The Ontario Electricity Market

The Ontario electricity market was opened to competition on May 1, 2002. With the opening of the market, consumers were given the ability to choose their supplier of electricity. Energy retailers and wholesalers can offer consumers fixed price contracts for the energy portion of their bill. For more information on Energy Retailers, click here: Electricity Retailer Information

Most residential and small commercial consumers who do not have a contract with an energy retailer pay the Regulated Price Plan. This plan was first introduced by the Ontario Government in 2004 to help smooth the price of electricity so these consumers were not subject to unexpected fluctuations in the cost of electricity while still reflecting the true cost of electricity.

Large consumers such as large commercial and industrial customers, along with customers who have installed a special ‘Interval Meter’ pay the wholesale price of electricity.

The wholesale price of electricity, also known as the spot market energy price, changes hourly. In the spot market, generators can submit offers for electric power in different quantities and prices for each hour of the day. Every five minutes, a new spot market price is calculated by balancing the supply of electricity with demand. As demand increases, more expensive offers from generators are accepted, which raises the price of electricity. As demand drops, only the less expensive offers are accepted, which reduces the price.

This electricity spot market and the provincial electricity grid are controlled by the Independent Electricity System Operator or IESO.

The IESO

The IESO or Independent Electricity System Operator is a not-for-profit organization formed in 1998 as part of the restructuring of Ontario's electric power industry. The IESO balances the supply of and demand for electricity in Ontario and then directs its flow across the province's transmission lines.

For more information about the IESO and the wholesale energy market, visit the IESO website at: www.ieso.ca.

How electricity prices are set

There are two main components that make up the cost of electricity: the price of the actual electricity used; and various other costs, including transmission fees, and charges from your local utility.

All of the charges that appear on your bill are either set by or approved by the Ontario Energy Board (OEB). The OEB regulates and licenses all participants in the electricity sector including electric utilities and energy retailers.

For more information on the Ontario Energy Board click here: www.oeb.gov.on.ca/OEB/For+Consumers

For more information on the Regulated Price Plan click here:
www.oeb.gov.on.ca/OEB/

Additional Sources of Information:

Ministry of Energy
:: 1-877-818-2900 www.energy.gov.on.ca

The Energy Shop
:: 1-877-331-1141 www.energyshop.com

Ontario Energy Board
:: 1-800-632-6273 www.oeb.gov.on.ca