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DEMAND RESPONSE

Demand response is shifting or shaving of electricity use during peak demands in response to price signals or other criteria. By smoothing peaks in demand, consumers can both reduce their electricity costs and their environmental footprint.

Managing the way energy is used is a low-cost and environmentally responsible approach to maintaining a balance between supply and demand. Investments in shifting consumption to off-peak periods and reducing overall demand are more cost-effective than financing the construction of additional generation just to meet peaks in demand.

Demand response is starting to have a noticeable and positive impact on the provincial power system. During a heatwave during the summer of 2011, businesses and residential consumers provided 400 MW of demand response to help manage the peak in demand for electricity.

For some customers, demand response can entail joining formal demand response programs that require participants to reduce their energy use at critical times. For others, it is a matter of reducing energy use when prices are higher.

In Ontario, there are a number of opportunities and incentives for small and large electricity consumers to shift their electricity use as it makes financial and/or operational sense for them:

Demand Response Programs: Both large and small consumers can enrol in programs with specific criteria for when consumers will dial down their energy use and be compensated for it. These programs include peaksaver™ (available at select local utilities) for small businesses and homeowners, where a signal is sent to air conditioning units to power down when the power system is under strain.

Large facilities can enter into the Ontario Power Authority’s Demand Response Voluntary Program (DR1) or Contractual Program (DR3), which are available through local utilities or demand response aggregators.

Reserve Power: The IESO-administered wholesale market also offers some creative solutions for providing reserve power. In the wholesale market, generators receive payments to be on-call to provide reserve power. Larger industrial loads can bid directly in the real-time market and offer operating reserve (stand-by capacity online when resources are quickly needed to restore the balance of supply and demand).

Price response: When supplies of electricity are tight, the wholesale price is typically higher, providing a financial incentive for consumers to shift or reduce non-essential consumption.

Industrial and commercial users can respond to higher wholesale market prices by reducing their energy use when prices are higher. Those customers with an average peak demand over 5 MW can also reduce their Global Adjustment payments by reducing their energy use during the five highest demand peaks of the year. The wholesale market is also structured so that consumers can agree to cut consumption at pre-determined price levels.

Small electricity consumers (homes and small businesses) can also shift electricity consumption based on prices if they are paying Time-of-Use rates. To help consumers adapt to Time-of-Use rates and see how it can work to their advantage, there is 10 Smart Meter Lane, an interactive house where users input their appliance usage details, and see how much money can be saved by shifting electricity use from on- to mid- and off-peak periods. A similar tool, Time-of-Use Rates at Work is tailored for small businesses.

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