Revamp peak electricity prices: watchdog
Jan. 13, 2015
The difference in electricity prices between peak and off-peak times in Ontario is far too small to encourage people to conserve energy, the province's environment watchdog said Tuesday.
Environmental commissioner Gord Miller's conservation progress report echoed findings of the auditor general, who said last month that the narrow difference undermines time-of-use pricing as an incentive for ratepayers to shift to off-peak.
Both oversight officers have found that the majority of local electricity distribution utilities are missing targets for peak reduction and about half are expected to miss their target for reducing overall consumption.
Auditor general Bonnie Lysyk found last month that the Liberal government's $2-billion smart-meter program has so far spent double its projected cost and has not led to the government's electricity conservation goals being met. The energy minister has disputed Lysyk's numbers and has suggested her conclusions are premature.
Miller reviewed dozens of countries with time-of-use electricity pricing and found that for significant savings to be achieved, the peak price must be four or five times higher than the off-peak cost. In Ontario, the ratio is 1.8 to one.
"The differential is just too small to make a big difference," Miller said at a news conference.
Ontario Power Authority and Ontario Energy Board studies have shown a two to five per cent reduction in consumption during peak periods.
"I argue in the report, well, let's make it where it should be, four or five to one, and then we'll see conservation or reduction of peak of 10 per cent or so according to the international data," Miller said.
"Whether you're opposed to gas plants or opposed to wind turbines we build the new generation to handle the peak load. If we can reduce peak we don't have to build any new generation."
The Ontario Energy Board is reviewing price ratios, said a spokeswoman for the Ministry of Energy.
On the most optimistic reading of the province's conservation plan, Ontario may not need to build any new plants aside from nuclear refurbishments, Miller said.
In general, Miller's report praised the government's emphasis on conservation, but several factors held him back from an "unqualified endorsement," he said. For instance, the government eliminated interim electricity conservation targets and has said it plans to reduce gross demand for electricity by 16 per cent in 2032.
"Those (interim) milestones are really important if you're going to hold them accountable," Miller said. "Seventeen years is a very long time. It's at least three governments."