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Story Idea?
Better Farming
December 2016
remote areas who are being encour-
aged to manage their demand may
turn to generators, and diesel fuel is
relatively cheap. But the fuel is dirty
compared to natural gas. “I would
much rather people have the ability to
fire up the cleanest fossil fuel possible
to do that,” he says.
Natural gas proponents anticipate
that this infrastructure will benefit all
residents and businesses in rural
Ontario, no matter their hydro
account type. As of mid-October,
however, the province had not yet
released details of the $230 million it
had allocated in its budget for loans
and grants to support gas-line
extensions. Both of the province’s two
utilities, however, did have extension
proposals before the Ontario Energy
Board.
And it will take years to get natural
gas infrastructure in place. A farm
industry rate, by way of contrast,
could be faster to implement and
could ease the costs that farms like
Heeman’s – already on natural gas –
incur on general service accounts.
Convincing decision makers far
away from the farm community about
the rate’s appropriateness will take
If you used $100 worth of electricity in 2015, then you
spent only $23 of your usage on the actual cost of the
electricity. So what was the remaining $77 spent on?
The global adjustment, says Julie Kwiecinski, the
Canadian Federation of Independent Business’s provin-
cial affairs director for Ontario.
Hydro One describes global adjustment as either
“
a
credit or a charge to the customer to account for the dif-
ference between the spot price of electricity and the
rates paid to various regulated and non-regulated
generators across Ontario.
”
Among those
“
various
regulated and non-regulated generators
”
are nuclear
plants and hydroelectric generating stations, as well as
contracted power generators such as renewable energy
facilities and gas-fired facilities. The adjustment also
covers the cost of delivering conservation programs.
Everyone pays the global adjustment. For those who
use more than an average of 50 kilowatts a month and
are on demand billing, the global adjustment appears
as a separate line on the bill. For those who use less
power, the adjustment is built into the per-kilowatt-
hour time-of-use or tiered rates.
In a 2015 report, the Ontario Chamber of Commerce
claimed medium-sized businesses that use an average
hourly peak demand of more than 50 kW a month but
less than three megawatts bear the brunt of this
adjustment. At that time, three MW marked the point
that divided demand-billed customers into categories
of Class A (above three MW) and Class B (everyone else).
In September, the Ontario government reduced the
minimum qualification for Class A to one MW peak
demand.
Class A customers can qualify for the Industrial
Conservation Initiative which reduces their share of the
global adjustment when customers shift their peak
demand to the province’s off-peak periods.
“
In theory, that benefits everybody because Ontario
as a whole, when they look at the market, they now see
that as a whole Ontario’s peak has gone down a bit,
”
says Ian Nokes, the Ontario Federation of Agriculture’s
energy and environmental economic policy analyst.
“
So
if everybody could manage his or her peak use, then
our overall peak goes down. And if it goes down, then
that means we don’t have to have as much generation
on the go (or) generation in the queue.
”
But the reality, the chamber report asserts, is that a
higher percentage of the global adjustment ends up
being paid by Class B demand-billed customers.
Nokes says he’s concerned that many farm opera-
tions in the general service category are vulnerable to
the impact of global adjustment.
“
I don’t want it to end
up that our farmers are left in the dark,
”
he says.
BF
The trouble with global adjustment
RISING
ELECTRICAL
COSTS
An example of the water lines for the in-floor heating system
at the Heeman greenhouse operation.