Time of Use Meter or “Smart” Meter – What is it?

What is a TOU Meter or Time Of Use Meter (Smart Meter)?

TOU is an electricity billing system that relates the cost of using a kilowatt hour (kwh) dependent on the time of day that kilowatt hour is consumed.  During “peak” periods when the electrical grid is under high demand the electricity consumer will pay more for a kwh than they would during off peak periods when there is less stress on the grid.  Special meters have been developed called “Time of Use Meters” to calculate this increasingly complex method of billing.

Between now and 2025, Ontario must build almost a whole new electricity system. This includes replacing about 80 per cent of our current generating facilities are retired over time, and expanding the system to meet future growth. Building new supply is vital. So is conservation. That’s why the Government of Ontario is introducing new tools like smart meters that will encourage all of us to think more about how and when we use electricity.

Time of Use Meters measure hourly electricity use, so electricity prices can be different at different hours of the day. That better matches the way prices work in the electricity market, and will encourage us to think more about how and when we use electricity. As we move consumption away from the more expensive (peak) times of the day, we can help Ontario reduce its peak demand, which can help limit the building and operation of peak generating facilities.

Why are there Time of Use Meters?

Supplying electricity at peak times (those times when we’re all using a lot of electricity) has a range of impacts:

  • It adds to our electricity costs because higher demand often means higher market prices.
  • It’s hard on the environment because more of the less attractive forms of generation must be run to meet them.
  • It adds to the amount that Ontario needs to invest in the system because meeting the peaks means building even more new generating facilities, and more transmission and distribution infrastructure and that also adds to electricity costs.

High demand peaks affect the power system in three ways:

  • They strain the power system. Particularly during sustained heat-waves, power generators work at almost full capacity.
  • High demand pushes up the cost to produce electricity. At peak, more expensive types of electricity production are called upon.
  • Peak demand forecasts are used by power system planners to determine how much more power production the province will need in the years ahead. The higher the demand peaks, the more investment will be needed in the electricity system – building new generation plants, new transmission and distribution infrastructure.

The real impacts of heavy drain on the grid were displayed in 2006 when a massive heatwave hit North America which sadly resulted in 225 deaths.  As people cranked their air conditioning the grid system could not supply the electricity demand and “brownouts” rolled through cities, provinces and states. The Ontario government believes (is hoping) that by altering how electricity is billed based on the Time of Use Meter, people will adjust their energy usage habits in order to save money on their power bills.  All of this makes logical sense, however, as implemented today it isn’t really working.

What are Smart Readers?

A smart meter tracks how much electricity you use and when you use it, providing key information to help you manage your electricity costs. A smart meter looks like the meter you have now, except the display is digital and there are no dials. It records how much electricity was used and when it was used (typically hourly) and communicates this information automatically via wireless and other technologies. A smart meter electronically tracks how much electricity is used and when it is used, paving the way for time-of-use pricing.

How much will electricity cost?

The TOU will change how Ontarians pay for electricity consumption.  Some centres, like the Greater Toronto Area have already phased Smart and Time of Use Meters into their customers daily lives.  The costs for electricity depend on the season, day of the week and time of day.  The charts below show what a consumer will pay per kwh.  As Ontario is the first province to introduce TOU rates, Premier McGuinty has admitted that the incentives to use off peak times are too low.  In addition, as you will see in the pricing below, the “On Peak” rates are almost double what Ontarians pay (or paid) prior to the TOU rates.

The current pricing for TOU is as follows:

Summer WeekdaysWinter Weekdays
May 1 – October 31November 1 to April 30
7 am to 11 amMid-Peak8.17 am to 11 amOn-Peak9.9
11 am to 5 pmOn-Peak9.911 am to 5 pmMid-Peak8.1
5 pm to 9 pmMid-Peak8.15 pm to 9 pmOn-Peak9.9
9 pm to 7 amOff-Peak5.19 pm to 7 amOff-Peak5.1
Weekends & HolidaysWeekends & Holidays
All dayOff-Peak5.1All dayOff-Peak5.1

Our Time of Use Situation

As mentioned in Our ecoEnergy Retrofit, we will be changing all of our lightbulbs from incandescent to CFL bulbs.  With TOU it is likely we would probably stand to save even more than the $150 a year we determined a household would save by switching to CFL bulbs.  We also have a sun room that has electric baseboard heat and these HAVE TO GO.  We are hunting for a suitable and cost effective solution but have not landed on it yet.  In addition we will follow many of the tips in the next section.  We will also get rid of our electric hot water heater and replace it with a natural gas model – no electric charges and we won’t be renting any longer.

