Price Overview

HOEP (Hourly Ontario Energy Price) is only one component of the total commodity cost for electricity in Ontario. Global adjustment (GA) is another component which covers the cost of building new electricity infrastructure, maintaining and refurbishing existing generation resources and covers the cost of delivering conservation programs in order to ensure adequate electricity supply over the long term in the province of Ontario.

The following graph shows the breakdown of the total commodity costs on a typical electricity bill. There is an inverse proportionality between HOEP and GA (i.e., generally when HOEP is lower, GA will be elevated and vice-versa).

Average HOEP plus Average GA

Source Data: Average HOEP plus Average GA

Global adjustment covers the difference between the total payments made to certain contracted or regulated generators, conservation programs, and any offsetting market revenues. The GA charge is applied to all customers in Ontario, including those who pay the market price (HOEP) and those who have signed a contract with a licensed electricity retailer. Customers that participate in the Industrial Conservation Initiative (ICI), which are referred to as Class A customers, pay their share of global adjustment based on their Peak Demand Factor (PDF). A customer’s PDF is based on their percentage contribution (i.e., the quantity of energy withdrawn from the IESO controlled grid or distribution system of a local distribution company) during the top five peak hours of the corresponding base period. All other customers, which are referred to as Class B customers, pay their share of GA based on their monthly consumption multiplied by the applicable Class B rate for that month. For customers on the Regulated Price Plan (RPP), the GA charge is factored into the rate set by the Ontario Energy Board.

For more information regarding how the monthly Class B rates are determined, please refer to the IESO’s Class B Global Adjustment web page. 

The Bottom Line on Electricity Prices

These Class B customers will see a separate line item on their bill for GA.

Your LDC will be able to tell which variation of the GA they bill on. If the rate on the IESO website is different than the rate on your bill, your LDC can provide more information (for example, your billing period spans more than one calendar month).

Class B Global Adjustment

The IESO publishes three variations of the Class B GA rate for each month in order to accommodate the various billing cycles for all of Ontario’s Class B customers. The published 1st and 2nd GA Rate Estimates are based on projections of monthly costs that are covered under GA and also include a true-up component to cover any over-collection or under-collection which resulted from the previous month’s published rates. The 1st and 2nd GA Rate Estimates are also based on the projected total energy consumption within Ontario during the month for which the rate is being calculated. The published Actual GA Rate for the month is the representation of the actual GA costs which are allocated over the total energy consumed in Ontario by Class B customers. The Actual GA rate also includes a true-up component to cover any over-collection or under-collection which resulted from the previous month’s published rate. The Class B rate that is applied by LDCs to bill their customers should not affect the overall amount that is paid by the customers over time if the rates continue to be applied consistently.

Below are the three variations of the Class B rate in ¢/kWh for the current and previous calendar year.

The table below does not include the GA deferral recovery amounts for 2021. For more information on the 2021 Global Adjustment estimates and actual recovery rates, visit the Class B Global Adjustment and Global Adjustment Components and Costs web pages.

Global Adjustment (¢/kWh)

Global adjustment by components

The global adjustment (GA) amounts increase or decrease in response to changes in HOEP. When HOEP is lower, the GA is higher to cover the additional payments such as for energy contracts, and regulated generation. GA also changes in response to system conditions, and with the addition of, or changes to generator contracts and programs.

The GA is calculated as a total dollar amount for each month based on the difference between market revenues and the following components:

Wind

• Includes projects under Renewable Energy Supply, Renewable Energy Standard Offer Program, and the Feed-in-Tariff program

Biomass, Landfill and Byproduct

• Includes projects under Renewable Energy Supply, Renewable Energy Standard Offer Program, Feed-in-Tariff, converted OPG Atikokan facility, and NUG contracts with the IESO

Hydro

• Facilities with agreements through Renewable Energy Supply Program, Renewable Energy Standard Offer Program, Hydroelectric Contract Initiative, Hydroelectric Standard Offer Program, and the Feed-in-Tariff programs, as well as OPG's facilities that fall under the Hydroelectric Energy Supply Agreement

Nuclear

• Bruce Power nuclear

Natural Gas

• Natural gas facilities including OPG’s Lennox (dual fuel)

Solar

• Includes projects under Renewable Energy Supply, Renewable Energy Standard Offer Program, and Feed-in-Tariff program.

Other Programs - IEI and Storage

• Industrial Electricity Incentive (IEI) Program: An incentive for eligible consumers in Ontario to increase industrial production. Eligible activities include building a new, or expanding, a facility that falls within a specific NAICS Canada 2012 sector
• Storage: Includes facilities operating under the Phase II energy storage program

Funds and Financing

• Includes programs supporting community groups in the design and delivery of renewable energy initiatives and also includes contract penalties received from generators

Conservation

• Conservation programs including Save on Energy and Grid Innovation Fund (formerly Conservation Fund)

Ontario Power Generation – Regulated Nuclear and Hydro

• Regulated rates for OPG’s nuclear and remaining hydro generation as set by Ontario Energy Board

Ontario Electricity Financial Corporation – Non-Utility Generation

• Contracts administered by Ontario Electricity Financial Corporation with existing generation facilities

Monthly Global Adjustment by components data can be found in the Monthly Market Report of the Power Data section.