ClimateWise Webinar · Independent Electricity System Operator (IESO). In this role he is responsible for IESO customer outreach activities as well as engaging the sector on IESO

ClimateWise WebinarWHAT IS THE GLOBAL ADJUSTMENT (GA) CHARGE?

MAY 18TH, 2017

Agenda

• Introduction

• Robert Doyle – Section Head, Customer Outreach, IESO

• Scott Rouse - Managing Partner, Energy@Work Inc.

• Panelist Q&A

What is ClimateWise?The ClimateWise Business Network is a program for local organizations where members receive one-on-one support and guidance in setting environmental targets and seeing the returns of investing in sustainability.

ClimateWise helps you figure out how going green can benefit your facility, how to make it work for your team, and where you should start, learning from coaches and businesses in the network just like yours.

ClimateWise Founding Partners

Robert DoyleSection Head, Customer Outreach, IESO

Robert Doyle is the Section Head of Customer & Stakeholder Relations for the Independent Electricity System Operator (IESO).

In this role he is responsible for IESO customer outreach activities as well as engaging the sector on IESO initiatives such as working groups, engagement meetings and the IESO’s Stakeholder Advisory Committee.

Global Adjustment and the Industrial Conservation Initiative

May 18, 2017

Robert Doyle, Section Head, Customer & Stakeholder Relations

The Independent Electricity System Operator (IESO) works at the heart of Ontario's power system – ensuring there is enough power to meet the province's energy needs in real time while also planning and securing energy for the future. It does this by:

– Planning

– Promoting Conservation

– Ensuring Supply

– Operating the Grid

– Engaging Stakeholders

Who We Are and What We Do

6

Two Decades of Change

7

20222012

8

33%

25%

22%

18%

2%

Installed Capacity

39 GW

37%

16%

26%

<1%

21%

Installed Capacity

31 GW

20%

26%

23%

26%

5%

Installed Capacity

41 GW

Ontario’s Electricity Supply - Capacity

2015 20252005

Demand

ResponseSolar/Wind/

Bioenergy

Water

Natural

Gas

Nuclear

Demand

ResponseSolar/Wind/

Bioenergy

Water

Natural

Gas

Nuclear

Coal

Solar/Wind/

Bioenergy

Water

Natural

Gas

Nuclear

Reflects transmission grid connected

and embedded generation, at year end.

9

Electricity Pricing: Energy Costs & Capacity Costs

Market Price (HOEP)

• Signals current supply and demand situation

• Covers operational costs of electricity production –such as fuel

• Impacted by consumption, weather, time of day, season, and sometimes contracts

• Set every 5 minutes

Global Adjustment (GA)

• Fixed investment or capacity costs to build or refurbish infrastructure

• Revenues that are not recovered through market price

• Includes contracts, and regulated rates to generators, as well as conservation

• Set on a monthly basis

10

Electricity Pricing Trends

Why Does Global Adjustment Vary?

• GA costs change from month-to-month depending on trends in the real-time electricity market, the addition of new contracts that contribute to total GA costs and true-ups that account for differences between estimated and actual GA costs.

11

Global Adjustment by Components

12

13

Industrial Conservation Initiative

• The initiative was introduced by the Government of Ontario in 2010 : rather than be charged on a volumetric basis, Class A customers are charged Global Adjustment based on their percentage contribution to the top five peak demand hours each year.

• The ICI is a form of voluntary demand response: the curtailment of load from the grid during peaks reduces demand, which over the long-term will reduce the need to build additional infrastructure; while customers who curtail will reduce their GA costs

14

ICI Eligibility

• Effective Jan 1, 2017, O. Reg. 429/04 is amended :– Eligible consumers with an average monthly peak demand

greater than 1 MW can participate in the ICI. NAICS code requirements have been removed for customers over 1MW.

• Effective April 2017, O. Reg. 429/04 is amended :– Eligible manufacturing and greenhouse consumers with an

average monthly peak demand greater than 500 kW can participate in the ICI. NAICS code requirements will apply for the 500kW – 1MW customers (ie. codes commencing with “31”, “32”, “33” or “1114”).

Eligibility – Average Peak Demand

• In order to be eligible to participate in the ICI, customers must have an average peak demand greater than 500 kW during an annual base period from May 1 to April 30.

• Example

12-month average = (3.6 + 2.8 + 2.1 + 3.2 + 4.8 + 4.6 + 4.9 + 3.8 + 4.1 + 5.1 + 3.7 + 3.5) / 12 = 3.85 MW

15

Base Period Months May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

Peak hourly consumption for the month (in MW)

3.6 2.8 2.1 3.2 4.8 4.6 4.9 3.8 4.1 5.1 3.7 3.5

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2016

2017

2018

BASE PERIOD

ADJUSTMENT PERIODOPT IN/

OUT

ICI Timing

“billing” period

“peak setting” period

We are here!

