This report examines the effectiveness of the IESO’s planned competitive market mechanisms for meeting Ontario’s electricity system needs and reviews more suitable alternative procurement approaches. The four-part examination considers:
- The theory and effectiveness of electricity markets for achieving efficiencies, managing and sharing risks, and accommodating other public policy objectives;
- A historical look at how the electricity markets in Ontario have fared against these criteria;
- The nature of demand that the electricity system in Ontario must supply and the characteristics of the foreseeable low emission options available to supply it; and,
- Simulations of how market mechanisms would accommodate these low-emitting supply options.
The analysis shows that Ontario’s “lessons learned” are indicative of global electricity market challenges, especially with respect to reducing emissions. These lessons reflect the consequences of Ontario’s pursuit of electricity markets that are predicated on fossil-fuel dominated U.S. market models.