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Understanding Ontario’s Electricity SystemPresentation by Robert Doyle, Communications Advisor, IESOSeptember 13, 2010
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Who We Are and What We Do
• The IESO is a not-for-profit entity established in 1998 under the Electricity Act to manage Ontario’s power grid
• The IESO:– Directs the flow of electricity
across the transmission system to meet the province’s power needs
– Balances demand for electricity against available supply through the wholesale market
– Manages the financial operations of the $10-billion wholesale market
– Oversees emergency preparedness activities for Ontario’s power system
– Sends real-time price-signals to trigger demand response
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The IESO’s Role
• There are a number of different entities but all have their own set of accountabilities and defined responsibilities
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Ontario’s Electricity Market:The Dispatch of Energy
Dispatch Dispatch
Offers/Schedules BidsSuppliers Consumers
Local Distribution Companies
WholesaleConsumers
Transmitters
Electricity
Generators and Traders
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Ontario at a Glance(as at August 2010)
Installed Capacity 35,781 MW
Record Summer Peak
27,005 MW (August 1, 2006)
Record Winter Peak 24,979 MW (December 20, 2004)
Total Annual Energy Consumed
139 TWh (2009)
Customers 4.5 million
Ontario Import Capability
4,600 MW
Transmission Lines 30,000 km (18,600 miles)
Average Price plus Adjustments
6.77¢/kWh
The IESO is the reliability coordinator for Ontario and works closely with other jurisdictions to ensure energy adequacy across North America.
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Impacts on Demand – Winter
Cloud Cover/Snowfall: contributes to increased lighting load by as much as 750 MW
Temperature: each degree below 10°C incrementally raises demand by 50 MW to as much as 250 MW a degree at -20°C (furnace load)
Ice: can cause damage and interfere with restoration and repairs
Wind: a 30 km/h wind on a cold day (-10°C) can increase demand by 800 MW
Lighting influences demand peaks in winter with late sunrise and early sunset
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Impacts on Demand
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Demand for Electricity
2004 2005 2006 2007 2008 2009 2010 2011130
135
140
145
150
155
160
Fo
reca
st
Fo
reca
st
Ontario Energy Demand 2004-2011
Year
Ontario Energy
Demand (TWh)
Green Energy Act (GEA)
• Standard offer program for renewable generation
• Conservation targets for local utilities
• Streamlined processes
• Foundation for a Smart Grid
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Output by Fuel Type – Then and Now
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Nuclear55.2%
Hydro25.5%
Coal6.6%
Gas10.3%
Wind1.6% Other0.8%
2009
Nuclear42.5%
Hydro22.8%
Coal 25.8%
Gas8.1%
Other0.8%
2003
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Future Supply
• 3,400 MW of new and refurbished supply is scheduled to come into service over the next 18 months– Nuclear, Gas and Wind, Water and Biomass
• Decisions on future of existing nuclear stations• 5,000 MW of renewable generation announced
– includes wind, solar, hydro, biomass, biogas and landfill gas
• Coal phase out well underway with four units to be shut down this fall
Wind Integration
• Wind generation is playing an increasingly important role in meeting Ontario’s electricity needs
• Ontario leads the country with almost 1,100 MW of installed wind energy capacity on the grid
• Wind’s variability can be managed
• The IESO developing a centralized wind forecasting service 12
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How Customers Pay for Electricity
IESOMarketPrice
LocalDistribution
Company
Market Price
(Business/Industry)
RPP
Weighted Average Price(Conventional Meter)
Hourly Price (Interval Meter)
Tiered Prices
Time of Use (Smart Meter)
At any time a consumer can enter into a retail contract, regardless of the rate structure or the meter.
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Post November 2009
• Since November 1, 2009, the public sector has been moved from the RPP to market pricing
• Pricing structure depends on whether or not the facility has an interval meter– With an interval meter, the time at which you consume
electricity will impact your bill• Most items on your bill are the same except for
the commodity charge which is now split into two line items (provincial benefit and commodity charge) which were bundled together in the RPP price
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What is the Provincial Benefit?
• The Provincial Benefit ensures reliability by providing adequate generation capacity for Ontario
• It reflects the difference between the market price and:– The regulated rate paid to Ontario Power Generation
baseload generating stations (nuclear, large hydro)– Gas-fired facilities, wind farms, and other contracted
projects through the Ontario Power Authority– Rates paid to generators who signed contracts with
Ontario Hydro• The rate changes monthly and is set on the first
business day of the month• It is charged to all large customers that are on a
retail contract or pay market prices– It is included in the RPP charged to houses and small
businesses
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Why is the provincial benefit rising?
• The market price declined significantly in 2009:– Lower demand– Increased supply– Lower fuel costs– Regional trade– Changing supply mix
• Low prices mean reduced market revenues for generators which increases the need to recover costs guaranteed in their contracts through the provincial benefit
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Global Adjustment - Provincial Benefit
OntarioHydro
Contracts
OPG Nuclear
&Hydro
Base Load
Renewable EnergyStandard Offer
Program
Conservation and Demand Management
OPAContractedGeneration
Contributions to the Global Adjustment
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Recent Electricity Prices
Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-100
1
2
3
4
5
6
7
8
9
Market Price Provincial Benefit
Cen
ts/k
Wh
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2006 2007 2008 2009 Jan-Aug 100
1
2
3
4
5
6
7
8
Average Hourly Ontario Energy Price Adjustments
¢/k
Wh
Electricity Pricing Trends
5.00
5.35
5.49
6.07
6.77
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Evaluating a Retail Contract
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec YTD
Fixed Retail Contract Price Provincial Benefit
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Daily Demand vs. Price
1 3 5 7 9 11 13 15 17 19 21 230
5000
10000
15000
20000
25000
30000
0
2
4
6
8
10
12
14July 6 Demand and Price
Ontario Demand
On
tari
o D
em
an
d (
MW
)
Pri
ce (
cen
ts/k
Wh
)
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Ontario Reliability Outlook
Priority Areas:• Resource Adequacy• Integration• Transmission• Consumer Engagement
Ontario’s electricity system is becoming more participatory, distributed and sustainable – challenging the industry to respond and innovate
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Consumer Engagement
• Load control has the potential to provide added flexibility
• The stage is being set:– Three million smart meters
installed; time-of-use prices being rolling out
– Technologies – smart appliances, home energy systems, PHEV’s, coming on to the market
• More meaningful price signals are needed to increase responsiveness
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IESO Resources
• Visit www.ieso.ca/publicsectorto read:– Research reports– Description of incentive
programs– A guide to electricity charges– Profiles and publications to
help you manage electricity costs
• Contact IESO Customer Relations at 1-888-448-7777 or [email protected]
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www.facebook.com/OntarioIESO
www.twitter.com/IESO_Tweets