Disclaimer: This blog post, which answers “How do make-whole payments work under IESO’s Market Renewal Program?,” was generated using PCI’s ISO/RTO Documentation AI Chatbot, powered by ChatGPT. While the content is based on curated market documentation, it is intended for informational purposes only and may not reflect the most up-to-date or comprehensive information. We recommend verifying any key details directly with relevant sources before making business decisions.
For the latest answer to this question, generated live, visit our free ISO/RTO Documentation Chatbot.
The Independent Electricity System Operator (IESO) in Ontario has undergone a significant transformation with its Market Renewal Program (MRP). One of the most notable changes is how make-whole payments now work, replacing the older Congestion Management Settlement Credit (CMSC) payments. These updates aim to streamline cost recovery mechanisms and ensure fair compensation for generators, particularly for start-up, no-load, and other unrecovered costs.
In this blog post, we’ll explore how IESO’s new make-whole payment system operates, how it differs from the CMSC framework, and what market participants can expect to see on their settlement statements. By the end, you’ll have a clear understanding of how these changes impact Ontario’s energy market and its participants.
ISO/RTO Documentation Chatbot
Use our AI to search Business Practice Manuals from ISO/RTO markets at no cost.
How CMSC payments have evolved under the MRP
Before the Market Renewal Program, CMSC payments were a cornerstone of IESO’s cost recovery framework. These payments compensated generators for congestion-related costs, but they often led to inefficiencies and unintended financial outcomes. For instance, CMSC payments sometimes resulted in overcompensation or payments for self-induced constraints, which were inconsistent with the program’s original intent.
Under the MRP, CMSC payments have been eliminated. Instead, IESO has introduced a more targeted and transparent approach to cost recovery. This includes make-whole payments, which are designed to ensure generators are fairly compensated for legitimate costs like start-up, no-load, and other unrecovered expenses. These changes aim to align compensation more closely with actual market conditions and operational needs.
How make-whole payments work
Make-whole payments under the MRP are calculated to cover specific costs that generators incur when market revenues don’t fully compensate them. For example, if a generator is dispatched but doesn’t earn enough from market revenues to cover its start-up or no-load costs, a make-whole payment bridges the gap.
The process is straightforward: IESO identifies eligible costs and calculates the payment based on predefined rules. These payments are particularly relevant for scenarios like intertie schedule curtailments, where adjustments (MAX, FIX, or MIN) determine eligibility for compensation. This ensures that generators are made whole without overcompensating for operational inefficiencies or self-induced constraints.
What participants will see on settlement statements
Market participants will notice several changes in their settlement statements under the MRP. Make-whole payments are reflected as specific charge types, replacing the older CMSC-related entries. For instance, adjustments for self-induced CMSC payments are no longer applicable, as these payments have been phased out. Instead, participants will see entries for make-whole payments tied to their operational activities and cost recovery needs.
Additionally, the settlement process continues to include preliminary and final settlement statements, ensuring transparency and accuracy. These statements provide detailed breakdowns of all charges, credits, and adjustments, allowing participants to reconcile their accounts effectively.
Why these changes matter
The shift from CMSC payments to make-whole payments represents a significant step forward for Ontario’s energy market. By eliminating inefficiencies and introducing a more transparent cost recovery mechanism, IESO is fostering a fairer and more competitive market environment. Generators can now focus on operational efficiency, knowing that legitimate costs will be covered without the complexities and inconsistencies of the old CMSC framework.
What this means for Ontario’s energy market
The introduction of make-whole payments under IESO’s Market Renewal Program is more than just a procedural update—it’s a fundamental shift in how Ontario’s energy market operates. By replacing CMSC payments with a streamlined, transparent system, IESO is ensuring that generators are fairly compensated while promoting market efficiency.
As these changes continue to unfold, market participants should stay informed and adapt to the new settlement processes. Whether you’re a generator, distributor, or other market participant, understanding these updates is crucial for navigating Ontario’s evolving energy landscape.
For the latest answer to this question, generated live, visit our free ISO/RTO Documentation Chatbot.
