This is the cost of the electricity supplied to you during this billing period and is the only part of the bill that is subject to competition. PowerStream collects this money and pays this amount directly to the Independent Electricity System Operator who in turn pays the generators.
The wholesale market price for electricity is based on supply and demand. Suppliers submit offers to sell electricity and wholesale buyers submit bids to buy electricity. The Independent Electricity System Operator (IESO) then uses these offers and bids to match electricity supply with demand, and establishes the Hourly Ontario Energy Price, or HOEP. This is the price paid by wholesale customers.
This spot market energy price changes from hour to hour, day to night, from season to season, and for short periods in response to high levels of demand or sudden changes on the IESO-controlled grid. In the market, generators can submit offers for electric power in different quantities and prices for each hour of the day. Every five minutes, the IESO calculates a new spot market price by balancing the supply of electricity with demand. As demand increases, more expensive offers from generators are accepted, which raises the price of electricity. As demand drops, only the less expensive offers are accepted, which reduces the price. Wholesale customers are able to respond to changes in prices by shifting some of their demand to off-peak periods.