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The Independent Electricity System Operator (IESO) has redefined its resettlement process under the Market Renewal Program (MRP), introducing new timelines, triggers, and charge types. Resettlements are a critical part of ensuring accuracy in market settlements, allowing for adjustments when new data or corrections come to light. With the introduction of the Day-Ahead Market (DAM) and other enhancements, the resettlement process has become more streamlined and transparent.
In this blog post, we’ll walk you through how the IESO resettlement process works under MRP. You’ll learn about the timeline for resettlements after the initial settlement, what triggers a resettlement, how often they occur, and how the DAM and new charge types have reshaped this process.
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How the resettlement timeline functions after initial settlement
The resettlement process begins after the issuance of the initial settlement statements. Under the MRP, the IESO follows a structured timeline to ensure market participants have ample opportunity to review and address discrepancies. Preliminary settlement statements are issued shortly after the trade date, followed by final settlement statements. If errors or new data emerge after the final statement, resettlements are triggered to correct these discrepancies.
The IESO’s Settlement Schedule and Payments Calendar (SSPC) outlines the timing for these resettlements. Typically, the first round of resettlements, known as the Routine Commercial Settlement Statement (RCSS), occurs ten business days after the applicable month-end. Additional resettlements may follow, depending on the nature of the issue. For example, long trade period resettlements, such as those addressing metering errors, can span up to 18 months and are processed in a single run to improve efficiency.
What triggers a resettlement
Resettlements are triggered by various factors, all aimed at ensuring the accuracy of market settlements. Common triggers include:
- Metering errors:Â If discrepancies in metering data are identified, a resettlement is initiated to correct the affected settlement charges.
- Data corrections:Â Post-final updates to data, such as embedded generation figures, can prompt a resettlement.
- Disagreements: Market participants can file Notices of Disagreement (NODs) if they believe there’s an error in their settlement statements. Once resolved, these disagreements may lead to resettlements.
The IESO’s resettlement process is designed to handle these triggers efficiently, ensuring that market participants are fairly compensated or charged based on the most accurate data available.
How often resettlements occur
The frequency of resettlements depends on the nature of the issues being addressed. Routine resettlements, as outlined in the SSPC, occur on a regular schedule. However, ad-hoc resettlements can be triggered for exceptional cases, such as long trade period corrections. These ad-hoc resettlements are processed outside the regular schedule to address specific issues more effectively.
For instance, if a metering error spans multiple months, the IESO may process the entire correction in a single resettlement run rather than adhering to the standard timeline. This flexibility ensures that even complex issues are resolved in a timely and efficient manner.
How the Day-Ahead Market and new charge types have changed the process
The introduction of the Day-Ahead Market (DAM) under the MRP has brought significant changes to the resettlement process. The DAM operates on a two-settlement system, which includes both day-ahead and real-time settlements. This system has introduced new charge types and modified existing ones, requiring updates to the resettlement process.
For example, new charge types specific to DAM transactions, such as those for virtual transactions, are now included in settlement statements. These changes ensure that all market activities, whether physical or virtual, are accurately reflected in the resettlement process. Additionally, the elimination of CMSC payments and the introduction of make-whole payments have streamlined cost recovery mechanisms, further enhancing the efficiency of resettlements.
Why the resettlement process matters
The resettlement process is more than just a back-office function—it’s a cornerstone of market integrity and fairness. By ensuring that all charges, credits, and payments are accurate, the IESO fosters trust and transparency in Ontario’s energy market. The updates introduced under the MRP, including the DAM and new charge types, have made this process more robust and adaptable to the evolving needs of the market.
As Ontario’s energy market continues to evolve, understanding the resettlement process is essential for market participants. Whether you’re a generator, distributor, or other stakeholder, staying informed about these changes will help you navigate the complexities of the market with confidence.
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