It’s now been over two years since the Ontario Government introduced a mandatory ICI peak hiatus for Industrial Conservation Initiative (ICI) participants to allow businesses to focus on recovering from the impacts of COVID-19.
The June 26, 2020, announcement came as a huge relief to many Commercial & Industrial (C&I) enterprises. Many enterprises had suffered huge economic challenges since the onset of the pandemic. In short, for Class A customers participating in the 2020-2021 base period (May 1, 2020 – April 30, 2021), they could temporarily abandon their familiar practice of anticipating and reducing their electricity demand during peak hours. Ultimately, this meant C&I businesses could increase production again.
Carry on reading to learn more about the ICI peak hiatus, its legacy, and how Ontario businesses are bouncing back as we approach 2023.
THE INDUSTRIAL CONSERVATION INITIATIVE (ICI) EXPLAINED
A demand response program with the aim of shifting large electricity users’ consumption to off-peak hours when Ontario’s grid is experiencing its highest demand, the Industrial Conservation Initiative (ICI) was introduced back in 2010.
A set of amendments introduced by the Government to Ontario Regulation 429/04, Class A customers can lower their Global Adjustment (GA) exposure during the top 5 IESO Coincident Peaks (CP). This empowers them to reduce their power bill in the next billing year. Pre-pandemic, Coincident Peaks typically occurred during late hot summer afternoons, but COVID-19 made peaks way more irregular.
Generally, participating Class A customers would reduce their load during Coincident Peaks by performing process shutdowns or temporarily closing their entire facility. Despite causing production interruptions, so-called Coincident Peak chasing has been the norm when it comes to reducing future IESO Global Adjustment costs.
This isn’t without huge effort and sacrifice, however. After all, peak shifting means that the opportunities to reduce load to hit the Coincident Peaks can average approximately 20 days for periods of 3 hours a day. This is certainly a lot in terms of worker downtime and delayed production.
WHY WAS THE ICI PEAK HIATUS INTRODUCED?
Since many Ontario businesses were struggling to survive and recover from the impacts of COVID-19, the ICI peak hiatus was introduced to help the economy bounce back.
An idea proposed by a collection of Ontario’s largest power consumers, the ICI peak hiatus meant Global Adjustment charges were frozen. This meant C&I companies could return to full levels of production without the fear of electricity costs spiking.
Instead, more stable electricity pricing was guaranteed for two years at a time when businesses needed it most. In the spirit of the ICI peak hiatus, Ontario businesses were encouraged to ramp up production and start hiring again, while resuming their relationships with consumers.
ANALYZING THE IMPACT OF THE ICI PEAK HIATUS
The message behind the ICI peak hiatus was for C&I businesses to increase production again. It’s safe to say that the response was emphatic. During summer 2020, the Independent Electricity System Operator (IESO) confirmed that Ontario had experienced the highest peaks since 2013, just three years after the ICI was established.
With the provincial load being significantly higher, the ICI peak hiatus heralded widespread economic activity. Who knows, maybe it helped sidestep a continued post-COVID-19 recession too?
Between summer 2020 and winter 2021, the five highest Coincident Peaks each totaled more than 24 000 MWh. The record peak was experienced on July 9, 2020, and totaled 25 110 MWh. To put things in perspective, peaks of this scale had not been experienced for over eight years, and the 25 110 MWh peak was the highest in over a decade.
In comparison, the top five peaks were 11.3% higher than the previous year. Additionally, they were 9.5% higher than the average of the previous five years. Higher HVAC usage at home did also contribute however, due to increased remote working because of temporary workplace abandonment.
THE ICI PEAK HIATUS WASN’T ALL POSITIVE
Looking back on the era of the ICI peak hiatus, things were far from straightforward. Firstly, many businesses were caught off guard by the timing of the June 26, 2020, announcement. This came two weeks after the ICI enrolment deadline. At the time, the market had already responded seven times to potential peaks, curtailing on numerous occasions to combat high usage.
Then of course came the negative impact of higher peaks. Putting the Ontario grid and its infrastructure under significant strain, the first ever Emergency Demand Response (DR) call was made. DR events are only activated when there is too much pressure on an electricity system due to extreme demand. Ultimately, enrolled Ontario manufacturers were forced to curtail, take less power, and help the grid survive this popular period.
It’s never ideal for C&I companies to operate under the constraints of an Emergency Demand Response call. After all, companies are only made aware one day ahead. Following this, they must put an immediate halt on production, scheduling, and getting their products to their customers in need.
Lastly, the peaks meant that Ontario’s fatigued gird had to turn on rarely used peaker plants to meet high demand. Almost exclusively fossil fuel generators, power facilities like these are of course environmentally unfriendly.
HOW ARE COMPANIES BOUNCING BACK AS WE APPROACH 2023?
Over two years since the ICI peak hiatus was announced, it’s been reassuring to see C&I companies bounce back. Take Fab-Cut Systems, JPB Fabrication Services, Wonton Crunch Inc., and BGM Metalworks for example. In October 2022, all four companies made the Eastern Ontario Business Journal’s top 10 fastest growing companies list .
All experiencing significant revenue growth in the past three years, success stories like these are great for the economy. Krystle Mitrow of MNP, the company presenting the prestigious list, said: “In my accounting practice, I’m seeing strong growth, especially in construction and manufacturing.”
WHAT UPDATES HAVE BEEN MADE TO THE INDUSTRIAL CONSERVATION INITIATIVE (ICI)?
Following the end of the ICI peak hiatus, the Industrial Conservation Initiative (ICI) resumed in May 2021. Regulation amendments that impacted ICI eligibility became active in May 2022, however.
Before May 2022, the top five peak hours were determined using final adjusted AQEW (allocated quantity of energy withdrawn). At the beginning of the 2022 base period (May 1, 2022 – April 30, 2023), the final adjusted AQEW won’t determine the top five peak hours anymore. Instead, they will be determined using Ontario demand. In other words, the five hours during the base period in which the greatest volume of electricity was dispatched through the IESO-administered markets for the purpose of supplying Ontario demand.
Ultimately, modern-day Commercial and Industrial customers have a choice. They can continue to adjust their business, so they are able to curtail on peak days. Alternatively, if they cannot curtail due to 24/7 production schedules, they can transform their energy supply with Demand Power. We have the innovative energy storage solutions that businesses need to navigate the high cost of peak demand.
TRANSFORM YOUR ENERGY SUPPLY. CONTACT DEMAND POWER TODAY.
If your business is looking to maintain production around the clock, speak to Demand Power today. Our team has the knowledge and resources to help you navigate the high cost of peak demand. For answers to your questions, please call 855-336-2638 at your earliest convenience and we’ll be happy to assist.