For most people in New Brunswick, the idea of time-based pricing of electricity seems pretty foreign. We’re used to a flat rate per kilowatt-hour for the electricity we use. However, just like any other product we use, the cost of generating that electricity varies quite dramatically based on how it was made – we just don’t see it at our end.

At certain times we are paying significantly more than it costs to generate, and at other times, we are paying significantly less – i.e. the utility is losing money selling it to us.

Unlike other products though, we can’t (yet) economically store electricity in large quantities, so it has to be produced as and when it is needed. During the year, we tend to use more electricity in the peak of summer and the peak of winter for air conditioning and heating than we on a mild September day. In the course of a day, we go through cycles too – people tend to get up, go to work, eat, and go to bed at roughly the same time – and so the electricity demand curve mirrors our personal activity levels.

Using Ontario as an example (publicly available data), we can see that in 2009, electricity demand was 10.7GW at a minimum and 24.4GW at a maximum – an increase of over 125 per cent. The larger that the margin becomes between minimum and maximum, the more expensive our electricity becomes, as we have to recoup the building cost for these power stations that aren’t used very often.

In fact in 2009, while Ontario had enough installed capacity to be able to supply the 24.4GW of electricity, the electricity demand only exceeded 20GW for approximately 20 days during the year.

By flattening the electricity demand curve we would be able to operate fewer power stations more frequently, and thus reduce (or at least limit increases to) the cost of our electricity supply.

One method of doing this is through time-based pricing. When electricity demand is low, our electricity is generally produced from sources that are the cheapest to run (such as nuclear and coal), and so the cost of generating that electricity is low.

As demand increases, increasing expensive to operate power plants are brought online to meet the temporary need, such as natural gas and oil. Time-based pricing would see that the price we pay for electricity more accurately reflect the cost of generating it – so using power in the middle of the day in August (peak period) would cost more than using power in the middle of the night in September (off-peak period).

This would accomplish two things. First, people and companies would start to shift their behaviour patterns to match the new pricing profile. Dishwashing or laundry could be saved until the late evening or early morning.

Power-intensive industries could reschedule certain activities to obtain cheaper electricity. This would have the effect of lowering the peak demand, and increasing the off-peak demand. Second, it would hopefully reduce overall energy consumption. Air conditioners and heaters might get adjusted a couple of degrees during the day when no one is actually in the house, due to the higher cost of electricity.

Some new technologies are needed, and some are on their way, such as smart metres, capable of recording the amount of electricity and time of use, which would also be capable of displaying the current power rate to consumers to aid in decision-making. Smart appliances are on the horizon, such as washers and dryers that automatically run when electricity is at its cheapest, and fridges that will delay compressor cycles at peak price times.

Future electric vehicles have the potential to charge themselves during off-peak hours, and re-sell electricity to the grid during peak hours for a profit, thus acting as a giant national battery of sorts.

Jurisdictions such as California and Ontario have already rolled out time-based pricing, with 3.6 million customers in Ontario expected to be on the new system by mid-2011. Ontario has three price bands for electricity (not including transmission and distribution) – On-Peak at 9.1 cents per kWh, Mid-Peak at 7.6 cents, and Off-Peak at 4.2 cents. Without wading into the NB Power debate here, it would be interesting to know how the deal will affect the future of time-based pricing in New Brunswick, regardless of which way it goes.

With the environment becoming a bigger and bigger issue by the day, many consumers are demanding to know the environmental impact of the things they buy. And businesses are beginning (slowly) to respond.

The concept it to label consumer goods with something similar to a nutritional label, but for the environment. Tesco, a major grocery reatiler around the globe, has made commitments to make the carbon footprints of it’s products as easy to compare as their nutritional information or their price. The photo on this post is from a Tesco store, showing the carbon footprint of one brand of juice and comparing to others available for sale.

While displaying a carbon footprint is one step, it’s possible to take this idea even further. Products could clearly display information such as the amount of:

• Carbon dioxide released
• Water consumed
• Raw materials used
• Waste sent to landill

We would be able to clearly identify which products were better for the environment, rather than having to rely on often misleading marketing campaigns.

Unfortunately, it’s not as easy as it sounds. Unlike food, the environmental impact of a product is largely external, while nutritional information is internal. That means that for nutritional labels, we simply have to look at what is in the food, while for environmental labels we have to look both inside and around it.

We need to look at the raw materials that were used, and the methods used to extract them. We need to consider the factory where the product was built, and how it was powered. We need to consider how the product is used (a car for example, emits carbon dioxide as it runs). And we need to look at how the product is disposed of, as well as everything else in between.

It quickly becomes a case of ‘where do we draw the line’.

Until we have some sort of accepted standard in place, it will be hard to compare one product to another, as we don’t know whether they have included the same things.

Fortunately, some standards are being developed. The Carbon Trust in the UK now certifies products for the carbon dioxide emissions, with the certification being removed if a product increases its emissions per unit from year to year.