Key Dates:• May 31, 2017: LDC’s issue the peak demand factors for eligible customers• June 15, 2017: deadline for customers to opt in or opt out of Class A• July 1, 2017: customers that have opted in will be billed as Class A

The Top Five Peaks

• The top five hours of peak demand in a base period – The days with greatest

amount of MW of electricity withdrawn from the grid.

– They are established and posted by the IESO at the end of the base period.

http://www.ieso.ca/sector-participants/settlements/global-adjustment-and-peak-demand-factor

17

http://www.ieso.ca/sector-participants/settlements/global-adjustment-and-peak-demand-factor

Calculating Peak Demand Factor

18

How Class A Customers are Charged GA

• The Class A customer's Peak Demand Factor (PDF) is used to calculate monthly GA charges during the adjustment period. This is done by multiplying the monthly, Ontario-wide total GA costs by the customer's PDF.

• Example:

– Total system GA costs for March 2016 were $1120.1 million

– Customer PDF is 0.000164

– Customer’s GA costs for March 2016 = $194,654.84

19

Lowering Your Peak Demand Factor

• Curtailment strategies could include:

– Reducing refrigeration set points

– Set back HVAC or lighting in the facility

– Turning off production lines and processes

• Tools could include:

– Subscribing to peak advisory notices

– Checking weather forecasts

– Monitoring the IESO website: peaktracker

20

Anticipating Peaks

21

www.ieso.ca/peaktracker

Class A or Class B?

• Considerations for moving to Class A or staying as Class B:

– Operational schedule and demand profile.

– Ability to anticipate peaks and to curtail.

– Changes to facility’s future demand.

– What are the financial implications?

22

• Contact your LDC

• www.ieso.ca

– Publications & Backgrounders

– Subscribe: IESO Bulletin

– [email protected]

@IESO_Tweets

• www.saveonenergy.ca

@saveonenergyONT

Contact & Resources

mailto:[email protected]

http://www.twitter.com/ieso_tweets




Scott Rouse

Scott Rouse is the Founder and Managing Partner of Energy@Work Inc. Energy@Work specializes in energy management and energy efficiency and provides independent strategic advice and support in implementation to commercial, industrial and institutional clients seeking to optimize their energy use.

Scott is a Professional Engineer (P.Eng) in the Province of Ontario, Certified Energy Manager (CEM), Certified Measurement and Verification Professional (CMVP) and Certified Sustainable Development Professional (CSDP) with the Association of Energy Engineers.

As founding chair of the Canadian Energy Manager Network, Scott has been an active advocate for energy efficiency and willingly shares energy efficiency information in an effort to help Canada improve economically, environmentally and be more socially responsible. Scott assists organizations to bridge the chasm between the status quo and enhanced competitive position through the development of a corporate energy strategy to achieve the ‘Triple Bottom Line' benefits.

Scott achieved North American recognition for developing an energy efficiency program that won Canadian and US EPA Climate Protection Awards through practical and proven solutions.

Managing Partner, Energy@Work Inc.

.

.

GLOBAL ADJUSTMENTAssessing Your Facility's Profile

& derive savings by knowing the rules

ClimateWise

Presented by Energy@[email protected]

www.Energy-Efficiency.com

416-642-0571

May 18th 2017

2017-05-15 Energy@Work GA ClimateWise Webinar ©


http://www.energy-efficiency.com/

26

Global Adjustment Overview

Global Adjustment (GA)…

is a charge paid by all electricity ratepayers in Ontario.

Was initially a credit (Provincial Benefit), but has become a charge

Total for Ontario has recently reached over 1 Billion dollars/month

Beginning to exceed 50-60% of ratepayers electricity bill.

Referred to as the..

Global Adjustment Mechanism = GAM


How big is GAM: BIG Once a credit, now a cost

$54,500,00 per month in 2006 and increase to

$1,076,000,000 in 2016 = 18.7 X higher in 10 Years2017-05-15 Energy@Work GA ClimateWise Webinar ©

28

Global Adjustment Mechanism <GAM>

Understand + Prepare = Win The GAMe

All customers must pay Global Adjustment – It’s a matter of how.

2 Options: Class A or Class B

Decision #1: Evaluate A Vs B, decide by June 15th

Decision #2: GA Response Strategy (May 1st– April 30th)


29

Customer Perspective of GAM:

GAMe or GAMble

Does not need to be a gamble if the right plan is in place,

but there are rules that must be obeyed.


