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Ontario’s Industrial Conservation Initiative (ICI): What is it, and how does it work?

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As of January 1, 2021, industrial and commercial businesses in Ontario benefited from lower electricity costs through lowered Global Adjustment costs thanks to the Industrial Conservation Initiative (ICI). In case you don’t know, the Industrial Conservation Initiative is another program from Ontario that consumers from the industrial sector or commercial sector can use to manage energy costs.

What is the Industrial Conservation Initiative (ICI) in Ontario?

The Ontario Industrial Conservation Initiative (ICI) is a demand response program aimed at shifting large electricity users’ power consumption to off-peak hours. This allows these customers to manage their Global Adjustment (GA) costs by reducing demand during peak periods. 

Who’s eligible to participate in the Industrial Conservation Initiative?

To be eligible to participate in the ICI, customers must have an average monthly peak demand greater than 500 kW during an annual base period from May 1 to April 30.

Customers who are eligible to participate in ICI may include:

  • Customers in the manufacturing and industrial sectors, including greenhouses (with NAICS codes commencing with the digits “31”, “32”, “33” or “1114”) with an average monthly peak demand of greater than 500 kW and less or equal to 1 MW.
  • Customers with an average peak demand of above 1 MW but less than or equal to 5 MW.
  • Customers with maximum hourly demand for electricity in a month that exceeds an average of 5 MW for the applicable base period.
  • Existing Class A customers who participated in one or more of the programs specified in Ontario Regulation 429/04 in Section 6.2 (3) and dropped below the peak demand threshold during a base period for an adjustment period that began on or after July 1, 2016, may be eligible. (Class A is automatically applied for customers with average monthly peak demand above 5 MW.)

An example calculation for average monthly peak demand to determine eligibility is shown in the table. Image source: Taken from Industrial Conservation Initiative Backgrounder & FAQs.

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When can companies and industries apply for the ICI?

Each cycle of the ICI starts with a base period, May 1 to April 30. At the end of this base period, customers are assessed for eligibility. Eligible customers with an average monthly peak demand greater than 500 kW and less than or equal to 5MW that wish to participate will need to opt-in to the ICI by June 15.

Customers with an average monthly peak demand above 5 MW are automatically considered Class A and must opt-out by June 15 if they choose not to be settled as a Class A customer for the upcoming adjustment period.

What is the ICI hiatus and how long is it going to be?

On June 26, 2020, the Ontario government introduced a mandatory ICI peak hiatus for ICI participants to allow businesses to focus on recovering from the impacts of COVID-19.

The peak hiatus applies to Class A customers participating in the ICI for the July 1, 2020 – June 30, 2021 adjustment period.

How to apply for the ICI in Ontario?

Eligible customers will be informed by their distributor before May 31 each year if they are eligible – to opt-in or out of the ICI, contact your distributor.

Can companies anticipate power peaks?

The more accurately that a Class A customer can predict and reduce their consumption during the top five Ontario peak demand hours, the more they will be able to reduce their overall electricity charges.

The Independent Electricity System Operator (IESO) publishes a Peak Tracker and associated data tables to assist Class A participants with anticipating the possible peaks. ICI peak hours are confirmed using Final adjusted AQEW (allocated quantity of energy withdrawn) values. Class A customers are billed Global Adjustment-based on their contribution to the top 5 peak hours. These values are published 20 business days after the trade date and only the highest demand hour of the day is used.

Information on energy management is available on the IESO’s website.

What is the Peak Demand Factor (PDF)?

Peak Demand Factor refers to a Class A customer’s percentage contribution to the top five peak Ontario demand hours over a 12-month period of May 1-April 30 (base period).

After the IESO establishes the final top five Ontario demand peaks using adjusted allocated quantity of energy withdrawn (AQEW) for a base period, the IESO and LDCs then look at each Class A customer’s consumption during those five hours (coincident peaks) to calculate their corresponding portion of peak demand or PDF.

This PDF is used to determine a customer’s allocation of costs for the billing period. For more information on how customer PDFs are calculated, you can visit the IESO website.