Ontario's Demand Response vs ICI Programs

How to earn money by reducing your peak energy consumption

Published: April 7, 2020 · Updated: October 23, 2026
By Ryan Bagshaw, Director of Business Development

It is well known that it costs money to consume electricity, sometimes more than you might like, and organizations these days are utilizing multiple strategies to keep operating costs low and profit margins high. A common method used by organizations to save on energy costs is by becoming more energy efficient, keeping consistent output levels while reducing the amount of electricity to accomplish this.

Other methods to achieve cost savings, or even generate revenue, is to reduce your consumption during selective times throughout the year when the grid is experiencing high electricity demand from consumers, otherwise known as peak demand events. To reduce strain on the grid from peak demand, the Independent Electricity System Operator (IESO) can either rush to get natural gas generation plants online to provide more power to the grid, or they can encourage consumers to lower their consumption in return for compensation. Consumers who reduce their consumption may be providing more benefit to the grid than adding more generators since they reduce strain on local grid infrastructure with less overall power being transmitted through the lines.

Ontario has two unique programs that allow organizations to earn revenue or save a considerable amount of money for their energy reduction efforts during peak demand events, called Demand Response (DR) and the Industrial Conservation Initiative (ICI).

Demand Response (DR)

The Demand Response program allows for large electricity consumers to earn revenue through reducing their consumption during peak demand events (or DR events) that are clearly defined by the IESO. When participants receive notification of a DR event, they are to reduce their consumption during the exact time slot the IESO identifies, which can last a maximum of 4 hours. The notifications from the IESO are typically sent one day away, or early in the morning on the day of the DR event, allowing multiple hours for participants to prepare to reduce their consumption. DR events in the summer (May 1 – Oct 31) are eligible to occur between 12-9 PM, and in the winter (Nov 1 – Apr 30) between 4-9 PM. As an example, the IESO could send out a notification of an upcoming DR event on June 4, with the DR event occurring the next day (June 5) between exactly 5-9 PM, requiring participants to lower electricity consumption from the grid for four (4) consecutive hours.

The value of Demand Response to your organization

The revenue available from participating in the DR program is important to justify the actions required to reduce your electricity consumption as the IESO requires. The DR program currently operates on an annual Capacity Auction that sets the price for DR activities. The average annual clearing price from the 2025 auction was $171,963.9/MW-year ($645.24/MW-day in the summer; $725.31/MW-day in the winter).^[1] To determine the amount of revenue you could earn from participating in the DR program per year, simply multiply the price above by the amount of electricity that you can reduce or displace during a DR event. For example, if you can stop running some of your non-essential production equipment during a DR event, resulting in a 1-MW electricity reduction during each event, you would be able to earn over $171,963.9 per year!

In addition to the Capacity Auction revenue, participants in the DR program can earn Emergency Activation Payments when the IESO calls on Demand Response resources during system emergencies. These payments are only made when an actual DR activation occurs. When activated, participants are paid based on the difference between the DR offer price (currently capped at $1,999/MWh) and the Ontario Energy Market Price (OEMP) for each hour of activation. Participants can expect approximately five emergency activations per year, with each one lasting anywhere from 1 to 4 hours. This results in incremental earnings of approximately $6,500 to $7,500 per MW per 4-hour activation. For a facility capable of reducing 1 MW, this can translate into an additional $30,000–$35,000 per year in emergency activation revenue, on top of the Capacity Auction payments.

Participating in Demand Response

Workbench Energy administers your demand response participation directly with the IESO for a flat fee, an approach designed for large power consumers in Ontario that can reduce 1 MW or more. Our Demand Response Direct service covers Capacity Auction opt-in support, electricity metering and analysis, and communication with the IESO on your behalf. Your DR revenue is paid directly to you by the IESO, allowing you to keep more of what you earn from the DR program. Participating directly also lets you self-schedule your test activations, lowers your participation costs and can increase your revenue through a bid strategy customized to your facility.

Some organizations instead participate through an energy services company, often called an aggregator, which provides similar services but typically pools all of its clients into one large DR resource. The aggregator receives your DR payments from the IESO and keeps a percentage of each client’s revenue as its fee before passing the rest on. This can be a practical option for smaller facilities, but for large power consumers a revenue share grows with every MW delivered, so a flat fee with Workbench Energy typically means higher net earnings.