In our city we received notice that time of use meters will be used in full effect by the end of the month!  The rates we will pay are dependent on the season (summer/winter) as folks use more power in the afternoon in the warm months (cooling) and evening/morning in the winter (heating food, space, water). “Peak” is used to define the high consumption time periods.  The following are our new rates:

  • On Peak (6 hrs daily): $0.108/kwh
  • Mid Peak (6 hrs daily): $0.092/kwh
  • Off Peak (12 hrs daily): $0.062
Our old rates were flat:
  • $0.071/kwh for the first 1000 kwh
  • $0.083 for the remainder

Strategies to Reduce Electricity Use

  • Cut your air conditioning costs. Making wise use of your air conditioner will have the biggest impact on your summer energy bill. Set your air conditioner a few degrees higher than you normally would, and turn it off when no-one is home. You can also help your air conditioner work more efficiently:
    • Replace or clean the filters once a month.
    • Use a ceiling fan to circulate the cold air. This will allow you to raise the thermostat setting by a few degrees without a noticeable difference.
    • Close shades and curtains on the sunny side of the house.
  • Clothes dryers consume a lot of energy. Wait until evening or the weekend and you’ll pay a third of the cost.
  • Electric water heaters can really make electricity use spike as they refill and heat water. If you reduce the amount of hot water you use during peak periods, you also reduce the amount of electricity you use during these times.  Get the utility company to reduce the heat of the heater. Although some manufacturers set water heater thermostats at 140ºF, most households usually only require them set at 120ºF and by dropping by 20ºF you can save 6-10% in your electrical bill.
  • If you have a pool, run your pump and heater during off-peak hours. You may only need to run your pump for six or eight hours a day.
  • Your electric stove is also a high energy user – but there are a lot of simple ways you can minimize these costs at peak times:
    • Match the pots to the element size, make sure the bottoms of your pans are flat and put the lids on.
    • Minimize the pre-heating time for your oven. Unless you are baking, you may not even need to pre-heat.
    • Better yet, use a crock pot, toaster oven or a small microwave – you’ll use less energy, and you won’t be creating extra heat in the house on hot days.
  • Do laundry on weekends and wash in cold water.
  • Turn the dishwasher on after 9 p.m. and select the economy setting and air dry cycle.
  • Set the air-conditioning a few degrees warmer during the afternoon.  We don’t have central air so we’ll run the window unit before bed – after 9pm.
  • Turn appliances such as the computer, radio and TV off when they’re not in use.
  • Most common but sometimes forgotten, turn lights off when not in us.
  • Turn your computer monitor off if you are not going to use it for 20 minutes, and turn your computer off if you’re not going to use it in the next two hours.
  • Fix water leaks and drafts, clean filters on air conditioners and furnaces and generally keep your appliances in good working order.
  • Buy Energy Star rated products for your home. Switching to the most energy-efficient products can save you hundreds of dollars in energy costs.
  • The average Canadian home has 25 electronic devices that use standby power which can add up to 10 per cent of household electricity consumption. Plug these devices (TVs, VCRs, etc..) into a power bar, which cuts off the supply of electricity.

TOU Meter Results to Date

The results to date have not been good and are proving to be a political land mine for the Premier. According to data released, 68 per cent of 10,000 tracked Toronto Hydro customers had higher bills in the first year of the new program.  The government will state that this is due to people not changing their energy usage habits but their NDP and Conservative critics are calling the TOU rates an electricity tax grab which has hit Ontarians very hard when considering the HST tax has been added to bills as well.  Bills are going up and the conservation reduction is not occurring.  People are using off peak times and not seeing the savings on their bills.

At this point I would have to agree that the program, which cost Ontarians $2 billion dollars ($500 to install each meter!), is failing in its stated purpose (conservation) and must be altered very soon. People aren’t changing their consumption habits which makes the everyperson less wealthy and does little good for our environment.

How is electric consumption measured where you live? How do you manage your time of use meter?

24 thoughts on “Time of Use Meter or “Smart” Meter – What is it?

  1. Some excellent points made, I switched back to an electric clothes dryer, and I am now regretting that move. If I had stayed with Natural Gas, even with it’s price going up it would be cheaper than the price Hydro is now charging.

