Smart meters and time-of-use electricity pricing have only modestly reduced residential energy demand during the most expensive peak periods, a study suggests.

Researchers at the University of Waterloo in Canada compared data for nine months before and nine months after time-of-use rates were introduced in November 2011 by an unidentified electric distribution company with more than 20,000 household customers in southwestern Ontario.

Smart meter deployment cost around $740mUsing statistical tools to factor out the impact of weather differences, the analysis showed residential demand for electricity dropped 2.6% during on-peak periods and 2.4% during mid-peak periods following the change.

"There is a gain, but the gain is very small," says Lukasz Golab, a management sciences professor and Canada Research Chair at Waterloo.

Smart meters to enable time-of-use pricing were installed by utilities across Ontario at a cost of about C$1 billion ($740 million). A goal was to shift demand away from peak periods to reduce maximum capacity requirements and save money on infrastructure.

The study did not attempt to assess if the cost of the switch to time-of-use pricing has been justified by modest changes in the behavior of residential customers.

"Is it enough?" says Catherine Rosenberg, a professor of electrical and computer engineering and also a Canada Research Chair at Waterloo. "Of that I'm not sure. We don't have the data to decide if these kinds of savings warrant the use of smart meters."

The findings also suggest that time parameters used to set rates may not be aligned properly with actual usage, at least for residential customers. The summer on-peak period on weekdays in Ontario is noon to 5 p.m., but demand actually hit its highest point at 6 p.m. in the utility used for the study.

The research was published in the journal Energy Policy.