THE POWER SYSTEM
Ontario's power system is managed to meet the highest expected demand with extra power in reserve.
Ontarians use more than 141,000,000 megawatt hours of electricity a year. Ensuring that there is enough energy to meet that demand is an ongoing and highly-complex process, requiring the close co-ordination of all parts of the system. The IESO is at the centre of it all, directing the flow of power across the province. Here's how it works:
IESO Control Centre
Each day, the IESO forecasts the demand for electricity and makes this information available to participants in the market. Generators and other energy suppliers then send in their offers to provide energy. Every five minutes, the IESO chooses the least expensive offers and instructs those generators and suppliers to send electricity into the system. Throughout the day, demand forecasts are updated and suppliers revise or send in new offers.
The IESO also ensures that there is enough reserve energy available on short notice should there be a surge in demand or an unexpected equipment failure at one of the generators or on the transmission system. The IESO offers reserve payments to generators to be on call to provide extra energy and to large volume users to cut consumption.
Ontario has a diverse power sector. Nuclear and large hydro-electric facilities typically run 24 hours a day and provide what is referred to as "base load generation". Fossil-fuel generators generally run during the day and ramp-up production during peak periods of demand. Hydroelectric facilities that have the capability to store water can often provide power during higher demand periods, with the capability to store water until it is needed to generate electricity. Other forms of power production in Ontario include small amounts of wood-waste and wind facilities.
Ontario's internal generation is supplemented by power imported from Quebec, New York State and other neighbouring jurisdictions. Ontario's interconnected transmission system is capable of importing up to 4,800 MW of electricity into the province, strengthening system reliability.
There are more than 20 different companies that own and operate power generators connected to the IESO-controlled electricity grid. The largest is Ontario Power Generation, controlling 70 per cent of generation in the province.
Over 30,000 kilometres of transmission lines criss-cross the province, carrying electricity to large-volume consumers and utilities for distribution. The IESO directs the flow of electricity over these lines, while the transmission companies are responsible for their operation and maintenance. The voltage and frequency of electricity travelling along these lines is carefully monitored to ensure safety and reliability. There are five transmission companies in Ontario: Hydro One, Great Lakes Power, Canadian Niagara Power, Five Nations Energy and Cat Lake Power Utility Limited.
Industries that are directly connected to the IESO-controlled grid are also participants in the market. Other companies that use large amounts of electricity can choose to join the market so that they can better manage their electricity use. Participating in the market allows them to derive more benefits from cutting consumption when demand and prices are high. For example, a large-volume user can receive reserve payments to be on call to cut consumption if demand unexpectedly surges.
Local Distribution Companies (Local Utilities)
Once power is delivered to local utilities, the voltage of the power is reduced and sent along distribution lines to homes and businesses.Utilities throughout the province purchase electricity through the IESO on behalf of all its customers, which include:
Electricity consumers have the option of signing a contract with an energy retailer to pay a fixed charge for electricity. These retailers purchase electricity in the market and through contracts with generators. The Ontario Energy Board posts a list on its web site of energy providers licensed to sell electricity in the province.
Overseeing Ontario’s Power System
The IESO works in partnership with other entities in Ontario’s electricity sector, these include:
Ministry of Energy
The Ontario Ministry of Energy establishes energy policy for the province, working to ensure that Ontario’s electricity system functions at the highest level of reliability and productivity. Another provincial agency, the Ontario Electricity Financial Corporation (OEFC), manages the liabilities of the former Ontario Hydro.
Ontario Energy Board (OEB)
The Ontario Energy Board regulates all non-commodity electricity rates licences the IESO and all market participants. The IESO issues annual fee submissions (link to regulatory page) for review by the OEB, as well as quarterly updates on its fulfillment of licence requirements.
Ontario Power Authority
The Ontario Power Authority (OPA) was established in December 2004 with the responsibility for medium and long-term planning and ensuring an adequate supply of electricity and demand response in Ontario. The IESO is responsible for preparing short-term forecasts and assessments and works in co-ordination with the OPA.