Critiquing Time-of-Use pricing in Ontario

Abstract

Since 2006, with the progressive deployment of Advanced Metering Infrastructure, jurisdictions in the Canadian province of Ontario have been increasingly using Time-Of-Use (TOU) pricing with the objective of reducing the mean peak-to-average load ratio and thus excess generation capacity. We analyse the hourly aggregate load data to study whether the choice of TOU parameters (i.e., number of seasons, season start and end times, and choice of peak and off-peak times) adequately reflects the aggregate load, and to study whether TOU pricing has actually resulted in a decrease in the mean peak-to-average ratio. We find that since the introduction of TOU pricing, not only has the mean peak-to-average load ratio actually increased but also that the currently implemented TOU parameters are far from optimal. Based on our findings, we make concrete recommendations to improve the TOU pricing scheme in Ontario.