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Useful Resource

The Bottom Line on Energy Management: Making Ontario's Electricity Market Work for Your Business explains how your company can reduce electricity costs with more efficient energy use. Included are case studies, as well as an explanation of your electricity bill. Download a copy or request a free printed copy from marketing@ieso.ca.

Managing Electricity Costs

By understanding how and when your business uses electricity, you can discover opportunities to reduce your overall energy costs. Taking the following steps can help your organization manage its electricity costs and make a difference to its bottom line. 

Step 1 - Know Where You Stand

Interval Meters Track Usage Hourly

For business customers, interval meters are the only way to take advantage of fluctuations in price. Interval meters track how much electricity you use on an hourly basis, or in some cases, every 15 minutes. Having an interval meter means your utility charges the Hourly Ontario Energy Price (HOEP) for electricity based on your usage for each hour.

Businesses without interval meters pay a weighted average of the hourly price, which is based on the consumption patterns of similar consumers in your area, rather than just your own.

If your electricity use is fairly consistent 24 hours a day, or if you use more electricity during off-peak hours, you can likely reduce costs by installing an interval meter. Ask your local utility or an energy consultant to help determine if it's the right solution for you.

Get the Details on Your Demand

Consider creating a demand profile to track and view the details of your company's electricity use over time. Keep track of hourly use for each day, and times of peak demand for each month.

Once you identify the demand peaks, you can then decide which equipment or processes can be shifted to lower demand charges, which can total up to 30 per cent of your bill. The key is to minimize electricity use at the most expensive times of day.

A demand profile helps you to monitor your usage patterns and manage them more effectively. Contact your local utility or an energy consultant to provide you with the relevant data and information to create and use your demand profile.

Step 2 - Invest in An Energy Management Plan

An energy management plan will help your business to set energy goals and provide the road map to help achieve them.

Start by focusing on your company's technical systems and daily operations to better manage electricity usage and reduce costs. Outline this information in an official plan to help employees recognize what changes need to be made and why. A plan will also help track your progress and return on investment in energy efficiency over time.

The following eight steps provide a clear and simple approach to understanding how your business uses electricity, and how to effectively manage your costs.

Step A: Understand Your Energy Costs

Identify the factors on your bill that influence your demand (measured in kilowatts or kilovolt-amperes) and energy costs (measured in kilowatt hours) for insight into what your business can do to reduce those costs.

Step B: Monitor and Target

Compare monthly data to determine how much energy consumption at your facility varies over time. For example, by comparing energy consumption against production, you can determine energy costs per unit of production as a means to assess potential savings opportunities.

Step C: Know When Energy is Used

The cost of electricity is influenced by the time of day it's consumed.  Look at your company's demand profile to study energy use patterns - essential information if you're considering making changes to lower demand. Or, if you have an interval meter, take advantage of times of the day or month when electricity prices are lower.

Step D: Know Where Energy is Used

Identify the equipment that draws the most power. By improving its efficiency, you will see a corresponding reduction in your electricity costs. Consider an energy audit to get a useful, detailed breakdown of electricity consumption in your facility. 

Through the IESO's Save on Energy program for businesses, customers are eligible for incentives to complete energy audits assessing the potential for energy savings through equipment replacement, operational practices, or participation in building systems and envelopes projects. See Save on Energy's Audit Funding for more information.

Step E: Eliminate Waste

Energy waste can appear in many forms including excess time, volume, pressure and temperature. It is important to match the energy your business actually uses to what is really needed. Once a better balance is established, eliminating waste becomes an effective cost-cutting tool.

Step F: Maximize Efficiency

The condition of your company's equipment and operations can have a significant impact on savings. Consider making strategic changes in how you operate by scheduling more frequent maintenance for existing equipment, or investing in more energy-efficient technologies. While some operational changes may have relatively low  implementation costs, investments in equipment upgrades or retrofits can have a shorter payback period and lead to permanent long-term savings.

Step G: Optimize the Energy Supply

Once you have reduced your energy requirements, you may consider supply-side alternatives to meet your energy needs such as heat recovery, cogeneration, and renewable generation options like wind, solar or biofuels.

Step H: Monitor Progress, Share the Results

Chart your progress over time to share successes with staff and encourage them to keep looking for ways to lower electricity costs. Create an operational schedule and maintenance plan that takes advantage of opportunities to reduce electricity costs.

