Changes are required to Ontario’s electricity system to help bring prices more in line with neighbouring jurisdictions. This is the conclusion of a 2015 report from The Council for Clean and Reliable Electricity. “Apples to Apples: Fixing Ontario’s Electricity Price Mismatch” explains how the lack of a day-ahead market in Ontario and the current global adjustment system have resulted in Ontario selling exported electricity at prices lower than those paid by Ontario consumers. At the same time, this discrepancy creates a loophole that can benefit electricity exporters.
Greg Baden, author of the report, notes that New York and Michigan are the primary markets for Ontario electricity. Both those states operate day-ahead and hourly markets. Ontario, on the other hand, only operates an hourly market. In many hours, hydroelectric generation is the marginal generator in the Ontario hourly market and natural gas generation is the marginal generator in New York and Michigan. The differing market fundamentals create a price spread that can be exploited by an exporter buying Ontario electricity and selling it in either Michigan or New York. The revenues earned by the exporter are not included in the calculation of the Global Adjustment.
“Apples to Apples” highlights the value of adopting continuous improvement in energy management, even at the Ontario provincial electric system level. Taking action to address structural reforms could potentially save Ontario consumers significant costs for their electric energy.
Website for The Council for Clean and Reliable Electricity: www.thinkingpower.ca/