Save money with smart meters?

Zoomer | November 11th, 2010

Want to cut energy costs? When you use electricity may soon be as important as how much you use — especially if you live in Ontario or British Columbia. Smart meters are supposed to offer many benefits, including savings for consumers and energy providers.

How, exactly? Essentially, smart meters record your energy use throughout the day — at hourly intervals, for example — and send regular feedback to your energy provider. As with automated meter reading (AMR) meters, a hydro company employee no longer has to stop by to read your meter because the information is sent in real time. This data also helps energy companies determine demand in your area — thereby allowing for better planning — and alerts them to power outages without waiting for a phone call.

Smart meters also open up options for billing. Some companies have been testing pay-as-you-go pricing plans, while others like Ontario have set energy prices based on market demand during the day. Time-of-use (TOU) pricing is a classic example of supply and demand: if you want to use energy during times of high demand, you’re going to pay more for it. Ideally, TOU pricing will change consumers’ habits — the extra costs will encourage consumers to ease up on their consumption. A lighter load means less stress on energy resources, fewer blackouts and fewer power plants on standby to meet demand.

Sounds like a good idea? Smart meters have been met with their fair share of controversy. Critics question their cost and effectiveness — especially since many areas need to upgrade their aging energy infrastructure. Follow the news and you’ll see many contradictions about the savings: some reports say smart meters are a good thing for communities, while others suggest their failure to show sufficient return on investment. On the consumer side, some studies claim people conserved more energy and saved money as a result, while others say that it will take more than smart meters to get people to change their ways. In Canada, it’s too soon yet to say how smart meters will affect our habits and our budgets.

Furthermore, TOU pricing can lead to increased costs for people who don’t have any choice but to run electricity during the day — like shut-ins, stay-at-home parents and work-at-home employees.

Who has them?

If you’re in Ontario, you’ve already seen your first bill with the mandatory TOU pricing (not to mention the HST). What’s in store for the rest of the country?

British Columbia is next — it plans to implement smart meters across the province by the end of 2012. Unlike Ontario, the program offers some flexibility. For instance, consumers can choose to keep their previous pricing plan or opt for time-of-use. They can also choose to purchase add-ons like digital displays in the home to provide feedback on energy use.

Some provinces like Alberta already have an automatic metering system, but time-of-use or pay-as-you-go pricing could be part of their future plans. Many provinces are currently investigating smart meters and smart grids in addition to other technologies — like net meters for people who are producing their own electricity — and pilot projects are popping up across the country. (To find out what’s going on in your area, check with your local power company or your province’s energy board.)

Around the world, many countries are adopting the new technology too. In the future, smart meters will also monitor natural gas and water — especially in areas where these resources are expensive and scarce.

Saving throughout the day?

So can you save with TOU pricing — whether it’s your choice or not? Rates and policies will differ, but here’s a look at how things stand in Ontario*:

The old two-tiered Regulated Price Plan (RPP):

6.5 ¢/kW up to 600 kWh per month during the summer, up to 1000 kWh in the winter
7.5 ¢/kW after the threshold

The new time-of-use rates:

Off-peak periods: 5.3 ¢/kWh
Mid-peak periods: 8.0 ¢/kWh
Peak periods: 9.9 ¢/kWh

When do the rates apply? It depends on the time of year as well as time of day. Year round, weekends and holidays are always off-peak, as are the hours between 9:00 pm to 7:00 am.

During the “summer” (May to October), weekdays look like this:

Mid-peak: 7:00 am to 11:00 am
Peak: 11:00 am to 5:00 pm
Mid-peak: 5:00 pm to 9:00 pm

In the “winter” (November to April) the periods are reversed — likely because of shorter days.

Peak: 7:00 am to 11:00 am
Mid-peak: 11:00 am to 5:00 pm
Peak: 5:00 pm to 9:00 pm

(*Prices as of May 1, 2010. For the full break down on energy prices in Ontario, visit the Ontario Energy Board. Time-of-use pricing does not apply to delivery and regulatory charges or debt retirement charges.)

So will you save? If you’re a night owl or an early bird, TOU works in your favour. Run the dishwasher before bed and dry the laundry at 5:00 am and you’ll actually save money over the RPP — 1.3 ¢/kWh, in fact.

However, perform those same chores during peak periods and you’ll pay nearly double the off-peak rate — not to mention an extra 3.4 ¢/kWh over the RPP.

What about items that run 24/7, like appliances and the furnace? Expect to pay a little more overall: average out the rates throughout the day and you get 7.35-7.5 ¢/kWh, depending on the season. That’s slightly above the first tier of the RPP.

Money-saving tips

Confused by the math? The bottom line is that if you’re willing to shift as much of your energy consumption to off-peak periods as possible, you might be able to keep up or come out ahead with TOU pricing… But continue to consume during peak periods and you’ll find your bills will peak as well.

Here are some tips to make smart meters work in your favour:

– Give yourself visual cues. Post the rates and times in obvious places (like your fridge or dishwasher) to make you think twice.

– Keep a close eye on your bills. Compare your new charges to your past bills to see how your costs compare — and where you can improve.

Also, make sure the price is right. Some media sources note that smart meters aren’t always correct and many people saw their bills jump. Keep an eye on your rates and question anything that looks suspicious.

– Tweak your routine. Shift some of your usual activities to off-peak hours. You’ll pay less if you wait until after 9:00 pm to run the dishwasher or until the weekend to do the baking.

– Leave the oven off. We do most of our cooking during peak or mid-peak periods, so look for alternatives to turning on the oven. For instance, opt for a convection toaster oven to cook meals for one or two people, or poach fish on the stovetop.

– Set timers and reminders. Turn down your air conditioner or heater during peak periods, and set some appliances to run while you sleep. Programmable thermostats are just the beginning — as smart meter technology takes off, look for timers for other devices and appliances as well.

– Let the sunshine in — or not. Use your curtains and blinds to their best advantage. In the summer, keep them closed to keep out the heat during the day. In the winter, let the sun’s heat and light help you cut costs.

– Upgrade your home. A few improvements like increasing insulation, replacing old windows and sealing air leaks will help take the pressure off your furnace and air conditioner during expensive times. (See Get your home ready for winter for details.)

– Lock in your rate? Is now the time to enter into an energy contract? Energy companies sure think so, but do your research and give it some careful thought before you sign on. (And know how to get out if you change your mind — see Breaking the contract for details.)

In addition, any measures you can take to cut your energy consumption — like retiring old appliances and using energy efficient light bulbs — will help you save cash too. If you haven’t already done so, now is a great time to learn about all the things you can do to save energy. Many cities, provinces and energy companies have awareness campaigns and incentives (like energy rebates) to help out.

So will smart meters live up to their names? It’ll be a while before we get an answer to that question, but understanding what they are and how they work can help where it matters: your budget.

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