Ontario’s Electric Reliability Framework
A product of the Energy Mines Ministers’ Conference
|~ 4.9 million
|Transmission System length (≥ 115 kV)
|~ 30,000 km
|Interconnections with Quebec, Manitoba, New York, Michigan, Minnesota
Approximately 90% of power generated in Ontario in 2015 came from clean sources of energy such as hydro, nuclear and renewables.
Ontario is the first jurisdiction in North America to eliminate coal as a source of electricity. Phasing out coal-fired electricity generation, completed in 2014, was the single largest climate change initiative in North America and the equivalent of taking up to 7 million cars off the road.
The Ontario Ministry of Energy (“Ministry”) is responsible for setting the policy and legislative framework for Ontario’s electricity system. The Ministry develops solutions and advises on all aspects of energy policy for Ontario, including electricity, natural gas and oil. It also has legislative responsibility for the Ontario Energy Board (“OEB”) and Independent Electricity System Operator (“IESO”).
The Independent Electricity System Operator (“IESO”) is a not-for-profit corporation in the Province of Ontario, Canada and established under the Electricity Act, 1998of Ontario. The objects of the IESO are described in s.6(1) of the Act and include statutory responsibility to develop and administer wholesale electricity markets, to direct the operation and maintain reliability of the IESO-controlled grid, to establish and enforce criteria and standards for reliability of the integrated power system made by standards authorities, to plan for adequacy and reliability of electricity resources, to administer and contract for electricity resources, and to promote electricity conservation within the Province of Ontario. The IESO is subject to the OEB’s oversight authority.
The Ontario Energy Board’s (OEB) mandate is determined by the provincial government and is embodied in legislation, regulation and directives. The OEB’s mission is to promote a viable, sustainable and efficient energy sector that serves the public interest and assists consumers to obtain reliable energy services that are cost effective. In the electricity sector, the OEB sets transmission and distribution rates, and approves the IESO’s budget and fees. The OEB also sets the rate for the Standard Supply Service for distribution utilities that supply electricity (commodity) directly to consumers. The OEB licenses all market participants including the IESO, generators, transmitters, electricity storage, distributors, wholesalers and retailers. OEB approval is required for the construction of electricity transmission lines longer than two kilometres.
Electric Reliability Regime in Ontario
Reliability standards are intended to ensure the integrity of the interconnected North American Bulk Electric System. The recognized standards authorities, the North American Electric Reliability Corporation (NERC) and the Northeast Power Coordinating Council (NPCC), define the reliability requirements for planning and operating the North American bulk electric system. NERC develops and enforces Reliability Standards and the Federal Energy Regulatory Commission (FERC) approves Reliability Standards. NPCC develops criteria that are applicable to NPCC entities.
Compliance with reliability standards and criteria has been mandatory and enforceable in Ontario through the Market Rules and OEB licences since 2002. IESO enforces NERC reliability standards and NPCC criteria through the Market Rules.
In 2006, NERC was certified as the Electric Reliability Organization (ERO) charged with developing and enforcing reliability standards in the U.S. Energy Policy Act (EPAct). NERC was also recognized as the international ERO in Ontario legislation and regulation.
The IESO has the authority under s. 32(1) (c) of the Electricity Act to establish standards and criteria relating to the reliability of electricity service or the IESO-controlled grid, if necessary.
The Ontario reliability standards framework was designed and is implemented according to the mutual understandings set out in Memoranda of Understanding between the IESO, NERC, and NPCC and between NERC and the OEB.
Generally, unless the OEB stays operation of a NERC reliability standard or remands back to NERC, a reliability standard becomes effective in Ontario when it is declared in force in the United States. The OEB or any person may make an application for review of a reliability standard as long as actions are initiated as prescribed in the s. 36.1 and s. 36.2 of the Electricity Act. If reviewed, the OEB has the authority to stop the standard from applying in Ontario and to refer it back to the standards authority.
The IESO is the sole Ontario entity accountable to NERC or NPCC for compliance with NERC reliability standards. This accountability includes violations by Ontario entities of any of these requirements. By extension of licence conditions, the OEB could also find licenced entities non-compliant and invoke penalties including revocation of licence and financial penalties for contravening enforceable provisions. The OEB remedies are independent of NERC or NPCC.
The Act also authorizes the IESO to make and enforce rules (“Market Rules”) that govern the operation of Ontario’s electricity system. The IESO’s compliance and enforcement activities have been delegated to an independent business unit called the Market Assessment and Compliance Division (MACD) through a letter of delegation from the IESO’s President and CEO to MACD’s Director. As such, MACD makes all determinations and exercises all authorities accorded the IESO in the Market Rules concerning monitoring, investigation and the enforcement of rules and standards concerning the wholesale electricity system and market.
For more information related to how standards are reviewed, adopted, monitored, and enforced in Ontario, please go to the Ontario Provincial Summary which is currently available on the NERC website: Provincial Summaries, and to the Reliability Standards Framework and Reliability Standards Compliance summaries on the IESO website.
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