Step 3 - Control Electricity Use

Reduce Your Peak Demand​

It's possible to use the same amount of energy overall and still reduce electricity bills. All you need to do is manage your business's electricity demands and draw the same amount of electricity from the system at a slower rate.

Demand charges are used to cover the cost of the wires and equipment needed to get the electricity to your business. If your business uses a lot of equipment at the same time, you will have a higher demand peak. This requires additional wires and transformers to supply electricity at the peak rate to prevent overloading the system. So, higher peak demand translates to higher electricity costs

Class A eligibility for Industrial Conservation Initiative has been expanded to include customers with a peak demand greater than 3 MW. Read more on Changes to Class A Eligibility.

Your electricity delivery charges for the months are based on one 15-minute or 60-minute peak. If you can reduce your peak, you will reduce your delivery charges. In the example below, "Company A" and "Company B" are using the same amount of energy overall. However, "Company A" is drawing its electricity at a slower rate. This means it has a lower peak and, as a result, will have a lower demand charge on its bill.

Graph demonstrating peak electricity periods 

Contact your local distribution company to learn more about conservation and demand management programs, which can help shift the peak demand of your facility.

Conserve and Eliminate Waste

Learn how to be energy smart to save on both electricity and costs. 

Simply by getting regular equipment maintenance or turning off equipment when not in use, your business can shave up to five per cent off its electricity bill. For example, a grocery store in Burlington took a closer look at how it used electricity. When they examined their demand profile, they noticed that overnight electricity use dipped much lower on weekends. They realized that employees were turning off fewer lights during the week than on weekends. Changing the closing procedures on weekdays cost nothing, and the electricity savings added up.


Energy Conservation

The IESO, through Save on Energy, offers several province-wide energy efficiency programs that provide funding to retrofit current electrical equipment and to perform energy audits. There are also incentives for new construction projects that exceed energy efficiency standards on the Ontario Building Code. For more specific program information for your business or home, visit www.saveonenergy.ca.

Your local utility delivers these province-wide programs and may also offer specific programs to address local issues. Ask your local distribution company what's available in your area.

If you are a transmitted-connected customer, financial incentives are available under the Industrial Accelerator Program (IAP) for  investments in process changes and equipment retrofits that will reduce electricity consumption. See Industrial Accelerator Program to learn if your organization qualifies.

Natural gas providers also offer a number of conservation and demand management programs designed to increase overall energy efficiency. Contact them to see how these programs can work for you.

Consider Self-Generation​

Another option for your business is to generate your own electricity. Look at renewable-energy options like wind turbines, solar panels, biomass/biogas systems, or natural gas generators to offset some or all of your electricity costs.

If on-site generation can be regulated at different times of the day, you could use it to replace what you would normally consume from the power system during demand peaks or when the price of electricity is high. It can be more economical to generate your own power during these times. An added benefit is back-up power in the event of power outages.

To learn more, see Embedded Generation

Engage Staff in the Process

Day in and day out, your employees operate machinery, control your building management system and turn on computers, lights. Engage employees directly in the energy management process to let them know how their actions can positively impact energy costs and the organization's bottom line.

Staff will be more likely to use electricity efficiently and it will also present opportunities to facilitate ongoing training and collaboration between business units. This can lead to employees actively sharing ideas about how energy use can be reduced in their area to the benefit of the entire company.

Step 4 - Benefit from Demand Response​

Demand Response​ capabilities can be an effective way to cut electricity demand and be rewarded. Instead of simply generating more electricity in periods of high demand, businesses are reducing or shifting their electricity use. They are rewarded for their actions by the utility through lower electricity bills or payments if they are participating in a Demand Response program.

For example, large users of electricity, whose peak monthly demand is over three megawatts, are eligible for the Global Adjustment Allocation​ where costs based on a number of peak consumption days. The more they reduce electricity demand on specific days, the lower their overall global adjustment charge will be.

More Opportunities for Demand Response

The IESO's Demand Response (DR) Auction facilitates the entry of new suppliers of demand response. Under the DR Auction, large consumers, such as dispatchable loads, as well as aggregators of smaller institutional, commercial and industrial customers can compete to provide DR capacity, helping to meet Ontario's overall system adequacy needs.

For more information, see Demand Response Auction.

Learn how demand response can help balance the grid on a second-by-second basis.