INTERVAL ENERGY:

Ontario Global Adjustment
Immediate and affordable Class A vs. B business case analysis to choose the lowest
electricity rate for your organization.
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Class A Global Adjustment


Class A is one of two mechanisms for businesses in the province of Ontario to pay their share of the Global Adjustment amount that is due each month. The Class A rate is paid based on your building's contribution to the top 5 system peaks throughout a one-year period. To save on the Global Adjustment charge, Class A rate payers typically deploy a mix of no-cost/low-cost or technology solutions to lower their demand during all of the potential top 5 peak events. Class A rate payers have much more control over their Global Adjustment costs than Class B rate payers.


Eligibility


The Class A rate structure has particular eligibility requirements that allow certain building types and sizes to opt-in to the rate. The eligibility requirements are broken down into two major categories:



The industrial/manufacturing buildings are those with NAICS codes ending with digits "31", "32", "33" or “1114”. The lower average peak demand allowance for these buildings is attributed to the 'Industrial Conservation Initiative (ICI)' that was introduced in April 2017.


Note that the above scenario is truly an average, and it is okay if your building has a peak demand lower than the threshold in some of the months. The important thing is that the 12-month average works out to be greater than either the 1-MW or 500-kW numbers mentioned above.


The "12-month average" is typically measured during the 12-months during the previous Class A peak setting period (see below for more details), which is from May of one year to April of the following year. This is key for those close to the opt-in requirements to ensure they are meeting the Class A eligibility requirements over the correct 12-month period.


Major Class A Periods


The Class A rate structure has three major periods that govern how your rates will be calculated, described in detail below.


The three Class A periods can be visulaized below.




The key item to remember with Class A is that you are always being billed one-year after a peak setting period, so you will always realize the (potential) Class A savings one-year after you implement a savings plan.


Peak Demand Factor (PDF)


Class A cost calculations are mostly governed by a factor that describes how you performed during the top 5 system peaks, called your Peak Demand Factor (PDF). The PDF is simply your building's percentage contribution to the province's overall system peaks during the highest electrical demand hour of the peak day. The PDF calculation is best described by the table below, which uses the example of the 2019-2020 peak setting period.


Date Ontario Demand (MW) Your Demand (kW)
July 5, 2019 | HE 17:00 21,275 1,542
July 20, 2019 | HE 17:00 21,147 1,871
July 29, 2019 | HE 17:00 21,068 1,576
July 19, 2019 | HE 12:00 21,006 1,720
July 4, 2019 | HE 18:00 20,956 1,843
Totals: 105,452 MW 8,552 kW

To further understand the above table, we will break down the July 5, 2019 row. Let's start with the "HE" tag, which means "hour ending", signifying the hour that the peak happened during July 5th. The hour ending terminology means the peak happened between hour 16:00 to 17:00 (4-5 PM EST). Now, in the "Your Demand (kW)" column, this shows your building's electrical demand during this exact same hour that the provinced peaked. The process is repeated for all other days and their specific hour ending peaks.


Now we are ready to calculate your percentage contribution to Ontario's system peaks, otherwise known as your "peak demand factor (PDF)," using the data from the above table.


PDF = [Sum of Your Demand (kW)] / [Sum of Ontario's Demand (MW) x 1,000]

PDF = 8,552 kW / [105,452 MW x 1,000]

PDF = 0.00008110

Utilizing the Peak Demand Factor


The PDF is the key item to determining your building's specific Class A costs. Your PDF is simply multiplied by the province's total Global Adjustment amount for each month. Let's explore an example using the PDF calculated above, and the total provincial Global Adjustment amount in July 2019.


Class A Cost = PDF x Monthly Total Global Adjustment

Class A Cost, July 2019 = 0.00008110 x $1149.6 million

Class A Cost, July 2019 = $93,233

Peak Demand Factor Key Reminders


Your PDF remains the exact same number for an entire year, after the peak setting period is over. The PDF starts to appear on your bill in July of any given year, and is last used on your June bill in the following year. The PDF will re-set every year in July, using the peak performance set in the previous year.


Class A Savings Options


As described above, Class A costs are driven by your peak demand factor (PDF), multiplied by monthly Global Adjustment amounts. We know the GA amount is out of our control, so the way to reduce costs as a Class A rate payer is through reducing your PDF, which is done by lowering your grid consumption during peak events.


Lowering your peak energy consumption can be accomplished through a few different strategies that range in complexity and savings potential, including no-cost strategies to capital cost technology strategies. Learn more about cost reduction strategies below.



  • Learn more about Class A reduction strategies