Market Renewal Newsletter - August Update
August 31, 2021
Every issue we’re featuring an update from someone different on the Market Renewal team to shed light into their line of work.
From the desk of...
Kevin Lam, Market Power Mitigation Specialist, Market Renewal Program
The Market Renewal Program’s (MRP) implementation phase is moving forward and we’ve recently hit another milestone with the release of the market power mitigation market rules and manuals.
While the details of market power mitigation have some complexities, and we look forward to stakeholder comments on this batch of materials, the concept is one that markets around the world have embraced, and will provide benefits to a wide range of participants.
For the market overall, there is a clear structure for compliance, greater price integrity, and guardrails against exercising market power. For dispatchable participants, they receive greater confidence in the market, clear rules and structure around their operations. And for consumers, they have another set of safeguards against those who may want to act in bad faith, and impact prices.
Market power mitigation touches many areas of the Independent Electricity System Operator (IESO) and my team is hard at work to ensure mitigation functionality is seamlessly adopted. Reference levels and reference quantities development is an integral part of the market power mitigation framework and from these consultations, my role allows me to work closely with market participants. Behind-the-scenes, I work with our business analysts on the processes, requirements and solutions needed for the market power mitigation framework.
This is an exciting time for me at the IESO and for being a part of a project to benefit the Ontario electricity sector which will bring an expected $800 million in net benefits in the first 10 years alone. With tremendous support across the organization and the goal of an improved and efficient market, we will continue our path forward to ensure all of this work will bear fruit.
What we're working on
MRP Implementation phase - Market Power Mitigation batch now available
The Market Power Mitigation batch of market rules and manuals is available for stakeholder review and feedback will be accepted until October 15. At the August 26 stakeholder engagement day, an overview was provided of how the documents are organized, topics of interest and outlined the stakeholder review schedule. A recording of the presentation is available.
Continuing work on the replacement of the IESO's Settlement System (RSS)
With the final design update for the Settlement Disagreements and Resettlements Process published in June, the Replacement of the IESO's Settlement System (RSS) is now transitioning into the implementation phase of work. On August 26, the IESO provided an overview of its plans for the implementation phase, including what's changing from a tool and process perspective, market rule impacts, and timelines for testing and training activities. A recording of the presentation is available.
MRP Technical Advisory Group
On August 13, the second MRP Technical Advisory Group was held continuing the discussion on MRP tool changes, timing for testing, and market participant segmentation for training and testing activities.
Related IESO news
Annual Acquisition Report sets out next steps to secure Ontario's future resource needs
After years of strong supply, Ontario is now entering a period of growing electricity system needs and actions are needed to ensure the continued reliability of the grid.
To address these upcoming supply needs, the IESO has released its first Annual Acquisition Report (AAR). The AAR represents the implementation of the IESO’s Resource Adequacy Framework, outlining the steps needed to cost-effectively address supply needs identified in the 2020 Annual Planning Outlook.
The planned actions described in the report continues the move toward more competitive approaches to meeting those needs and drive down costs for ratepayers. This multipronged approach will provide flexibility to adapt to changing conditions and help facilitate participation from new technologies in the years ahead.
Capacity Auction update
The second annual capacity auction will be held on Wednesday, December 1, 2021 for the Summer 2022 and Winter 2022-23 obligation periods. Annual capacity auctions are a key short-term mechanism to meet Ontario’s capacity needs in a flexible, competitive and transparent manner.
Organizations interested in participating in the Capacity Auction will need to complete key activities by specific deadlines.
Stakeholder feedback due by October 15:
- Feedback is due on the Market Power Mitigation batch of draft market rules and market manuals by October 15. Please fill out the feedback form and submit it to email@example.com.
- September 21-23: Engagement Days
Did you know?
What is the exercise of market power?
A market thrives when there is open and fair competition among many resources. However, the realities of the transmission network can, at times, reduce the amount of competition between participants. Competition becomes unfair when market participants exercise their market power by either economically or physically withholding energy from the market to increase the price.
Through the Market Renewal Program and the implementation of a day-ahead market and single schedule market, market power mitigation will be applied in all operational timeframes – day-ahead, pre-dispatch and real-time.
A before-the-fact mitigation framework will be used to test for relatively high offers that have a specific impact on local prices. If that’s the case, the offers will be revised down before they have an impact on final schedules and prices.
Ensuring that the widest range of resources possible is eligible to set prices will enhance competition and support efficient price signals in Ontario.
You can now view the Market Power Mitigation draft amendments to the market rules and market manuals.