Global Adjustment plays a big role in Ontario’s energy market. Do you know how it works?
TL;DR
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Global Adjustment (GA) is part of Ontario’s Peak pricing system and revenue from GA is used for grid upkeep, capacity expansion, green energy programs, and generation contracts.
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Class A participants pay GA costs based on their company’s percentage of total provincial energy use.
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Hardware upgrades, load shifting, investing in on-site generation, battery storage, and/or changing company habits are all ways to tackle GA costs.
Anyone who’s looked at an energy bill in Ontario knows that Global Adjustment (GA) represents the lion’s share of your energy costs.
The meteoric rise in GA costs has been a headache for businesses in Ontario for years, yet despite GA’s ubiquitousness, many people still don’t know what it actually is. In short, GA covers several energy programs and cost structures.
There are three main components used by the Independent Electricity System Operator (IESO) that go into determining GA rates, all of which centre on generating contracts and system upkeep.
The first component deals with the contracts administered by the Ontario Electricity Financial Corporation with existing generating stations, specifically the fees paid by the IESO to generating stations for their energy capacity.
The second component deals with the money paid to Ontario’s baseload generation (nuclear and hydroelectric stations) – the crucial stable foundation of Ontario’s energy supply.
Lastly, GA covers the contracts by the IESO for new generating capacity (whether from renewables, gas, waste, or biomass) as well as refurbishments for the nuclear sector and energy conservation programs.
From hardware to leasing, to software and proactive management solutions, businesses have many options to reduce GA fees.
The reason that the IESO uses GA to cover these various costs is that it provides a convenient catch-all to pay for expensive infrastructure maintenance and renewable energy capacity expansion. One element to this is the fact that as Peaks become larger, more standby capacity needs to be built in order to ensure adequate supply on those few hours or days a year when demand is greatest.
This is why GA is part of the IESO’s Peak pricing system, and why reducing your energy use during Peak hours saves you GA fees. For instance, Class A participants in the Industrial Conservation Initiative (ICI) pay a percentage of the province’s total GA fees based on their respective percentage of total energy use (i.e. 1% of total use means you pay 1% of total GA costs).
More than one way to tackle GA
Fortunately, there are a host of ways that you can reduce your GA costs that don’t necessarily involve curtailing production or shutting down altogether during Peaks (although both options can be valid tactics in certain scenarios).
Alongside making investments in on-site generation capacity (using backup generators or co-generation capabilities) and battery storage, changes in company habits can also play a significant role.
For instance, scheduling maintenance and training during Peaks helps avoid unnecessary downtime, and changes to shift and production schedules can help businesses stagger large increases in energy use or spread them out more over the course of the week.
From hardware to leasing, to software and proactive management solutions, businesses have many options to reduce GA fees, if they choose to take advantage of them. If you’re interested in tackling your energy bills and GA fees, we would encourage you to register for a free account with EnPowered.
Doing so gives you access to our free bill analysis – offering actionable items to reduce costs – as well as more information and other resources on Ontario’s energy market.
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