The wholesale market is where generators sell power to the grid, hour by hour. The IESO operates the auctions. There are three settlement mechanisms, and together they decide what every generator gets paid and how much reserve the province carries forward.
Generators submit offers and loads submit bids by 10am the day before. The IESO clears the market and posts a Day-Ahead Ontario Zonal Price for every hour of the next day.
Clears every 5 minutes, settles every hour. A Load Forecast Deviation Adjustment reconciles the day-ahead schedule with what actually happened on the grid.
A yearly procurement, separate from energy. Generators and demand-response resources commit to be available one year ahead. The clearing price is a forward scarcity signal.
The headline number, decoded: when newspapers cite "the Ontario wholesale price", they mean the Ontario Price (formerly HOEP). It currently averages near 6.41¢/kWh, but the Global Adjustment of roughly 4.56¢/kWh sits on top of it. Total cost of power for Class B = 10.96¢/kWh, not 6.4.
The Ontario Price is one of the most-cited and least-understood numbers in Canadian energy news:
All three are routinely repeated in mainstream coverage. None survives a careful reading of an IESO market summary.
"I should switch plans when the wholesale price drops."
This is the most common misread of the Ontario market, and it shows up every time the news cites an unusually low or unusually high spot hour. The wholesale price changes every hour and can move by an order of magnitude across a single day. A household on the Regulated Price Plan, which is roughly 90% of residential customers, sees none of that movement directly. Your per-kWh rate is set in advance by the Ontario Energy Board and only changes every May 1 and November 1.
When a wholesale spike does feed through, it does so smoothed across an entire six-month forecast horizon, with a true-up Variance Account catching the difference between forecast and actual costs over time. The OEB uses an explicit smoothing mechanism precisely so that one cold winter morning or one heat-wave afternoon does not move your monthly bill. The lever you can actually pull is not "wait for the wholesale price to drop", it is "pick the regulated price plan (TOU, Tiered or Ultra-Low Overnight) that best matches how you use power".
How a wholesale market hour actually clears
The Ontario market runs on marginal pricing. The IESO ranks every generator's offer from cheapest to most expensive, accepts enough offers to cover forecast demand, and the price of the last accepted offer (the marginal bid) sets the clearing price for that hour. Every dispatched generator gets paid that same price, regardless of how cheaply they were willing to supply.
Step 1 · Day-ahead clearing
Generators submit hourly offers and loads submit bids. The IESO ranks offers cheapest-first, accepts enough to meet forecast demand, and the marginal bid sets the Day-Ahead Ontario Zonal Price for each hour.
Step 2 · Real-time balancing
Actual demand and weather rarely match the forecast exactly. The IESO runs a real-time market every 5 minutes to dispatch additional generation, demand response or imports, then settles the gap hourly via the Load Forecast Deviation Adjustment.
Step 3 · The Ontario Price
DA-OZP + LFDA = Ontario Price (OEMP), the single hourly number that replaced the legacy HOEP. This is what newspaper headlines mean when they say "Ontario wholesale price". It is the energy half of generation cost, not the full bill.
There is one more piece. Most Ontario generators do not actually live on the wholesale price alone. Bruce Power, Ontario Power Generation, IESO-contracted wind and solar projects, and most natural-gas peakers operate under long-term contracts that guarantee a different price. The Global Adjustment is the reconciliation line: it tops up the wholesale price to match what these generators are owed under contract. When wholesale is low, the GA is high; when wholesale spikes, the GA tends to fall. The two move inversely, which is why focusing only on the spot number always misses half the story.
How an hour in the Ontario wholesale market actually plays out
A worked example. By 10am on a Tuesday, the IESO has collected offers from every dispatchable generator in the province for each hour of Wednesday. For the 6pm to 7pm window, the system needs roughly 22,000 MW of supply to meet the forecast peak. The IESO ranks the offers cheapest-first: Bruce Power's nuclear units come in at almost zero ($0.50/MWh), Ontario Power Generation's hydroelectric dams next, then IESO-contracted wind and solar, then natural-gas combined-cycle plants, and finally simple-cycle gas peakers that bid in the hundreds of dollars per MWh. The IESO accepts offers from the cheapest up to whichever offer meets the 22,000 MW demand.
The last accepted offer (the marginal bid) is a gas peaker at, say, $85/MWh. Every accepted generator in that hour gets paid $85/MWh, the nuclear unit included. That is the Day-Ahead Ontario Zonal Price for 6-7pm on Wednesday: 8.5¢/kWh.
Then Wednesday actually happens. Demand at 6:30pm runs slightly hotter than forecast because of a sudden cold snap. The IESO dispatches an extra peaker plant in real time. The Load Forecast Deviation Adjustment for that hour adds another 0.6¢/kWh on top. The published Ontario Price ends up at 9.1¢/kWh for that hour. Bruce Power's nuclear unit, which bid into the market at almost nothing, gets paid 9.1¢/kWh for the energy it produced that hour, plus a top-up under its long-term contract via the Global Adjustment so its total revenue matches what was negotiated when the unit was refurbished.
The IESO does not buy or sell any energy. It is a financial settlement engine: loads pay into the market pool, generators draw from it, and the IESO ensures the two sides balance to the cent. Its own revenue is a small administrative levy on market participants, which funds its operating budget. A 50-cent wholesale price and a $2 wholesale price are economically identical for the IESO. The numbers flow through it, not to it.
Five things the news coverage usually leaves out
When a wholesale price story makes the news, five common misreadings turn up in the comments section every time.
The IESO runs the wholesale market. The Ontario Energy Board sets the regulated retail price, licenses distributors and retailers, and writes the consumer-protection rules. The IESO has no power to change what you pay; the OEB has no role in the day-ahead clearing.
