My local utility just mailed me a notice informing me that they’ve installed a new smart meter at my home that will start monitoring and charging me for my electricity depending upon time of use.

The first thing I noticed about smart (i.e. off-peak) prices was how expensive dumb (i.e. peak) prices were. At 9.3 cents per kilowatt hour, power ain’t cheap anymore on the grid Sir Adam Beck built from Niagara Falls.

Sure, if I wanted to do my laundry, run the dishwasher and charge my electric car (if I had one) at night, I could get all the juice I wanted at the very reasonable price of 4.4 cents per kilowatt hour. But I might just want to sleep and leave the laundry and dishes for another day and take the bus to work in the morning.

Toronto Hydro’s new smart-pricing initiative is married to Ontario’s new Green Energy Act, which sanctions increased reliance on renewable energy. After gagging on the cost estimates for a couple more reactors, the province backed away from nuclear. And it’s vowing to close down North America’s single largest source of CO2 emissions, the Nanticoke coal plant, within the next four years (mind you, the same Ontario government has promised this before).

Tomorrow’s power will come from renewables via a $7 billion deal with Samsung to install wind turbines in the Great Lakes, and to provide solar energy as well.

Many will applaud the addition of this clean and renewable source of power to the grid. Fewer will applaud the 19-cent-per-kilowatt-hour price tag that’ll come along with it.

As they say in stock brokerage, find a strong enough wind, and even pigs can fly. Pay 19 cents per kilowatt hour for power, and you can let the wind turn on the lights. But at that price, how long will you leave them on?

The larger the contribution wind power makes to tomorrow’s grid, the less power you will be able to afford to draw from it—the same way triple-digit oil prices, which will pull tomorrow’s oil supply out of Alberta’s tar sands, will translate into pump prices that’ll force millions of drivers right off the road.

It’s not how many megawatts of additional power new sources like wind add to the grid that counts. Rather, it’s the amount of power demand that a 19-cent–per- kilowatt-hour price will kill that’ll have a far greater effect.

In the end, Ontario’s implicit strategy of future price rationing may be the best energy policy of them all. If power prices keep rising, demand will peak, and maybe then we won’t need to build any new power plants in the first place.

As for my new smart meter, what bears monitoring is how its benchmarks will change. With wind turbines taking over from coal plants, tomorrow’s smart power prices will soon cost more than today’s dumb ones.

  • vegiegrower

    So where's the rest of the blog Jeff?Did I stumble on this half way by accident right at the beginning?Your book was interesting but hardly definitive.A LOT of people are running around like chicken little crying the sky is falling,the end is coming.Maybe. But to paraphrase Gwynne Dyer the end has always been just around the corner. Price rationing as you call it is part of the answer but a bigger issue is rationalization of pricing.First determine real cost of development,production, distribution and marketing then do an equivalent process for the cost of human and environmental impact,add them and put on a reasonable profit margin.Secondly stop camouflaging prices with subsidies,development incentives,regional initiatives and supports,industry supports,job supports,combined “P3″ developments of all types,tax breaks and supports,and on and on.In my industry local development of vegetable production is held back by people being shielded from the true cost of California vegetables landed into western canada by US federal grower export subsidies,hidden illegal labor subsidies(illegals are ,wink,wink,not permitted in the US),farm price support subsidies,fuel cost subsidies,interest rate subsidies,trucking subsidies,free highway usage subsidies,and on and on.We have to compete with all that while paying higher costs for power (as an example) than large users do because we use less. Progress in avoiding collapse/the end of the life we want may depend more on right pricing encouraging innovation,conservation,substitution than continuing this path governments have us on of insulating us from reality.Smart meters,real pricing,usage reduction,subsidy elimination,smart grid concepts,efficiency increases and the technological innovation stirred by them may create a new reality far better than the doom sayers suggest

  • vegiegrower

    Just an addendum to my thoughts. Price is the prime motivator.If you want food,shelter and an enriched lifestyle?Accept change.Drive change.It doesn't matter what all you guys out there want-change is coming,however;we, as individuals and as a society,do not have to lay back and get run over.

  • laurenthorvath

    Bonjour Jeff,
    I'm surprised with the number you mentioned: 4,4 or 9,3 cents per kWh is insane and not sustainable. I leave in Switzerland. Electricity price is 21 cents per kilowatt hour. Price is approximately the same all over Europe (15 – 25 cents).
    No wonder why US and Canada are at the top of electric consumption. When you give away free stuff, people don't respect it and tend to waist it.

  • Ivan

    As a reader from Sweden I am also somewhat surprised about the apparently low power prices. We pay about 0.15 C$ per kWh whereof a significant portion is energy tax. This provides a mix of hydro, nuclear and some renewable with very handsome profits to the generators. Our houses are built with thick insulation and triple glazed windows.

