Dispute Resolution

Parties to an arbitration under the dispute resolution process each provide a concise summary of the facts underlying the dispute for publication in accordance with MR Ch.3 s.2.9.2.1.  The contents of these summaries have not been endorsed by an arbitrator and only reflect the understanding of the parties at the outset of the arbitration. 

Nexus Energy Inc.’s Summary of Dispute 

On December 17, 2024, the Markets Assessment and Compliance Division (“MACD”) of the Independent Electricity System Operator (“IESO”) issued a notice of non-compliance alleging that Nexus Energy Inc. (“Nexus”) had breached the IESO’s market rules with respect to certain failed scheduled intertie transactions over a period spanning from December 2017 up to and including December 2023 ("IESO Order"). The subject transactions constituted a small percentage of transactions scheduled by Nexus during the relevant period and Nexus did not receive any significant transmission rights benefits or other revenues as a result of the failed transactions. The IESO has not assessed any penalties or sanctions against Nexus with respect to said failed intertie transactions and is instead seeking to affect a settlement adjustment to recover “congestion rents” allegedly avoided by Nexus when those intertie transactions failed, as those congestion rents are not included in the calculation of the over $1.6 million in failure charges already paid by Nexus to the IESO for the benefit of market participants in the Ontario wholesale electricity market.

Nexus Energy disputes the authority of the IESO to recover "avoided congestion rents" under the market  rules with respect to the subject failed transactions. Alternatively, even if "avoided congestion rents" may be recovered by the IESO, Nexus Energy disputes that the circumstances surrounding the subject transactions warrant such action based on a purposive interpretation of the relevant market rules.

Furthermore, the IESO has breached its obligations of procedural fairness under Chapter 3 of the market rules. Following Nexus' filing a notice of dispute with the IESO on February 11th, 2025 challenging the lawfulness of the IESO Order, IESO Legal Services altogether failed to participate in the dispute resolution process – including negotiations and mediation as prescribed under the market rules - and MACD failed to participate in mediation in good faith. 

IESO’s Summary of Dispute 

Nexus Energy Inc. (“Nexus”):- Failed intertie transactions under the Market Rules. During the period from December 2017 to December 2023, Nexus breached Chapter 7, section 7.5.8A of the Market Rules by failing, other than for bona fide and legitimate reasons, intertie transactions at the Michigan-Ontario, Minnesota-Ontario, Manitoba-Ontario, Quebec-Ontario and New York Ontario interties. 

When a market participant fails intertie transactions, it may avoid paying certain settlement amounts and/or may receive payments to which it is not entitled. Failed intertie transactions adversely impact market prices, competitive outcomes, and efficiency. For example, such avoided payments can result in settlement shortfalls and, in turn, higher costs to consumers. The Market Rules provide for the adjustment of settlement amounts, including the recovery of amounts avoided and payments received due to cross-border trade failures that are within a market participant’s control and, therefore, not for bona fide and legitimate reasons. 

The IESO (MACD) sanctioned Nexus for certain of its failed intertie transactions by issuing a non-compliance letter and an order to adjust settlement amounts to recover $2,083,756.68 in respect of the breaches.

Nexus filed a Notice of Dispute in respect of IESO’s sanction and order. IESO denies the allegations made by Nexus, including its allegations with respect to procedural fairness.