Households in Ontario have 3 electricity bill rate plan options to choose from:
Time-of-Use (TOU) rates (the default rate plan that you are probably on now) depend on when you use your electricity. There are 3 rates based on the time of day the electricity is used: off-peak, mid-peak and on-peak. The off-peak rate is the cheapest and and charged overnight and weekends, when demand for electricity is lowest. The on-peak rate is the most expensive and is charged in the afternoon when there is the highest demand for electricity at the same time (many are cooking, running furnaces/AC and doing laundry). The intent of TOU rates is to incentivize consumers shift their usage to evenings, weekends or overnight or reducing overall usage. They were first made available in 2009, and became the default by the end of 2012.
Tiered rates depend on how much electricity you use. The rate is cheaper than TOU’s On-peak and Mid-peak rate for usage up to 1000 kWh per month in the winter (November 1 to April 30) and less than 600 kWh in the summer (May 1 to October 31). Monthly usage above those thresholds is charged at a rate that is a little more than the Mid-peak rate. This rate option was first made available November 1, 2020.
Like TOU, Ultra-Low Overnight (ULO) rates depend on when you use electricity. The difference is the addition of a 4th, very cheap rate during the night while charging a much higher on-peak rate. The intent is to further incentivize consumers to shift their usage – particularly owners of electric vehicles to charge their cars overnight. It also opens up the possibility of using a smart thermostat to crank up the heat/AC overnight when electricity is cheaper and turn it down during the day. These rates were first made available May 1, 2023 and all local hydro companies offered them by November 1, 2023.
What rate plan is better?
The best plan for your household depends on your personal electricity use profile – specifically when and how much electricity you use.
In general, households that use less than 1000 kWh per month in the winter months and/or 600 kWh per month in the summer will see savings by switching to tiered rates and those with electric cars and possibly shift workers and those with electric heating can save by switching to the ULO rate, which the government estimates may save some customers $90 per year.
To find out which plan is better I put together this detailed bill calculator in Google Sheets to compare how much you would have paid based on your past electricity usage. You enter your actual hourly usage data and it compares the annual cost of the 3 different rate plans.
Note: The calculator is provided as-is and I do not guarantee its accuracy. I made it to provide a better estimate of savings than the official calculators do, not for replicating bill calculations down to the cent.
Based on my usage over the last 2 years, switching to tiered rates will save $50 per year. In addition, being on tiered rates means I no longer have to think about what time of day it is when I’m using electricity-intensive appliances such as the washer, dryer and dishwasher.
There is no guarantee that you will save money by switching, especially if your usage changes from one year to the next.
The OEB’s official comparison calculator only lets you enter 1 month at a time does not let you input your actual electricity usage and the Green Button data format export is a great feature, but the .XML file format it produces is not user friendly for the average consumer.
See: Current electricity rates for each rate plan
Who is eligible to switch to tiered or ULO rates?
If you are a residential or small business customer, have a smart meter and are billed on TOU or Tiered prices, you can switch your rate plan at any time. You can switch back or to another rate plan at any time, as many times as you want.
The Ontario Electricity Rebate and Ontario Electricity Support Program (OESP) are still applied to your bill regardless of what rate plan you choose.
How to switch between Time-of-Use, Tiered, and Ultra-Low Overnight rates
Some hydro companies such as Elexicon provide online forms on their website that makes switching very easy:
For those that don’t, as of October 13, 2020, hydro companies in Ontario must make an Election Form available on their website, and to any customer that requests it and completed forms must be accepted by email or mail at a minimum. Here’s an example Election Form:
The switch takes effect at the start of the next billing period.
What is the purpose of these rate plans?
The goal of the time-based rate plans is to incentivize customers to shift their electricity usage from the middle of the day to evenings and weekends for two main reasons:
1. Reduce maximum capacity requirements
Hydro utilities have to design their infrastructure to handle the absolute maximum demand for electricity (the “peak”) that customers draw from it at a point in time, even if that level is only hit once or twice a year. This means that the equipment used is bigger and more expensive than it needs to be during the rest of the year. By reducing their peak, utilities can spend less on costly infrastructure.
The government estimates that the addition of ULO rates has the potential to save $5.7 million per year in capacity costs. These savings will in turn help to reduce costs for all Ontario electricity customers. Electricity rates are set every year on November 1st by the OEB based on on a forecast of how much it will cost to supply customers with the electricity they are expected to use over the next 12 months, so when costs decrease, so do rates.
2. Use less fossil fuels and more clean energy
Shifting electricity use from on-peak to the off-peak periods reduces greenhouse gas emissions.
More fossil fuels are used to generate electricity during on-peak periods to provide for high and excess demand, while overnight Ontario has excess clean, zero-emissions energy, generated by nuclear, hydro and wind power.
Over to you
If you have any feedback about the calculator, please leave a comment below and let me know so I can improve it. I’d like to make it easier to input usage data that comes in different formats.
I’m interested to know – how much would/did you save by switching to another rate plan? Which plan works best for you?
