The Global Adjustment (GA) is a monthly adjustment that ensures the commodity price paid for electricity on the wholesale market (spot market price) more accurately reflects the cost to produce this electricity.
The GA accounts for differences between the spot market price and the rates paid to regulated and contracted generators as well as conservation and demand management programs. As a result, its value may be positive or negative, depending on whether the market price is lower or higher than the fixed rates.
All electricity consumers pay the GA.
- Small business and residential customers who pay for electricity on the Regulated Pricing Plan (RPP) have the GA costs factored into the RPP rates.
- Small business and residential customers on a retail contract who have opted out of the RPP have GA as a separate line item on their bill.
- Customers with a peak demand of over 50 kilowatts have GA as a separate line item on their bill.
All rates are posted to the Independent Electricity System Operator’s website.
IMPORTANT NOTICEGLOBAL ADJUSTMENT CHANGES EFFECTIVE JANUARY 1, 2021
In December 2020, the Ontario government made two announcements related to the Global Adjustment (GA) that will change industrial and commercial electricity costs: The GA Deferral Recovery and the GA Reduction, both effective January 1, 2021.
Global Adjustment Deferral Recovery
To providecustomers with temporary relief on their electricity bills, in response to the COVID-19 pandemic, the Ontario government deferred a portion of the GA charges for commercial and industrial customers who do not participate in the Regulated Price Plan (RPP) during the months of April, May and June 2020.
The Ontario government has now made regulatory amendments to O. Reg. 429/04 that enables the recovery of those deferred GA costs. Effective January 1, 2021, over a 12 month-period, non-RPP customers will repay the GA deferral recovery costs.
Global Adjustment Reduction
The Ontario government also announced that effective January 1, 2021, a portion of renewable energy contract costs will be paid by the government instead of electricity consumers. This will result in lower GA costs for all Class A and Class B customers, as well as lowering regulated price plan rates (time-of-use and tiered).
2021 Customer Bill Impacts
Factoring in the GA deferral recovery throughout 2021, Class A and non-RPP Class B customers could see savings of 11% and 12% respectively on their bills, depending on consumption patterns.
These reductions are considerably larger than the deferral repayment costs, and the intent is for this funding to continue after the deferral recovery is complete.
These changes will automatically appear on customers’ bills starting January 2021
Class A and Class B customers are defined by the Ontario Energy Board (OEB) as follows:
- Class A: Customers who participate in the Industrial Conservation Initiative (ICI), pay global adjustment (GA) based on their percentage contribution to the top five peak Ontario demand hours over a 12-month period. Customers participating in this initiative are referred to as Class A.
- Class B: 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. A first estimate of GA in $/kWh is provided by the province, and applied to the customer’s bill (i.e. the $ value is multiplied by their unadjusted kWh consumption for that billing period). These customers are referred to as Class B customers.
Want to know more about the deferral recovery and the reduction of the GA? Please check our Frequently Asked Questions (FAQ’s) below.
If you don't see your question, you can reach us online or by phone at 613-738-6400.
Deferral Recovery and reduction of the GA FAQ’s
What is the government of Ontario doing and why?
In May 2020, to help support industrial and commercial customers impacted by COVID-19, the Ontario government deferred a portion of the GA charges in April, May and June 2020, by limiting the Class B GA rates to $115/MWh for non-RPP customers and providing reductions for Class A customers. At that time, the government also indicated that it intended to recover these deferred costs in 2021 over a 12-month period.
How will this affect electricity costs for industrial and large commercial customers?
The recovery of the deferred GA costs will put upward pressure on costs for Class A and non-RPP Class B customers in 2021. However, this will be more than offset by the government's initiative to shift a portion of non-hydro renewable energy contract costs to the tax base. Those reductions are considerably larger than the deferral repayment costs, and the intent is for this funding to continue after the deferral recovery is complete. The result will be a significant net benefit to these customers.
Can Class A and non-RPP Class B customers expect savings on their electricity bills?
Class A and non-RPP Class B customers could see savings about 11 % and 12 % respectively. After 2021, savings are expected to increase as the recovery of deferred GA costs would be complete and the funding of a portion of non-hydro renewable energy contract costs is expected to continue. Actual savings will depend on consumption patterns.
How will the GA be presented on customers’ bills?
For customers who will be paying both the regular GA amount and the recovery GA amount, the amounts will be combined and displayed as one Global Adjustment line item on the bill.
Will residential customers, small businesses and farms be affected by this?
No, the GA deferred costs will be recovered from the same customer class that benefited from this deferral.
Regulated Price Plan (RPP) customers, including residents, small businesses and farms, will not be affected by the recovery of deferred GA costs.
Who sets the Global Adjustment charges and recovery costs?
The Global Adjustment is set by the Independent Electricity System Operator (IESO) and passed through to Local Distribution Companies (LDC’s) like Hydro Ottawa.
The deferred recovery costs are in addition to the normal GA charges that Class A and non-RPP Class B customers are responsible for. There is a separate deferred GA recovery rate being calculated by the Independent Electricity System Operator (IESO) to be charged to non-RPP Class B customers.
The IESO will post the monthly GA recovery rates applicable to non-RPP Class B customers, and provide the allocated deferred GA recovery amounts for Class A customers.
For more information, on the Global Adjustment Components and Costs, you can also visit the Independent Electricity System Operator (IESO) website at ieso.ca
Please contact us if you have any questions about your bill.