  2. If TOUs are based on actual supply & demand they can be a smart way to go. They should also change billing practices to use volt-amperes (I think that is the measurement) instead of watts so that you CFL users pay for the true cost of your energy consumption. ;)

    They could apply the same concepts to the highways as well to cut down on peak congestion and internalize some of the costs of driving that are currently externalized or paid indirectly via other means.

    1. I need to look into this a bit more (the volt-amperes).

      We have no issue w/ TOU but things have to make sense (and cents). The rates are not properly set, the meters are proven to not work properly and this is a political land mine for the party in power in Ontario.

  3. In some ways it shows that even in an ‘eco’ aware country like Canada when people are asked to change individual habits, they won’t! I like the aim of the system and see it’s point so find it really sad people are not changing…. I’m not on that meter but you got me thinking that I should change my energy time use. Mind you, I rarely run the dryer, I wash up by hand and I watch 1 TV show a week (after midnight on Mondays but it records at around 9). I can be forgetful about lights, need auto lights installed!

    1. When we were notified of the rate adjustment the utility company added comparative data for the months of Nov, Dec, Jan. It showed that we would pay $2 more per month.

      Our habits are already pretty good in terms of saving electricity but can still improve. It was interesting to see how much “peak” power we used during these months. Always room for improvement!

  4. We don’t have these here yet but I won’t be surprised if they get implemented. Our electricity is measured with a standard meter and we get a bill every month. My hubby and I watch it pretty close to see if there are any changes we can make to use less.

    Thanks for sharing the tips on how to accommodate them though. They will be handy if we make the change over.

    1. Part of the TOU implementation reasoning was the rolling brown outs in the US North East / Ontario / Quebec a number of summers ago. The infrastructure simply could not handle all the power being used to cool buildings.

  5. I have only used the dishwasher, washer & dryer on the weekends (when possible) for the last few months and still don’t see a HUGE difference in my costs. I did see the off peak hours increased last billing period but with the increase in costs AND the HST….it kinda defeats the purpose.

    But, in all things McGinty, he forces things down people’s throats and will only do things his way (or no way) and that’s the way he implemented these. There wasn’t even a choice. There was one already on my home when I purchased it or I might have raised a stink about it, not wanting the extra electric fields around my house.

    Have a look at my last blog article for a little insight into something else interesting: http://pennythots.com/2012/05/12/the-tax-man-cometh/


  6. While I am all for conservation and not wasting electricity I don’t think the smart meter is the answer. I have heard that there are health hazards to these meters and a lot of people are fighting the implementation of them. There are issues of radiation poisoning, privacy issues and escalating energy costs. I think there is a need for an unbiased investigation into them.

  7. I Live in a part of Ontario that does not have natural gas service. We have 6 water power generating stations within 30 km of our town and the water power generating company distributes the power to our area. Therefore, we have a form of “green” power. I heat with electricity (my rural driveway is not designed for ease of access for an oil fuel delivery truck).

    I wash only with cold water. I use my dryer once every 3 months. I wash dishes by hand in the evening. I use a toaster oven or microwave whenever possible. I have programmed my electric heat thermostat to make the home comfortable (62F at night, no more than 68F during parts of the day; etc). We are not on time of day pricing yet.

    So here are some trends in electricity pricing I am seeing:
    – I did a comparison of 2 months of electrical use in 2009 and in 2011: electrical use was up by 5% but cost was up 30%
    – I reviewed 5 years of electrical bills and found that in the winter that actual use of electricity was only 48% and in the summer actual use of electricity was 33% – the rest of the bill was delivery/transmission charges, taxes, OPG debt repayment, etc. Therefore, even if you conform to the time of day pricing, your power bill may not go down because of all the other charges on your bill that are going up.

    My strategy now is to invest in the local power generator (publicly traded utility company) to the point that their dividends will “pay” my electrical bill. I will also be investing in the publicly traded company that took over the delivery of the electricity and their dividends will pay most of the other costs on my electricity bill.

  8. wow, what a comprehensive post, thanks for sharing it! I try to convince myself that using ly clothesline instead of the dryer offsets the A/C ;) Have you read Gail Vaz-Oxlades site – you two would probably really get along, lol!

  9. How accurate is the TOU system? I’ve tried something else like this but it’s not really that accurate. It’s just a waste of money when all I wanted was to find something efficient and useful.

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