When Class A Isn’t the Objective
Rethinking ICI as a Financial Strategy Decision
As we move into the final months of the current base period, May 1 to April 30, many organizations in Ontario are asking: Are we ready for peak season? It is an important question, but it may not be the most strategic one right now.
A more valuable question is whether the current Class A position still aligns with both financial outlook and operational reality. Class A status itself is not the objective. The real goal is managing Global Adjustment cost risk in a way that operations can consistently support.
Eligibility Is Not Strategy
Under Ontario’s Industrial Conservation Initiative, eligible customers may be designated as Class A. Their Global Adjustment costs are based on their share of demand during the top five peak hours in the base period.
Because only a few hours determine GA costs for the following year, a significant portion of financial exposure depends on performance during a very limited number of operational moments.
For many organizations, qualifying for Class A gradually becomes the focus. However, qualification alone does not mean Class A remains the right financial or operational position. Participation ties GA costs directly to demand during those peak hours and can introduce variability that needs to be understood and managed.
The more strategic question is not whether an organization can qualify as Class A. The real question is whether Class A continues to align with operational flexibility and financial risk tolerance.
Understanding What Drives Cost
ICI determines how much of the Global Adjustment each eligible customer pays. Demand during the top five peak hours establishes the Peak Demand Factor, and that factor determines your share of GA costs for the following twelve months.
In practical terms, a small number of hours can shape an entire year of electricity cost exposure. This raises an important planning question for both finance and operations teams. How much could one peak hour change what we pay next year?
If that impact is not clearly understood, it is difficult to know whether the current strategy truly supports broader financial goals.
Operational Change Directly Affects Class A Outcomes
One of the most important and often underestimated factors in Class A planning is how frequent operations change.
Facilities expand or consolidate. Production schedules shift. Equipment is added or retired. Energy use increases or decreases. Curtailment flexibility may improve in some periods and tighten in others. Even short-term adjustments can affect demand during peak hours.
Because Class A results depend on performance during only a few critical hours, it is essential to maintain a clear and current understanding of how the facility operates and how upcoming changes may influence demand.
Class A is therefore not just a market designation. It reflects operational readiness as much as financial strategy.
Balancing Predictability and Exposure
When operational flexibility is strong and consistently available, Class A can deliver meaningful cost advantages. When flexibility is limited, inconsistent, or changing, Class A can introduce variability into annual electricity costs.
Finance teams typically prioritize predictability, budget stability, and managed cost risk. Operations teams prioritize production continuity, safety, and reliable execution.
ICI decisions sit at the intersection of these priorities. For that reason, Class A positioning should be evaluated as both a financial and operational strategy, not simply as an eligibility outcome.
Why February and March Matter
With the current base period nearing completion and the next base period approaching on May 1, this is one of the most valuable windows of the year to step back and review positioning.
Organizations can assess:
- How they performed during this base period
- How stable their Peak Demand Factor appears to be
- What operational or facility changes are expected in the coming year
- How sensitive next year’s GA costs are to demand during peak hours
- Whether the current Class A approach still aligns with operational capability and financial planning objectives
This period also provides an opportunity to move beyond reacting to peak alerts and instead confirm that the overall ICI strategy is deliberate and aligned. That means integrating forecasting, operational readiness, financial sensitivity, and risk management before the next base period begins.
The Value of an Annual Class A Review
Class A positioning should be reviewed each year as part of a structured assessment rather than treated as a fixed designation.
Revisiting participation annually allows organizations to evaluate potential savings alongside potential cost risk, particularly as operations change, production plans evolve, or facility requirements shift.
When this review is combined with deliberate GA planning and broader electricity cost management, organizations are better positioned to maintain budget predictability, manage electricity spend, and support reliable operations throughout the year.
A Better Question to Ask
Instead of asking whether we are prepared for the next peak hour, organizations may benefit from asking whether they are positioned both operationally and financially for next year’s Global Adjustment costs.
Shifting the conversation in this way moves ICI from a short-term operational focus to a coordinated financial and operational strategy. In the final months of the base period, making that shift can be especially valuable.
Connect With Us
If reviewing your Peak Demand Factor or your current Class A strategy would support upcoming budget discussions, we can walk through it with you. Contact your Account Manager or email info@blackstoneenergy.com.
