Time-of-Use vs Tiered pricing (Ontario): what really changes
Most confusion comes from assuming your “rate” is a single number. It usually isn’t.
Why these two options exist
Ontario offers two main pricing structures for residential electricity customers: Time‑of‑Use (TOU) and Tiered. Both include the cost of electricity itself, plus system‑wide components such as Global Adjustment. The difference is how the usage portion is calculated.
Neither option affects Delivery, Regulatory charges, or taxes — which is why switching plans doesn’t always change the total bill as dramatically as people expect.
Time-of-Use (TOU): price depends on the clock
Under TOU, electricity costs vary depending on when you use it. The day is divided into three price periods:
- Off‑peak: lowest price
- Mid‑peak: medium price
- On‑peak: highest price
These periods shift seasonally. In summer, on‑peak hours are midday (when AC demand is highest). In winter, on‑peak hours shift to mornings and early evenings (when heating and cooking demand rise).
TOU can work well for households that can shift usage to off‑peak hours, for example:
- Running laundry or dishwashers in the evening or overnight
- Charging EVs overnight
- Using programmable thermostats to reduce heating/cooling during peak times
Even if you shift usage, your total bill may not fall as much as expected because Delivery and other charges don’t change with time of day.
Tiered pricing: price depends on how much you use
Under Tiered pricing, you pay one rate for the first block of monthly usage (Tier 1) and a higher rate for any usage above that threshold (Tier 2). The Tier 1 threshold is higher in winter than in summer.
Tiered can work well for households that:
- Have predictable, moderate usage
- Use most electricity during on‑peak TOU hours
- Prefer a simpler, more stable pricing structure
- Stay within Tier 1 most months
Tiered does not reward shifting usage to different times of day — only the total monthly kWh matters.
What actually changes when you switch plans
Switching between TOU and Tiered only changes how the electricity/usage portion of your bill is calculated. It does not change:
- Delivery charges
- Regulatory and other charges
- Taxes
This is why some customers switch plans and see less impact than they expected. The usage portion may move, but fixed and semi‑fixed components remain similar.
The mistake most people make
Most people focus on TOU vs Tiered and ignore delivery and system cost recovery charges. So they do the work of shifting usage or changing plans… and see less impact than expected.
If Delivery and Global Adjustment make up a large share of your bill, changes to the usage portion will only move the total so far. Understanding this mix helps set realistic expectations.
How to think about TOU vs Tiered
- If you can shift usage: TOU may reward you for moving load to off‑peak hours.
- If your usage is steady and moderate: Tiered may feel simpler and more predictable.
- If most of your usage is during peak hours: Tiered can sometimes be less volatile.
Neither option is universally “better.” The impact depends on your household’s patterns — when you use electricity and how much you use in a month.