20 FAQs about the Ontario Market Renewal Program and the Shift to a Nodal Market

You asked. We answered. 

With Ontario’s Independent Electricity System Operator (IESO) going nodal on May 1, we’ve received many questions from our customers about the Market Renewal Program and how it will impact operations and trading in the region. 

Learn about the changes happening in Ontario when the Market Renewal Program (MRP) goes live May 1, as well as answers to frequently asked questions from our customers. 

You can also get tips on how to prepare for the switch to nodal markets in our recent IESO blog, or listen to this on-demand webinar about the upcoming changes happening in the Ontario power market.

What’s Changing in Ontario on May 1? 

To modernize and deliver more efficient markets and ensure customers have reliable electricity at the lowest cost, IESO’s Market Renewal Program (MRP) will transform Ontario’s energy markets by shifting to a nodal market with a formal day-ahead market as well as a virtual market for the first time. 

The market design changes summarized below will introduce more transparency into the price formation through the reporting of nodal LMPs that account for the congestion costs, instead of reporting a system-wide price and handling congestion costs through out-of-market payments. The MRP will also introduce more competition and certainty for market participants through the introduction of a formal day-ahead market as well as a new virtuals market. 

Source: Yes Energy’s PowerSignals product, which includes the new nodal price data for IESO (Source: IESO Sandbox environment) 

Read on for more information on the key changes happening in IESO in May with the introduction of the Market Renewal Program. IESO is:

• Shifting to a single schedule market, establishing one schedule for both pricing and dispatch. 
• Shifting from a voluntary day-ahead clearing process to a formal day-ahead market that is financially binding. 
• Moving away from out-of-market congestion payments to locational cost of congestion handled in nodal LMPs.
• Adopting nodal pricing for all generation resources and dispatchable load customers in the real-time and day-ahead markets, replacing the single price system. There will be around 970 generator nodes when the MRP goes live.
• Introducing price-responsive loads, a new participation type for load customers. The pricing for non-dispatchable loads will remain uniform across Ontario but will better reflect the congestion costs of delivering energy across the grid.
• Introducing a new zonal-based virtuals market that will be financially binding.
• Creating the framework to support FTRs. While this feature won’t be available at the May 1 launch, the introduction of nodal LMPs and location-based congestion prices sets the stage for future FTR support.
• Providing 35 new public reports. 

20 Frequently Asked Questions about the IESO Market Renewal Program

Key Dates

This section includes key dates and go-live details for the Market Renewal Program.

• When does the IESO MRP go live?

1. On the morning of April 30, IESO will announce whether the MRP will launch on May 1.
   1. Real-time and pre-dispatch data will be published.
      1. Pre-dispatch data will be published at approximately 2:36 a.m. EST.
   2. On the morning of May 1, IESO will announce whether the day-ahead market will operate on May 2 for the market day May 3.
2. On May 2, day-ahead market data will be published.
3. On May 7, Price Responsive Loads (PRLs) will come into effect (registered loads can begin participating as PRLs).
4. On May 8, virtual trading begins.

Market Participation Information

This section includes information on market participation requirements. 

• Do you have information on minimum market participation requirements, e.g. cash/collateral requirements? 

1. For this information, see the Guide on Prudentials. A Prudential Support Obligation will be determined separately for physical transactions and virtual transactions, informed by all activity in the day-ahead and real-time timeframes. A market participant authorized for both types of transactions will have two separate Prudential Support Obligations.

Data Publication Information 

This section includes information on data publication nuances (e.g., timezones) and data accessibility in the IESO Sandbox/test environment.

• How can I access data in the IESO Sandbox environment to familiarize myself with the data before market go-live?

1. Public site: https://reports-public-sandbox.ieso.ca/public/ 
2. Gateway Sandbox: https://gateway-sbx.ieso.ca/. 
3. Here is the document outlining how to access the data: https://www.ieso.ca/-/media/Files/IESO/Document-Library/market-renewal/Market-Participant-Testing/Connectivity-Testing-IESO-Gateway.pdf 

Source: IESO’s Sandbox environment

• Will IESO keep publishing data in EST and not EDT when the clock moves forward?

