When you looked at the delivered cost, the price difference looks much less significant. Only the commodity charge varies by time of use, not the distribution charge.

I agree that the problem of the less well off is, or should be, a separate issue. Electricity billing and social welfare have been intertwined for a long time, which has led to price signals becoming muted and confused. I was merely pointing out that, within the confines of the current system, political action represents a balance between conflicting factors. It would be political suicide to raise peak rates high enough to provide a real financial incentive to load-shift, hence the balancing act that will please no one.

The solution IMO is to sharpen price signals through real-time feedback and billing innovations which eliminate the effects of amalgamation and delay. There are already tried and tested systems in place which do this, and they work because they are smart in a human sense, rather than only being smart in a technological sense. In combination with time-of-use pricing, these methods could be used to turn a blunt instrument into a precision instrument. Both the problems of the need for social considerations and the need for load-shifting can be addressed in such a way that they do not poltically confound one another. For details, see Part II.

Why don't they stagger the distribution charge by time too?  That doesn't make any sense to me.  Sure, the distribution cost may be the same at all times, but then again the grid wouldn't need to be able to support as much load if people were spreading the loads around to off peak hours.  It seems to me an easy solution would be to adjust distribution costs to be an equal ratio to the difference in commodity prices.  
The commodity charge is set provincially, whereas the distribution charge varies by utility. It would be politically challenging to institute that level of reform, and Ontario politicians of various political stripes have not proven themselves to be adept at handling challenges.

The last party at the helm declared themselves free marketeers and set up a pool pricing system for electricity. Pool prices rose quickly (to about 8 cents/kWh), whereupon the government promptly slapped a cap on rates at a level so low that consumption was being actively subsidized - and this after only a four months trial period for floating prices (when it had been obvious prices would rise as supply was tight).

The present administration raised the rate cap (because the subsidy was costing the province a fortune) and introduced a tiered payment system. They declared that the bad old days of Ontario Hydro (which had accumulated some $40 billion in debt) were over, then promptly set up an even more centralized bureaucracy. If its Standard Offer Contract is anything to go by, it seems to be determined to micromanage everything in such as way as to impose completely unnecessary cost burdens on those trying to introduce alternative generation, particularly at small-scale. The metering program also imposes unnecessary costs, largely due to the political requirement for two-way communcation and critical call capability.