Ontario Electricity Rates
When it comes to the price of electricity in Ontario, consumers face two components: the Hourly Ontario Energy Price (HOEP) and Global Adjustment (GA).
The Global Adjustment is used to fill the gap between the price as determined in the wholesale market (HOEP) and the price necessary to cover contracted generation. If GA goes up, then HOEP goes down and vice versa. The wholesale price of electricity changes hourly based on its demand and the availability of supply.
Global Adjustment Explained
Global Adjustment (GA) was created as a result of Ontario’s 2009 Green Energy Act and is a fee billed to all hydro customers in the province. The charge is included on all of consumer’s monthly electricity bills to cover the costs of providing adequate generating capacity and conservation programs throughout Ontario. This cost accounts for approximately 70% of a consumer’s total electricity bill.
Most commercial consumers are categorized under “Class B” Global Adjustment. These consumers pay a monthly posted Global Adjustment (GA) rate that is calculated by the IESO.
How is the Global Adjustment Calculated?
The GA is calculated each month as a total dollar amount based on the difference between market revenues and the following areas:
- Biomass, Landfill and Byproduct
- Natural Gas
- Industrial Electricity Incentive (IEI) Program
- Ontario Power Generation – Regulated Nuclear and Hydro
- Ontario Electricity Financial Corporation – Non-Utility Generation
- Conservation Programs
- Funds and Financing
Customers classified under Registered Price Plans (RPP) are charged either time-of-use or two-tiered rates that include an estimate of the Global Adjustment.
What is the Industrial Conservation Initiative?
The Industrial Conservation Initiative (ICI) is a government program introduced by the IESO to reduce the costs of managing Ontario’s electricity infrastructure. In exchange for reducing electricity usage during the top 5 peak hours each year, large volume consumers are able to reduce their Global Adjustment costs by approximately $500,000 per MW.
Larger businesses who are eligible to participate in the ICI program are categorized as ‘Class A’ and their monthly Global Adjustment charges are based on their electricity demand during the top five hours of system peak from the previous base period.
How Active Business Services Can Help Optimize Your Global Adjustment Costs
As more and more users begin to participate in the ICI program, it is becoming more difficult to predict and curtail during the top 5 peak hours each year. If you believe your business is overpaying for the cost of energy, Active Business Services can offer a robust and accurate peak prediction service to large volume consumers to help manage their consumption and maximize their Global Adjustment cost savings each year. Learn more about our Energy Assessments here.
Complementary Customized Assessments
Active Business Services can build a no-cost customized peak notification assessment for your facility outlining the potential Global Adjustment Class A cost savings.