Most businesses in Ontario today are on time of use also known as smart meter pricing in Ontario. This program is intended to help conserve energy by charging a premium (more than 2x) the base rate during peak day time use vs. night and weekend consumption. Based on the typical business offices hours of operation of 9am – 5pm, this means a business open weekdays, during day time hours will use the majority of their electricity at on-peak and mid-peak rates. Here is a breakdown of how time of use is calculated (and charged).
Reasons for Higher and Lower Prices
Time-of-use electricity prices are like many cell phone rates, which are cheapest when demand is lowest: during the evenings, on weekends and on holidays.
Likewise, electricity rates in Ontario are cheapest when demand is low. That’s because the province is using a steady stream of its cheapest electricity. This power comes from low-cost sources like nuclear generators and large hydroelectric stations.
As daytime begins, more people and businesses turn on their lights, appliances and devices. At some point, the province will exhaust its supply of cheap power. It then turns to more expensive sources, like natural gas-powered plants-and renewables like wind turbines.
Interesting to note that large enterprises businesses are exempt from this time of use policy and are eligible for a flat monthly rate. Most small businesses are unaware that they too have options through group rates through brokers available to them that allows them to also receive wholesale rates and pay a blended rate 24 hours a day, and avoid the peak rates they are currently being charged by default.
Two PEAK Seasons: Summer & Winter
People use electricity differently depending on the season. The Ontario Energy Board, therefore, has established two sets of peak prices. These prices only apply to weekdays. Electricity is at its cheapest price all day on weekends and holidays throughout the year, which is good for home users, but the lower rates do not benefit small dental practices, as most are closed on holidays and weekends.
Smart Meters: The Key to Time-of-use Pricing
Time-of-use requires one vital piece of equipment: Smart Meters tell your utility exactly how much electricity you are using and when you use it. Old hydro meters could only measure how much power you used. Almost every household and small business in Ontario now has a smart meter. With a broker or electricity marketer you can not only chose other rate types that remove the premium usage rates of time of use meters, you have the option to lessen the volatility of the market for the duration of a contract. If you do nothing you will by default be subscribed on the regulated payment plan through your local utility, who is unable to charge you anything different than the time of use pricing which is an approximation of the actual market cost of electricity (which actually changes every 5 minutes in ontario). Therefore, when electricity rates rise and fall so will your energy bill.
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