IESO Statement on the Auditor General’s 2017 Annual Report


December 6, 2017

Maintaining the reliability of Ontario’s electricity system is at the core of what the IESO does. This means ensuring Ontario residents and businesses have power whenever they need it.

The Auditor General’s December 6, 2017 report focuses on two market functions that are critical to accomplishing this task: the Real-Time Generator Cost Guarantee (RT-GCG) program and Congestion Management Settlement Credits (CMSC).

Without these market functions, the reliability of Ontario’s electricity system would be reduced and North American power system reliability standards would not be met—standards put in place following the 2003 blackout.

The IESO’s Market Assessment and Compliance Division and the Ontario Energy Board’s Market Surveillance Panel (MSP) have identified inefficiencies with these programs over the years, and the IESO has taken action to address them.

Enhancements to the RT-GCG program include pre-defined costs and stricter rules that have increased transparency and efficiency. Annual program costs were $23 million in 2016, down significantly from $61 million in 2014. Ineligible costs claimed under the previous version of the program were identified and the majority were recovered, and one generator responsible for two-thirds of them was fined an additional $10 million.

Regarding CMSC, the IESO has updated more than a dozen market rules to make it more efficient. As the MSP noted in a December 2016 report, “Many of the most problematic issues associated with the CMSC regime have been brought to an end – in large measure as a result of the Panel having identified these situations, and the IESO having acted to eliminate them.”

More information about these programs is available in the IESO’s backgrounders for the RT-GCG program and CMSC.

Ontario is in a stable supply situation as a result of investments made over the last decade, making now the right time to make more fundamental changes to the electricity market. These changes are being made through the IESO’s Market Renewal Program, which will result in a more efficient, competitive, and transparent electricity market.  The OEB’s Market Surveillance Panel is supportive and participating in the market renewal initiative.

Market Renewal is estimated to result in up to $5.2 billion in savings over 10 years, the majority of which will be realized by ratepayers. This will include replacing the RT-GCG program with a more efficient and transparent mechanism and eliminating CMSC. Read more about market renewal.

On Cybersecurity, the Auditor General says the IESO is adhering to North American standards but suggests it could be doing more.  The IESO is already in the process of hiring a new Chief Information Officer with an increased focus on cybersecurity. The creation of a senior-level position for cybersecurity with formal reporting to both IESO executives and our Board is also being considered.

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