to be weak, they indicated that higher occupancy (specifically with more children) lower income households experienced, proportionately, higher costs. The social and policy implications of these disaggregated results are investigated.