Understanding Ontarios Electricity System

Presentation by
Robert Doyle, Communications Advisor, IESO
September 13, 2010
 Who We Are and What We Do

The IESO is a not-for-profit

entity established in 1998
under the Electricity Act to
manage Ontarios power grid
The IESO:
Directs the flow of electricity across
the transmission system to meet the
provinces power needs
Balances demand for electricity
against available supply through
the wholesale market
Manages the financial operations of
the $10-billion wholesale market
Oversees emergency preparedness
activities for Ontarios power
system
Sends real-time price-signals to
trigger demand response
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 The IESOs Role

There are a number of different entities but all have their

own set of accountabilities and defined responsibilities

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 Ontarios Electricity Market:
The Dispatch of Energy

Suppliers Offers/ Consumers

Schedules Bids
Local Distribution
Generators and Companies
Traders
Dispatch Dispatch

Wholesale
Consumers

Transmitters

Electricity 4
 Ontario at a Glance
(as at August 2010)

Installed Capacity 35,781 MW

Record Summer Peak 27,005 MW
(August 1, 2006)
Record Winter Peak 24,979 MW
(December 20,
2004)
Total Annual Energy 139 TWh (2009)
Consumed
Customers 4.5 million
Ontario Import 4,600 MW
Capability
Transmission Lines 30,000 km
(18,600 miles) The IESO is the reliability coordinator for
Ontario and works closely with other
Average Price plus 6.77/kWh
jurisdictions to ensure energy adequacy
Adjustments
across North America.
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 Impacts on Demand Winter

Ice: can cause damage and

interfere with restoration Cloud Cover/Snowfall:
and repairs contributes to increased
lighting load by as much as
750 MW

Temperature: each
degree below 10C
incrementally raises
Wind: a 30 km/h wind on a cold
demand by 50 MW to
day (-10C) can increase demand
as much as 250 MW a
by 800 MW
degree at -20C
(furnace load)

Lighting influences demand peaks in winter with late

sunrise and early sunset

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Impacts on Demand

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 Demand for Electricity

Ontario Energy Demand 2004-2011

160

155

150
Ontario
Energy
145
Demand
(TWh)
140

Forecast

Forecast
135

130
2004 2005 2006 2007 2008 2009 2010 2011
Year

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 Green Energy Act (GEA)

Standard offer program

for renewable generation
Conservation targets for
local utilities
Streamlined processes
Foundation for a Smart
Grid

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 Output by Fuel Type Then and Now

2003 2009
Other Wind Other
0.8% 1.6% 0.8%

Gas Gas
8.1% 10.3%
Coal
6.6%

Coal Nuclear
25.8% 42.5% Nuclear
55.2%
Hydro
25.5%
Hydro
22.8%

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 Future Supply

3,400 MW of new and refurbished supply is scheduled to

come into service over the next 18 months
Nuclear, Gas and Wind, Water and Biomass
Decisions on future of existing nuclear stations
5,000 MW of renewable generation announced
includes wind, solar, hydro, biomass, biogas and landfill gas
Coal phase out well underway with four units to be shut
down this fall

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 Wind Integration

Wind generation is playing an

increasingly important role in
meeting Ontarios electricity
needs
Ontario leads the country with
almost 1,100 MW of installed
wind energy capacity on the grid
Winds variability can be
managed
The IESO developing a
centralized wind forecasting
service
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 How Customers Pay for Electricity

Hourly Price
Market (Interval Meter)
Price
(Business/
Industry) Weighted Average Price
(Conventional Meter)
IESO
Market Local
Price Distribution
Company

Tiered Prices
RPP

Time of Use (Smart Meter)

At any time a consumer can enter into a retail contract, regardless of the
rate structure or the meter.
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 Post November 2009

Since November 1, 2009, the public sector has been

moved from the RPP to market pricing
Pricing structure depends on whether or not the facility
has an interval meter
With an interval meter, the time at which you consume
electricity will impact your bill
Most items on your bill are the same except for the
commodity charge which is now split into two line items
(provincial benefit and commodity charge) which were
bundled together in the RPP price

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 What is the Provincial Benefit?

The Provincial Benefit ensures reliability by providing

adequate generation capacity for Ontario
It reflects the difference between the market price and:
The regulated rate paid to Ontario Power Generation baseload
generating stations (nuclear, large hydro)
Gas-fired facilities, wind farms, and other contracted projects
through the Ontario Power Authority
Rates paid to generators who signed contracts with Ontario Hydro
The rate changes monthly and is set on the first business
day of the month
It is charged to all large customers that are on a retail
contract or pay market prices
It is included in the RPP charged to houses and small businesses
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 Why is the provincial benefit rising?

The market price declined significantly in 2009:

Lower demand
Increased supply
Lower fuel costs
Regional trade
Changing supply mix
Low prices mean reduced market revenues for
generators which increases the need to recover costs
guaranteed in their contracts through the provincial
benefit

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 Global Adjustment - Provincial Benefit

Renewable Energy
Standard Offer
Program
Contributions to the Global Adjustment

OPG
Ontario Nuclear OPA
Hydro & Contracted
Contracts Hydro Generation
Base Load

Conservation and
Demand
Management

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 Recent Electricity Prices

6
Cents/kWh

0
Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10

Market Price Provincial Benefit

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 Electricity Pricing Trends

6.77
7
6.07
6
5.49
5.35
5.00
5
/kWh

0
2006 2007 2008 2009 Jan-Aug 10

Average Hourly Ontario Energy Price Adjustments

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 Evaluating a Retail Contract

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec YTD
Fixed Retail Contract Price Provincial Benefit
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 Daily Demand vs. Price

July 6 Demand and Price

30000 14

25000 12
Ontario Demand (MW)

10

Price (cents/kWh)
20000
8
15000
6
10000
4

5000 2

0 0
1 3 5 7 9 11 13
Ontario 15 17 19 21 23
Demand
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 Demand vs. Price cont.

www.ieso.ca/demand
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 Ontario Reliability Outlook

Ontarios electricity system is becoming

more participatory, distributed and
sustainable challenging the industry
to respond and innovate

Priority Areas:
Resource Adequacy
Integration
Transmission
Consumer Engagement

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 Consumer Engagement

Load control has the potential to

provide added flexibility
The stage is being set:
Three million smart meters installed;
time-of-use prices being rolling out
Technologies smart appliances, home
energy systems, PHEVs, coming on to
the market
More meaningful price signals are
needed to increase responsiveness

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 IESO Resources

Visit www.ieso.ca/publicsector
to read:
Research reports
Description of incentive programs
A guide to electricity charges
Profiles and publications to help
you manage electricity costs

Contact IESO Customer

Relations at 1-888-448-7777 or
customer.relations@ieso.ca

www.facebook.com/OntarioIESO

www.twitter.com/IESO_Tweets 25