A water heater is one of the largest users of electricity in a typical home, the utility says.
With metered service, customers are encouraged to reduce costs by reducing their hot water use.
But some people are upset after receiving letters from Toronto Hydro giving them a conversion deadline and telling them to pay for the costs.
"They threatened to cut off my water heater unless the work is done by September. I'm away most of the summer," said Darryl Palmer, who wrote to me in August.
Luckily, Toronto Hydro is extending the deadlines when customers ask.
"We're trying to nudge them along and we're not cutting off anyone yet," says Blair Peberdy, vice-president of communications.
"There are about 36,000 legacy water heaters with flat-rate billing, and about 18,000 have converted to metered service."
Palmer, who runs a business called the Singing DJ, was reluctant to convert to metered service until the price was right.
"I found a local electrician who did it for $50 for one hour, plus $38 for parts and fees for electrical inspection," he says, adding that he received an earlier quote of $300.
Many of the holdouts are seniors, who switched to flat rates when they had young families at home.
As empty nesters, they should find it less expensive to switch to meters, Peberdy insists.
But Veronica Dreher, a senior, is digging in her heels and refuses to have the work done.
"Hydro told me that we would save money in the long run, but was unable to say how much or how long it would take to recoup the expense of conversion," she says.
"My neighbours buckled under Hydro's threats and spent the $300 to convert. Since then, the hot water portion of their bill has doubled."
She and her husband don't want to go without hot water, but they do want to take a stand against what she calls "bureaucratic bullying."
John Nawrocki, also a senior, received notice last April that his hot water tank could be disconnected.
He refused to cover the cost of switching, saying that Toronto Hydro had encouraged him to go to a flat rate a number of years ago. He also complained that no one was returning his calls.
Once I got involved, Nawrocki ended up paying half the conversion cost (about $100), with Toronto Hydro paying the other half.
The utility wrestled with a question of fairness, Peberdy said. Covering the cost of converting to metered water heaters would mean charging higher electricity rates to all residential customers.
Toronto Hydro decided to make users pay for conversion and struck a deal with a contractor, Aerostar Electrical Services, to offer a reduced rate of $185 plus GST.
Complicating the issue is the fact that Toronto Hydro no longer rents water heaters. It sold the rental business to Direct Energy in 2000.
"This is causing a billing concern for us," Peberdy says. "If customers switch to gas and don't tell us, we may continue to bill them for electricity."
Switching to a gas-powered water heater can save money, as can buying your own gas-powered tank (instead of renting).
But if you plan to stay with Toronto Hydro, you should try to negotiate a lower conversion cost.
This is preferable to facing the risk of having your hot water switched off one day.