The legacy Hourly Ontario Energy Price was retired under Market Renewal. The Ontario Price (OEMP) is the post-MRP equivalent. Older articles and explainers still cite HOEP, and the two are not identical.
For a Class B Ontario customer, the GA recently averaged 4.56¢/kWh, which usually exceeds the wholesale spot itself. The "total cost of power" line in IESO publications is wholesale + GA, currently around 10.96¢/kWh.
A scarcity event can push the hourly spot above $2/kWh. None of that reaches a Regulated Price Plan bill that hour. It only feeds in (lightly, smoothed) at the next OEB reset on May 1 and November 1.
Ontario has a competitive wholesale market under a mostly-regulated retail price. The wholesale design looks like Alberta or PJM, the retail design looks more like Quebec. Mixing the two layers is the most frequent error.
Wholesale price translator
Pick an hourly wholesale scenario, choose your Regulated Price Plan, and see what would actually appear on your bill for that hour. The mechanics here are the same ones the OEB uses when it builds an RPP forecast for a six-month period.
Wholesale price translator
Pick a wholesale scenario and a price plan to see what one kilowatt-hour actually costs you in that hour.
Pick a wholesale scenario and a plan to see why hourly swings do not hit your bill.
Wholesale and GA values are illustrative scenarios drawn from typical IESO market outcomes. Class A industrial customers and market-linked retailer contracts see hourly settlements more directly. Not a contract recommendation.
The Global Adjustment usually exceeds the wholesale price itself
Here is the part that almost never appears in headline coverage. The wholesale Ontario Price recently averaged 6.41¢/kWh across a full calendar year. Across the same period the Class B Global Adjustment averaged 4.56¢/kWh. The GA represents the gap between what the market clearing price would pay generators and what their long-term contracts actually owe them. In most months, that gap is larger than the spot price itself.
The mechanism matters. When the wholesale price is low (windy night, abundant nuclear output, weak demand), the GA expands to cover the contractual top-up generators are owed. When the wholesale price spikes (heat wave, scarcity, gas-peaker dispatch), the GA contracts because the spot already covers more of the contract. The two move in opposite directions, which is why focusing only on the wholesale half always understates the real cost of generating power in Ontario.
| Component | ¢/kWh | Share | Who sets it |
|---|---|---|---|
| Ontario Price (wholesale energy) | 6.41¢ | 58% | IESO day-ahead + real-time market |
| Class B Global Adjustment | 4.56¢ | 42% | IESO settlement of long-term contracts |
| Total cost of power (Class B) | 10.96¢ | 100% | This is the real number |
Recent calendar-year averages from IESO market summaries. The wholesale portion shrinks below half the total in most months. Class A customers pay a different GA allocation tied to their on-peak consumption.
For a household on the Regulated Price Plan, both lines are already baked into the commodity rate the OEB sets every May 1 and November 1. You never see them split out. The headline "Ontario wholesale price" you read about in the news is therefore both the wrong number to use as a benchmark (it ignores half the cost) and the wrong number to react to (it cannot reach you in real time anyway).
What this means for you in practice
- Ignore the daily wholesale price headlines. A scarcity event hitting $2/kWh for a single hour is a real market signal, but it does not appear on your bill that month or even that quarter. The OEB smooths underlying wholesale plus GA into a six-month forecast horizon.
- Watch the OEB's twice-yearly RPP announcement instead. That is the moment the past six months of wholesale and GA outcomes actually translate into your retail rate. Resets happen on May 1 and November 1.
- Track the capacity auction outcome once a year. A sharply rising capacity clearing price is the forward signal that next year's RPP will move up. It cleared at roughly $170,000/MW-year recently, a jump from $59,000 the year before. That increase will flow into upcoming RPP resets.
- If you are on a market-linked retailer contract, read the fine print. A small number of retail products explicitly pass through the hourly Ontario Price plus GA. Those customers do see scarcity events directly. The vast majority of residential retail contracts do not work this way.
- If you are a Class A customer, focus on the top five peak hours. A Class A customer pays a Global Adjustment allocation tied to their consumption during the five highest provincial peak hours of the year. Curtailment of even modest load during those five hours is the single largest controllable lever on a Class A bill.
- For everyone else, the controllable lever is plan choice. Whether you sit on TOU, Tiered or Ultra-Low Overnight matters far more than where the wholesale price is sitting on any given Tuesday.
A wholesale market in the middle of structural change
The IESO has just finished implementing the biggest wholesale-market reform in more than two decades. The Market Renewal Program introduced day-ahead market scheduling, a locational Ontario Zonal Price, a sharper distinction between energy and capacity, and a single-step settlement that replaced the legacy two-schedule design. The Ontario Price (OEMP) is the new published reference; the Hourly Ontario Energy Price (HOEP) was retired during the transition. Old academic papers and explainer articles still use HOEP, but every market notice the IESO now publishes uses the post-MRP language.
Alongside this, the capacity auction has emerged as the clearest forward signal in the market. The most recent auction cleared at roughly $170,000 per MW-year, an 188% jump from the prior auction. The IESO acquired about 1,833 MW of resources for the next summer and 1,125 MW for the following winter. That sharp increase reflects a real structural tightening: nuclear refurbishments at Bruce and Darlington remove capacity for years at a time, electric vehicle adoption continues to grow, and data-centre demand has begun to materially influence load forecasts.
None of this hits a Regulated Price Plan household bill immediately. The OEB's smoothing mechanism is doing exactly what it is designed to do: dampening the volatility before it reaches you. But capacity prices are a leading indicator of where the next several RPP resets are headed, and the recent direction is up. Households cannot control any of this. What they can control is the choice between TOU, Tiered and Ultra-Low Overnight, which is the lever that actually moves the bill more than any wholesale market headline ever will.
