Global Adjustment Deferral initiative
429/04: Adjustments under Section 25.33 of the Act
Bill or Act:
Electricity Act, 1998
Summary of Proposal:
The proposed regulatory amendments would, if approved, provide for the recovery, throughout 2021, of certain electricity generation costs that were not charged to non-RPP consumers between April and June 2020 as a result of government's GA Deferral initiative to mitigate the impact of COVID-19 on commercial and industrial consumers in Ontario.
Earlier in 2020, through a combination of emergency orders and regulatory amendments, the government set an upper limit on the GA rate for non-Regulated Price Plan (RPP) Class B (i.e., commercial) consumers of $115/MWh for the months of April, May and June 2020. Class A (i.e., industrial) consumers, who pay a fixed GA charge monthly that is independent of consumption received a reduction in GA proportional to the reduction that Class B consumers received.
The actual non-RPP Class B GA rate for each of these months exceeded $115/MWh, leading to a shortfall in the amount collected from consumers, with the actual deferred amount totalling approximately $333 million. Non-RPP Class B received approximately 62% ($206M) of the total deferred amount, and Class A received approximately 38% ($127M).
The government is proposing to recover these costs, throughout 2021, from the same consumer classes that benefitted from the deferral. At the time of the announcement of the GA Deferral initiative, the government indicated its intention to recover the deferred GA costs (excluding interest) from industrial and commercial electricity consumers during calendar year 2021.
The proposed recovery approach involves IESO adding about $10.6 million to Class A recovery each month and $17.2 million to Non-RPP Class B recovery (i.e., one-twelfth of the total for each consumer class each month). For Class A consumers, the rate impact under this approach is based on their peak demand factor (PDF), and for non-RPP Class B consumers, the rate impact will vary each month based on the amount of consumption. At the end of 2021, ENDM will be in receipt of all 2020 deferral dollars, and the two classes of electricity consumers that benefited from the deferral will have paid their respective shares.
Details of the recovery approach are subject to change and further refinement after considering feedback from the Regulatory Registry (RR) posting and stakeholder consultations.
Analysis of Regulatory Impact:
October 14, 2020
Comments Due Date:
November 30, 2020
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Toronto, ON M7A 2C1