1. IESO will keep publishing data in EST, but the DAM process timelines will follow Eastern Prevailing Time (EPT).

• Can I access the Sandbox data for the new MRP reports in Yes Energy to prepare for market participation?

1. Yes! Yes Energy customers who subscribe to the IESO trading region, can access the nodal, zonal, and system-wide prices from the real-time, day-ahead, and predispatch reports in Yes Energy. Also, customers can access virtual zonal prices from the real-time and day-ahead reports in Yes Energy. That’s not all though – we collect many other reports from Ontario (load, shadow prices, generation data, etc.). Reach out to sales@yesenergy.com for more information or to your account manager if you already subscribe to Yes Energy.

Pricing Data

This section includes information related to the reporting format of LMPs, reference nodes, and maximum/minimum price limits in the real-time market. 

• Will IESO publish nodal day-ahead prices ahead of the nodes going live?

1. Nodal day-ahead prices are available in the IESO Sandbox environment before go-live. Yes Energy has this data already flowing into our products! Note, this is just test data that is meant for market participants to familiarize themselves with before the MRP go-live. 
2. Timing of newly created or updated data IESO reports:
   1. May 1 is the first day of real-time market operation and the first day of real-time report publication.
   2. On May 2, market participants will submit day-ahead market dispatch data. The first day of day-ahead report publication for the trade date is May 3.

• Will the pricing data be reported by locational marginal price components (LMP, congestion, loss) for both nodal and zonal prices?

1. The day-ahead and real-time LMP price reports will include the LMP, loss, and congestion components for the over 900 generator and load nodes. The zonal price reports also include the LMP, loss, and congestion components. See more information.

Source: IESO’s Real time 5 Min Energy LMP Report from the Sandbox site

• How is the Hourly Ontario Energy Price (HOEP) going to be calculated after MRP?

1. After the MRP implementation, HOEP will be replaced by LMPs, and contracts will be settled based on these LMP prices. HOEP’s Global Adjustment (GA) charge will continue to exist following the implementation for Ontario, which is available in Yes Energy.

• What is now the reference node in IESO?

1. By default, the reference bus will be the Richview Transformer Station. If the reference bus is out of service, then an alternative station will be chosen as per the prevailing system conditions (Real-Time Calculation Engine, p. 42).

• Is there a maximum or a minimum price in real-time in Ontario post-MRP?

1. The settlement floor price is -$100/MWh. The maximum settlement will remain at $2,000/MWh. Resources can still offer as low as -$2,000/MWh, however.

Transmission Congestion Data

This section provides information regarding the availability of transmission constraint data, whether FTRs will be tradable in IESO post-MRP, and transmission rights (TR) products.

• Will IESO post binding constraint data?

1. Yes, after MRP, IESO will publish real-time, day-ahead, and predispatch binding constraint files. Unfortunately, the data will be published on a six-day lag on its public site. Read more about the day-ahead binding constraint shadow price report, the real-time binding constraint shadow price file, and the predispatch binding constraint file. IESO will publish day-ahead and predispatch security constraint files on a more real-time cadence, but this provides visibility into the constraints assumed in the day-ahead clearing engine and predispatch engine. Read more about the day-ahead security constraint report and predispatch security constraint report.

• Will shift factors be posted? 

1. Not directly. IESO used to publish an annual Loss Penalty Factor Report. Per IESO, “Loss penalty factors are used to account for the incremental change in transmission losses as a result of the change in output from a resource (including generators, loads and intertie connections)”. While they sound similar to a shift factor, the range of 2024 loss penalty factors is 0.91-1.22. IESO says that the dynamic loss penalty factors, which will be calculated in each pricing pass of the calculation engine, can be determined using the LMP reports. (IESO Publishing and Reporting Market Information (Final), p. 37).

• Will there be an FTR product?

1. No, there will not be a financial transmission rights (FTR) product. IESO currently offers and will continue to offer a transmission right product that market participants can use to hedge risk (e.g., for unpredictable congestion costs). Transmission rights are traded at the zonal level, not nodal level.

• Will financial transmission rights still settle on the real-time price, or will they settle on the day-ahead price?

