In a bulletin issued January 22, 2009, the IESO says “the decision was a difficult one to make,” but “given the current economic conditions, and the relatively small efficiency gains, the IESO concluded that in the circumstances we should not make the change to use of an average forecast.”

AMPCO’s analysis—using the IESO’s numbers—showed that the change would have increased market prices by $0.72/MWh on average, with the increases primarily occurring during off-peak hours. Even with so-called natural hedges, the Global Adjustment and the OPG Rebate on Non-Prescribed Assets, the change would have increased rates to industrial customers by $0.15/MWh, increasing power costs for AMPCO members by more than $1.8 million per year.

Credit goes to AMPCO and its members who were involved directly in IESO consultations at the Market Pricing Working Group, with senior IESO staff and management and at the Stakeholder Advisory Committee.

In the bulletin, the IESO also “endorsed a structured approach to decision-making aimed at encouraging a general understanding within the industry as to how we would resolve the tensions that can exist between efficiency improvements and impacts on participants, providing more transparency and predictability of decision making, accelerating the decision making process, and resulting in “better” overall decisions.  Drawing on expert advice in cost-benefit analysis and public policy decision making, four possible decision criteria were identified and presented for consideration to the members of the Stakeholder Advisory Committee (SAC).  All four criteria build on the cost-benefit analysis work, and all are informative.  From the IESO’s perspective, those criteria that assist in balancing the impacts on participants are especially helpful in decision-making.”

More information is available at:

www.ieso.ca/imoweb/pubs/consult/se54/se54-20090122-PeakvsAvg-Decision.pdf