Ontario Electricity Rates Explained: TOU, Tiered, and Ultra-Low Overnight

Electricity is typically the largest utility expense for Ontario commercial and industrial operations—and unlike natural gas, the price you pay depends heavily on when you consume it. Ontario's Regulated Price Plan offers three distinct pricing structures, and choosing the wrong one can cost a small business thousands of dollars per year without a single change in total consumption.

Whether you manage a retail plaza, a food-processing facility, or a multi-property portfolio, understanding time-of-use (TOU), tiered, and ultra-low overnight (ULO) pricing is essential to controlling costs. This guide breaks down how Ontario's electricity system works, what each rate plan costs in 2025–2026, and how to determine which structure fits your operation.

Why Understanding Ontario Electricity Rates Matters

For most Ontario businesses, electricity ranks among the top three operating expenses—often exceeding property taxes or insurance on a per-square-foot basis. A 20,000-square-foot retail centre consuming 400,000 kWh annually at an effective rate of 14 cents per kWh pays roughly $56,000 per year in electricity alone, before delivery and regulatory charges.

The challenge is that Ontario's electricity bill is not a single rate multiplied by consumption. It is a stack of components—energy charges, Global Adjustment, delivery, regulatory fees, and taxes—many of which vary by time of day, season, and account classification. For eligible small business accounts under the Regulated Price Plan (RPP), the choice between TOU, tiered, and ULO can swing annual energy costs by 5–15% with identical total kWh consumption.

Facility managers who treat electricity as a fixed cost miss the largest lever available without capital investment: aligning consumption with the rate structure you have—or switching to the structure that matches how your building actually operates.

How Ontario's Electricity Pricing System Works

Ontario's electricity market involves multiple entities, each responsible for a portion of what appears on your bill:

• Independent Electricity System Operator (IESO) — Operates the provincial grid, manages wholesale electricity markets, and administers programs including demand response and the Industrial Conservation Initiative (ICI)
• Local Distribution Companies (LDCs) — Toronto Hydro, Hydro One, Alectra Utilities, Elexicon Energy, and others deliver power to your meter and bill most customers
• Ontario Energy Board (OEB) — Regulates rates, sets RPP prices twice annually (May 1 and November 1), and approves delivery charges
• Generators and retailers — Supply electricity; large customers may contract directly with retailers for energy supply while still paying delivery and Global Adjustment

The Regulated Price Plan (RPP) applies to residential customers and small business accounts with a connected load of 50 kW or less. These customers may choose among TOU, tiered, or ultra-low overnight pricing for the energy portion of their bill. Larger commercial and industrial accounts face a different rate structure that includes demand charges, Class A or Class B Global Adjustment treatment, and often retail contract pricing.

Even for RPP-eligible businesses, delivery charges, the Ontario Electricity Rebate (where applicable), and other fixed components apply regardless of which energy pricing option you select—making the energy charge optimization a focused but high-value exercise.

As of the 2025–2026 rate period, OEB-regulated TOU on-peak rates reach approximately 15.8 cents per kWh—nearly six times the ultra-low overnight rate of 2.8 cents per kWh.

Pricing Structure 1: Time-of-Use (TOU)

Time-of-use pricing charges different rates depending on the hour and day electricity is consumed. The logic is straightforward: shift consumption away from periods when provincial demand is highest, and you pay less. Ontario defines three TOU periods—on-peak, mid-peak, and off-peak—with rates and period boundaries that change seasonally.

