All electricity rates charged in Ontario include the Hourly Ontario Energy Price (HOEP). For residential and small business customers, the HOEP is included in time-of-use and tiered rates. For medium and large businesses, the HOEP appears as a separate line item on their electricity bill.
The HOEP changes throughout the day. When Ontario's electricity demand is high, the electricity system needs to draw energy from more expensive forms of supply. When demand is low, Ontario can rely on lower-cost forms of supply, reducing overall electricity prices.
How the HOEP is Determined
The IESO Forecasts Electricity Demand: The IESO assesses current and historical data to forecast Ontario’s electricity demand for the days and weeks ahead.
Suppliers Bid to Provide Ontario’s Energy Needs: Suppliers submit bids to the IESO indicating the amount of electricity they can produce and at what price.
The IESO Accepts Bids Until Ontario’s Demand is Met: The IESO reviews and accepts bids, starting with the lowest-cost options, until enough energy is secured to meet Ontario’s demand. This process sets a new clearing price every five minutes. The HOEP is the average of the 12 clearing prices set in any given hour.
Electricity is Charged to Customers: All electricity customers in Ontario pay the HOEP. For residents and most small businesses, HOEP is included in their time-of-use and tiered electricity rates. For medium and large customers, it is included as a separate line item on their bill.
By communicating a price, and a forecast, the HOEP helps customers decide if they want to shift their electricity use to lower-cost periods. This can reduce a customer’s electricity bill, while helping the electricity system avoid drawing from more expensive resources.