Debate over time-of-use electricity rates and impact on price of electricity in Ontario

Ontario’s Regulated Price Plan (RPP)-time-of-use electricity rates have garnered criticism for their impact on the price of electricity in the province. Energy savings activists believe the three-price system is too confusing and doesn’t influence customer behaviour. Others argue that the rate structure has not led to reductions in peak demand and has penalized some clients, such as businesses that keep regular 9 to 5 hours.

The issue has come to the forefront in Ontario’s provincial election campaign, with the NDP suggesting the immediate elimination of RPP-time-of-use rates. In replacing time-of-use rates, the NDP suggests switching to a flat charge of kilowatts per hour, which the party says would reduce the price of electricity in Ontario by an average of 17%.

According to Ontario Energy Board data, rural Hydro One customers pay delivery costs that are significantly higher than urban customers, the NDP hydro report says. That is compounded by the fact that many customers paying higher delivery costs are the same customers without access to natural gas for heating, who are then forced to use expensive electric heat. The NDP pledges to change the system so rural and seasonal Hydro One distribution customers pay the same delivery costs as current Hydro One urban customers, as well as ensuring businesses pay delivery only for the power they use.

Still, Active Business Services are those who believe that setting peak, mid-peak and off-peak hours for electricity use is a good idea. “Let consumers know there is a difference between on and off peak drives behaviour to eliminate portions of energy consumption, perhaps more so than actually shifting the load,” says Andrew Pride, an engineer and energy management consultant, in an interview with Canadian Property Management.

However, Adam Krehm of O’Shanter Development notes that for his company, the largest electricity loads are at periods of peak demand. “Something like the electricity load in the elevator is very difficult to control. If everybody leaves to go to work around 8 a.m., you can’t shift that load,” explains Krehm. “But what you can do, when it’s time to replace them, is install the most energy-efficient system. That’s what we’ve been doing where we’ve had the opportunity.”

Active Business Services’ team of expert consultants works with companies on their energy requirements, looking for ways to maximize efficiency. Following a thorough research process, which includes the study of a business’s historical electricity consumption and load profile, ABS will produce an in-depth report on a company’s energy needs, including suggestions for change.

The aim is to develop and determine the most effective purchasing strategy that best mitigates risk to volatile market prices, particularly in Ontario, where, at least for now, many businesses are tied to the RPP-time-of-use system.

Author: Active Business Services

Active Business Services is an energy management firm that has dedicated the last ten years to providing Canadian commercial and industrial customers with natural gas and electricity supply and risk management solutions.

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