Understanding the Global Adjustment
We receive many questions about the Global Adjustment from our business customers.
According to the Independent Electricity System Operator (IESO) website – (www.ieso.ca):
If you pay the market price (called the Hourly Ontario Energy Price) or have signed a retail contract, your electricity bill also includes a line for the global adjustment. The global adjustment affects the final commodity price you pay.
The IESO updates information on the Global Adjustment on a monthly basis so that consumers can get an idea of what their final electricity costs may be.
What is the Global Adjustment?
The Global Adjustment provides both adequate energy supply and green energy for Ontario. It accounts for differences between the market price and the rates paid to regulated and contracted generators and for conservation and demand management programs. As a result, its value may be positive or negative, depending on the fluctuation of prices in the spot market.
The rate is set to reflect the difference between the market price and:
- The regulated rates paid to Ontario Power Generation’s nuclear and hydroelectric baseload generating stations;
- Payments made to suppliers that have been awarded contracts through the Ontario Power Authority such as new gas-fired facilities, renewable facilities (like wind farms) and demand response programs; and
- Contracted rates administered by the Ontario Electricity Financial Corporation paid to existing generators.
Who is affected by the Global Adjustment?
This adjustment applies to business customers who pay the spot market price and customers who have signed a contract with a licensed electricity retailer. It appears as a separate line on the bill. For customers who pay the Regulated Price Plan, it is factored into the rate set by the Ontario Energy Board, and does not appear as a separate line item.
Does your company have a peak demand of over 5 MW?
If you have been designated a Class A consumer by your local utility or the IESO, more information about how you are charged for the Global Adjustment is found here.
Why does the Global Adjustment vary from month to month?
The Global Adjustment increases and decreases in response to changes in spot market prices. When the spot market price of electricity is lower, the Global Adjustment is higher in order to cover the additional costs of energy contracts and other regulated generation. It also changes when new projects come into service and the contract payments take effect.
What is the monthly rate for Global Adjustment?
There are three rates, each available at different times of the month. Each is set to recover the total monthly costs of the global adjustment. Depending on when in the month you are billed, your LDC may use any one of the three rates. The 1st estimate is posted by the first business day of the billing month, the 2nd estimate is posted by the final business day of the billing month and the actual global adjustment is posted on the tenth business day after month end.