Energy Waste Sensei – Top three things you need to know about opting in (or not) to Class A Global Adjustment hydro billing and if you missed the June 15th cut-off date it’s not too late to do something!
Do you know if you should change your hydro billing classification? What’s a billing classification? Why do I (you) care?
Let’s cut to the chase!
So, the fun fact is that if you opt in it may cost you, but if you don’t opt in it may still cost you. Not very helpful right! I’ll explain after briefing you on classifications.
Ok, some of you may have already heard this a million times, in which case, this is really for my new readers.
In Ontario, there are basically two billing classifications: Class B and Class A. The main distinction between the two are how you are charged Global Adjustment (GA) Tax.
As a Class B hydro billed customer, you are charged both cost per kWh consumed and GA tax per kWh. However, Class A billing is substantially different. Your tax as a Class A is figured out as such; the IESO tracks the 5 highest demand hours in the year, calculates your percentage of use and then that is multiplied by 10 billion dollars. Voila, your portion of the GA tax figured out. Ouch! Oh, and the activities of the electrical use are lagging. This means that last year’s hydro consumption activities dictate this year’s billing.
Now let’s get back to our top three “need to know” about billing classifications and whether you should:
1.Opt in (B to A)
2.Not opt in to Class A from B (B to B)
3.Opt out of A (A to B)
As a class B client, you consume hydro and pay tax as a blended cost per kWh. Your energy strategy, if you have one, can only be as effective as your energy consumption lowering strategies. In other words, the only way to really reduce the cost of your monthly hydro bill is to consume less kWh! With that, typically you don’t focus on peak management and therefore you may have a big surprise on your hands if you opt in to a Class A billing strategy.
Keeping in mind the difference between both billing types it is reasonable to have different strategies. The probability of having consumed electricity on those 5 highest hours last year are very high. In which case, you will be paying significantly more for your monthly hydro bill and therefore, should NOT opt in.
Before deciding which way to go, you should consult with me, your energy waste sensei.
Depending on your use, we will find the right strategy for you. We may develop a peak management strategy for you to apply this year that will allow you to realize benefits when you opt in the following year. Or perhaps, you have inadvertently avoided those 5 high hours in the year, and opting in now is the right strategic move as your contribution factor could be zero, therefore rendering you an 80% reduction in your monthly hydro bill!
You may be a Class A client that has not yet employed a peak strategy, thus contributing a bigger piece of the hydro pie then necessary, making you the government’s Tax MVP! In this case, you would likely be advised, after thorough analysis, to opt out of Class A until your appropriate strategy is determined.