Wonder what “Global Adjustment” is? [electricity charges]

Hi all,

In terms of electricity costs, I was wondering what the “Global Adjustment” (GA) is and how much the Feed-in-tariff (FIT) program is responsible for in overall GA costs. So, I wrote the good folks at the Ministry of Energy and received the response below (eventually ;-). I found the response helpful.

Cheers,
Pete

Response from the Ministry of Energy:

All consumers in Ontario pay the blended (or commodity) cost of electricity. This is comprised of two components, the market price for electricity and the Global Adjustment. The Global Adjustment pays contracted and regulated generators the difference between their rates and the market rate for electricity. The Global Adjustment also covers the cost of conservation programs.

The Global Adjustment was introduced in 2005 to ensure that new generators had sufficient revenue certainty to warrant investment in Ontario’s electricity system.  Since that time Global Adjustment has been successful in delivering stable prices as well as ensuring that capacity is in place to deliver a reliable supply of energy.

Global Adjustment costs for most consumers have increased significantly in recent years; however this increase has been accompanied by a decrease in the market price for electricity. The net effect is that the increase in the blended electricity price has been limited.  Electricity bills are increasing in nearly every province, even those that rely predominantly on coal and hydroelectricity.

The Global Adjustment reflects the non-market costs associated with contracted and regulated generation such as nuclear, natural gas, and renewables, as well as the cost of conservation programs.

In 2011, non-hydro renewables accounted for about 10 per cent of global adjustment, and the Feed-in-Tariff program made up about 1 per cent of a typical consumers bill.

I hope this information is helpful. Should you have any further questions of a general nature, please call the ministry’s information line at 1-888-668-4636, TTY 1-800-387-5559.

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