Co-Authors Stewart Fast (University of Ottawa) and Brendan Haley, (Carelton University)
The new fall session at Queen’s Park has seen the Opposition parties take aim at smart meters. By suggesting that seniors are being told to “do their laundry at 2 am in the morning” and connecting this to a general increase in hydro rates, the Opposition has found a rallying point. It is a strategy that taps not only into public frustration with rising energy prices, but also into a deep uncertainty with treating electricity as a commodity with variable prices that requires conservation. After all, smart-meters and time-of-use metering are a long way from capped electricity prices and even further away from predictions of that electricity will be “too cheap to meter” in the age of nuclear power.
In the midst of the political rhetoric, the technical and economic arguments for time-of-use metering, for which ‘smart’ meters are an essential tool, are worth reviewing. With time-of-use rates consumers can benefit from consuming power when it costs less. When there is less overall demand for power, electricity can be bought from the lowest cost generation facilities, be that hydro dams, wind turbines on a windy day, natural gas generators when gas prices are low or any other option.
By reducing electricity consumption at peak times, time-of-use pricing helps everyone in the province by enhancing system reliability, reducing pollution and decreasing the costs on the electricity system. The energy that Ontario buys during peak periods is very expensive (up to $1.60/kWh compared to $0.03/kWh during off-peak periods). It also tends to be very dirty – often coming from coal plants in the Midwest US whose emissions contribute to smog in southern Ontario. As it stands now, the equivalent output of a mid-sized coal-fired generating station must be available to meet the few moments of high energy demand in Ontario. Lower peak demand will also mean fewer moments of extreme electricity use and less overall stress on the grid. The summer blackout in 2003 occurred at exactly such a moment of peak consumption.
The real political issue is that hydro prices for consumers have increased in the last few years (4.3 ¢ / kWh in 2002 to 6.5 ¢ / kWh in 2010) and will continue to do so. Realistically, under all future energy scenarios, be it increasing use of renewables, or a reliance on nuclear, coal and natural gas, electricity generation costs are on the way up. The Government has admitted this and the Legislative Opposition has been clever to tie inevitable price hikes to the roll-out of smart-meters. In this way the larger social debate on appropriate energy sources and on minimizing disproportionate impacts on those that can least afford higher energy costs is sidestepped. Instead we are left pinning the problem on the new meters. A more fruitful debate would centre on helping consumers by developing energy poverty strategies, cutting bills through energy efficiency, and enabling consumers to more fully benefit from time-of-use pricing by installing smart/programmable energy and appliance systems in households and businesses.
Energy costs increases arise from decades of underinvestment in the grid and the need to replace unreliable nuclear and dirty coal plants in a world facing climate change. Smart-meters may be fated to be a central part of the political energy debate as we move closer to an election year. If so, we must not conflate rising energy prices with the smart-meter. To do so would forfeit an unfamiliar but promising gadget to a lackluster discussion on our shared energy future.