GAMe Players

Set the Rules

Ministry of Energy

Keeps Score

IESO

Determines Eligibility

LDCGA Class A letter required to be sent by May 31

PlayersOntario Ratepayers

Must make ‘A or B’ decision by June 15th


Regulation Updates to ICI

Newly Eligible Customers

• All customers with a demand over 1 MW

• Manufacturing, Industrial & Greenhouse customers over 500 kW

Previously Class A but under 1 MW due to CDM - Might still be eligible!

“Existing Class A customers who participated in…demand

management programs …and dropped below the peak demand

threshold ... may be eligible to continue participating in the initiative.”


Decision 1: Class A or B

Step #1: Check Eligibility (Commercial > 1 MW, Industrial > 500 kW)

Step #2: Evaluate A Vs B

Class B: Set rate each month ($/kWh)

or

Class A: Peak demand factor (PDF) x Monthly Ontario GA Cost

PDF = during the top 5 Ontario demand peaks.

Step 3: Decide + Contact LDC account manager by June 15th

Building DemandOntario Demand


Case Study: Class B, 24% Savings

Based on adjusted interval data from Real Time Monitoring. Class B is favorable.

Due to the property’s high demand during COPs, Class A costs are high. Class B is better.

With the right tools, talent and tenacity, there may be an opportunity to review for 2018,

but need to start this year!

Average Peak Demand 1,798 kW

Demand during COP 1,829 – 1,962 kW

Average monthly kWh 623,000 – 997,000 kWh

PDF 0.0000831746

Class B Costs $827,000

Class A Costs $1,026,00

Savings $198,000 (24% savings over Class A)

kW high in

relation to kWh

=

Class B


Case Study: Class A, 35% Savings

Based on adjusted interval data from Real Time Monitoring. Class A is favorable.

This building had NO demand reduction strategy and Class A was still favorable!


Demand during COP 1,862 - 2,186 kW

Average monthly kWh 1,411,000 -1,622,000 kWh

PDF 0.00009114

Class B Costs $1,735,000

Class A Costs $1,124,000

Savings $610,000 (35% savings over Class B)

kW low in

relation to kWh

=

Class A


Case Study: Class A, 10% Savings

Based on adjusted interval data from Real Time Monitoring. Class A is favorable.

Although Class A is favorable after a basic analysis, there are many factors & scenarios that should also be assessed before deciding.


Demand during COP 1,575 – 1,852 kW

Average monthly kWh 644,000 - 765,000 kWh

PDF 0.00006167

Class B Costs $818,209

Class A Costs $738,644

Savings $79,566 (10% savings over Class B)

Be cautious of

savings <10%


Case Study: No GA Strategy, $800,000 Savings

• Overall a Class A benefit of $800,000 over the past few years without demand curtailment during COP.

• Beginning to ‘experiment’ with non-impact measures(i.e. shaving load)

Large office complex (single account)

High baseload makes Class A favorable for this building

Even small reductions are impactful! 100 kW = $10,000 / COP


Case Study: Flat Profile (Class A Selected)

> Highly volatile, i.e. One month = $178,000 more, but another month = $153,000 saved

Overall savings of $3+ Million = direct benefit to tenants!> Demonstrating the volatility of GA i.e. need to track results!

Commercial office, multi mix tenants + large data center

= High baseload + High demand = Flat profile + Volatile savings


Case Study: Large Industrial with CHP

Current Adjustment Period (2016-2017)

Predicated savings of $377,000 savings (on track)

= With NO demand reduction efforts

Next Adjustment Period (2017-2018)Predicted savings of $841,000, 97% GA Saving!

= With Strong GA demand strategy!!

Conclusion: GA Team responded, monthly engagements paid off = Team remains 100% committed

Large Industrial with Class A Strategy using Cogeneration


Demand (kW)

Plant Purchased Demand = 0 kW

COP Hour: 4-5:00 pm EST

24 Hour Period

Case Study: Boosting Peak Demand

Customers are allowed to artificially “boost” demand to meet minimum monthly

kW threshold & ensure Class A eligibility, i.e. load bank, chiller, other loads

Ok to do this? Yes!

If your Average Monthly Peak Demand (on your bill) is below 1,000 / 500 kW:

Step 1) Class A vs. B analysis to see if Class A is favorable.

Step 2) If it is, boost your demand for 1 hour a month to reach the threshold.


Decision #1: Prepare for June 15th

Step 1: Review demand profiles to determine PDF

Step 2: Review operations (past with future )

- Consider ALL possible scenarios

Step 3: Compare predicted Class B and Class A costs

- Consider ALL possible scenarios

Step 4: Decide & Document (Contact LDC account manager)

- Deadline: June 15th - is a hard deadline


41

Help is Available – What to ask for:

1. Executive Summary: Clearly laid out

- Specific decision and supporting rationale

2. Global Adjustment Overview of Market

3. 2017-18 Cost Projections A Vs B

4. Scenario Review – “what if?”

- Operational changes

5. Recommendation on 2017-18 GA Strategy

- Project Team Responsibilities

- GA Training to minimize GA Costs

Global

Adjustment

Report:

2017-2018

Technical Director

Cc Property

Manager


42

Knowing the Risks

1. Changes to GA Costs and RatesWe expect changes to the total GA cost to have roughly the same impact for A & B.

The % of the total GA cost allocated to each class is constant throughout the adjustment period.

