How Global Adjustment Rate Structure Unexpectedly Cost An Organization $250,000 In One Year

CoEng started a partnership with a rapidly growing and expanding Licensed Producer named Agripharm in mid 2018. They were looking for support in their pursuit to achieve the lowest possible energy cost per unit of production. They enrolled in the REA app, which utilizes a software and services platform to automate the work at hand while ensuring there is constant communication between the client and the service provider. Energy and asset management must be practiced… Continuously!

One of the first things analyzed in REA was the rate structure in which Agripharm was enrolled in. Rate structure refers to how a client is billed for energy use and is a major factor in how much an organization pays for their energy each year. For medium to large electricity consumers in Ontario, we immediately look at the business case for Class A vs. Class B Global Adjustment.

In Agripharm’s case, they were eligible for the Class A rate structure (threshold of 500 kW for manufacturers), but they were not able to re-enroll in Class A. This caused some red flags, as the Class A costs were SUBSTANTIALLY lower than the Class B rates they were paying. How much lower!? $250,000 annually!!!

After analyzing the electricity data in the REA Energy Dashboard, we uncovered the problem. In the summer of 2017, Agripharm initiated a major shutdown for facility cleaning & refitting, which meant average electricity demand went below the required 500 kW threshold. The facility only kept on minimal equipment (lighting and some HVAC equipment) during the shutdown, and now had 3-months of peak demand far below 500 kW (see below).

Data above from CoEng’s REA Energy Dashboard platform. (https://www.coengadvisors.com/rea)

From the above chart, it is clearly seen that the facility shutdown dropped consumption drastically, causing the 12-month average peak demand to drop below 500 kW, ultimately forcing the organization to move into Class B rates.

So, how could have this been prevented to avoid the $250,000 cost caused by a production fluctuation changing monthly energy consumption?

The moral of the story is that every organization should have a system in place to manage energy. Whether it’s an in-house person who is excited about the task or a paid service provider, continuous tracking of all aspects related to energy and asset management is required to stay competitive as an organization.

CoEng practices continuous, strategic, and smart energy management with clients using the world’s first Robo Energy Advisor software and advisory services platform. REA keeps costs low and improves the overall delivery of energy and asset management workflows.

The good news…!!

Due to CoEng’s work with our client, we have now enrolled them into the Class A rate structure, which is forecasted to save $80,000 over the following year. Even more exciting is that the client is doubling production this summer while nearly keeping energy costs the same! Stay tuned for our next blog post to learn more about this amazing success story!

Contact the team at rea@coengadvisors.com to learn more about the REA platform and how it can help you always make the best energy decisions for your clients or organization.


GREG YOUNG, B.Eng., EIT.
Manager of Engineering
E: greg.young@coengadvisors.com
C: 705-716-4315

www.coengadvisors.com
205-3365 Harvester Road
Burlington, ON, L7N 3M8

Meet REA, our new Robo Energy Advisor: www.coengadvisors.com/rea

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