Market participants pay a combination of commodity charges, wholesale market service charges, wholesale transmission charges and other associated charges. Here is a list of possible electricity charges market participants may see on their bill.
Hourly Ontario Energy Price (HOEP)
The HOEP is the hourly price that is charged to local distribution companies (LDCs) and other non-dispatchable loads. HOEP is also paid to self-scheduling generators. HOEP becomes the basis of the commodity charges in the retail electricity market if customers receive their electricity from their LDC. Customers who have arranged contracts with licensed retailers are charged their agreed-upon contract rate for the commodity.
The IESO provides a convenient graph of real-time HOEP prices for the day and an estimate for the remainder of the day on the Power Data page.
The actual supply/demand balance can vary from the IESO's projections for a number of reasons:
The actual demand for electricity can fluctuate as factors such as weather (temperature, amount of cloud cover and wind), affect the amount of electricity required by consumers
At the same time, operational difficulties or delays in a generation unit returning from an outage can result in higher priced generation being required to fill the gap
Finally, any changes in price resulting from such variations can cause some price-sensitive loads to make alternative consumption decisions, or cause importers and exporters to revise their plans
Customers that pay market prices, or that have signed a contract with a licensed retail for electricity will see a separate line for global adjustment on their bill. The global adjustment rate includes:
The Global Adjustment may be a positive or negative number, depending on whether the market price is lower or higher than the fixed rates.
Wholesale Market Service Charges
Hourly Uplift Charges
This charge is applied to all customers in the wholesale market. The IESO uses funds collected under these charges to pay for such items as the three types of Operating Reserve, any Congestion Management Settlement Credits owed to dispatchable resources, Intertie Offer Guarantee payments and other incurred hourly costs such as energy losses on the IESO-controlled grid.
- Congestion Management Settlement Credits (CMSC)
CMSC are payments made by the IESO to all dispatchable resources, such as generators or large consumers, who responded to instructions from the IESO to take specific actions to avoid possible overloads of the transmission system, or to maintain the balance between supply and demand.
- Intertie Offer Guarantees (IOG)
IOG relates to electricity imports into Ontario that are set on an hourly schedule. If that pre-dispatch price exceeds the five-minute prices set in the market, these additional costs are contained in the uplift charge.
- Energy Losses
Energy Loss occurs when electricity flows across transmission lines. The resistance in the lines causes them to heat up, consuming power in the same way, as does the filament in a toaster. This is referred to as line losses. Since the IESO pays generators using the same price as it uses to charges customers, and since the presence of line losses requires generators to produce more than what is consumed by customers, the IESO must recoup the additional money required to pay all generators in full, and does so via the Hourly Uplift Settlement Charge.
- Operating Reserve Prices
Operating Reserve is generation capacity or load reduction capacity that the IESO can call upon on short notice. It serves as a buffer to maintain the reliability of the system by allowing for sudden unexpected surges in demand or unanticipated reductions in supply. Like energy dispatch instructions, Operating Reserve schedules are determined every five minutes, with a resultant price for each type of operating reserve for every five-minute interval.
- The IESO purchases defined amounts of Operating Reserve from market participants through three real-time markets: a 10-minute synchronized reserve market, a 10-minute non-synchronized reserve market, and a 30-minute reserve market.
Daily Uplift Charges
Through the Day-Ahead Commitment Process charges are incurred to commit generators to day-ahead schedules. These costs pay for resources to be effectively and economically scheduled to provide electricity for the following day.
Monthly Uplift Charges
The IESO incurs some monthly costs to purchase services required to ensure the reliability of the Ontario power network, and to meet commitments to other system operators throughout North America. The IESO must purchase three services under contract from suppliers: Black Start Capability, Voltage Support, and Regulation Service. Also included are the costs of operating the IESO's Demand Response programs. The monthly uplift costs are shared among all wholesale customers on a pro rata basis.
IESO Administration Fee
The IESO charges administrative fees to operate the wholesale electricity market and manage the electric power system in Ontario. The rate is set by the Ontario Energy Board. There are two separate rates for the IESO Administration Fee, one applied to domestic transactions and another to export transactions. See Corporate Accountability for more information on the IESO fee.
OPA Administration Fee
The Ontario Power Authority (OPA) was established by The Electricity Restructuring Act, 2004 and this fee is intended to help ensure it achieves its legislated organizational objectives with respect to electricity resources in Ontario. Effective January 1, 2017 this fee is no longer applicable.
Rural and Remote Electricity Rate Protection
Wholesale Market Service Charges also include the Rural and Remote Electricity Rate Protection charge, which is used to partly offset the higher cost of providing electricity in rural and remote areas of the province.
Wholesale Transmission Charges
This charge to LDCs and some large consumers covers the cost incurred by transmission companies to construct and maintain the high-voltage transmission lines needed to transport electricity from generating stations to LDCs or consumers. It encompasses the Network Charge, the Connection Charge and the Line and Transformation Charge. The rate for this service is approved by the Ontario Energy Board.
Debt Retirement Charge (if applicable)
This charge is set by the Government of Ontario to pay down the debt of the former Ontario Hydro. This charge is collected on behalf of the Government of Ontario.