Background

At its core, the Market Renewal Program (MRP) will deliver more efficient markets, ensuring that all Ontarians have a stable and reliable supply of electricity at the lowest cost.

To deliver on its mission to enhance the efficiency of Ontario’s electricity markets, the MRP will:

1. Replace the two-schedule market with a single schedule market (SSM) that will address current misalignments between price and dispatch, eliminating the need for unnecessary out-of-market payments.
2. Introduce a day-ahead market (DAM) that will provide greater operational certainty to the IESO and greater financial certainty to market participants, which lowers the cost of producing electricity and ensures we commit only the resources required to meet system needs.
3. Reduce the cost of scheduling and dispatching resources to meet demand as it changes from the day-ahead to real-time through the enhanced real-time unit commitment (ERUC) initiative.    
4. Though capacity auctions, secure capacity to meet Ontario’s future resource adequacy needs transparently and at the lowest cost in the long run.

Mission and Principles

The IESO and its stakeholders worked closely together to establish a mission and set of guiding principles for the MRP. Together the mission and principles of efficiency, competition, implementability, certainty and transparency provide a shared vision for the sector on where the program is heading and how it will get there.

Benefits of the Market Renewal Program

The IESO has published two reports assessing the potential benefits for market renewal. In 2019, the IESO released a business case that assesses the operational, reliability and financial benefits and costs associated with implementing the new energy market. The net benefits of implementing the market renewal projects are expected to total approximately $800 million over the first 10 years of implementation.

The business case, informed by stakeholder input, found once the MRP projects are implemented, a number of benefits will be realized to both IESO and the sector, such as: enhancing reliability by aligning price and dispatch; addressing instances and causes of gaming; incenting good investments; laying the foundation for enabling and participation of new technologies in the future; and providing for greater competition between resources.

In 2017, the IESO published a commissioned, independent report assessing the potential benefits case for market renewal. The report drew from past Ontario studies, the experience of jurisdictions that had implemented similar market changes, and extensive stakeholder consultation. The report found the benefits from market renewal are likely to grow over time as contracts expire and the sector becomes more distributed in nature.

Stakeholder Participation

Given the scale and scope of the changes being proposed, the IESO has made working closely and collaboratively with stakeholders a priority since April 2016. At that time, the IESO developed a stakeholder engagement framework to ensure alignment and collaboration with those that will help reshape the electricity marketplace.

The framework included:    

• Stakeholder engagements for each initiative to discuss options for the high-level and detailed design phases.
• Technical subcommittees, if needed, for focused discussion on specific issues, such as the Non-Emitting Resources Subcommittee (NERSC).
• A Market Renewal Working Group to guide, advise and inform the IESO on important strategic, policy and design issues that could impact the overall success of market renewal. The work of this group has now concluded.
• A CEO Roundtable to share information, issues and create alignment at the executive level.

For more information about becoming involved in MRP, please contact engagement@IESO.ca.