Executive Summary 8

Looking at Ontario�s Wholesale Electricity Market 10

History of Ontario�s Electricity Policy

Introduction to Ontario�s Electricity Market Deregulation 17

Overview of Ontario�s Electricity Market Deregulation 18
Introduction 18
Overview of Ontario�s Wholesale Competitive Electricity Market 19
Optimization of the Physical Market 21
A Look at the Market Timeline 23
Inter-Jurisdictional Energy Trading 25
Ancillary Services 28
Market Fortification 30

Major Issues in Deregulation and Restructuring 31
Generation Challenges 31
Transmission and Distribution Challenges 34
Demand-Side Restructuring Issues 36
Stranded Costs 38

Ontario�s Electricity Deregulation Drivers 41

Design of Ontario�s Competitive Electricity Market 45
IMO-Managed Markets and Market Rules 46
Real-Time Markets 47
Financial Markets 48
Looking at Market Rules 50
Market Power Mitigation and Generation Restructuring 50

Programs in Place to Improve Market Operation 53
Intertie Offer Guarantee 53
Hour-Ahead Dispatchable Load Program 54
Spare Generation On-Line Program 55
Control Actions Operating Reserves Program 56
Multi-Interval Optimization Project 56
Look at the Demand Response Programs 57
Emergency Demand Response Program 57
Emergency Load Reduction Program 58
Improving the Market Power of Ontario Power Generation 59
Ontario�s Day-Ahead Commitment Process 60

Impact of Deregulation on Energy Prices 62

Appendix 65

Basics about Deregulation 65

Utilities Communication with Customers 71

Glossary 74

About the Publisher 77

List of Figures

Figure 1: Ontario�s Interconnections with Other Areas 23
Figure 2: Determining Zonal MCP 25
Figure 3: Monthly Weighted HOEP Averages and Peak Demands, 2002-2006 61