Current TOU Rates (Approximate 2025–2026)

• Off-peak: ~8.7 ¢/kWh
• Mid-peak: ~12.2 ¢/kWh
• On-peak: ~15.8 ¢/kWh

TOU Period Hours

Winter (November 1 – April 30):

• On-peak: Weekdays 7 a.m.–11 a.m. and 5 p.m.–7 p.m.
• Mid-peak: Weekdays 11 a.m.–5 p.m.
• Off-peak: Weekdays 7 p.m.–7 a.m.; all hours on weekends and statutory holidays

Summer (May 1 – October 31):

• On-peak: Weekdays 11 a.m.–5 p.m.
• Mid-peak: Weekdays 7 a.m.–11 a.m. and 5 p.m.–7 p.m.
• Off-peak: Weekdays 7 p.m.–7 a.m.; all hours on weekends and statutory holidays

TOU rewards businesses that concentrate energy-intensive operations during off-peak windows—nights, weekends, and holidays. A restaurant prep kitchen running ovens at 6 a.m. on weekdays pays on-peak rates in winter; the same ovens running at 10 p.m. pay off-peak.

Pricing Structure 2: Tiered Pricing

Tiered pricing ignores time of day entirely. Instead, you pay a lower rate for consumption up to a monthly threshold and a higher rate for all consumption above that threshold. Tiered works well for businesses with steady, predictable consumption that does not cluster during expensive on-peak periods.

Current Tiered Rates and Thresholds (Approximate 2025–2026)

Winter (November 1 – April 30):

• Tier 1: ~9.8 ¢/kWh for the first 1,000 kWh per month
• Tier 2: ~11.5 ¢/kWh for all consumption above 1,000 kWh

Summer (May 1 – October 31):

• Tier 1: ~9.8 ¢/kWh for the first 600 kWh per month
• Tier 2: ~11.5 ¢/kWh for all consumption above 600 kWh

Tiered pricing benefits low-consumption accounts—small offices, professional services firms, and seasonal operations that stay well within Tier 1 limits. A law office using 800 kWh monthly in winter pays entirely at the lower tier rate. However, a convenience store using 3,500 kWh monthly pays Tier 2 rates on 2,500 kWh regardless of whether that consumption occurred at midnight or noon.

Commercial tenants in mixed-use buildings with individual submeters often find tiered advantageous when their standalone consumption is modest and their operating hours align with on-peak periods under TOU.

Pricing Structure 3: Ultra-Low Overnight (ULO)

Introduced as a fourth RPP option and now a permanent choice, ultra-low overnight pricing creates an aggressive incentive to shift load to overnight hours. ULO replaces the standard off-peak rate during overnight windows with a dramatically lower price, while maintaining on-peak and mid-peak periods during weekdays.

Current ULO Rates (Approximate 2025–2026)

• Ultra-low overnight: ~2.8 ¢/kWh (11 p.m.–7 a.m. every day, including weekends)
• Weekend off-peak: ~8.7 ¢/kWh (7 a.m.–11 p.m. on weekends and holidays)
• Mid-peak: ~12.2 ¢/kWh (weekdays 7 a.m.–4 p.m. and 9 p.m.–11 p.m.)
• On-peak: ~15.8 ¢/kWh (weekdays 4 p.m.–9 p.m.)

ULO is designed for the electrification era—EV fleet charging, heat pump thermal storage, ice battery systems, and industrial batch processes that can run unattended overnight. The 2.8 ¢/kWh overnight rate represents roughly an 82% discount versus on-peak pricing.

The trade-off is extended on-peak hours (4 p.m.–9 p.m. weekdays) compared to standard TOU. Businesses with heavy late-afternoon loads—retail centres running full HVAC during customer traffic, restaurants during dinner service—may see on-peak costs rise even as overnight costs plummet.

Which Pricing Plan Is Best for Commercial Businesses?

