What is a system operator? What is the IESO?

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System operators are key to maintaining a healthy grid.

The linchpin organization at the heart of any electricity grid is the system operator, which is charged with operating and overseeing the electricity market in its given area of jurisdiction.

In order to get an understanding of the various tasks that system operators undertake, let us look at one such organization, namely the Independent Electricity System Operator (IESO) that operates in Ontario. The IESO is a non-profit entity whose board of directors is appointed by the Ontario government.

The IESO is one of seven independent system operators in North America and is tasked with ensuring adequate electricity supply to the province of Ontario.

The IESO: A system operator example

The IESO also directs and regulates actors involved in energy initiatives, together with operating a virtual electricity market. This virtual marketplace allows participants (generators, distributors, etc.) to buy and trade electricity – as exemplified by Ontario’s annual Capacity Auction.

As part of its management of the wholesale electricity market in Ontario, the IESO sets the Market Clearing Price and the Day Ahead Clearing Price – two important electricity markets in the province.

Alongside overseeing the province’s electricity grid in real-time, the IESO also plays an important role in managing energy forecasting models. Specifically, the IESO works to provide consumers in Ontario with publicly available information regarding provincial energy demand, supply, and Peak predictions.

A further responsibility of the IESO is managing energy conservation and demand response programs in Ontario, together with long-term modeling of Ontario’s future energy needs.

Considerations about Ontario’s developing energy mix (i.e. hydro/nuclear baseline and renewables), together with future infrastructure and generation capacity investments also fall under the IESO’s purview. To this end, the IESO has implemented Global Adjustment (GA).

GA is a fee that comprises the majority of Ontario energy bills, and one which is designed to finance grid operation, maintenance, construction, and green energy promotion.

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