Global Adjustment for Mid-sized and Large Businesses
Consumers with a peak demand of 50 kilowatts (kW) up to five megawatts (MW) typically pay the global adjustment (GA) through their regular billing cycle with their local distribution company (LDCs) − these customers are referred to as Class B customers. If you are one of these customers, the information you need to know about global adjustment is found on this page.
As of January 1, 2017, Class B customers with an average peak demand of above 1 MW can opt to participate in the Industrial Conservation Initiative (ICI). Consumers participating in the ICI are referred to as Class A customers and pay global adjustment based on the percentage of their contribution to the top five peak Ontario demand hours over a 12-month base period.
In April 2017, the Government of Ontario further reduced the ICI threshold from 1 MW to 500 kW to make Ontario consumers/market participants in targeted manufacturing and industrial sectors, including greenhouses, (i.e., with NAICS codes commencing with the digits "31", "32", "33" or “1114”) with an average monthly peak demand of greater than 500 kW and less than 1 MW eligible to opt-in to the ICI.
How global adjustment rates are calculated
The IESO calculates a monthly Class B global adjustment rate based on Ontario’s electricity consumption and the costs of providing adequate capacity and delivering conservation programs for the province. This rate varies depending on the following factors:
- Trends in the electricity market: most contract payments and regulated rates are tied to the revenues generators receive through the IESO wholesale market. As a result, the GA can go up if the market price is low, and vice versa.
- The addition of new generator contracts and programs that contribute to total GA costs.
Throughout the month, the IESO publishes three Class B global adjustment rates that are used by LDCs for customer billing. Each LDC chooses which rate − 1st Estimate, 2nd Estimate or Actual − they consistently use to bill their Class B customer classes. The rate used does not affect the overall amount paid for GA by customers over time. The first and second estimates include true-ups to account for the difference between the estimates and actual GA costs from the prior month.
For Class B market participants (those who pay the market price and are billed directly for electricity consumption by the IESO) the Actual GA rate is charged 10 business days after the end of each month.
For more information and frequently asked questions, see Understanding Global Adjustment.
How to calculate your bottom line
For Class B customers paying the wholesale market price, the commodity price paid for electricity is made up of the monthly average weighted Hourly Ontario Energy Price (HOEP) and the global adjustment. If you are distribution-connected, you can contact your LDC to determine which rate − 1st Estimate, 2nd Estimate or Actual − is applied to your business.