    On the other hand, by replacing your conventional 60W bulbs with 6W LED you cut down usage 90%, I am sure similar savings can be achieved in many other areas.
    Although a tough financial situation will hinder large investments, I am sure higher energy prices will stimulate certain low/medium cost energy use improvements in North America. And I think many of these materials are manufactured in country, e.g. insulation/rock wool.

  • Rojelio

    So what's your point? Do you advocate using more renewables or not?

  • Bryan Frazer

    Like the movies Flow, The age of stupid etc etc your book scared the hell out of me. But I am always left with the feeling my contribution to reducing energy use will simply be consumed by the Hummer/jetski/ etc folk who already own 90% of everything and would build, well, ski resorts in the desert – damn that HAS been done! I would have liked graphs and tables to see how oil depletion/price/inflation etc fit together. But the visuals would not have changed the impact I guess just scared me more. Thanks for your great effort.

  • Twyla Dell, Ph.D.

    Hi, Jeff, I admire your work. I'm on your side. I want to ask you about a quote in Christopher Steiner's work $20 Per Gallon from you: Rubin says gasoline will likely cost $7 a gallon by 2010. As a result, he says, “Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America's highways in history. By 2012, there should be some 10 million fewer vehicles on American roadways than there are today–a decline that dwarfs all previous adjustments including those during the two OPEC oil shocks.”

    I know prophecies are always difficult. Can you tell me if 1) you think this is still going to happen in 2010 (It's only February) and 2) on what factors you base your forecasts? At least this one? And if not this year at $7 then when as a revised estimate?

    Thanks so much. I'm researching near-term forecasts and would like to include your material in my survey.

    Best regards, Twyla Dell, Ph.D.

  • Smilin Jack

    I've been a conservationist all of my life.

    The ultimate conclusion that all of the environmental 'limits to growth' arguments, predictions and projections lead me is that there are simply too many of us. If 50% of us offed ourselves tomorrow, what a wonderful contribution we would make to the sustainability of life on this planet. We are the blight that soils our world. Anything less are just half measures and/or excuses to impinge on my freedom and my wallet.

    Now, don't get me wrong, I don't accept that conclusion but that is where the thought process takes me. It is IMO, the premise on which environmental activism is built and I reject it.

    I have no right to consume energy as 'I' responsibly determine? Apparently not. The government wants to decide that for me. If I don't comply voluntarily through the re-education being applied, then they will impoverish me by imposing taxation to alter my behavior. And if I still resist, the green police will go through my trash, inspect my light sockets for incandescents and tell me what and how much I may eat. How long will it be before I'm summoned before a government board to explain why my daily electrical consumption is 5% over what is deemed' acceptable'?

    I drawn the line. No more. I have the right to live responsibly, as I choose. I am free and I will not relinquish that freedom without a fight.

    If the government wants to save energy or carbon emissions or the planet, why not turn the grid on for only 2 hours a day? There's an idea.

    Let's have an international conference to agree to implement this idea. The Bozo Accords for Sustainability 2010. Yah, that's it. We'll encourage volunteers to off themselves on say, September 17 and we'll make it an annual event. No rock wool required.

    And of course we should lead by example. So why not just shut the grid down completely? How dare we soil the planet for even 2 hours a day. Imagine how many tons of carbon emissions we'd save and just think of all the oil we could leave in the ground if we tore up the roads and highways.

    We could then return to the pastoral village life of an idyllic and simpler time when peasants toiled shoulder to shoulder in the fields with their bare hands.

    Count me out.

    End of rant.

  • Patti

    Hi Jeff
    I'm head of a nonprofit volunteer-driven environmental group in Caledon, just northwest of Toronto. Our speakers series is very popular (and our speakers are normally at no charge). HOwever, we'd love to have you come out and talk about your book and may be able to get a sponsor so we can pay a speakers fee. The last time we did this arrangement the author changed us a reasonably affordable fee and sold all 3 boxes of his books that he brought with him. Is this something you could consider?

  • Ed Lypchuk

    You may be interested in my write-up on this matter, earlier this month… See below.


    Thanks to the M'Guinty government, I have made the decision to become a senior vampire … well, at least for five days of the week! Let me explain.

    Hydro One has installed a so-called smart meter in our home and the word is that they are going to start charging for electricity based on time-of-day usage. A great efficiency measure, they say, provided we use their electricity at off-peak hours. Off-peak for whom, you may ask? Well, let's see.

    According to their schedule, the pricing will be in three categories for the “winter” period from November 1st to April 1st: During weekdays, the cost will be 9.3 cents per kWh from 7 a.m. to 11 a.m. and 5 p.m. to 9 p.m.; eight cents from 11 a.m. to 5 p.m.; and then, 4.4 cents from 9 p.m. to 7 a.m. on weekdays and all day on weekends.

