The IESO’s Market Renewal Program (MRP) has officially launched and completed its first week. According to the IESO’s MRP implementation plan, the full transition to MRP is now complete. MRP marks the largest overhaul in the design of the IESO-Administered Market (IAM) since the wholesale market was launched in 2002. MRP includes, among other changes:
Now that the new, post-MRP market has operated for one week, there are numerous new data points to review and analyze. We do want to stress that there remains a very limited amount of data and MRP is very much in its early stages. We expect that the market impact and outcomes that are a direct result of MRP will take weeks, months and possibly years to fully analyze. Nonetheless, there are some preliminary outcomes to discuss.
Price Volatility in the Real-Time Market is Common
Nearly every day since the post-MRP market launched, there has been a fairly significant price spike in real-time – even in hours when demand is moderate (discussed further below) and there is ample spare capacity that has not been committed. Additionally, the real-time price spikes have not been prevalent or forecasted in the DAM and many pre-dispatch prices did not closely correlate with real-time. The following figure shows the real-time and day-ahead hourly Ontario Zonal Price (OZP), which is a load-weighted average of all LMPs across the IAM. In numerous hours, the real-time OZP was more than $100/MWh, while the equivalent DAM price was below $40/MWh. The largest spread occurred on May 7 in hour ending (HE) 7, with the real-time OZP hitting $278/MWh, while the DAM OZP was $37/MWh.
Divergences between Pre-Dispatch (PD) prices (in the one hour prior to real-time) and real-time have also been significant. As the week moved on, the trend was higher PD prices compared to real-time prices.
Many of the price spikes are driven by volatility in 5-minute interval prices in real-time. In some hours, the 5-minute interval price moved by hundreds of dollars within a single hour. On May 5, HE 17-18, real-time volatility in 5-minute pricing occurred across both hours. The figure below shows the changes throughout the two-hour period by 5-minute interval.
Global Market Power Mitigation Has Arrived
The IESO announced its first Global Market Power Mitigation event. Global Market Power is in place when the entire market is tight on supply – in contrast to narrow mitigation events that apply to local constraints that are expected to occur at different points across the IAM. The IESO considers both the DA and RT timeframe for Global Market Power Mitigation. The RT event this past week occurred in HE 17 on May 5 when Ontario Demand was just 15,882 MW – below the 2024 average Ontario Demand. Based on Power Advisory’s preliminary review, it appears the distinguishing feature of this hour is that it is the only hour over the first week when the amount of Operating Reserve (OR) procured was reduced at the end of one hour and then that reduction was carried over into the following hour (HE 17 when Global Market Power was declared). It appears that the primary driver was a lack of OR, although the IESO has not released any details about the event.
Location Matters: Prices Diverging Across the IAM
The introduction of LMPs is highlighting that energy is valued differently across the IAM, depending on local supply/demand conditions and transmission constraints. The average prices across the different zones ranged throughout the week, with the highest average price in the West Zone ($27/MWh) and the lowest average price in the Northwest zone ($16/MWh).
The West zone, in particular, experienced significantly higher prices than other zones on an interval basis. In 6 intervals throughout the week, the real-time zonal price hit the market ceiling of $2,000/MWh. No other zone experienced similar pricing outcomes.
OR Prices Were Elevated Throughout the Week
OR prices spiked throughout the week and were often higher than energy prices. While this is not new to the IAM, the magnitude of the OR price spikes and divergence from energy prices was surprising. OR prices will often move higher during the spring months as many hydro facilities move to “must run” conditions and will remove OR offers. At the same time, the large supply from low marginal cost hydro and moderate demand will put downward pressure on energy prices. The combination of limited OR supply and low energy prices can result in many gas-fired units – which can also provide OR – not being committed, putting further pressure on the OR supply. The highest DAM OR price on the week was $600/MW and occurred in HE 24 (i.e. in the middle of the night).
As noted, OR prices were typically higher than energy prices in many hours throughout the week.
High Prices With Limited Demand
Demand throughout the week was well below the 2024 average demand. While price volatility – particularly with OR – can always be expected in real-time electricity markets, the magnitude of price spikes on a week with very limited demand is something that we will continue to monitor as we move into the peak summer season. The winter of 2025 also experienced significant price volatility and some of the highest wholesale prices in years, so there is some recent precedent for price volatility that was unrelated to MRP and market design changes.
Dispatch Volatility for Dispatchable Loads
While price volatility is a component of all wholesale markets, dispatch volatility can be particularly concerning. Dispatch volatility was one of the primary reasons for the introduction of the 3-times ramp rate (initially 12-times) in the legacy IAM. Even though the data sample is small, MRP appears to be increasing dispatch volatility for dispatchable loads. The following chart shows the change in dispatch for dispatchable loads in the week prior to MRP and the first week of the post-MRP market. Overall, dispatchable loads were moving on an interval-to-interval basis in 5% of intervals in the legacy market, compared to 20% in the new market.
Oneida Has Entered the Room
Ontario’s first large-scale battery storage system, Oneida (250 MW/1,000MWh) is officially operating. Oneida was providing energy throughout the week – often supplying energy in hours when real-time prices were elevated due to its fast-ramping capability. The introduction of Oneida marks the first step in a new era for Ontario’s supply mix, with close to 3,000 MW of battery storage included in the IESO’s last round of procurements which are expected to begin coming online next year. How Oneida operates within the post-MRP market will be of particular interest to other Market Participants. Without Oneida online, it is likely prices would have been higher this past week.
Lennox Never Left the Room
At the same time as Ontario’s first large-scale battery plant began participating in the wholesale market, one of Ontario’s oldest thermal plants – the 2,100 MW dual-fired Lennox Generating Station – was operating throughout the entire first week. Lennox often plays a key reliability role given its large capacity for each of its four units and low Minimum Loading Point (MLP). As can be seen in the following graph, Lennox largely stayed at its MLP for the entire week, providing limited energy beyond that and never hitting its full output capacity. It is unlikely that Lennox was committed economically in every hour for the entire week. It is more likely that the IESO has constrained on Lennox at certain points throughout the week as it has in the past to provide system flexibility. However, Oneida has injected more energy this past week than the Lennox facility has (above its MLP).
Stay Tuned
Power Advisory will continue to provide updates as we navigate the post-MRP market. It was a busy first week with lots of ground to cover and we felt that for the first weekly update that it would be worthwhile providing a broad view of the underlying market elements. Feel free to reach out to Power Advisory for any market related questions.