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Class B Global Adjustment – What might change?

Electricity TransformerThere are some proposed changes to the Class B Global Adjustment on the horizon. Global Adjustment (GA) is a mechanism used by the IESO (Independent Electricity Supplier of Ontario) to account for the difference between the wholesale market price (HOEP – Hourly Ontario Energy Price) and the cost to deliver electricity (regulated rates for nuclear & hydroelectric, infrastructure requirements, and conservation programs).

For larger building owners, there are two main ways in which GA is charged:

Class A:

  • Greater than 5,000 kW Demand.  Customers are automatically Class A, but can opt out.
  • Demand between 1,000 kW and 5,000 kW.  Must opt in to be Class A.
  • Industrial customer between 500 kW and 5,000 kW.  Must opt in to be Class A.
  • Global Adjustment is based on the building’s load during the five “coincidental peak days” from the previous year.
    • For 2018, the 5 peak days and times are:
      • Sept. 5, 17:00-18:00
      • July 5, 15:00-16:00
      • July 4, 18:00-19:00
      • Aug 28, 16:00-17:00
      • Sept 4, 16:00-17:00
    • A building’s demand for these times are used to calculate the 2019 monthly GA costs.

Class B:

  • Greater than 50kW demand, but are not eligible or have not opted in to Class A.
  • GA is based entirely on consumption.
    • The cost per kWh is calculated monthly.
    • The cost is the same, whether it occurred during a heavy demand time or in the middle of the night or on a weekend.

There has been a fair bit of criticism about the way GA is charged for both classes, and it is something that the Ontario Government is looking into.  The OEB (Ontario Energy Board) has recently published a staff research paper looking at alternate ways of charging GA for Class B clients.

This is not surprising, as a kWh used at 3am on Sunday morning costs little to nothing to produce, whereas a kWh used at 3pm on a hot Thursday costs significantly more.  (Yes, some of that difference is reflected in the HOEP, but it also requires more infrastructure and more generation to produce, and should be reflected in the GA cost.)

The options in the OEB report include:

  • Status Quo
  • Flat Pricing
  • Expanded Time of Use.  Mirrors commodity TOU pricing for GA.
  • Demand-Shaped pricing.  Market costs, based on HOEP.
  • Supply -Shaped pricing.  Also based on HOEP.
  • High N. GA costs are recovered based on consumption during highest demand hours within billing period.

It will be interesting over the coming months as the OEB consults with stakeholders and industry to come up with recommendations.

Multi Residential MetersFrom a conservation standpoint, changing Class B GA costs will change the strategies of building owners.  There will be an increased focus on reducing weekday demands.  Solar power, which typically occurs during higher demands, will be more attractive.  But most importantly, building owners will want to actively manage their consumption, and you can’t manage what you don’t measure.  Systems like Kontrol Energy’s SmartSite, SmartSuite and SmartFactory will make even more sense.[/vc_column_text][/vc_column][/vc_row]