    Now, this may not sound too onerous if one assumes that we all work outside the home during weekdays and turn the heat down, etc., upon sending any kids off to school and leaving for the day. And during this period, some pundits say, other than a few appliances that have to be left on continuously, like refrigerators and freezers, there will be minimum power usage from the likes of stoves, hot water heaters, lighting, computers, and related appliances and gadgetry. Hey, the major consumption for the latter will be at work, don't you know! And guess what? There will be a big bonus on the weekend, once we are all at home … only 4.4 cents for whole day!

    But wait … lest the celebrations get out of hand for this ingenious scheme. Some questions are definitely in order. Is the government demographically illiterate? Have those in charge not heard there is a rapidly increasing number of people working from their homes, especially in today's turbulent economic times? Also, hasn't anyone told them that the nation is getting older as a whole, that seniors are living longer, are more active and staying in their homes much longer than ever before?

    One would think it should be obvious to our political masters that those eight cents from 11 a.m. to 5 p.m. will be a real killer for this very large stay-at-home population, especially when coupled with the 9.3 cents for the morning and evening hours. But, as the smart meters get smarter, all we will probably get are reminders on our Hydro bills telling us the eight cents is equivalent to punishment for having the audacity of, say, cooking a weekday lunch on our own, or turning up the heat in mid-afternoon during a recent cold spell. And, no doubt, there will also be a reminder of how much we could have saved by just waiting until the weekend!

    But, there is even more … come July 1st, the Ontario Harmonized Sales Tax (HST) will be upon us. This eight percent tax will be added to a host of items, previously exempt, including all forms of energy. A double whammy for all, and especially for those who don't fit the nine-to-five working stereotype. It will be like a tax upon a tax for being home alone!

    Now, my wife and I have been thinking about what we should do about this blatant discrimination. One option is to turn everything way down during the day and go to the mall. That is no solution. We may be in our seventies, but there are too many productive things that we like doing at home. So, I have decided to become a weekday vampire! Yes, sleep during the day, work at night, and party all weekend … that will be my motto! My wife, an artist, has not made a firm commitment as of yet.

    Now, to calm any fears, I plan to be a gentle vampire and not of the blood sucking variety. The government has already occupied that space with its double whammy.

    Ed Lypchuk

  • PlantedWetLife

    Interesting that Samsung also just won a 20-40 billion dolar nuclear energy deal with the United Arab Emirates (endorsed by US)

  • GreyBrother

    Hi Jeff

    I think your point about renewables causing higher electricity prices and lower demand is a good one.

    I'd be interested to see how your smart meter works out. I installed an energy monitor in my house in the UK about a year ago and this has drastically affected my attitude to electricity use. My first reaction was complete horror at the amount of power sucked by incandescent lightbulbs, which have now all been replaced.

    The effect has been enormous. The average UK electricity bill is £445 (Can$725 ). Mine has dropped to £276 (Can$449). For a family of four this is an acceptable saving and there's more to come as I continue to increase efficiency.

    I was inspired by David MacKay's book which is available free at:

    I'm also a big fan of your book, which sets out the economic scenario of triple digit oil without the hysteria of less financially literate commentators.

    Keep up the good work!

  • vegiegrower

    The point is votes for what to do are close to irrelevant.Agreement is never total,opposition always exists,conspiracy theories abound,it barely matters what any of us want.To set the parameters that will result in the most efficient change establish tax guidelines and government policy through pricing of societal supports-ie roads,power,training,etc,etc that encourage real pricing (production,delivery,marketing,disposal and profit costs) and then stan back and let millions of consumers bitch and curse while they work out the best path for them.Perhaps too Anne Randish to ever be realized but do you really think world wide binding decision making at the national and international level will ever occur?

  • R4-DSTT

    The average UK electricity bill is £445 (Can$725 ). Mine has dropped to £276 (Can$449).

    Wow. That's too high.
    Wait, you mean one year , right ?

  • Steve

    The meme that nuclear is so expensive that wind is a better alternative is false. Even with the Ontario case quoted here, the facts don't support that argument. I might go so far as include words like misinformation, lies, propaganda… So, I'm going to vent a bit here.

    The $26B Ontario nuclear deal was reported in The Toronto Star, for example, as if to imply that was the cost of the reactors. That is NOT TRUE. That cost is the SIXTY YEAR levelized cost, plus balance of plant, not the cost of the reactors alone. The sixty year cost includes all fuel, maintenance and decommissioning. So, pointing to that number and saying “OOOOh, look how expensive nuclear is” is utterly dishonest without putting the number in proper context.

    The levelized cost per kWh is 5-6 cents.

