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Global Adjustment

Many electrical bills in Ontario have a line item called “Global Adjustment”. The purpose of this line item is to account for the difference between the market rate for electricity and the rate paid by Ontario to regulated and contracted electricity generators. In theory, this value can be either negative or positive. That is, it can either reduce or increase your electricity bill.

In reality, the Global Adjustment (GA) increases your utility bill, sometimes significantly. For example, a client of ours received their bill for February 2012 where the global adjustment was more than twice the cost of electricity. Unfortunately, the Global Adjustment is not explained on most utility bills. It is simply listed as a total cost; it does not list the unit cost for electricity.

The GA paid depends on the type of customer:

  1. Residential and small business. The price is built into the Regulated Price Plan (RPP), with the RPP rate set by the Ontario Energy Board.
  2. Customers with a retail contract. The customer pays the contract price for electricity plus the Global Adjustment. The kWh GA rate is published on the IESO (Independent Electricity System Operator).
  3. Businesses with Peak Demands over 50kW and under 5MW. The customer pays both the market rate for electricity plus the Global Adjustment.
  4. Businesses with Peak Demands over 5MW. There is a complicated formula, where part of the GA is based on percent that the business contributed to Ontario’s 5 highest demand peaks in the previous years.

For example, for Feb. 2012 if you have a peak demand of 800kW and a monthly consumption of 400,000 kWh, the IESO states a “1st Estimate” of $49.06/MWh or $0.04906/kWh. The GA would be 400,000kWhx$0.04906/kWh=$19,624.

For buildings over 5MW, they use the 5 Coincident Peaks between May 1 and April 30 to adjust the billing between July 1 and June 30. For May 1/10 to Apr 30/11, the Peaks occurred on July 6/10, July 7/10, July 8/10, August 31/10 and September 1/10. If you happened to shut down your plant for these 5 days, your Global Adjustment would be minimal.

 

Scott Martin, P.Eng