2. Changes to building profileChanges to the amount of kWh purchased from the LDC will impact the % savings over Class B. Although Class A will not change, if kWh is reduced, Class B costs will reduce.

3. # of customers switching Classes

GA costs avoided by Class A must be paid by Class B!If customers switch to Class A, there will be fewer people in Class B left to split the cost

(I.e. Class B will have a higher $/kWh rate).

This is hard to predict, but makes Class B more volatile.

What impacts Class A vs B comparison?


43

Recommended Timeline

Receive GA Recommendation Report Thurs, May 25th

Presentation of Report Tues, May 30th

Confirm LDC Letter Received & Correct PDF Thurs, June 1st

Internal Approval Friday, June 9th

Reply to Utility with Class A or B decision Wed, June 14th (Before June15th)

Base Period Strategy May 1st, 2017 – June 30th , 2018

Important to leave ample time for executive approval

of GA by June 15th – decision is locked for 12 months!


44

Decision 2: Class A GA strategy will maximize savings!

Now that you made Decision #1, Think proactively about next year!

Class A Strategy – Reduce your demand during the COP hours

• Target ~ 20 days to ensure 5 COP hours are captured

• Peaks can shift – reduce for a 3 hour window (recommended)

• Engage operations, tenants, etc.: dim lights, adjust set points, etc.

Small changes can add up to large savings

• Shave 100 kW off 1 of your peaks = $10,000 in savings

• Shave 100 kW off all 5 peaks =$40,000-$50,000 in savings

HOWEVER, the reverse is true – 100 kW during a COP hour adds $10,000

Difference will appear in the following Adjustment Period.


45

Decision 2: Class B2 Part Plan: Reduce kWh & Consider Class A?

Thinking proactively!

Class B Strategy – Reduce use (kWh) all year!

• Target kWh reduction and use the CDM incentives!

• Consider moving to Class A – is it possible to become eligible for Class A by

increasing average monthly demand?

If monthly average demand is 950 kW – is it practical to increase to > 1,000 kW?

- must evaluate A Vs B, but at least there is an option to consider


46

Class B to Class A Example – 7 kW difference- Boost the demand to > 1,000 kW

Playing the GAMe!


IF, the property can raise the monthly average demand 7 kW it will become eligible to participate as a Class A customer in 2018-19 adjustment period.

Still must evaluate if Class A is an advantage, but at least it is an option.

MV 90 Bill

kW kW

May 1,024 1,049

June 1,114 1,130

July 1,130 1,147

August 1,084 1,116

September 1,105 1,138

October 889 914

November 937 946

December 780 804

January 824 849

February 881 900

March 884 904

April 1,001 1,021

971 993

2016

2017

Average

Base Period

Below the 1,000 kW Demand - Class B

Frequently Asked Questions

“What are the right GA tools?” Real time monitoring (ability to check demand profile), motivated team, knowledge & experience

“Will the rules change again?” Likely yes, dynamic market (Changed 5 to 3 to 1 and now .5 MW)

“Is the MOE’s estimated 34% savings from switching from Class B to A guaranteed?” NO, savings vary by customer

“Do tenants care about GA?” Getting very concerned with rising costs & asking: “What was your choice, reason and plan?”

“Who is checking that these costs are fair?” Great question! We asked this in our response to Ontario’s Long Term Energy Plan

“Can anyone switch A/B or B/A during the year?” No: In extreme cases, such as fire, plant shut down, act of war – but has not happened.


Recap: Key Steps

Step #1: Check Eligibility

• Commercial > 1 MW

• Industrial > 500 kW

Decision #1: Evaluate A Vs B & decide by June 15th

Decision #2: GA Response strategy - May 1st , 2017 – June 30th, 2018


Was this Webinar useful?Please let us know

[email protected]

We are very interested in your comments

and are happy answer questions

Presentation available at:

http://www.energy-efficiency.com/globaladjustment

Thank You!



http://www.energy-efficiency.com/globaladjustment

Email: [email protected]

Tel: 416.642.0571

Fax: 416.352.7424Web: www.Energy-Efficiency.com

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Toronto, Ontario, M5A 1J2

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ClimateWise Webinar · Independent Electricity System Operator (IESO). In this role he is responsible for IESO customer outreach activities as well as engaging the sector on IESO

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