What Changed: HOEP to OEMP
The IESO’s Market Renewal is the most significant structural reform to Ontario’s electricity market since deregulation. The key change:
- Before (HOEP): A single province-wide hourly energy price. Simple but inefficient — it didn’t reflect local transmission constraints or generation costs.
- After (OEMP): Combines Day-Ahead Market pricing with a Load Forecast Deviation Adjustment. Supports nodal pricing at individual delivery points, similar to how PJM and NYISO operate in the US.
For US energy professionals tracking Ontario, this reform makes cross-border procurement and price comparison significantly more transparent.
Bill Components for Toronto Commercial Customers
- OEMP (commodity): The base cost of electricity, now determined through day-ahead scheduling with real-time settlement — conceptually similar to NYISO’s LBMP.
- Global Adjustment (GA): Covers contracted and regulated generator payments, conservation programs, and legacy energy contracts. This is often the largest component for large commercial customers.
- Toronto Hydro delivery: Updated January 1, 2026. Covers local distribution infrastructure — poles, wires, transformers, and smart meters across Toronto.
- Regulatory charges: Also updated January 1, 2026. Covers wholesale system administration and provincial grid reliability costs.
- IESO usage fees: $1.4492/MWh (2025 rates applied on interim basis for 2026 pending OEB approval).
US Market Comparison: How Ontario Stacks Up
For commercial buyers operating on both sides of the border, Ontario’s market now structurally resembles US ISOs:
- vs. NYISO: Ontario’s OEMP parallels NYISO’s LBMP, but Ontario’s Global Adjustment has no direct US equivalent — it functions more like a capacity + legacy cost adder. NYISO’s capacity market is separate and auction-based.
- vs. PJM: PJM’s capacity costs surged 262% in 2025 due to data center demand. Ontario faces similar demand growth pressures but manages capacity through long-term contracts rather than auctions.
- Key advantage: Ontario’s nuclear baseload (~60% of generation) provides price stability that gas-dependent US ISOs cannot match. No Henry Hub correlation risk.
What Toronto Commercial Buyers Should Do
- Understand Class A vs Class B: Class A customers (large commercial/industrial) pay Global Adjustment based on their peak demand contribution. Class B pays a blended rate. Ensure you’re optimally classified.
- Optimize peak demand: Class A customers can reduce GA exposure by curtailing load during Ontario’s system peaks — similar to PJM coincident peak strategies.
- Budget for 5% increase: The IESO’s projection covers commodity costs. Delivery and regulatory charge updates may add additional pressure.
- Review retailer contracts: With OEMP creating more volatile intra-day pricing, fixed-price retail contracts may offer better budget certainty.
Source: IESO Market Renewal Program Documentation; Toronto Hydro 2026 Rate Schedule; Ontario Energy Board (OEB) rate orders; En-Pro Industries Ontario Market Forecast; Grid Status IESO Data; Otter Energy Ontario Analysis.