Global AdjustmentOverview

Christine Woon, P. Eng.

Key Account Specialist

Customer Care

Toronto Hydro

Understanding Global Adjustment (GA)

• The GA was established by the Provincial Government in 2005 to

cover the cost of providing adequate generating capacity and

conservation programs for Ontario

• The GA is the difference between the Hourly Ontario Energy Price

(HOEP) and regulated/contracted price of generation that includes

Ontario Power Generation’s (OPG) regulated nuclear and hydro

generation

Independent Electricity System Operator’s (IESO) contracts with

generators

Contracted rates administered by the Ontario Electricity Financial

Corporation (OEFC) paid to existing generators

• All electricity rate payers in the province pay the GA, even if it is not

listed on the bill. The GA is included in Time-of-Use (TOU) and Tiered

Rates for residential and small commercial customers

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Toronto Hydro

Understanding Global Adjustment

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http://www.ieso.ca/power-data/price-overview/global-adjustment

Toronto Hydro

Understanding Global Adjustment (GA)Background:

• Prior to 2010, the global adjustment was recovered from all customers via a

volumetric rate ($/kWh)

• In 2010, the provincial government introduced a mechanism whereby

customers whose monthly demand during a specified base period

exceeded 5,000 KW, were eligible to participate as a Class A (also known

as the Industrial Conservation Initiative - ICI)

• All other customers are considered Class B

• Effective January 1, 2017, the Ontario government lowered the Class A

demand threshold to 1,000 kW

• On March 2, 2017, the Ontario government announced the threshold for

North American Industry Classification System (NAICS) 31-33 customers

would be further lowered to 500 kW

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Toronto Hydro

Understanding Global Adjustment (GA)

Allocation of Costs:

• Most customers pay global adjustment based on the volume of

electricity they consume each month (kWh) – Class B Customers

• Eligible customers who participate in the Industrial Conservation

Initiative program pay global adjustment based on their contribution to

the 5 highest provincial peaks (Customer’s Peak Demand Factor)

during a base year – Class A Customers

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Toronto Hydro

Understanding Global Adjustment (GA)

2010

Customers with an average monthly demand greater than 5,000 KW

during a specified base period

2014

Customers with an average monthly demand greater than 3MW. Sector

restrictions for customers 3,000 – 5,000 KW (NAICS code 493120 or

commencing with the digits ‘21’,’31’, ‘32’, ‘33’, ‘518’ or ‘1114’)

2017

Customers with an average monthly demand > 1MW

2017

Coming Soon: Customers with an average demand greater than 500

KW and less than or equal to 1,000 KW. Sector restrictions for NAICS

code starting with ‘31’ and ‘32’

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Regulatory Changes

Toronto Hydro

GA Regulation

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Requirements to participate in the Industrial Conservation Initiative (Class A) are

outlined in regulation

Toronto Hydro

ICI Annual Cycle

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• Each ICI cycle (base period) begins May 1 and ends April 30

• Customers with a peak demand > 5 MW are automatically in the

program and must OPT-OUT if they don’t want to participate

• Customers with a peak demand >1 MW and <5 MW must OPT-IN if

they wish to participate

• Customers have until June 15 to opt in/out

Toronto Hydro

ICI Critical Timelines

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April 30, 2017: Base period

ends

May 31, 2017: LDCs to provide

each eligible Class A

consumer of its peak demand

factor

June 15, 2017: Customers to

notify their LDCs if they

elect to opt-out or opt-in to ICI

July 1, 2017: Next ICI

adjustment period begins

and ends June 30, 2018

Current Base Period: May 1, 2016 to April 30, 2017

For Billing Period: July 1, 2017 to June 30, 2018

Toronto Hydro

ICI Overview

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Determine Eligibility to Participate - Example

Toronto Hydro

ICI Overview

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Data from separate load facilities, even if they are under the same

ownership, cannot be totalized for an electricity consumer to qualify

for ICI. For example, Meter 1 cannot be added to Meter 2

Totalization of Meters Not Permitted

Meter 1 Meter 2

Toronto Hydro

Provincial Peaks

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Posted on the IESO’s website

http://www.ieso.ca/sector-participants/settlements/global-adjustment-and-peak-

demand-factor

Toronto Hydro

ICI Overview

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Customer’s Peak Demand Factor (PDF) = 8.225 ÷ 113,934.900 = 0.00007219

