A Kitchener man says his company can save some residential customers and small businesses money by enrolling them in groups to access lower commercial rates for electricity and natural gas.
Tomas van Stee, the founder — and so far, sole full-time employee — of EnPowered, came up with the group-buying concept last November. Customers were able to sign up on his website, www.en-powered.com, as of Sunday, the same day that time-of-use electricity prices in Ontario increased nearly four per cent.
Since time-of-use pricing was introduced in 2006, electricity prices have increased more than 95 per cent for residential customers and 115 per cent for small businesses.
Typically, residential customers use almost two-thirds of their electricity during off-peak hours, when prices are lowest. Those customers, van Stee says, won’t save money by enrolling in a group.
But he says an estimated 15 per cent of homeowners and 75 per cent of small and medium-sized businesses consume more than half of their electricity between 7 a.m. and 7 p.m. weekdays, when the new peak rate of 18 cents per kilowatt hour will soon apply.
Those users, says van Stee, should save money by joining one of his groups. Average residential customers with heavy peak-hour electricity use should save between five and 10 per cent of their total bill — $50 to $100 a year. Small businesses could save considerably more.
Once enough customers have enrolled, EnPowered will close the group and negotiate a lower price from a supplier for its members. The company will create new groups every month or so for other customers as existing groups fill up and close.
For residential hydro customers, savings could start with as few as 50 group members and would max out when membership reaches about 1,000, van Stee says.
EnPowered will make money, he says, from a small fee — a fraction of a penny per kilowatt hour — embedded in the electricity rate. “We’re making very little money per customer.”
Unlike energy retailers who sign customers to contracts with stiff cancellation fees, EnPowered’s group members will be able to drop out at any time without penalty, van Stee says.
If EnPowered’s approach succeeds, says energy consultant Tom Adams, “it would simply result in a shift in the allocation of costs.”
While some individual customers “with particularly unfavorable usage patterns” will likely save money, Adams says, those savings would be offset by higher costs passed on to those still paying time-of-use prices.
In the past couple of years, the provincial government has ordered the Ontario Energy Board to “artificially jack up” the differential between peak and off-peak electricity prices to encourage off-peak use, Adams says.
As a result, people who are using a disproportionate amount of peak power are now paying too much, he says. “They’re subsidizing the customers who are using most of their power off peak.”
By drifting away from cost-based rates and moving to artificially differentiated prices, the government has “created an opportunity for people like van Stee to step in and cherry-pick those customers that are bearing extra cost,” Adams says.
“Every corner of the power system now is just so fraught with inscrutable complexity and structural inefficiencies that smart folks are trying to find way to tap into it.”