IESO Introduces Renewed Electricity Market
May 6, 2025
Independent Electricity System Operator’s (IESO) has announced their renewed electricity market is now live — a major milestone in the IESO’s work to modernize the province’s electricity market.
With more efficient scheduling and pricing, the renewed market ensures electricity prices better reflect the cost of delivering electricity, supporting a more efficient and reliable grid.
“These improvements pave the way for a more competitive future market, the integration and enablement of new technologies, and a rapidly growing electricity system,” said IESO on LinkedIn
“Over the last few days, we’ve been working with market participants to bring this renewed market to life. We appreciate the support, effort and dedication of everyone involved in making this transition a success and begin a new era for Ontario’s electricity market.”
New Aspects of IESO’s Renewed Electricity Market
Day-Ahead Market
The introduction of a day-ahead market complements the existing real-time market and provides greater operational and financial certainty for those who supply electricity and those who consume it. By committing supply a day in advance, the system has greater assurance that electricity will be available when it’s needed.
Balanced Supply & Demand
With a day-ahead market in place, the real-time market balances supply and demand based on actual system conditions – accounting for differences between what was committed the day before and how much electricity is used in real-time.
Locational Marginal Prices
At the same time, both markets will feature locational marginal pricing (LMP), which accounts for the ability of the transmission system to deliver power from where it is produced to where it is needed. With almost 1,000 local prices throughout the province, congestion in the system becomes more transparent, encouraging new supply to be located where it is needed most.
Improved Demand Forecasts
More granular weather data and improved modelling will increase the accuracy of the IESO’s forecasts for electricity demand in Ontario. In addition to the provincial forecast, the IESO now produces four regional (or zonal) forecasts to provide a better view of electricity demand in various parts of the system. These improvements will help the IESO more effectively balance supply and demand in both the real-time and day-ahead markets.
Enhanced Market Power Mitigation
The IESO has adopted a streamlined and more transparent approach to managing situations where one or more market participants could use market power to impact prices. Checks are now embedded within existing processes – from registration to settlement – protecting the integrity of the price as it is published and settled. This reduces the need for after-the-fact adjustments and saves time and money.
Most Consumers Continue to Pay Province-Wide Prices
Business customers who pay the wholesale price for electricity through their local hydro company will pay a new price called the Ontario Price which replaces the Hourly Ontario Energy Price. The Ontario Price is based on the Day-Ahead Ontario Zonal Price adjusted based on any differences in the real-time market.
Locational marginal prices in the real-time and day-ahead markets are aggregated to create Ontario Zonal Prices. The Day-Ahead Ontario Zonal Price is the best indication of the cost of electricity for each hour.
What these customers pay for electricity, however, remains the same and will continue to appear as part of the commodity charge on their monthly bills. Residential and small business consumers will continue to pay electricity rates set by the Ontario Energy Board.
