Previously from the Energy Waste Sensei: We discussed how to focus in on your operations to identify opportunities for lowering energy consumption both from a peak shifting mindset and from an overall consumption perspective.
I think we need to revisit why it’s so important as an Ontario hydro consumer to be the first to jump on the peak management buzz! Here are the top 3 reasons why you need to do this!
First off, let’s confirm that you are an industrial hydro client and meet the criteria!
- Are you a manufacturing company?
- Do you have a peak demand of at least 500kW?
If yes, you qualify to register your company as a Class A client. Being Class A is very important as it allows you to employ cost reduction strategies that you can’t as a Class B client!
Let’s get started now!
The top 3 reasons you need to move now are these:
- Tax reductions,
- Late starters pay more, and
- Class B clients will be left to pick up the slack.
If You’re Not Leading This Effort, You’ll Be Paying for It!
Global Adjustments (GA) is a TAX you pay on your hydro bill. It pays for all the hydro contracts our Ontario government has signed off on. This bucket of money owed is roughly 10 billion dollars! Class A and B clients pay this tax, however, Class B clients have it included as part of their consumption, whereas Class A clients are charged based on their contribution to demand on the five highest demand hours of the year in the Ontario grid.
Seeing the Cost of Lagging Behind
So, let’s say hypothetically… if there were only ten Class A customers, each similar to one other in energy needs, and none of them start employing peak management, they would all end up with charges for their respective 10% contributions to the system-wide peak demand hours. This means that each of them would owe $1 billion in GA tax!
As an Energy Waste Sensei, I practice peak management strategies to avoid those 5 highest demand hours. So, because I didn’t consume energy during those peak demand periods, my GA tax (or peak demand factor) would add up to a whopping 0% tax. Not bad for just changing your energy behaviour in just five hours out of an entire year! To put it another way: Employing this concept reduces your monthly hydro bill by 80%!
Now, in our example, there are only nine clients left drawing power on those five peak demand hours, so now the pot gets divided between 9 instead of 10. That increases the GA tax for those nine to $1.1 billion while I just saved $1 billion on my bottom line!
By the way, if you’re not Class A and peak managing, be very careful to dismiss what I’m trying to convey! As a Class B client, you’re not safe either. As peak management by Class A clients grows, less and less of the GA tax will be supported by Class A clients and therefore, you will see an increase in GA tax to Class B clients respectively.
Do yourself a favour and reach out to me, your Energy Waste Sensei, so I can help you peak your savings, not your costs!
As one of my students (an Energy Waste Ninja, aka client) has commended about our ability and approach: “You are the guiding light in Ontario’s dark hydro cost”. At CoEng Advisors, we are here to help you find your way!