Hydro Quebec is backing away from a major government initiative that would have reduced electricity consumption in the province, CBC News has learned.

The conservation plan— which hinged on smart meters to cut peak period hydro consumption— is too costly to deliver real savings, according to the Quebec power corporation.

The smart meters, alreadycommon in Ontario, allow consumers to save money by monitoring their usage andconsuming the bulk of their power at night when rates are lower, rather than during peak periods in the morning and evening.

But they are expensive to install in residences and that cost would inevitably be offset by raising electricity prices, said Hydro Quebec distribution president André Boulanger.

"In California, for example, smart meters make a lot of sense. A lot more sense than here. We have to evaluate the cost of it, and the benefit at the same time," he told CBC News. "Because we don't want to increase the bills of our customers."

The Quebec Liberal government first floated the idea of smart meters in 2006 when it unveiled a nine-year, multi-billion energy strategy thatincluded plans to increase electricity production and cut down on consumption.

At the time, Premier Jean Charest said Quebec homes would be equipped with smart meters by 2009 to encourage people to use energy more efficiently.

Quebecers are among the biggest hydro consumers in Canada, a habit that needs to change, according the premier.

"The golden rule about energy and the environment [is] it's the energy you do not consume that is the best investment you can make," he recently said.

Hydro Quebec is still open to a pilot project testing smart meters, but is not prepared to introduce them on a wider scale, Boulanger said.

In Ontario, the province's power utility has installed more than 200,000 smart meters in recent years after a successful pilot project spearheaded by Ottawa's municipal utility.

The Hydro Ottawa Smart Price Pilot results revealed that, with conservation considered, "93 per cent of customers paid less than they would have under regular rates," said Hydro One spokesman Dave Watts.

Lower energy use during peak times means less need for new generating stations, he said.