New electricity market design will lead to cost-savings for all Ontarians
The IESO manages the province's power system so that Ontarians receive power when and where they need it. — Photo courtesy IESO
The Independent Electricity System Operator (IESO) released today its high-level design for a single schedule market (SSM) representing an important milestone in the IESO's efforts to enhance the efficiency of Ontario's wholesale electricity markets and lower energy costs for all consumers.
A foundational element of the IESO's market renewal program, the high-level design for the SSM serves as the blueprint to addressing longstanding concerns with the design of Ontario's current markets and is the first step in the broader redesign of Ontario's electricity market. When fully implemented, the market renewal program is expected to create $3.4 billion in savings over a 10-year period with the potential to reach as high as $5.2 billion.
"The completion of the high-level design represents the culmination of almost 18 months of consultation with a wide range of stakeholders and lays the foundation for a more effective electricity market in Ontario," says Leonard Kula, IESO COO and VP, Planning, Acquisition & Operations. "Moving to the new design will align Ontario with the proven design used in all other markets in North America and will benefit all Ontarians by reducing overall system costs."
When implemented, the SSM will introduce locational prices for generators and other resources that participate directly in the market. Compared with current province-wide uniform pricing, locational pricing ensures that prices more accurately reflect the cost of producing or consuming electricity. It also reduces the need for inefficient out-of-market payments that currently exist. The majority of energy consumers, which includes residents and small businesses, will continue to pay a province-wide price for electricity.
The IESO will continue to engage with stakeholders to review the high-level design, ensure feedback has been captured correctly and that the decisions consider appropriate linkages with the other market renewal initiatives. The final high level design will be available in early 2019, after which work will begin with stakeholders on a detailed design.
The high-level design and backgrounder explaining the single schedule market are available here.
About the IESO
The IESO manages the province's power system so that Ontarians receive power when and where they need it. It plans and prepares for future electricity needs and works with its partners to guide energy efficiency efforts.
SOURCE: Independent Electricity System Operator
