Energy Market OverviewThe Independent Electricity System Operator (IESO) is the hub of the electricity wholesale marketplace, connecting all participants - from the generators and suppliers who sell electricity to wholesale consumers. Its responsibilities include: overseeing the IESO-administered wholesale markets; ensuring the reliability of the integrated power system; and forecasting supply requirements.
The wholesale market price for electricity is based on supply and demand. Suppliers submit offers to sell electricity and wholesale buyers submit bids to buy electricity. The IESO then uses these offers and bids to match electricity supply with demand, and establishes the Hourly Ontario Energy Price, or HOEP. This is the price paid by wholesale customers.
This spot market energy price changes from hour to hour, day to night, from season to season, and for short periods in response to high levels of demand or sudden changes on the IESO-controlled grid. In the market, generators can submit offers for electric power in different quantities and prices for each hour of the day. Every five minutes, the IESO calculates a new spot market price by balancing the supply of electricity with demand. As demand increases, more expensive offers from generators are accepted, which raises the price of electricity. As demand drops, only the less expensive offers are accepted, which reduces the price. Wholesale customers are able to respond to changes in prices by shifting some of their demand to off-peak periods.
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