Industrial Conservation Initiative (ICI)

The Industrial Conservation Initiative (ICI), often referred to as Class A Global Adjustment, operates under similar principles as the DR program, motivating electricity consumers to lower consumption during peak demand times when the grid is most stressed, but does not provide the luxury of knowing exactly when to lower your consumption like the DR program. Instead, the ICI program operates over a one-year period from May to April of the following year, requiring an electricity consumer to lower their energy consumption when there may be a province-wide electricity grid peak happening. When the one-year period is over, multiple province-wide electricity peak events would have happened (usually but not always in the summertime), and your electricity bill will be based on how your organization performed during only the top five (5) peak hours. The ICI program does not require you to reduce consumption for a prolonged amount of time, instead only evaluating an organization’s performance based on their consumption during the highest one-hour period of the peak day. For example, if a peak occurred on July 5 at hour ending 17:00 EST (between 5:00 to 6:00 PM EST), your electricity consumption reduction performance would only be measured during this one-hour time slot. Important to note, the IESO does not observe daylight savings, so hour ending actually means hour starting during the summer.

The value of ICI to your organization

The ICI program is used to justify how much Global Adjustment (GA) you get charged for an entire year on your electricity bill. Global Adjustment often accounts for up to 50% of an organization’s electricity bill, which provides a significant opportunity to reduce electricity costs by performing well in the ICI program. The ICI program determines your GA charge by looking at your organization’s contribution to the top five Ontario grid system peaks, resulting in a fixed fraction that is used to bill you for an entire year of Global Adjustment. The higher your electricity consumption is during the Ontario-wide peak event, the higher your Global Adjustment charge will be. If you don’t consume any electricity from the grid during these times, your Global Adjustment charge could actually be zero, and you would save 50% on your utility bill for an entire year.

Another method for evaluating the value of the ICI program is using average prices for electricity during these Ontario-wide peak events, which are typically $50,000/MW during one single peak event, and $250,000/MW annually if we consider all five peak events. If we use the same example listed above in the DR section, an electricity consumer that is able to reduce demand by 1 MW during the peak events, the annual savings from the ICI program would be over $250,000!

Who is eligible for the ICI program?

Eligibility for Ontario’s Industrial Conservation Initiative (ICI) is based on a facility’s average monthly peak demand, which is the highest hourly demand in each month averaged over the 12-month base period from May 1 to April 30. A facility can dip below the threshold in some months and still qualify, as long as its 12-month average is above it.

- Greater than 5 MW: Facilities are automatically eligible and stay in the ICI unless the customer opts out by June 15.
- Greater than 1 MW and up to 5 MW: Any facility is eligible but must opt in by June 15.
- Greater than 500 kW and less than 1 MW: Only manufacturing facilities and greenhouses are eligible, and they must opt in by June 15.

Eligible customers are notified before May 31 each year by their local distribution company, or by the IESO if they are a market participant. Customers in the ICI are called Class A customers and keep that status in following years unless they opt out, as long as they continue to meet the regulatory requirements.^[2]

Participating in the ICI program

Participation in the ICI program simply involves opting in to be a Class A Global Adjustment ratepayer by June 15 of each year with a signed form to your local utility. Once you opt-in, you will begin paying Class A rates starting in July of the same year until June of the next year, based on the previous year’s peak event performance. This decision needs to be carefully analyzed each year before locking your electricity rates in for a year-long period. If you did not perform well during the previous year’s peak events, it may actually be a cost increase by opting into Class A. Consult an energy services company, like Workbench Energy, for an evaluation of your Class A savings potential.

To ensure your organization performs well during the Ontario peak events, it is important to have an action team in place so that you can react appropriately and reduce electricity consumption during the potential peaks. It is also best practice to have a system in place that alerts you when a peak is likely. Unlike DR events, which come with advance notice, the ICI program operates in a more unpredictable nature, where you have to predict when peak events may occur. NRG Peaks by Workbench Energy is a market-leading peak advisory service that provides exactly this, with an expert team of operators who notify you when a peak event is highly likely. This enables our customers to focus on their business, rather than spending time attempting to identify peaks.

Summarizing the Programs

Below is a summary of the key points to understand for each peak energy consumption program.

Demand Response (DR)

Peak events:

Occur at a predetermined time, with fair warning from the IESO.

Value:

Current price is $171,963.9/MW annually.

Participation in program:

Opt-in individually as an organization, or work with an energy services company.

Industrial Conservation Initiative (ICI)

Peak events:

Unpredictable and no guarantee when they will occur between May 1 and April 30.
Performance is greatly improved by utilizing a peak event prediction service to reduce the risk of missing a peak event.

Value:

$50,000/MW during each peak day, $250,000/MW annually.

Participation in program:

Opt-in your organization before June 15 of each year.
Evaluate the previous year’s performance during the provincial peak events to ensure this rate structure is the right one for your organization.

Choose the program(s) best for your organization

Participation in each program is independent from each other, which means you do not have to be enrolled in one of the programs to enroll in the other, nor do you have to be enrolled in both at the same time. Your organization should weigh the pros and cons of each program with your energy services provider to decide which combination of programs is best for you.

Workbench Energy offers free assessment tools, consultations, and a peak advisory and notification service to help you make the best decision and save the most amount of money on your electricity bill.