Ancillary Services Market

The IESO contracts for four ancillary services to help ensure the reliable operation of the power system: certified black start facilities, regulation service, reactive support and voltage control service, and reliability must-run.

Certified Black Start Facilities

Certified black start facilities help system reliability by being able to restart their generation facility with no outside source of power. In the event of a system-wide blackout, black start facilities would be called on during restoration efforts by helping to re-energize other portions of the power system.

Standard Terms and Conditions:         

  • Monthly fixed payments
  • Annual and monthly testing requirements
  • Payments may be reduced if the facility fails to pass tests or fails to perform during a blackout

Regulation Service

Regulation service acts to match total system generation to total system load (including transmission losses) and helps correct variations in power system frequency. This service corrects for short-term changes in electricity use that might affect the stability of the power system. Regulation service has historically been provided by generation facilities with automatic generation control (AGC) capability, which permits them to vary their output in response to signals sent by the IESO.

Current Regulation Service:

  • Minimum of ±100 MW of automatic generation control (AGC) must be scheduled at all times
  • Minimum overall ramp rate requirement for Ontario is 50 MW/minute
  • Payments comprise fixed and variable costs  

Evolution of the regulation service market

In 2012, the IESO took a first step towards increasing the participation of alternative technologies such as aggregated loads, flywheels and battery storage in the electricity market. This has been accomplished by selecting three new suppliers of regulation service, a grid-balancing function traditionally provided by generators − a first for Ontario.   

Growing needs for regulation capacity

Like many jurisdictions across North America, the IESO is monitoring several factors driving the need to expand the regulation service market in Ontario including:

  • The inherent weather-related uncertainty in all forecasts related to variable generation
  • The autonomous behaviour of embedded distributed energy resources such as controllable loads, embedded generation and storage that are not subject to IESO dispatch instructions
  • Non-linear behaviour of demand patterns between 5-minute dispatch intervals

The IESO plans to expand its capability to schedule regulation by increasing the amount of regulation usually scheduled from 100 MW to 150-200 MW between 2017 and 2019 and have sufficient market depth to schedule up to 250 to 300 MW of regulation capacity on an as-needed basis by the year 2020. The IESO is seeking to reach this target through:

  1. one or more competitive procurements between now and 2020 with a view to increasing competition;
  2. examination of potential additional regulation products to unlock the value of emerging technologies and fast-moving resources; and
  3. standardized, simplified, regulation agreements that are more in-line with prevailing commercial terms in North American electricity markets. 

December 16, 2016:  Draft version of potential regulation RFP posted for comment

The IESO is seeking to expand the depth of the regulation service market in Ontario. As a first step, the IESO conducted a Request for Information (RFI)  that closed on September 30, 2016. The information collected in that RFI has allowed the IESO to develop a draft design of a Request for Proposals (RFP) which was posted for public comment on December 16, 2016. This was not an invitation to tender at this time. Comments on the draft RFP were due by February 10, 2017.

 Regulation signal

In order to ensure compliance with applicable North American Electric Reliability Corporation (NERC) standards, the IESO computes the Area Control Error (the instantaneous difference between actual and scheduled interchange, taking into account the effects of frequency bias) and dispatches units contracted to provide AGC. The regulation signal is provided as a MW quantity ("setpoint") to generators at a frequency of up to once every two seconds.

The IESO's calculates the economic dispatch for AGC units ("basepoint") as a function of a generator's offer price relative to the Hourly Ontario Energy Price (HOEP). The basepoint dispatch respects the upper and lower bounds of the facility's operating range in which it can provide AGC services and takes into account the unit's ramp rate.

The difference between the setpoint and basepoint is the MW quantity of regulation service that a unit is providing at a given moment in time (in various jurisdictions the absolute value of this difference is more commonly referred to as "mileage").

