How pay-as-you-go electricity can save you money
By Melanie Chambers • Bankrate.com

Clyde Blackburn, of Grand Prairie, Alberta, was skeptical about how much money he could save by using a pay-as-you-go electricity meter. The ATCO Electric employee says he was already a penny pincher when it came to turning lights off and conserving energy in his home.

But after using the meter for about six months now, as part of his company's pilot program, he's changed his tune. Although he can't yet say exactly how much he's saving, as he has yet to compare last year's energy purchases to this year's, he says he's much more aware of how much energy costs now, thanks to the meter.

For example, he estimates that by turning off his computer every night instead of letting it run 24 hours a day, he saves 25 cents of electricity a night.

"I was wasting money for no good reason -- the computer wasn't doing anything but running, and over time that saves money," he says. "We've changed our habits and now turn off the computer every night."

Although 25 cents a night might not seem like much, it does add up over the course of a year. Although pay-as-you-go electricity is not available everywhere just yet, it's slowly being rolled out across the country. To find out how pay-as-you-go electricity could save you money, read on.

Buy energy like you buy gasoline
Woodstock Hydro, in Ontario, was the first electricity provider in Canada to roll out the pay-as-you-go program in 1988, offering customers an alternative to regularly billed electricity. Today, the program saves customers an average of 15 to 20 percent a year.

Last year, Natural Resources Canada, ATCO Electric Ltd. and Info Energy launched a 12-month pilot project in Drumheller and Grand Prairie, Alberta, to test the technology and see if consumers could learn to manage their usage better.

The idea behind pay-as-you-go electricity is simple: what if you could buy electricity like you buy gas for your car? A meter could show you exactly how much you've used and when you need to buy more. By the same reasoning, you could tell how much it costs to turn up an air conditioner a few degrees.

In Woodstock, 2,700 people -- about 25 percent of all residential customers -- now use pay-as-you-go meters. And about a year ago, when the company ran out of stock for the meters, there was a 300-person waiting list. "People were getting a little but upset with us," says Jay Heaman, manager of business development for Woodstock Hydro. "We had to stop and shake our heads -- it's not a case of us trying to jam this technology down anyone's throat."

And they have good reason to like it. Using our current technology, it's hard to tell how much electricity we use by reading the meter outside. If the round dial is spinning quickly, we're using a lot -- but we can't tell how much we're spending.

A pay-as-you-go smart meter, on the other hand, shows how much you've used and how much you are paying per hour for a kilowatt of electricity.

How it works
You need three pieces of equipment to use the pay-as-you-go system. First, there is an outdoor electronic meter. Then, there's an in-home display unit, which resembles a thermostat and plugs into any electrical outlet.

The in-home display unit communicates constantly with the outside meter, relaying how much energy you're using at the moment. For example, if you have the washing machine, dishwasher and dryer running at the same time, the meter might read 25 cents an hour, as opposed to late at night, when nothing is running, when the meter shows lower rate of eight cents an hour.

Lastly, there is the smart card. Like a prepaid phone card, users go to select stores and purchase electricity on their card. At home, you swipe the card through the in-house meter to keep the electricity flowing.

The in-home meter tells you how much money you have left on your card and will start to beep when it's running out and is time to fill 'er up.

Rates per kilowatt hour vary. When the rate has changes, the utility company downloads that information to the store computer, so you always pay the going rate.

There are other fees to pay besides the electricity fee. In Woodstock, there's a $50 unit deposit and a $7.50 monthly user fee, which is amortized onto your smart card.

Savings come from a better understanding of usage
Blackburn says the minute he puts a pot on the stove and turns the burner on high, the cost per kilowatt per hour jumps on his in-home display, which is easy to spot next to his stove. This knowledge has opened his eyes.

"We're far more conscious whether things are running in our house. If it's running at seven or eight cents, then I know the house is pretty quiet. But if it's running more than that, I start to wonder what else in the house is running and if it's supposed to be or not."

Blackburn says about $100 of energy on his smart card lasts him more than a month.

"It's trying to put more control and more information in front of the costumer," says Carl Kelly, manager of business development for Info Energy, the company that provides the smart meters to Woodstock Hydro and the pilot programs in Alberta.

"It means people are taking responsibility for their energy, and it allows the customer to have a choice, which we don't have at this stage."

The future of electricity
Unless you live in Woodstock, simply buying yourself a smart meter isn't an option -- yet. More and more energy providers are testing the pay-as-you-go system across the country, so it may be coming to your neighbourhood soon.

This September, Manitoba Hydro will roll out the meters in a pilot program, as will Brant County Power in Paris, Ontario. Kelly says the East Coast is their next target.

Melanie Chambers is a freelance writer based in London, Ontario.