Public Power - May 2008 - (Page 19)

the year 2010, time-of-use pricing will not be a choice for the 4 million electricity customers in the province of Ontario, Canada. Time-of-use prices will be required if customers want to continue to be served under the province’s regulated price plan. On-peak electric prices have been set at three times off-peak prices and mid-peak prices will be twice as much as off-peak prices. There is also a chance that during periods when demand is especially high, designated as critical peak events, prices will be about 10 times off-peak prices. “Ontario is at a pivotal stage of the smart meter initiative, as electricity distributors work to prepare for the rollout of time-ofuse pricing,” said Charlie Macaluso, president and CEO of the Electricity Distributors Association of Ontario. “Having the ability to change people’s consumption behavior by allowing them to react to price signals is an important aspect of how smart meters will contribute to furthering a culture of conservation among Ontarians,” he said. Mary-Jo Corkum, the vice president at Milton Hydro, said she supports the vision for Ontario’s electricity industry under which residential and small business consumers pay the true cost of electricity over time, but within a stable and predictable price framework. Paul Ferguson, president of Newmarket Hydro and a proponent of mandatory time-of-use pricing, believes it is the right thing to do. “It provides the right price signals to customers and will attract new technologies to the business,” he said. There are approximately 4.5 million electricity customers in Ontario and the province’s goal is to install 4 million smart meters that can be used for time-of-use pricing by 2010. At the end of 2007, installation was running ahead of schedule with over 1 million meters installed at 13 of the 85 local distribution utilities (primarily municipally owned) regulated by the Ontario Energy Board. “A customer’s ability to monitor usage and respond to price signals in peak demand periods is a relatively new concept for Ontarians,” Macaluso said. “Tens of thousands of residential electricity consumers will make the switch to a new pricing regime in 2008 and Ontario’s distributors are leading the way to make this happen. At full implewww.APPAnet.org By mentation, over 4 million electricity consumers will be on time-of-use pricing.” Milton Hydro, a municipal distribution utility in the fast-growing town of Milton, Ontario, already requires time-of-use pricing for all of its low volume regulated price plan customers who have smart meters. Since 2003, all new homes are required to have smart meters. Last November, the utility began installing smart meters at existing homes and small commercial (less than 50 kilowatts demand) sites. Those installations are expected to be completed before the end of 2008. The current plan for pricing electricity is the result of a series of government measures in recent years to arrive at stable and efficient electricity prices that will benefit consumers. Along the way there were missteps, but the government was quick to acknowledge them and take corrective action. Mandatory time-of-use pricing is the result of a 2004 law that required the Ontario Energy Board—which sets electricity prices for low volume consumers—to develop a regulated price plan that is forward-looking, stable, cost-effective and that blends market, regulated and contract prices. Ontario’s experiment with so-called competitive markets did not work out as expected. Markets were opened in May 2002 and residential customers had to purchase their electricity on a contract basis from independent suppliers, referred to as “retailers,” or from the spot market. Prices were high and volatile and customers did not learn until after the fact what price they had to pay for electricity they had already consumed because they all still had conventional meters. Smart meters will contribute to a culture of conservation in Ontario, said Charlie Macaluso, president and CEO of the Electricity Distributors Association of Ontario. In November 2002, the provincial government closed the market and fixed rates at 4.3 cents per kWh for “low-volume customers,” those using less than 250,000 kWh of electricity per year. The fixed price, however, resulted in significant taxpayer liabilities to pay the difference when the commodity costs (spot market prices) exceeded the fixed price, and the government then instituted an interim two-tier price plan with a threshold, based on levels of consumption, to provide consumers with an incentive to conserve. In early 2004 a government task force “recommended a future electricity market structure based on a hybrid market comprised of market-based, regulated and cost-based supply, with consumer prices to be established accordingly.” Then, in late 2004, Ontario’s energy minister announced that authority to set electricity commodity prices would be transferred to the Ontario Energy Board. The policy direction from the minister was to develop a rate plan to ensure that residential and Time of Use Rates and Periods Off-Peak Periods (3.0 cents per kWh): • Winter and summer weekdays – 10 p.m. to midnight and midnight to 7 a.m. • Winter and summer weekends and holidays – 24 hours (all day) Mid-Peak Periods (7.0 cents per kWh): • Winter weekdays – 11 a.m. to 5 p.m. and 8 p.m. to 10 p.m. • Summer weekdays – 7 a.m. to 11 a.m. and 5 p.m. to 10 p.m. On-Peaks Periods (8.7 cents per kWh): • Winter weekdays – 7 a.m. to 11 a.m. and 5 p.m. to 8 p.m. • Summer weekdays – 11 a.m. to 5 p.m. MAY 2008 19 http://www.APPAnet.org

Table of Contents Feed for the Digital Edition of Public Power - May 2008

Public Power - May 2008 Contents Perspective LEEDing the Way Ontario Moves to Mandatory Time-of-Use Pricing Journey to the Smart Grid Right-Sizing Transformers Energy Audits for Large Industries Economic Development Community Broadband Reliability Hometown Connections Parting Shot

Public Power - May 2008

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