Global Adjustment on Energy & More Control Over Your Costs

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GLOBAL ADJUSTMENT:

Many Ontario electricity customers have switched the method by which they are being billed for the Global Adjustment. This occurred when the government expanded the size of customers who could switch to Class A – billing based on a customer’s hourly demands during the top five electricity system peak demand hours – vs Class B – being billed based on electricity consumption. Most customers who switched to Class A billing are saving money this year.

However, care is required:

First, the more customers that opt for Class A billing, the more difficult it becomes for Class A customers to correctly pick the 5 highest system peak hours. This is because these some of these customers may respond to expectations about a potential peak hour by curtailing load thereby ensuring the hour is not a peak hour. In other words, guesses about system peak hours have to take into account the possible reactions of other Class A customers.

Second, the total amount of money that has to be recovered each month via the Global Adjustment is shared between Class A and Class B customers. As customers migrate to Class A leaving fewer customers to pay for the higher costs of Class B, the government, for political reasons, may have to adjust the allocations between Class A vs Class B customers. This could result in overall cost increases to Class A customers in the future.

Third, customers’ usage patterns are dynamic and depend on many factors including business volume, occupancy and weather so they need to be aware of these changing factors.

The bottom line is that just because Switching to Class A initially saves money does not mean it always will. Customers should carefully review the benefits of Class A billing at least annually.

They might also want to consider potential technical solutions, e.g., combined heat and power (CHP) or batteries, that can give them more control over their usage and demand and, hence, their costs.

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