 July 22, 2016: Additional regulation signal sample data posted

In the lead-up to the pending regulation RFI, the IESO posted a sample of its regulation signal data. This data will assist potential new entrants into the regulation market to assess, test, and simulate various scenarios with an actual sample of the IESO's regulation signal data. The regulation sample data files provide interested parties with an opportunity to analyze various characteristics of the regulation signal such as upward/downward bias, volatility, correlations with other datasets, etc. The data can also be mathematically scaled to fit the range of a prospective facility for testing and evaluation purposes. As of July 22, 2016, a complete calendar year of sample data is now available in across two sample files as follows:

Download: Signal sample: Concatenated Sample for the period from June 24, 2015 to December 31, 2015 (13MB)

Download: Signal sample: Concatenated Sample for the period from January 1, 2016 to June 30, 2016 (14 MB)

Download: Descriptor of the sample data, revised July 22, 2016

 IESO Market Rules governing regulation service

The following sections of the IESO Market Rules contain requirements concerning regulation service:

  • Chapter 4, Appendices 4.2, 4.8, 4.15 and 4.19
  • Chapter 5, Sections 4.4, 4.9, 4.10; Section 12; and Appendix 5.1, Section 1.1
  • Chapter 7, Section 9

 Technical description of the regulation signal

Reactive Support and Voltage Control Service    

Reactive support and voltage control service is contracted from generators and allows the IESO to maintain acceptable reactive power and voltage levels on the grid. Both active and reactive are required to serve loads. Reactive power flow is needed in an alternating-current transmission system to support the transfer of active power over the network. All generating facilities that are injecting energy into the IESO-controlled grid are required to provide reactive support and voltage control service in accordance with the market rules.

Standard Terms and Conditions:

  • Prices are based on the costs of providing reactive power.  Traditionally this includes the additional costs that occur as a result of energy losses during facility operation. Hydro-electric facilities that can provide speed-no-load and condense service may also receive additional payments if their service is required by the IESO to maintain system reliability.
  • Testing requirements are in accordance with NERC planning standards

Reliability Must-Run

Reliability must-run (RMR) contracts are used to ensure the reliability of the IESO-controlled grid. A RMR contract allows the IESO to call on the registered facility under contract to produce electricity if it is needed to maintain the reliability of the electricity system. RMR contracts obligate the market participant to offer into the IESO-administered markets the maximum amount of energy and operating reserve in a commercially reasonable manner and in accordance with stated performance standards. More information is available in Chapter 7, section 9.8.1 of the IESO's Market Rules.

Costs and Quantities of Contracted Ancillary Services

Annually, the IESO publishes costs and quantities of all contracted ancillary services in accordance with Chapter 7, section 9.8 of the IESO's Market Rules.

For the period January 1, 2015 to December 31, 2015

Ancillary Service


Quantity of Service purchased

Annual Financial Amount (2015)

Anticipated change to requirements over next 12 months

Certified Black Start Facility

4 generation facilities

Certified Black Start Service from each facility


No change

Regulation Service

7 generation facilities + 3 Alternative Technologies for Regulation (ATR facilities)

±289.8 MW with typically ±100 MW of regulation service scheduled


Additional facilities as rer Phase 1 Energy Storage program. See description of pending RFI.

Reactive Support and Voltage Control

59 generation facilities having 235 generation units

Reactive support and voltage control service as required by prevailing system conditions


Additional facilities as per Phase 1 Energy Storage program.

Reliability Must-Run





Total amount paid for all Ancillary Services for the period January 1, 2015 to December 31, 2015





For the period January 1, 2014 to December 31, 2014
  1. Eight market participants were under contract to provide reactive support and voltage control service from a total of 59 generation facilities having 235 generation units.
  2. Four generating stations were under contract to provide certified black start capacity.
  3. Ten generating stations, two energy storage facilities and one load aggregation facility were under contract to provide regulation service. The total contracted capability was ±245 MW with typically ±100 MW of regulation service scheduled.
  4. The amount paid by the IESO for contracted ancillary services was $64,205,856.27. The portion paid for reactive support and voltage control service was $15,688,062.11.