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Ontario Premier Dalton McGuinty admits he's hearing from people who aren't seeing reductions in their electricity bills despite shifting power use to off-peak hours. ((CBC))

Electricity prices could be dropping in off-peak hours to help encourage more Ontario residents take advantage of time-of-use pricing, Premier Dalton McGuinty suggested Tuesday.

McGuinty admitted he has been hearing from people who try to do dishes and laundry late at night to take advantage of lower electricity prices, but still see increases, not decreases, in their hydro bills.

"Yeah, we have heard some of that as well, and there should be an appropriate price differential in place that in fact rewards people for changing their behaviours," he said.

"We want to make sure that the pricing signals are right so that there is a real savings associated with using electricity in off-peak periods."

The opposition parties say the Green Energy Act, which included a new charge on hydro bills  along with the HST — which added eight per cent to the cost of electricity — and the higher prices for power during peak hours have all combined to drive up rates for consumers.

Local utilities have installed smart meters in about 4.1 million Ontario homes so far — the goal is 4.5 million — that allow them to measure exactly when electricity is being used in addition to how much is being consumed.

Utilities charge the lowest rates between 9 p.m. and 7 a.m. The exact daytime hours for the highest rates vary by season.

There is also a third tier of moderate rates during certain daytime hours that vary by season.

'Nothing but a tax grab'

The New Democrats said the $1.5 billion spent so far to install smart meters has been a dismal failure because people are actually paying about seven per cent more for their electricity than before the meters were installed.

The NDP released data from Toronto Hydro on Tuesday showing 80 per cent of customers using smart meters have seen their electricity bills rise, and most aren't changing their usage habits.

"This is a turkey that is not going to fly in this province," said NDP Leader Andrea Horwath.

"It's obviously an utter failure; people are not saving and conservation goals are not being met. It's apparent that this whole program belongs on the scrap heap."

The Progressive Conservatives said they had warned the Liberal government that a smart meter program would only drive up electricity bills, which now include a line item to pay for the meters.

"Dalton McGuinty's smart meter policy has simply been a more clever way to squeeze more money out of families' pockets," said Opposition Leader Tim Hudak.

"It is nothing but a tax grab."

Program in early stages

However, the government defends the smart meter program as an important component of conservation efforts that relieves pressure from the system in peak demand hours.

"The whole idea is, if we're going to motivate people, inspire them to do things at unusual times, not in keeping with their usual habits, then we've got to make sure there's a real incentive there for them," said McGuinty.

"In many other jurisdictions around the world, it has proven to be a boon for consumers and for those people in the business of generating electricity because you have to generate less."

Energy Minister Brad Duguid said the smart meter program was still in its early stages and most people had been adjusting to time-of-use pricing for less than a year, so it's too early to say it's not working.

The government will review the pricing tiers but has to arrive at a "tricky balance" to ensure it doesn't make electricity more expensive for seniors, some of whom have complained they won't be able to shift their usage to off-peak hours, said Duguid.

"It's new and it's going to take some time, but we want to make sure we're giving people enough incentive to shift their peak usage off of peak and at the same time we want to make sure we're not hurting people who can't [shift usage]," he said.

"We're going to take this slowly as we implement it and we're going to make sure that we get it right."