January 8, 2021
The Ontario government deferred a portion of the Global Adjustment (GA) between April and June 2020 by limiting the Class B GA rate to $115/MWh for non-Regulated Price Plan (RPP) customers and providing proportionate reductions for Class A customers. The deferred costs were intended to be recovered over a 12-month period beginning January 2021. The Ontario Government has now made regulatory amendments to enable the recovery of those deferred costs. The costs are being recovered starting January 1, 2021 from Class A and non-RPP Class B customers. There is no effect on RPP consumers. The regulatory amendments can be found at www.ontario.ca/laws/regulation/r20772.
Class A and non-RPP customers will repay deferral costs over 12 months, starting January 1, 2021. At the same time, Ontario is reducing the cost of electricity for industrial and commercial customers by shifting a portion of non-hydro renewable energy contract costs to the tax base. These reductions are considerably larger than the deferral repayment costs, and the intent is for this funding to continue after the deferral recovery is complete at the end of 2021.
The recovery of the deferred Global Adjustment (GA) costs will put upward pressure on GA costs for Class A and non-RPP Class B customers in 2021. However, this will be more than offset by the government’s initiative to shift a portion of non-hydro renewable energy contract costs to the tax base. Those reductions are considerably larger than the deferral repayment costs and the intent is for this funding to continue after the deferral recovery is complete, as mentioned above. The result will be a significant net benefit to these customers (Class A and non-RPP consumers). According to the government of Ontario, as a result of these two initiatives, in 2021, Class A and non-RPP Class B customers could see GA savings of about 11 to 12 per cent, respectively. After 2021, savings are expected to increase as the recovery of deferred GA costs would be complete and the funding portion of non-hydro renewable energy contract costs is expected to continue. Actual savings will depend on location and consumption.
Please note that Regulated Price Plan (RPP) customers, including residential, small business and farm customers, will not be affected by the recovery of deferred GA costs.