The Industrial Conservation Initiative (ICI) is another program from Ontario that consumers from the industrial sector or commercial sector can use to manage energy costs. Effective since May 1st , 2022, industrial and commercial businesses in Ontario benefited from lower electricity costs through lowered Global Adjustment costs thanks to the ICI. At the start of May 1st 2022 to April 30, 2023 base period, the final adjusted AQEW will no longer be used for determining the top five peak hours. Also as of May 1st, there is no longer a regulatory requirement for the IESO to provide LDC’s with draft PDFs – which before, they required peak hour data submitted to calculate everything. This is no longer the case.
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.
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.
Global Adjustment Class A-Eligibility
What is Class A Eligibility, and who is eligible?
Customers who are eligible and participate in the ICI are referred to as Class A customers, and they pay their share of global adjustment (GA) based on their Peak Demand Factor, as mentioned before, the PDF. A customer’s PDF is based on their contribution to the top five peak hours over a 12-month base period (May 1st to April 30th)
Changes since 2021 regarding the Class A adjustment eligibility
Effective May 1st, 2022, a transferee (new owner of the transferred load facility) may request for a transfer of title to all or a portion of a load facility under Section 8 or 8.1 of Ontario Regulation 429/04 by providing written notice of the transfer to their local distribution company (LDC), if they are a consumer or the IESO, if they are a market participant. Eligibility, peak demand factor calculation, and effective date will be determined as outlined in the regulation. The IESO will administer the transfer of ownership of ICI facilities for market participation as part of the transfer of facility registration procedure.
Which customers with varying average monthly maximum demand differences are eligible?
Customers with average monthly maximum hourly demand greater than 5 MW, as calculated for the applicable base period, automatically qualify to participate in the ICI. Eligible consumers will be informed by their local distribution company, and eligible market participants will be notified by the IESO before May 31st, and if the necessary data and consent are provided to the LDC (or IESO for market participants), as outlined in Ontario Regulation 429/04, sections 6 and 7. These customers must opt out by June 15th of each year.
A customer’s average monthly maximum hourly demand is determined by calculating the customer’s 12-month average of their highest hourly peak demand values for each of the 12 months of the base period. Peak demand values from separate load facilities under the same ownership cannot be aggregated for the purposes of determining Class A eligibility unless permitted otherwise under Ontario Regulation 429/04, section 6.1(4) or section 7.1(4).
Customers with an average monthly maximum hourly demand between 1 MW and up to and including 5 MW will be informed by their local distribution company, or the IESO if they are a market participant, before May 31 of each year if they are eligible to participate in the ICI. Eligible customers must opt in by June 15 and must provide the required data and consent outlined in Ontario Regulation 429/04, sections 6 and 7 in order to participate in the ICI during the associated adjustment period. Subject to compliance with all regulatory requirements, existing Class A customers’ facilities will retain their Class A status unless the customer chooses to opt out of the ICI program for the upcoming adjustment period.
Existing Class A customers who participated in one or more of the conservation programs specified in Ontario Regulation 429/04 and dropped below the average monthly maximum hourly demand threshold during a base period for an adjustment period that began on or after July 1, 2016, may still be eligible to continue participating in the initiative. LDC customers should contact their LDC, and market participants should contact the IESO if they believe that their eligibility or PDF calculation has been impacted by their participation in these programs.
Customers with average monthly maximum hourly demand greater than 500 kW and less than 1 MW in certain manufacturing and industrial sectors
In April 2017, the Government of Ontario reduced the ICI eligibility threshold for customers in targeted manufacturing and industrial sectors, including greenhouses (i.e., with NAICS codes commencing with the digits “31”, “32”, “33” or “1114”). Customers participating in the targeted sectors may be eligible to participate in the ICI if their average monthly maximum hourly demand during a base period is greater than 500 kW and less than 1 MW.
