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Ontario freezes a C&I load management program

image credit: Wikimedia Commons by Bryce Edwards

The Ontario government said in late June that companies that take part in an Industrial Conservation Initiative (ICI) will not be required to cut their electricity usage during peak hours, as their proportion of the program's so-called Global Adjustment charges is being frozen.

The government said the freeze is aimed at helping industrial and commercial electricity customers get their businesses back to normal after cutbacks that were forced by the Covid-19 pandemic.

"Ontario's industrial and commercial electricity consumers continue to experience unprecedented economic challenges during Covid-19," said Greg Rickford, Minister of Energy, Northern Development and Mines, in a statement. He said the freeze will allow large industrial employers to “focus on getting their operations up and running and employees back to work, instead of adjusting operations in response to peak electricity demand hours."

Global Adjustment (GA) covers the cost of building new electricity infrastructure in Ontario as well as delivering conservation programs. It is set monthly to reflect:

  • The differences between the wholesale market price for electricity, known as Hourly Ontario Energy Price (HOEP)
  • Regulated rates for Ontario Power Generation’s nuclear and hydroelectric generating stations
  • Payments for building or refurbishing infrastructure such as gas-fired and renewable facilities and other nuclear, as well as the contracted rates paid to a number of generators across the province
  • The cost of delivering conservation programs. 

By responding to changes in the HOEP, the global adjustment varies from month to month. Generally, when the HOEP is lower, the GA is higher in order to cover the costs of regulated and contracted generation.

The freeze may end cost-saving opportunities that many large commercial buildings were counting on this summer. One news report estimated that  90 percent of customers eligible to participate in the ICI will not be able to reap the benefits of their peak load management investments until at least July 2022.

Under ICI program rules, commercial electricity customers with average monthly demand of at least 1 megawatt and manufacturers with average monthly demand of a least 500 kilowatts have an annual opportunity to cut their next year’s GA costs. The metric is based on how well they trim energy loads during the five hours between May 1 and April 30 when highest overall system demand is recorded.

The rule change announced in late June postpones that process until next May 1 for all except new participants that need to establish a peak demand factor.

Some commercial building owners now won’t be able to take advantage of lower energy demand that stemmed from Covid-19-triggered business shutdowns. Many had expected to record lower-than-usual loads relative to the five peak hours. Doing so could have resulted in favorable peak demand factors, which would be used to figure their share of the GA for the period July 1, 2021 to June 30, 2022.

In addition, energy efficiency investments made since summer 2019 would have been eligible to deliver energy management paybacks next July when new peak demand factors were applied. The freeze means that the near-term business case for investing in demand management may have lost some momentum.

One property manager was quoted as saying that his company was working with large commercial office buildings to adopt technology to reduce their peak demand factors by cycling half of the building through “on” and “off” every 15 or 20 minutes. Those investments might now be delayed.

David Wagman's picture

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