2020 Ontario Budget Announcement Impacts
Starting January 1, 2021, a portion of renewable energy contract costs will be funded by the Ontario government instead of electricity customers. This will lower electricity bills for large and mid-sized commercial and industrial consumers who do not participate in the Regulated Price Plan (RPP) or receive the Ontario Electricity Rebate (OER) by reducing Global Adjustment (GA) costs.
Class A consumers could see savings of about 15 per cent on their bills, while non-RPP Class B consumers could see savings of about 16 per cent on their bills*. Actual savings will vary depending on customers’ location and electricity consumption.
RPP customers pay their share of the GA through the RPP prices set by the OEB. The 2020 Ontario Budget announcement also represents a reduction of about $1.35 billion in the estimated cost of supply for customers over the RPP forecast period of January 1, 2021 to October 31, 2021. The RPP prices set for January 1, 2021 reflect that reduction. Further, for a temporary period of 28 days starting January 1, 2021, all RPP customers, including those paying both time-of-use and tiered rates, will also benefit from being billed at the off-peak rate for 24 hours a day, seven days a week.
Although RPP prices are decreasing, the impact of the reduced supply costs on the electricity bills of RPP customers will be offset by a reduction in the Ontario Electricity Rebate (OER) from 33.2% to 21.2% also effective January 1, 2021. The OER is a total pre-tax credit that is funded by the Province and appears at the bottom of electricity bills.
*In 2021, Class A and Class B consumers could see savings of about 11% and 12%, respectively, due to the Global Adjustment (GA) deferral repayment in effect for 12 months starting January 2021.
Update to Global Adjustment Deferral
As part of the government's response to the COVID-19 pandemic, a portion of GA was deferred for Class A and non-RPP Class B customers for the months of April, May and June 2020. During those three months, the Class B GA rate was set at $115/MWh. Class A customers received a reduction in GA proportional to the reduction that non-RPP Class B customers received. It was expected that the deferred amounts would be recovered from Class A and non-RPP Class B customers at a later date. The Ontario Energy Board has now approved the recovery of this deferred GA over 12 months, effective January 1, 2021.
The total deferred GA amount was approximately $333 million, with non-RPP Class B customers receiving approximately 62% ($206 million) and Class A customers receiving approximately 38% ($127 million). In addition, the Government of Ontario will fund a portion of GA associated with the costs of non-hydro renewable energy contracts (i.e., wind, solar and bioenergy), which will offset the GA deferral.
In 2021, Class A and Class B consumers could see savings of about 11% and 12%, respectively, due to the Global Adjustment (GA) deferral repayment in effect for 12 months starting January 2021.
Class A: Each month in 2021, every Class A market participant will have their portion of the deferred Class A amount allocated to them. The Class A deferral amounts for 2021 can be found on the IESO's website. This value can be applied against your Peak Demand Factor to determine the portion of GA deferral being paid back monthly. This is bundled within the GA line item on your bill.
Class B: Each month in 2021, every non-RPP Class B consumer will have their portion of the deferred Class B amount allocated to them. This is the monthly Class B recovery rate ($/MWh) (as applicable) multiplied by the monthly total net volume of electricity (MWh). This is bundled within the GA line item on your bill ($/kWh). The Class B deferral amounts for 2021 can be found on the IESO's website.
For more information on the May 1, 2020 Ontario Government Emergency Order and Deferral of GA charges, please click here.