Guide to Wholesale Electricity Charges

Market participants pay a combination of commodity charges (Hourly Ontario Energy Price and Global Adjustment), wholesale market service charges, wholesale transmission charges and other associated charges. Possible electricity charges that market participants may see on their bill are outlined below.

 Description

Commodity Charges

 

HOEP

The HOEP is the hourly price that is charged to local distribution companies (LDCs) and other non-dispatchable loads. HOEP is also paid to self-scheduling generators. HOEP forms the basis of the commodity charges in the retail electricity market.

Note: Dispatchable loads pay the 5-minute market clearing price (MCP).

Actual Global Adjustment Class B Rate

The global adjustment rate includes:

  • Payments based on the difference between HOEP and:
  • Regulated rates for Ontario Power Generation’s nuclear and hydroelectric generating stations;
  • Payments for building or refurbishing infrastructure such as gas-fired and renewable facilities and other nuclear, as well as the contracted rates paid to a number of generators across the province;
  • Payments made to local distribution companies for conservation programs.

Note: Class A customers who participate in Industrial Conservation Initiative pay global adjustment based on their contribution to the top five Ontario peaks over a 12-month period.  

Wholesale Market Service Charges

 

Hourly Uplift – Congestion Management Settlement Credits (CMSC)

CMSC is paid to dispatchable resources, such as generators or large consumers, who responded to instructions from the IESO to take specific actions to avoid possible overloads of the transmission system, or to maintain the balance between supply and demand.

Hourly Uplift – Intertie Offer Guarantees (IOG)

IOG is paid to electricity imports into Ontario if the hourly pre-dispatch price exceeds the five-minute prices set in the market

Hourly Uplift – Other

These include energy losses and operating reserve costs.

Daily Uplifts

These costs are incurred to commit generators to day-ahead schedules through the Day-Ahead Commitment Process.

Monthly Uplifts

Monthly costs cover the services required to ensure the reliability of the Ontario power network, and to meet commitments to other system operators throughout North America, including Black Start Capability, Voltage Support, and Regulation Service. The monthly uplift costs are shared among all wholesale customers on a pro rata basis.

IESO Administration Fee

The IESO charges an administrative fee to operate the wholesale electricity market and manage the high voltage power system in Ontario. There are two separate rates for the IESO Administration Fee, one applied to domestic transactions and another to export transactions. The rate is set by the Ontario Energy Board.

Rural and Remote Electricity Rate Protection

This charge helps to offset the higher cost of providing service to consumers in rural and remote areas.

Class B Capacity Based Recovery

This charge includes capacity-based demand response, demand response pilot, demand response auction and other demand response programs.

Wholesale Transmission Charge

This charge to LDCs and some large consumers covers the cost incurred by transmission companies to construct and maintain the high-voltage transmission lines needed to transport electricity from generating stations to LDCs or consumers. It encompasses the Network Charge, the Connection Charge and the Line and Transformation Charge. The rate for this service is approved by the Ontario Energy Board.

Debt Retirement Charge

This charge is set by the Government of Ontario to pay down the debt of the former Ontario Hydro and is collected on behalf of the Government of Ontario.

Related Information

Charge types description and formulas: IESO Charge Types and Equations

Market Manual 5.5: Physical Market Settlement Statements

Real-time and historic HOEP rates: Power Data

Report: Monthly Market Summary