Fighting the Global Adjustment: How to Get from ICI Class B to Class A for Significant Cost Savings

Here’s how you can use enhanced demand management to reduce Global Adjustment fees.
5 April, 2022 by
Fighting the Global Adjustment: How to Get from ICI Class B to Class A for Significant Cost Savings
T&T Power Group.

Vijay is an energy manager at large manufacturing plant in Southwestern Ontario*. When he first took the post several years ago, his mandate was clear: reduce the factory’s carbon emissions and reduce energy costs.

Fast forward to the Spring of 2021, and Vijay had already overseen a complete LED lighting retrofit, the integration of a new smart climate control system, and variable frequency drives had been installed on most of the electric motors in the plant. He had even begun phasing out the fleet of gas-powered forklifts in favour of new battery-powered electric units.

While these and a few smaller projects reduced the factory’s carbon emissions measurably, they only translated into a modest decrease on the electrical bill. Furthermore, the benefit of these marginal savings wouldn’t be felt for quite a few years due to the high capital costs and lengthy pay back periods for the new equipment.

As it is for most Ontario manufacturers, the biggest single item on Vijay’s hydro invoice was the infamous Global Adjustment fee (GA).

Vijay did some analysis and found that in his case, the GA fee alone represented 50-70% of the plant’s electrical costs each month, which worked out to more than $80,000 per year. Like so many energy managers and business owners, Vijay hit the internet and spent more than a few hours learning about Ontario’s GA Fee, the Industrial Conservation Initiative (ICI), and how medium and large customers are divided into Class A and Class B ratepayers.

Armed with a basic understanding of the system, Vijay couldn’t help but feel he was getting a raw deal. As a Class B customer, he had no choice but to pay tens of thousands of dollars towards the GA fee each year, while Class A customers were able to participate in the ICI and dodge most or all of the GA by peak shaving. What’s more, the GA fees avoided by Class A customers don’t simply disappear - they get dumped onto Class B, fueling an ever-growing commercial class divide.

So, what could Vijay do about it?

Like most medium-sized manufacturing enterprises in Ontario, Vijay’s plant had an average monthly peak demand below the 500kW requirement to opt into Class A. To make matters worse, he had only missed the target by an average of 72kW each month during the 2020/2021 base period – a difference that would cost his company close to $100,000 dollars in GA fees for the coming year.

However, rather than accepting the status quo that is GA cost re-allocation from the industrial giants onto Class B, Vijay chose to work with T&T Power Group and fight back. And as it turns out – there is a solution for Class B customers that are just under the demand requirement for Class A.

After analyzing the facility’s demand profile, our expert team at T&T Power Group concluded that strategically deploying a piece of electrical test equipment called a “load bank” several times throughout the coming year would elevate the plant’s demand just high enough to qualify for Class A: a process we call Enhanced Demand Management (EDM).

“Enhanced Demand Management is all about using simple tools, like the load banks we have on hand already for generator testing, to strategically increase a Class B facility’s electrical demand enough to qualify for Class A,” explained Ben Tinklin, T&T Power Group’s lead on GA mitigation projects. “Because we only need to hit that peak demand for a short period of time, it doesn’t even require much more energy than the customer is already using – and it unlocks the potential of hundreds of thousands of dollars in savings.”

With confidence that by the Spring of 2022 his plant will qualify for Class A for the first time, Vijay had T&T Power Group install one of our turnkey peak shaving generator systems that will turn on and displace his load from the grid completely during each of the top five provincial peaks in demand (called coincident peaks) in the 2022/2023 base period. Not only will this be the last year he pays a dollar toward the Global Adjustment fee, but thanks to the new generator system installed, he has also secured enough back up power to keep the entire plant running during inevitable power failures.

To learn more about Enhanced Demand Management and how we can help you stop paying Global Adjustment fees, contact our team today for a free consultation.

*some names and details have been altered in this story to protect the privacy of our customers.

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