Global Adjustment costs

Class B Global Adjustment costs up for review

Tuesday, November 14, 2017

The newly released 2017 update to Ontario’s Long Term Energy Plan (LTEP) hints at future relief for commercial electricity customers currently carrying a disproportionate share of Global Adjustment costs. Nothing will happen before promised “consultations”, however.

“The government and the Ontario Energy Board are considering changes to the way the Global Adjustment (GA) is charged to mid-sized commercial and industrial consumers, otherwise known as non-RPP Class B consumers,” the LTEP states. “For these consumers, the GA is a fixed charge that is the same regardless of the time that they consume electricity.”

The document, which is subtitled, Delivering Fairness and Choice, does not address the structure of the Global Adjustment allocation across all non-RPP ratepayers. Class A — now open to commercial customers with an average peak energy demand of at least 1 megawatt and manufacturers with an average peak energy demand of at least 500 kilowatts — is granted the opportunity to significantly reduce GA costs through participation in the Industrial Conservation Initiative, but those avoided costs are redistributed to Class B consumers who do not qualify for the program.

Perhaps telling of the Ontario government’s priorities, the backgrounder accompanying the LTEP’s October 26 release discusses residential and industrial electricity rates, but makes no mention of the commercial sector. However, industry associations like the Building Owners and Managers Association (BOMA) of Greater Toronto have already been approached to discuss the Global Adjustment.

“They are genuinely interested in coming up with a creative, fair way to address this because we all know, right now, the Class B customers are carrying much of the cost load,” reports Bala Gnanam, BOMA Toronto’s director of sustainable building operations and strategic partnerships. “If it’s going to be fair, we need to look at it more holistically.”

“Many condominiums are surprised to learn they fit into the Class B designation. While a condominium is clearly a residence, these particular condominiums do not enjoy the same price protections given to single-family homes,” adds Rob Detta Colli, manager of energy and sustainability with Crossbridge Condominium Services.

“The Global Adjustment remains the elephant in the room,” says Scott Rouse, managing partner of the consulting firm, [email protected], who calls for more transparency of the various components now lumped into the GA’s bucket of costs.

On the plus side, he commends the LTEP pledge to address how the GA has been applied to energy storage. “It’s good that they are removing obstacles, including the possibility of offsetting the requirement to pay Global Adjustment for charging storage during off-peak periods,” he notes.

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