Category: ⚡ Markets & Operations
Complexity Level: ●○○○○ (Level 1–2 – Introductory)
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Electricity pricing determines how much electricity producers are paid and how electricity costs are reflected in the market.
In Ontario’s wholesale electricity market, prices are influenced by the balance between electricity supply and demand.
When demand is high or available supply is limited, electricity prices tend to rise. When demand is lower or supply is abundant, prices typically fall.
Electricity pricing helps coordinate the operation of the power system by providing economic signals that guide electricity production and consumption.
⚡ Electricity prices change as supply and demand change.
When electricity demand increases, higher-cost generators may be needed to supply electricity, which can raise the market price.
Electricity Price
The electricity price is the amount paid for electricity in the wholesale electricity market during a specific time interval.
Prices are typically determined repeatedly throughout the day as demand conditions change.
Electricity prices vary throughout the day because electricity demand and supply are constantly changing.
For example:
These changing conditions influence the price of electricity in the market.
Electricity prices are closely connected to dispatch decisions.
When electricity demand increases:
Related topic:
Dispatch
The electricity market determines prices by evaluating offers submitted by generators.
Generators submit offers indicating:
The system operator then selects generators needed to meet demand, and the market determines the price of electricity for that period.
Related topic:
Electricity Market Overview
Consider a hot summer afternoon when electricity demand rises significantly.
When demand later falls in the evening, prices typically decrease.
➡ Next Topic:
Ancillary Services
This topic explains additional reliability services that help maintain the stability of the electricity system.
Last Updated: 2026-03-27