Ultra-low overnight (ULO) electricity rates will make a patchy debut in Ontario next week with seven of the province’s 60 local distribution companies (LDCs) ready to offer the new pricing scheme to residential and small business consumers on the regulated price plan (RPP). The release of the rate schedule earlier this month makes it clear that most condominium corporations and rental housing landlords will need to make capital investments in energy storage alongside electric vehicle (EV) charging infrastructure to realize the benefits.

The ULO rate has been set at 2.4 cents per kilowatt-hour (kWh) from 11 p.m. to 7 a.m., which is 67.5 per cent lower than the off-peak rate of 7.4 cents/kWh that’s in place from 7 p.m. to 7 a.m. through the RPP’s standard time-of-use pricing. However, that comes with a counterbalancing on-peak rate of 24 cents/kWh in the hours between 4 and 9 p.m., and a mid-peak rate of 10.2 cents/kWh in place 7 a.m. to 4 p.m. and 9 p.m. to 11 p.m.

“The 10-to-1 ratio, on-peak to off-peak, is quite extreme,” observes Peter Love, an energy consultant who served as Ontario’s chief energy conservation officer from 2005 to 2009. “This rate is meant for people with EVs. That’s clearly what the intention is. They are primarily the people for whom this makes sense.”

“There will be cases where ULO rates might benefit EV drivers in multifamily buildings, but would result in higher costs for the entire common area or bulk account unless other strategies are employed to shift building consumption to the overnight period,” advises Rob Detta Colli, energy and sustainability manager with Crossbridge Condominium Services. “However, having ULO opens the door to consider things like pre-cooling and/or energy storage strategies. For example, that could be something like making ice, using cheaper overnight rates, then melting it to offset chiller use during the heat of the day.”

In announcing the ULO rate schedule, the Ontario government presented it as an opportunity for hydro customers who work evening shifts, heat their homes with electricity or have an EV charger tied to their account to potentially save about $90 per year. Perhaps more importantly, it is intended to have broader benefits for the entire electricity system, shifting demand to a period when there is typically surplus power capacity and easing peak demand at other periods of the day.

In ULO rate design recommendations submitted to the Minister of Energy in the spring of 2022, the Ontario Energy Board projected that a relatively modest enrollment of 23,000 customers, including 9,800 EV owners, could cut average annual peak demand by about 3 megawatts (MW). A more vigorous uptake of 318,000 consumers, including 32,000 EV owners, was projected to deliver about 40 MW of average annual peak demand reduction.

Shoring up the erosion of time-of-use pricing

Love has long been an advocate for greater differentiation in on-peak and off-peak prices, maintaining that 4-to-1 or 5-to-1 is a more effective ratio to promote energy-saving behaviour. Instead, the on-peak and off-peak rates have moved closer together, going from an approximate 3-to-1 ratio when time-of-use was first introduced in 2006 to a 2-to-1 ratio since 2009. As well, the Ontario Energy Board has begun to grant approval for LDCs to charge transmission and distribution fees at a fixed rate in place of heretofore variable rates tied to thresholds of consumption.

“That is disappointing. No matter how good you are at conservation or how bad you are, you’re going to pay the same distribution rate. It’s not a big impact, but it does dampen the impact of time-of-use,” Love says. “The new ultra-low overnight rate is the right move. We have a lot of off-peak power and it has always been the ideal that electric vehicles would charge at night when the system is at a low peak. It could also signal to people that maybe this would be a great time to buy an EV because this rate is very attractive.”

He cites the work of energy analyst Brian Lapp, who has calculated the annual cost to power his EV at the ULO rate should be about $97 versus the approximate $2,200 expenditure needed to fuel a gas-powered vehicle. ULO adopters could also see further benefits with adjustments to other aspects of their electricity consumption.

“It is an opportunity for people with air-conditioning heat pumps to use their programmable thermostats to keep the heating or cooling very low during the day when they are not at home and then, in the summer, really cool it down at night,” Love recommends.

Uptake could be straightforward in scenarios where apartment dwellers have exclusive use of a specified charger in a sub-metered building. Through their sub-meterer, they could opt in to the ULO rate for both their suite and the charger, thus shouldering any problematic on-peak costs separate from the building’s common area account.

“A sub-meter on an EV charger in the parking garage could be bound to one suite and that owner or tenant would get a bill (from the sub-meterer) with two meters shown on it,” explains Brian Aitken, senior manager, commercial accounts, with the meter provider, QMC Metering Solutions.

Meanwhile, investments needed to effectively benefit from the ULO rate in common areas and elements would generally also reduce greenhouse gas (GHG) emissions. That may align with the corporate mandates of some multifamily landlords or the directions that condo boards are receiving from their members.

Among possible complications, energy management specialists caution that energy storage systems could require a level of operational expertise that on-site building operators or superintendents may not have. “It’s a big investment so there would also be concern about a switch in political direction and the rules changing again,” adds Scott Rouse, managing partner of the consulting firm, Energy@Work.

For now, a lot of the province is still waiting for the ULO rates to become available since LDCs have until November 1 to get their programs in place. The keener cohort that is ready to roll out the new pricing option on May 1 includes: Toronto Hydro; London Hydro; Centre Wellington Hydro; Hearst Power; Renfrew Hydro; Wasaga Distribution; and Sioux Lookout Hydro.

Barbara Carss is editor-in-chief of Canadian Property Management.