The IESO administers an Operating Reserve (OR) market which ensures that additional supplies of energy are available should an unanticipated event take place in the real-time energy market. The IESO can then call on this spare energy capacity, which is offered into the OR market by dispatchable generators or dispatchable loads able to respond quickly in response to dispatch instructions from the IESO. To offer energy in the OR markets, participants must offer equal or greater amounts of energy into the real-time market. The scheduling of OR and energy in the real-time energy markets are co-optimized to ensure the most efficient outcome for the market.
The three types of operating reserve that can be offered by dispatchable generators and dispatchable loads are:
- 10-minute synchronized (spinning) reserve
- 10-minute non-synchronized (non-spinning) reserve
- 30-minute reserve (non-synchronized)
A price for this reserve energy is determined every five minutes based on offers in the market. All accepted offers are paid the market clearing price for that class of OR. When the OR is activated, the suppliers are paid for the energy provided.
Dispatchable participants can offer into any of the three OR markets. Even if the their offer is selected but not activated, they will receive stand-by payments for all megawatts for which they were selected without having to make changes to their production schedule.
OR requirements must adhere to reliability standards established by the North American Electric Reliability Council (NERC) and Northeast Power Coordinating Council (NPCC) — namely, the largest single unexpected event (contingency) plus half of the second largest contingency that could occur. Typically, this means the loss of Ontario's one and a half largest generators.