Thursday, March 7, 2013

Composition of Ontario's "Global Adjustment" Charge in 2012

I've been revisiting an old topic for one element of an argument I'm making using Ontario's Global Adjustment.  The global adjustment is the mechanism that recovers all supply costs (including capacity payments, feed-in tariff rates, regulated rates, demand/conservation spending, etc) from consumers.  In the distant past market rates recovered more than the contracted amount, but recently the Global Adjustment (GA) has been roughly 2/3rd's of the commodity charge, with the market rate recovering only 1/3rd of the cost.

  The argument I participated in came as certain groups spun reports the nuclear generation was responsible for 45% of the global adjustment into saying nuclear was responsible for increasing electricity costs.
The 2012 data with the estimates I regularly generate demonstrates, again, that nuclear contributes much of the GA because it is much of our supply.
Obviously if a type of generation produces a greater share of total production than it's share of total cost, it's less expensive than average.

I decided to graph the difference between the share of production and the share of the global adjustment (treating that as a proxy for cost).  The resulting figures (the orange bars in the above chart) show that hydro is by far the least expensive, contributing 21% of supply and only 5% of the global adjustment charges.  The biggest discrepancy the other way will surprise many, as it's gas - responsible for only 14% of production, but 26% of the global adjustment dollars.

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