Earlier this month the Ontario Energy Board’s (OEB) Market Surveillance Panel (MSP) released its first detailed report on prices in the renewed IESO-Administered Market (“renewed market”). The report covers the first year of the renewed market (May 2025 to April 2026),focussing only on pricing outcomes. It does not make any recommendations related to market design or other inefficiencies, as many previous MSP reports did throughout the evolution of the legacy market. The MSP notes that the locational pricing report is the first piece of a broader evolution of its reporting where it will provide “more frequent, shorter reports, on an ad hoc basis, that focus on specific monitoring issues, to supplement the MSP’s annual State of the Market reports.”
The report highlights many of the same themes examined in Power Advisory’s market commentaries throughout the first year (and beyond) of the renewed market:
- More Transparent Price Signals – The MSP concluded that LMPs have “improved price transparency compared to the legacy two-schedule market design.” The MSP reinforced Power Advisory’s commentary regarding the impact of a number of inefficient designs in the legacy market – namely the two-schedule system that resulted in Congestion Management Settlement Credits (CMSCs) and the removal of the 3-times ramp rate assumption. The MSP noted that CMSCs “imperfectly” reflected congestion and losses in uplift payments, while the 3-times ramp-rate assumption “obscured the costs of short-term, periodic constraints on ramping capacity.”
- Prices in the Northeast and Northwest Zones – The MSP highlighted that “price divergency” from the reference price is highest in the northern zones, largely as a result of “structural transmission constraints.” In particular, the MSP pointed to known transmission constraints on the Flow North (FN) and Flow South (FS), as well as the East-West Transfer East (EWTE) and East-West Transfer West (EWTW). All of these transmission constraints can result in material congestion across the Northeast and Northwest zones. In July 2026, for example, the average day-ahead price in the Northwest zone was around $53/MWh – a $20/MWh difference between the highest price zone (Ottawa).
- High Impact Pricing Events in Ottawa – The MSP noted that the “Ottawa zone demonstrates low congestion frequency but very high impacts, with large energy price spikes occurring when the Flow Into Ottawa (FIO) interface becomes a binding constraint.” Power Advisory has commented extensively on pricing in Ottawa, particularly in the December 2025 to February 2026 time period when congestion in the Ottawa zone was particularly high. The MSP reiterated our analysis showing that exports into Quebec can have a material impact on pricing in that zone (along with demand within that zone, a known transmission constraint and limited in-zone generation).
- Transmission Constraints Facing the Niagara Zone – The MSP showed that the price in the Niagara zone “consistently traded at a discount to the Richview reference bus” in the August to November 2025 time period. The large amount of supply in the Niagara zone from the Adam Beck generating station and a transmission constraint on the Queenston Flow West (QFW) interface has resulted in significant congestion in this zone as “excess supply remains trapped within the Niagara Zone.”
- Unique Supply Mix in the West Zone – High wind supply and potential transmission constraints along the Buchanan Longwood Input (BLIP) interface can impact power flows to and from the West zone. These conditions can be made worse by intertie flows from Michigan that “cannot adjust to intra-hour changes in system conditions.” As a result, there have been a number of hours of negative congestion in the West. We have highlighted in our renewed market commentaries that these conditions were most prevalent in the fall and winter of 2025/2026.
- Northern Hydro Output and Prices – One particular area of focus by the MSP was on the impact of output from hydro facilities on LMPs in the Northwest and Northeast zones. The MSP concluded that “seasonal variation in hydroelectric production, combined with transmission constraints and interregional trade limits, drive pronounced intertemporal and interzonal price dynamics in the Northeast and Northwest zones.” Ultimately, the MSP highlighted the “complexity of price formation in northern Ontario”, which supports much of our commentary since the renewed market launched. LMPs in Ontario’s northern zones remain one of the most complex elements of pricing in Ontario (mirroring what was seen historically with shadow prices).
Power Advisory Commentary
The MSP’s commentary on pricing is much needed given the general lack of public commentary from the IESO and other bodies on prices in the renewed market. Nearly all of the MSP’s report and commentary aligns with what Power Advisory has been identifying in its monthly reports over the past year and a half.
What is needed next is more directed commentary on inefficiencies or other issues with the renewed market. While the IESO has noted some issues with the new tools – a demand error last summer that was impacting prices – it has not released detailed analysis on the impact of any market design issues or tool issues. We expect that in any project of the scale and complexity of the renewed market, there will be a number of “teething” issues that need to be worked through. We believe that all of these issues – particularly as they relate to pricing, dispatch and settlement outcomes – need to be discussed transparently with all Market Participants and interested stakeholders. The MSP may also consider looking at the interaction between the market and contracts, given the importance of the “hybrid” design of Ontario’s electricity market.
The MSP has historically played a vital role in highlighting a range of issues in the wholesale market – ranging from “gaming” by Market Participants to inefficient market design. The need for timely and comprehensive analysis from the MSP remains just as vital in the renewed market.
