Enhancing rate design choices for Ontarians
- Jun 11, 2020 11:19 am GMT
In the late 2000’s the Canadian province of Ontario became a world leader in smart electric rate design by moving all residential and small business customers to a default time-of-use (TOU) electricity rate. Enabled by newly installed smart meters that recorded real-time electricity usage across the day, this was a global first.
TOU rates reflect the underlying costs of the electricity system by showing that in peak periods, when everyone is using the grid, electricity is more expensive to produce. By shifting some consumption to the cheaper off-peak period, customers can save money off their bill while lowering electricity costs for everyone else. There is empirical evidence Ontarians have adjusted their energy use patterns in response to the incentives provided by the rate design. We carried out an econometric analysis over a three year period and found that provincial peak demand had declined by 2% to 3% due to the TOU rates.
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