A new Ontario Energy Board report recommends a 2.5 cent per kWh overnight rate for customers that opt-in — 70 per cent lower than the current off-peak rate — as the province looks for ways to manage grid load from EVs

The Ontario Energy Board (OEB) today released a report outlining in detail its proposal for ultra-low overnight electricity rates at 2.5 cents per kWh after studying the issue for nearly six months.

The report is the OEB’s response to a request by Ontario’s minister of energy, Todd Smith, who asked the regulator in November 2021 to provide options for how to implement an ultra-low overnight rate plan.

“Introducing the ultra-low overnight electricity rate will help our efforts to make life more affordable for Ontario families by keeping costs down and saving them up to $90 per year while reducing EV charging costs and supporting the historic investments in our province’s rapidly expanding EV manufacturing sector,” said Smith in a press release.

The new rate structure would be optional for utility customers, presenting a third energy billing option — in addition to current time-of-use and tiered pricing structures — for Ontarians to select. The ultra-low overnight rate scenario could reduce system revenue between $56,000 and $653,000 per month in the first year, depending on the volume of enrolment, projects the report; at the same time, it could yield an overall savings of up to $5.7 million in the first year for electricity systems by reducing so-called “capacity cost” that would otherwise be spent to meet higher peak demand.

In the high-adoption scenario as much as 40MW of peak demand reduction could be achieved in the first year. A typical residential customer that opts-in could see a two per cent reduction in their monthly bill, while those with EVs who charge at home could realize savings as high as 5 per cent, or about $90 a year, under one scenario

The report advises there would be no seasonal changes to the rate structure, as there is with the existing model, and the specific purpose of the scheme is to “further incent demand-shifting away from peak periods to lower-demand periods.”

“These changes will enable further EV adoption and provide relief for consumers and small businesses while utilizing the full capacity of Ontario’s clean energy grid, protecting the environment now and for future generations,” said David Piccini, minister of the environment, conservation and parks, in a press release.

Reaction largely positive

Since the Conservative government scrapped Ontario’s EV rebate in 2018, the province has been viewed as a laggard in EV adoption — an opinion that is born out by recent statistics. In 2021, battery electric vehicles made up just 3.3 per cent of all new vehicles registered in the province, while Canada’s overall new BEV registration rate was 5.6 per cent.

The government has been resolute in not bringing back the consumer purchase incentives and, instead, has looked at alternative ways to promote EVs in the province through manufacturing and electricity bill breaks.

While many industry experts remain adamant that a purchase incentive is a necessary catalyst to spur adoption, the reaction to a break on energy prices is largely positive.

“We strongly support the Province’s plan to implement an ultra-low electricity price overnight. This rate structure will not only make electric vehicles even more affordable to own and operate, but will also make better use of Ontario’s surplus of electricity at night, benefiting the electricity system as a whole,” said Plug’n Drive CEO, Cara Clairman.

Since the onset of the Russian invasion and war in Ukraine, which among other things sent gasoline prices skyrocketing, interest in electric vehicles in Canada has shot up. The OEB report comes at an opportune moment when more Canadians than ever are considering a switch away from combustion engine cars.

The prospect of charging at home for 2.5 cents per kWh overnight, compared to paying nearly $2 per litre at the pump is an exclamation point on the potential savings an EV can bring a driver.

“The [Electricity Distributors Association’s] research shows that the number of Ontarians who believe it is likely that someone in their household will buy an electric or plug-in vehicle in the next five years is 30 per cent – with a further 27 per cent seeing it as likely in the next five to 10 years,” said Teresa Sarkesian, president and CEO of the EDA.

“This plan empowers customers with more choice and control over their energy usage.”

Putting the plan into action

With the OEB’s report now submitted, the government will review the document and feedback from stakeholders gained through the now-closed proposal on the Environmental Registry of Ontario.

The government is targeting Aril 2023 to make the new pricing plan available to Ontarians and enrolment will be done on an opt-in basis potentially through utility providers, much as the existing two rate structure models are.

“Customers expect to be able to choose the electricity price plan that best fits their lifestyle, allows them to manage costs and incents their adoption of new energy technologies,” said Susanna Zagar, CEO of the OEB in press materials.

“We are pleased that the insights we have gained through our analysis might enable more choice and empower Ontarians.”

The OEB’s full report can be found here.