In this article we will go over what a peak demand factor is, how it is calculated and it's significance in reducing energy costs.
Ontario’s Industrial Conservation Initiative (ICI) program allows Class A participants to reduce their global adjustment costs by curtailing electrical demand during the potential top five coincident peaks of the ICI program. Global Adjustment costs include the cost of building new electricity infrastructure in the province, maintaining existing resources as well as providing conservation and demand management programs.
Customers participating in the ICI program are classified as Class A and must meet the eligible requirements. Customers who are eligible for the program will be notified of their peak demand factor (PDF) from either their local distribution company or the IESO by May 31. Read our blog on the ICI program here for more details on becoming a Class A customer.
The purpose of the peak demand factor (PDF) is to determine a customer’s allocation of costs for the billing period, also known as the adjustment period. Each Class A customer is assigned their portion of GA costs based on their PDF which is the percentage that consumption contributes to the top five system coincident peaks.
For example, if you chose not to reduce your consumption or load during these events you could incur charges up to 550,000 per MW. The IESO calculates each eligible class A customer’s PDF over a 12-month period of May 1 – May 30.
A customer’s PDF can easily be calculated by dividing the sum of a customer’s consumption (MWh) during all 5 demand peaks by the total sum of the IESO’s Top 5 system-wide consumption peaks (MWh).
Manufactures with annual demand over 500 kW per month and all others with over 1MW per month can opt in once a year as a Class A customer. Every year in May your local distribution company is obligated to provide Class A users a PDF report. Your PDF (Peak Demand Factor) is based on your facilities demand as a percentage of the overall grid demand during the top 5 coincident peak hours of the ICI program past base period (May 1 – April 30).
This PDF is multiplied by the monthly Global Adjustment pool cost to determine what your GA charges will be on your monthly electric bill.
Having a lower PDF is crucial to generating any type of savings from the ICI program, choosing to ignore your facility energy consumption during these times can incur up to millions of dollars in charges depending on your facility’s usage.
If you’re still unclear on how to calculate your PDF or want to find out what your potential savings could be, Edgecom Energy will at no cost, do an analysis of your facility’s interval data which is then summarized into an easy-to-understand report.