With smart meters installed across Waterloo Region ready to monitor electricity use, it's time for residents to be prepared to make some changes to save money.

More than two million smart meters are already in use across Ontario. In some communities the meters have been in place for more than two years, and the province hopes to have the devices in service in most regions by the end of 2011.

The three major electrical suppliers in Waterloo Region are now ready to capture information on when you use electricity, and then bill you accordingly.

In Kitchener, some of the meters begin collecting data this week, and customers will see the results on their upcoming bills, where the cost of power will vary depending on the time of day it is used.

Jerry Van Ooteghem of Kitchener Wilmot Hydro says "For most people there will not be a big difference in their bill, but certainly if people are not making any changes to reduce their peak demand during the peak hours of the day there could be a small increase."

In Waterloo the first smart meters went online in May, while Cambridge North Dumfries Hydro isn't expected to make the switch until early 2012.

Waterloo North Hydro President John Janzen says "Those customers who cut over on May 9th, they will begin seeing their first time-of-use bill around mid-July, around July 22nd."

The meters monitor energy consumption and store the information until it is retrieved wirelessly by the utility company.

John Grotheer of Cambridge North Dumfries Hydro says "If people change their behaviour, in many cases, we don't want them to damage their comfort, we just want them to modify how they do things, there's a potential there for savings."

That savings depends on when household chores are being done. Electricity prices are highest during peak hours between 11 a.m. and 5 p.m. and lowest during off-peak hours from 7 p.m. to 7 a.m. and on weekends.

For example, doing one load of laundry in a house with an electric water heater will cost 83 cents during peak hours and 46 cents during off-peak hours. Meanwhile, for drying a load of clothes in an electric dryer the cost changes from 24 cents to 13 cents.

Van Ooteghem says "Those that are very proactive and very aggressive in managing their electricity costs will be able to show some savings."

Expected impact on Waterloo Region households

When it comes to time-of-use pricing, hydro companies are quick to note that almost two thirds of the hours in a month are off peak.

Also, in a study of 5,000 households earlier this year, Waterloo North Hydro found more than half of the power being consumed was during off-peak periods.

So the conclusion that many are drawing is that time-of-use billing should not be a major shock to the pocketbook for most people.

Janzen says "It shouldn't have a dramatic impact on what they pay on their bills, but I think it would be unfair to say that everyone will benefit. Some consumers will wind up paying more if they are unable to shift any of their load to off peak."

So while there isn't expected to be a dramatic impact, people will need to learn to manage how they use energy if they want to see any savings.

Coming up in part three: Meet a family that has been living with time-of-use billing for more than two years, and find out what impact it has had.