There is no universal answer—the optimal plan depends entirely on your load profile. Here is a decision framework by business type:

• Small office / professional services (<1,500 kWh/month): Tiered often wins, especially in winter when the 1,000 kWh threshold accommodates typical usage
• Retail with daytime HVAC and lighting: TOU or tiered depending on total consumption; heavy 4–9 p.m. loads penalize ULO
• Manufacturing with overnight production shifts: ULO or TOU; model carefully if production runs 4–9 p.m.
• EV fleet operators and warehouses with overnight charging: ULO is typically the strongest choice
• Restaurants and food service: TOU if prep work can shift off-peak; tiered if consumption is moderate and peak-hour cooking is unavoidable
• Agriculture (dairy, greenhouse): ULO for overnight irrigation, thermal storage, and EV charging; monitor mid-peak exposure during daytime operations

Accounts above 50 kW connected demand do not qualify for RPP rate selection—they require a separate analysis of Global Adjustment class, demand ratchets, and potential ICI participation. See our guide on peak demand charges for large-account strategies.

How to Analyze Your Bill to Find the Best Plan

Comparing rate plans using total monthly kWh alone will give you the wrong answer. You need interval data—consumption broken down by hour—to apply each rate structure accurately.

1. Obtain 12 months of interval data from your LDC or through a utility portal. Most Ontario utilities provide downloadable CSV files for accounts with smart meters.
2. Categorize each interval by TOU period, tier threshold, and ULO period for both summer and winter seasons.
3. Calculate annual cost under each of the three plans, including seasonal rate and threshold changes.
4. Model load-shifting scenarios — What if 20% of on-peak consumption moved to off-peak or ultra-low overnight? Quantify the incremental savings under each plan.
5. Switch and verify — After changing plans, compare actual bills against your model for two full billing cycles to confirm savings.

Energy Wiz simplifies this analysis by importing interval data, applying Ontario rate schedules automatically, and forecasting costs under each plan. Combined with real-time energy monitoring, you can track whether operational changes are delivering the expected rate-plan savings.

Strategies to Reduce Costs Under Each Pricing Plan

Under TOU

• Pre-cool or pre-heat buildings during off-peak hours before occupancy
• Schedule dishwasher, laundry, and process equipment for off-peak windows
• Use building automation to shed non-essential loads during on-peak periods
• Run weekend maintenance and batch processes when all hours are off-peak

Under Tiered

• Focus on total consumption reduction rather than scheduling—efficiency upgrades directly lower tier exposure
• Monitor monthly consumption against tier thresholds; summer's 600 kWh Tier 1 limit is tighter than winter's 1,000 kWh
• Consider whether growing consumption will push you permanently into Tier 2, making TOU or ULO more attractive

Under ULO

• Install timers or BAS controls to shift maximum load to 11 p.m.–7 a.m.
• Charge EV fleets and material-handling equipment exclusively overnight
• Use thermal energy storage to build heating or cooling capacity during ultra-low hours
• Minimize discretionary loads during the extended 4–9 p.m. on-peak window

For detailed load-shifting tactics, see our guide on time-of-use electricity pricing and load shifting. Broader commercial strategies appear in how to reduce commercial electricity bills in Canada.

Monitoring TOU Consumption in Real Time

Rate-plan optimization is not a one-time exercise. Operational drift—new equipment, schedule changes, tenant turnover—gradually shifts your load profile and can erode the advantage of your chosen plan. Real-time monitoring with smart alerts during on-peak windows helps operations teams intervene before expensive consumption accumulates.

Energy Wiz tracks interval consumption against your active rate schedule, sends alerts when demand exceeds targets during on-peak periods, and forecasts monthly costs so finance teams are never surprised by the bill.

Conclusion

Ontario's three Regulated Price Plan options—time-of-use, tiered, and ultra-low overnight—give eligible businesses meaningful control over energy costs without reducing total consumption. The right choice depends on when your facility uses power, not just how much. Interval data analysis removes the guesswork and often reveals that a simple plan switch outperforms expensive equipment upgrades.

Start by downloading 12 months of interval data from your LDC, model each plan accurately, and implement load-shifting strategies aligned with your chosen structure. Monitor results in real time to protect your savings as operations evolve.

Energy Wiz helps Ontario commercial teams compare rate plans, track TOU consumption, and receive smart alerts during on-peak windows—get started with Canada's mobile energy management platform.