RTO Insider is beginning regular coverage of Ontario’s Independent Electricity System Operator (IESO) in conjunction with the region’s transition to a nodal market May 1. (See related story, Ontario Introducing Nodal Market May 1.) 

Here’s an introduction: 

How does it compare with organized markets in the U.S.?

IESO has 37.2 GW of installed capacity and 18,640 miles of transmission, both ranked seventh among the nine organized markets in the U.S. and Canada. It hit its peak demand, 27,005 MW, in August 2006. Its record winter peak, 24,979 MW, was set in December 2004. 

How is power demand expected to change in the future?

The 2025 Annual Planning Outlook demand forecast predicts a 75% increase in electric demand by 2050 — up from the 60% increase forecast a year earlier — driven by industrial and data center growth in addition to commercial sector growth, increasing population and electrification. Annual consumption is seen rising from 151 TWh in 2025 to 263 TWh in 2050. 

Who owns and controls IESO?

IESO is a “Crown corporation,” a government organization with a mixture of commercial and public-policy goals, owned by the government of Ontario. 

It is governed by a board whose directors are appointed by the provincial government. 

Before 1998, Ontario Hydro and municipal utilities provided power to Ontario, with electricity prices set by the provincial government. 

The Ontario Electricity Act of 1998 split Ontario Hydro into IESO’s predecessor and four other companies, including:  

• • • the Electrical Safety Authority (ESA), which regulates and promotes electrical safety;
    • the Ontario Electricity Financial Corp. (OEFC), which is responsible for managing Ontario Hydro’s debt and contracts with non-utility generators;
    • Ontario Power Generation (OPG), which took over Ontario Hydro’s generation and now owns 66 hydropower stations, two nuclear stations and a handful of solar and gas generators in Ontario;
    • and Hydro One, which assumed Ontario Hydro’s transmission and distribution assets and now serves 1.5 million predominantly rural customers. 

IESO, originally called the Independent Electricity Market Operator (IMO), was created to prepare for deregulation of the province’s electrical system. It assumed the grid management functions of Ontario Hydro and was charged with developing a new electricity market. 

The wholesale electricity market opened in May 2002, and the IMO was renamed IESO in January 2005.  

How is IESO regulated?

The Ontario Energy Board regulates electric companies and sets residential electricity rates; it also approves IESO’s budget and fees. The OEB reports to the Ministry of Energy and Mines, which sets overall policies for the electricity sector.  

In an October 2024 report, Minister of Energy and Electrification Stephen Lecce signaled a shift from the previous Liberal government, which Lecce’s Progressive Conservative Party ousted in 2018, criticizing its “failed and ideologically driven energy experiments” and “sweetheart deals that paid several times the going rate for power,” a reference to 33,000 renewable energy contracts signed between 2004 and 2016 at up to 10 times the prevailing power prices. 

Lecce called for “an all-of-the-above approach to energy planning, including nuclear, hydroelectricity, energy storage, natural gas, hydrogen and renewables, and other fuels, rather than ideological dogma that offers false choices and burdens hardworking people and businesses with a costly and unnecessary carbon tax.” 

He touted “the largest expansion of nuclear energy on the continent with the first small modular reactor in the G7. The province is upgrading and refurbishing existing reactors at Darlington, Pickering and Bruce Power to extend their lifespan and building four 300-MW SMRs at Darlington.  

What is its fuel mix?

Nuclear (53%) and hydropower (25%) constitute more than three-quarters of IESO’s fuel mix, up from 66% in 2003. Wind (8%), solar (0.5%) and biofuel (0.4%) have increased their shares from a combined 1% in 2003. Gas and oil represent 13% (up from 11% in 2003). 

Coal, which represented one-quarter of generation in 2003 — and most of the system’s flexibility, according to IESO — was eliminated in 2014. 

Where is it expanding transmission?

IESO is developing five new transmission lines in southwestern Ontario to serve auto manufacturers and agriculture, two new lines in northeastern Ontario to support a steel mill’s planned conversion to electricity and mines, and one line in eastern Ontario to serve the Peterborough and Ottawa regions. 

How does it incorporate stakeholders in new market rules?

IESO says it dedicates one to three days each month for stakeholder engagement meetings. Current engagement issues include local generation, demand side management, the annual planning outlook and capacity auction enhancements. 

In addition, the Strategic Advisory Committee provides feedback to IESO’s Board of Directors and executive leadership team. Current members represent generators, transmission and distribution companies, communities, consumers, and energy-related businesses and services. The committee held three public meetings in 2024. 

The Technical Panel reviews proposed changes to market rules. Its current members include representatives of generators, renewable generators, energy-related businesses and services, importers and exporters, transmission and distribution companies, market participant consumers, residential consumers and demand response providers. It has scheduled seven meetings through the end of 2025.