Local Manufacturer’s $62,000 Monthly Hydro Bill Is... $10,000 too high

An article in a local Cambridge publication displayed, upon closer inspection, more than just a rant about electricity costs.

The company's bill reveals they were billed $10,199.31 more for December's electricity consumption than they would have if the global adjustment charge was based on December's final class B rate, instead of the 1st estimate it is based on.

Local Manufacturer’s $62,000 Monthly Hydro Bill Is Off The Charts Says MPP Rob Leone Cambridge Ontario Cambridge & Area News News on Cambridge Now!:

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Bill and Brenda Mechar, owners of Integrated Packaging Films (IPF) are stunned by their monthly hydro bill. Their January energy usage was $12,050.37. However, by the time they paid the debt retirement charges, regulatory charges, Global Adjustment charges and delivery charges, IPF's bill had ballooned to (are you ready for this?)$62,653.34.
In fact, from the excess charges IPF pays over and above their actual usage, they could hire a new employee every month throughout the year

When you purchase a salad or a meal to-go from someone like a Costco or another food retailer, there is a good chance that IPF created the plastic which made the clam-shell containers in which you carry it home.

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The firm that was the subject of the article appears to have all their billings based on the first estimate of the global adjustment - the math shows they were billed $76.07/MWh for the global adjustment (which was the 1st estimate for the month), while the final global adjustment was actually a third lower than that at $50.68/MWh.

The average cost for the December bill displayed in the article works out to $106.07/MWh.
That's higher than the record monthly commodity charge [1].

I've written a couple of blog entries on the confusing topic of multiple, and essentially arbitrary, global adjustment pricing:

• November's Record electricity Rates: the Global Adjustment/Ontario Roulette story | November 2013
• Wither the I in the IESO: politics hit May's global adjustment estimate | May 2014

The IESO responded to the latest article, with a comment including;

The estimate also includes a true up to the actual global adjustment for the month before the previous month so that, over time, customers billed on this basis will pay the actual global adjustment cost.

Graph, and data, in Google document

Maybe.
Maybe not.

Using the consumption history displayed above, the global adjustment rate would come close to averaging out over a 7-month period, but the customer would still be out about $6,000 over that 7 months (compared to a customer charged on the final global adjustment).

The first 3 months of 2014 they'll also have been overcharged.

Then, for April, they would have a low-cost month where the electricity rate is well under 3 cents/kWh! [2]

This is a good indicator of how disinterested in businesses the Wynne/McGuinty government has been.

They've trumped up a billing lottery where the cost of a customer paying bills based on the 1st estimate of the global adjustment, like IPF, has varied over the past 12 months from a low of $23.65/MWh (April 2014), to a high of ~$109.44/MWh (September 2013) - a range of $85.79/MWh.

Most electricity costs are fixed in Ontario, so costs don't vary anywhere near that much. Billed on the final global adjustment, the range over the same period is only $17.09/MWh (low of $78.04 in January 2014 and a high of $95.13 a month later).

Who wants their bill to vary 5 times more in order that they can be billed by their local distribution company 15 days earlier than the global adjustment being calculated on actual data for the month? [3]

Anybody?

The Ontario Energy Board should put a stop to billing based on global adjustment estimates.



Endnotes

1. the commodity charge is comprised of the Houlrly Ontario Energy Price (HOEP) and the global adjustment (Class B); the final Global Adjustment rate is released by the 15th each month.  The record is February 2014's $95.13

2. The HOEP average (weighted) for April was $33.30/MWh, and the first estimate of the global adjustment was a credit of $9.65/MWh.

3. Unfortunately the month's final global adjustment is also based significantly on the cost of production months earlier, due to embedded generation and poor systems design/reporting.  It isn't surprising the most expensive month in the period is September, because July gets lots of sun and embedded solar is very expensive.