Komorowski’s Korner – Smart Meters – Will they kill Small Business?

Smart Meters – Will they kill Small Business? 

As we have discussed, the idea of Smart Meters is to encourage less daytime, i.e. peak, electricity consumption, in order to balance the electrical supply and demand throughout the province. This way, there will be less of a need to build new, expensive generating stations, and highly polluting coal fired stations can be eliminated. However, the pricing structure will not allow this. The difference in price between on-peak power (13.81¢/kWh) and off-peak (8.91¢/kWh), i.e. 4.9¢/kWh, does not make the purchase of suitable appliances worthwhile. The only good thing to say about Smart Meters is that the low rate will include weekends and holidays, not usually the case in Europe.

Let’s take a look at what will happen to small business. Imagine a typical corner store, one which sells soft drinks, cigarettes (at least until the current distribution problems for tax free smokes are solved), ice cream and candy, milk, lottery tickets etc. For the sake of argument, let’s also imagine they’re open 14 hours per day, seven days per week, from 8:00 am to 10:00 pm, and that they use an average of 6 kWh per hour for lights, refrigeration, heating or air-conditioning, etc. while they are open. (That’s the equivalent of plugging in 4 electric kettles). At night, they won’t need quite so much power, but all the same, they still need to keep some lights on for security, and have the fridges and freezers running. Let’s assume, for the sake of argument, that night time power use is two thirds of the daytime use, i.e. 4 kWh per hour.

At the current small business rate, the cost for electricity to run the store every month would be $358.47 (actually, 28 days, as the math involved in trying to do it over a 30 or 31 day cycle is too involved for my brain right now)! Going with the Smart meter, using the exact same amount of electricity over the same period would cost – guess what – $368.87! Difference? $10.40 a month, or 2.9%! This isn’t really much of an increase, mostly because the cheap rates are available throughout the weekend, not just at night.

Suppose our store owner wanted to be responsible and manages to reduce his total consumption by 10%, by buying Energy Star appliances and fixtures, turning down the heat and air conditioning, and adding insulation. Guess what! Under the current system, his bill would drop to $323.89, a saving of $34.58, or 9.65% His Smart Meter bill would drop to $333.47, for about the same saving.

Now let’s look at the same store, only this time it’s in Cornwall. With full usage (6kWh/hr days, 4kWh/hr nights), the monthly bill would be $407.86! Actually, this is rather more than the equivalent Hydro One bill as Hydro One charges small businesses less than residences. However, if the Cornwall shop drops its total consumption by the same amount as in the out-of-town example, the monthly bill drops by $40.13 to $367.73.

Under the current and proposed billing systems, it is cheaper to run a small business out-of-town than it is in Cornwall. But this is only because homeowners (and renters) in effect subsidize small business in most of the province, whereas small business pays slightly more per kilowatt hour in Cornwall than an equivalent residence. However, Cornwall Electric does more to encourage conservation. Assuming, in the above examples, that it would cost exactly the same for all the upgrades to save 10% of electricity consumption, these upgrades would pay for themselves faster in Cornwall than out-of-town ($40 per week instead of $35 per week).

Next week, we’ll consider the situation of people who have to stay at home most of the time, such as the disabled or retired people.

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