What is Time of Use (Tou) Pricing and how could it affect you?

Some NZ electricity companies currently offer different pricing plans, some of which offer different tariffs at different times of the day.   Such pricing plans are often referred to as “Time of Use” (ToU) tariffs or pricing plans.

In some places where ToU pricing has been introduced electricity costs can be double at peak times relative to off peak. See: http://www.energy.gov.on.ca/en/smart-meters-and-tou-prices/

At the moment in NZ, “Time of Use” pricing plans are options, rather than being mandatory.  Don’t count on time-of-use pricing to remain optional, however, or for the government to come to the rescue of struggling households (or businesses that cannot change the time of day at which they need to use electricity, and theref0re face excessive costs.)  No, the government is all for the smart meters and has started a “smart grid forum”.  (More on this below.)

In a report by the Electricity Commission, “Advanced Metering Infrastructure in New Zealand: Roll-out and Requirements” (3 Dec. 2009) the purported benefits of “smart meters” are extolled:

“‘Smart’ electricity meters, and the infrastructure that accompanies them, can provide a richer information base with which consumers can make better decisions about electricity use. The functionality in ‘smart’ electricity meters allows consumers to participate in the electricity market by allowing them to respond to market signals by altering their consumption patterns.”

“Those ‘smarter’ meters can also provide better information to electricity lines companies about network performance and consumers consumption patterns, allowing better management of networks and more informed investment decisions. ‘Smarter’ meters can also allow retailers to offer a range of tariff options to consumers that:

“(a) financially incentivises consumers to respond to market signals in the form of tariff pricing by altering their consumption patterns to reduce delivered electricity cost;

“(b) allows tariff changes to be carried out remotely. Before smart meter technology, changing tariffs required a site visit and a physical change of meter; and

“(c) provides information to consumers that allows them to choose the best pricing plan for them.” [Emphasis added]

The Electricity Commission considered this differential pricing to be beneficial because it will force people to use less electricity at peak times as many people won’t be able to afford it. This allows the electricity industry to reap the profits from time-of-use pricing while delaying investment in any new generation capacity needed if NZ’s population continues to increase.  (Too bad if air pollution in cities increases because people can’t afford to run electric heaters on winter afternoons and evenings and therefore burn coal instead or people  in low income households can’t afford to eat hot meals.)

“Developments in AMI have the potential to allow additional peak demand to be managed, delaying the need for investment in new generation, transmission, and distribution,” stated the Electricity Commission.

The government has now created a special “smart grid” forum to move ahead plans for “smart” meters and the “smart grid”.


Yes, “smart” meters have a lot of advantages if you are an electricity company.

If you are a member of an ordinary family or run a small business (which can’t negotiate with the government for enormous discounts on your electricity), you will be bearing the costs of the implementation of the  “smart grid”, will be exposed to additional electromagnetic radiation from “smart meters” and associated infrastructure, and may have higher power bills to boot.  What a great deal! (Not.)