1. Under MRP, financial transmission rights will be settled based on the day-ahead congestion prices instead of the real-time price.

Virtuals Market

This section provides more information on the new virtuals market in IESO, including the number of tradable nodes, price formation, and data availability.

•  How many zones will be tradable in the virtual market? 

1. There are 10 electrical zones in Ontario, but only nine virtual trading zones. The Bruce and Southwest are combined into one Southwest virtual trading zone, see IESO's Introduction to Virtual Traders Report for more information.

Source: Figure 1 from IESO’s “Introduction to Virtual Traders” Report

• How is the virtual zonal price calculated?

1. Virtual transactions will be settled with the virtual zone prices, which is calculated as the load-weighted average of the LMPs at all load points within the zone. Load distribution factors (LDFs) will be used to determine the weight of each LMP in the virtual trading zone. Like with other prices, day-ahead market and real-time virtual zonal prices will be calculated and used for settlement. Pre-dispatch zonal prices will be provided for information purposes only.

• How far back will the virtual price data be available for?

1. IESO is launching a virtual market for the first time ever on May 8. Test data for the new virtuals market is available in the IESO Sandbox site. Yes Energy customers can start familiarizing themselves with this data in our products now so they are ready when the market goes live on May 8!

• Will there be uplifts on virtuals similar to other ISOs in the US? Will there be monthly or weekly settlements for virtuals?

1. There will be uplifts on virtuals. Due to the DAM Reliability Scheduling Uplift (DRSU), virtual transactions can be allocated a portion of the cost of DAM_MWP and DAM_GOG generated in Pass 2: Reliability Scheduling and Commitment of the DAM calculation engine for every MW cleared in the DAM.
2. Virtuals will be settled hourly and invoiced monthly. IESO will continue using monthly billing periods for settlement of the physical market (this includes both physical and virtual transactions), so virtual transactions will appear on the monthly invoice. Invoices will be issued 10 business days after the end of the billing period. The market participant payment date is the second business day following the issuance of the invoice. The weekly invoice will continue to contain only settlement amounts for the transmission rights auction.

Subscription Information

This provides information on IESO data availability in Yes Energy. 

• Does Yes Energy have an IESO offering? 

1. Yes! Customers can subscribe to the IESO trading region data in Yes Energy. It is accessible across our PowerSignals, QuickSignals, DataSignals API, DataSignals Cloud, and DataSignals Lake products. We have historical data available prior to the MRP changes going live on May 1, plus the new MRP data.

• Will independent load forecasts (e.g., Yes Energy Ontario IESO Demand Forecasts) be available for Ontario in Yes Energy?

1. Yes, you can check out our Demand Forecasts for IESO! We also have multiple load forecast partners who offer load forecasts for Ontario, which are available in Yes Energy.

Source: Yes Energy’s Demand Forecasts for IESO. This product includes a temperature sensitivity analysis so you can see how the load forecast changes under different scenarios.

Conclusion

Big changes are on the horizon for Ontario’s power market, and Yes Energy is ready to help you get ahead of them. With the Market Renewal Program going live on May 1, we’ve got the tools and insights you need to stay informed and prepared. 

Got questions? We’ve got answers. Reach out to our team to learn more about Ontario data in Yes Energy or get your questions answered about the MRP from our in-house market experts. In addition, Yes Energy’s RTO Insider will be initiating coverage of IESO and its nodal market launch next week. See www.RTOInsider.com.

About the author: Emily Merchant is a Director of Product at Yes Energy in charge of setting the vision and strategy for Yes Energy's PowerSignals, QuickSignals, and Trading Regions (public data) products. Emily has over 14 years of experience working in the energy industry. Prior to Yes Energy, Emily worked at Navigant Consulting (now Guidehouse) for seven years where she helped utilities assess the impact of their energy efficiency programs. She has also worked at E Source, Energy Trust of Oregon, and GDS Associates. A career highlight was being on the team that brought on S&P Global on as a new partner to Yes Energy in 2022. Outside of work Emily loves traveling (London is her favorite city), biking, reading, and spending time with friends and family.