    To compare like things, lets look at some facts for context. The recently completed Wolfe Island wind project in eastern Ontario involves 86 turbines of 200MW nameplate capacity for $478M to build. The capacity factor of that site is running around 23%. Lets be generous and call it 25% (and it is a good site on Lake Ontario). That means Wolfe Island is going to produce on average only 50MW. For $478M. That means a mean output of .581MW/turbine, and a build cost of $9.56M/continuous MW delivered. This means to provide the equivalent of 2400MW of juice at 90% capacity factor, i.e. a steady 2160MW, to match the nuclear plants, you would need approx. 3700 turbines costing $20.6B. That is to build. Now you have to maintain them for 60 years. From the Danish Wind Industry Association, the rule-of-thumb for maintenance is up to 2.0% per year of capital cost. That's $400M/year to maintain 3700 turbines. Thats another $24B for 60 years. Now, what about all the grid tie-in infrastructure for 3700 distributed turbines (FORTY-THREE Wolfe Islands)? I don't know, but that won't be cheap, possibly itself running in the billions. To keep the grid stable when the wind stops you'll need backup. How much does that cost to build / maintain? So, our total cost for a wind project to deliver the same amount of ENERGY over the same period of time would cost something close to double the supposedly “too expensive” nuclear project.

    Wind cost to the consumer: 19 cents per kWh. Hmmmm.

    Wind is also expensive in terms of material and construction resources. It takes 5-10 times more “stuff” (concrete and steel) per mean MW delivered than nuclear. That all has carbon costs. So, what is the environmental footprint of 3700 turbines vs. a couple of extra reactors? Not only is the cost going to be nearly double, but the net life-cycle environmental cost will be more than the nuclear option that delivers the same amount of energy over the same period of time.

    One more thing: Ontario's peak usage is ~25,000MW. That would be an order of magnitude bigger problem. If wind had to do it alone: 37000 turbines on 430 Wolfe Islands? The province would have to be literally paved with wind turbines. Environmental impact… off the charts! Scale is a big problem.

    In Asia, nuclear builds have been ongoing: on time and on budget, and costing a lot less per MW than this supposedly horrific Ontario number. What of the future? There is a movement now toward factory built / mass produced modular “cartridge” mini nuclear reactors (0.025-0.10GW) with fuel cycles ranging from 5 to 30 years and intrinsic passive safety, with some designs being “walk-away safe”. These reactors are to be shipped whole to the construction site and dropped into place with underground siting. This approach promises to turn the “too expensive”, and “takes too long to build”, “too much uncertainty / risk” arguments completely upside-down. Nuclear in such a form is completely scalable. It can be engineered to be inexpensive, so long as you keep 5-10 year permitting processes away and don't try to build them with lawyers. With energy density FIFTY MILLION TIMES greater than carbon (on atom-to-atom basis), the environmental impact per kWh of energy produced including material to be mined and waste to be dealt with scale accordingly, and is the smallest possible by many orders of magnitude of the nearest alternative as a result- much like going from vacuum tubes to micro-processors. That is an immutable fact borne of the physics and that is why many leading environmentalists are backing nuclear power, especially in new forms, not the technology of 3-4 decades ago (see James Hansen, James Lovelock, Stewart Brand for a start).

    Wind power and other renewables are very expensive diversions that won't scale to the extent of meeting the ultimate goal of ridding the world of burning fossil fuels. As a result, we should be getting our heads around how to do nuclear better, faster, cheaper, not how to get rid of it. Its the only practical, scalable, emissions free, and environmentally low-impact option we have to do the job of GETTING RID OF fossil fuels between now and 2050. All the rest will be, ultimately, window dressing, fiddling around the edges or dangerous delusions because the size of the problem is just so incredibly big, not just here but in places like China and India.

    If Ontario is smart, it will sieze this opportunity and lead in next generation nuclear tech rather than be a victim of green groupthink and orthodoxy because clean, intrinsically safe, modular nuclear that can be mass produced is the only thing that has the power to save the world from coal, oil and gas. This will be to the 21st century what rail was to the 19th century, or oil to the 20th century. It would be unwise to ignore something with a 50,000,000:1 potential advantage.

  • herbfeischl

    N,A. will have to rethink energy options, perhaps use renew and gas only for heating, more nat.gas + e. for transport[Pickens plan] and so cut out all not N.A. produced Oil;this will also reduce the $ weakness and solve a lot of tension around oil producing countrys.
    But who wants a win-win?

  • herbfeischl

    N,A. will have to rethink energy options, perhaps use renew and gas only for heating, more nat.gas + e. for transport[Pickens plan] and so cut out all not N.A. produced Oil;this will also reduce the $ weakness and solve a lot of tension around oil producing countrys.
    But who wants a win-win?