Calculating Peak Demand Factor Example – Co-Incident Demand

Toronto Hydro

ICI Overview

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Customer’s Peak Demand Factor (PDF) = 17.863 ÷ 113,934.900 = 0.00015678

Calculating Peak Demand Factor Example – Co-Incident Demand

Toronto Hydro

ICI Overview

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Notification Letter Example

Toronto Hydro

Opt-In Form

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Once a customer opts-in/out by June

15, they are ‘locked in’ during the

applicable adjustment period

Toronto Hydro

Consent Form

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The Ministry of Energy requires Class

A enrolled customers to provide the

address and GPS coordinates of their

head office and enrolled load facilities,

as well as consent for the information

to be shared with the Ministry and

made public

Toronto Hydro

GA Rates

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Posted on the IESO’s website

http://www.ieso.ca/sector-participants/settlements/global-adjustment-for-class-b

Class B:

Total GA:

Toronto Hydro

Class B Sample Billing

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Toronto Hydro

Class A Sample Billing

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Toronto Hydro

Class A vs Class B Sample Calculation

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December 2016

Class A Calculation:

Peak Demand Factor = 0.00007219

Total Provincial GA (Dec 2016) = $965.5M

Global Adjustment Class A = 0.00007219 x $965.5M = $69,699.45

Class B Calculation:

Adjusted kWh Used = 797,560.540

Class B Actual Rate (Dec 2016) = $0.08708/kWh

Global Adjustment Class B = 797,560.540 x 0.08708 = $69,451.57

Toronto Hydro

Class A vs Class B Sample Calculation

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Toronto Hydro

ICI Overview

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Scenario 1: Peak Demand Factor – Effect of Demand Reduction

Customer’s Peak Demand Factor (PDF) = 7.725 ÷ 113,934.900 = 0.00006780

Toronto Hydro

ICI Overview

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Scenario 2: Peak Demand Factor – Effect of Demand Reduction

Customer’s Peak Demand Factor (PDF) = 16.363 ÷ 113,934.900 = 0.00014362

Toronto Hydro

ICI Overview

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Bill Impact – Effect of Demand Reduction Scenarios

Scenario 1: 100 KW Demand Reduction

Peak Demand Factor = 0.00007219 GA = 0.00007219 x $965.5M = $69,699.45

Peak Demand Factor = 0.00006780 GA = 0.00006780 x $965.5M = $65,460.90

Difference $4,238.55

Scenario 2: 300 KW Demand Reduction

Peak Demand Factor = 0.00015678 GA = 0.00015678 x $965.5M = $151,371.09

Peak Demand Factor = 0.00014362 GA = 0.00014362 x $965.5M = $138,665.11

Difference $12,705.98

Toronto Hydro

Class A vs Class B Review

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Toronto Hydro

ICI Summary

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• ICI requirements are outlined by the provincial government in O. Reg.

429/04

• ICI Critical Timelines: After the end of a base period, April 30, Toronto

Hydro provides eligible customers with their peak demand factor by May 31.

Customer to ‘opt-out’ or ‘opt-in’ by June 15. Billing cycle starts July 1 and

ends June 30, the following year

• Customers are generally unable to switch from Class B to Class A or vice-

versa during a billing period

Key Considerations

Toronto Hydro

ICI Summary

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https://www.ontario.ca/laws/regulation/040429

http://www.ieso.ca/sector-participants/settlements/global-adjustment-class-a-

eligibility

http://www.ieso.ca/sector-participants/settlements/global-adjustment-and-peak-

demand-factor

http://www.ieso.ca/sector-participants/settlements/global-adjustment-for-class-b

http://www.torontohydro.com/sites/electricsystem/business/yourmeter/Pages/Int

ervalMeteredCustomers.aspx

References

Toronto Hydro

Disclaimer

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The information in these materials is based on information currently available to Toronto Hydro Corporation and its affiliates

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