For IESO Use Only MR-00407-Q00
IESOTP 274-3c
Market Rule Amendment Submission
This form is used to request an amendment to, or clarification of, the Market Rules. Please complete
the first four parts of this form and submit the completed form by email or fax to the following:
Email Address: Rule.Amendments@ieso.ca
Fax No.: (416) 506-2847 Attention: Market Rules Group
Subject: Market Rule Amendment Submission
All information submitted in this process will be used by the IESO solely in support of its obligations
under the Electricity Act, 1998, the Ontario Energy Board Act, 1998, the Market Rules and associated
policies, standards and procedures and its licence. All submitted information will be assigned the
confidentiality classification of “Public” upon receipt. You should be aware that the IESO will
publish this amendment submission if the Technical Panel determines it warrants consideration and
may invite public comment.
Terms and acronyms used in this Form that are italicized have the meanings ascribed thereto in
Chapter 11 of the Market Rules.
PART 1 – SUBMITTER’S INFORMATION
Please enter contact information in full.
Name: IESO Staff
(if applicable) Market Participant /
Metering Service Provider No.1: N/A
Market Participant Class: N/A
Telephone: 905-855-4128
Fax: 905-855-6371
E-mail Address: Rule.amendments@ieso.ca
PART 2 – MARKET RULE AMENDMENT SUBMISSION INFORMATION
Subject: Compliance
Title: General Conduct Rule
Nature of Request (please indicate with x)
Alteration
Deletion
Chapter: TBD
Addition
Appendix:
Clarification
Sections: TBD
Sub-sections proposed for amending/clarifying:
1
This number is a maximum of 12 characters and does not include any spaces or underscore.
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PART 3 – DESCRIPTION OF THE ISSUE
Provide a brief description of the issue and reason for the proposed amendment. If possible, provide a
qualitative and quantitative assessment of the impacts of the issue on you and the IESO-administered
markets. Include the Chapter and Section number of the relevant market rules.
Summary
The IESO proposes to amend the market rules by introducing a general conduct rule to support the
well-functioning of the IESO-administered markets.
Specifically, the amendments will:



Require market participants to conduct themselves in a manner consistent with the efficient,
fair, competitive and reliable operation of the IESO-administered markets and of the IESOcontrolled grid;
Prohibit conduct that a market participant knew or ought reasonably to have known would
undermine, or likely undermine, the efficient, fair, competitive or reliable operation of the
IESO-administered markets or of the IESO-controlled grid; and
Allow market participants whose conduct is alleged to have breached the general conduct rule
to establish a legitimate business purpose defense for its conduct.
This proposal is based on stakeholder consultation as part of SE-112 General Conduct Rule.
Further information on SE-112 can be found on the IESO’s website at:
http://www.ieso.ca/imoweb/consult/consult_se112.asp
Background
Electricity markets are complex by nature, and the market rules must evolve as the market design and
other factors, such as the nature and behaviour of market participants, evolve. It is very difficult,
perhaps impossible, for market rule designers to contemplate all possible scenarios and every specific
desired proscription/prohibition in advance. Notably absent from the current market rules is a provision
that invokes the larger objectives of the market rules of promoting an efficient, competitive and reliable
market for the wholesale sale and purchase of electricity and ancillary services in Ontario.1
A general conduct rule fills in gaps which may cause or allow harmful conduct, identifies undesirable
conduct going beyond any other single rule, and sets a baseline for discretionary conduct in all
scenarios. By not having such a rule, the Ontario market stands alone from its counterparts in North
America.
Examples of market activities which are representative of undesirable behavior, or which generate or
aim to generate undesirable market outcomes include gaming, manipulation, circumvention and anticompetitive behavior. Costs of these activities are ultimately passed on to consumers through higher
prices and/or uplifts and global adjustment. Such conduct can also undermine confidence in the energy
markets, thereby failing to promote economic efficiency and sustainability.
Although conduct identified after the fact can, if not captured by an existing market rule, be addressed
by a market rule amendment, rule amendments lag evolving circumstances. After the fact amendments
to address identified issues have been used by the IESO in its rule-making capacity, and have proven a
1
IESO market rules, Chapter 1, section 3.1.1
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PART 3 – DESCRIPTION OF THE ISSUE
means to fill in gaps or holes in existing rules once identified. However, such an approach does not
allow for sufficient accountability to be imposed for the undesirable behavior identified above and puts
the IESO in a position of chasing certain conduct.
The proposed rule amendment is consistent with existing market rule language. The market rules hold
a number of provisions which proscribe/prohibit specific conduct, as well as prohibitions with more
generalized language. The general conduct rule would be a complement to the continued enforcement
of specific rules, and would allow for an investigative process and resulting enforcement actions per
existing authorities under Chapter 3, section 6 of the market rules.
The concepts and language of the proposed rules are analogous to similar provisions regulated by
FERC (CAISO, NYISO, ISO-NE, PJM, MISO), Alberta and Texas, and are intended to allow the IESO
to address conduct that is inconsistent with the larger market objectives of the market rules.
For further information on General Conduct Rules for Electricity Markets in North America, please
refer to the following SE-112 link:
Link to Position Paper II, Sept 19, 2013 – Appendix A – General Conduct Rules for Electricity Markets
in North America (pgs 11-16): Actual Rules Language and Elements for Finding a Rule Breach.
PART 4 – PROPOSAL (BY SUBMITTER)
Provide your proposed amendment. If possible, provide suggested wording of proposed amendment.
Initial, conceptual rules language for reference only – to be discussed with stakeholders through SE112 General Conduct Rule:
1.0
General Conduct Rule
1.1
Market participants shall conduct themselves in a manner consistent with the
efficient, fair, competitive and reliable operation of the IESO-administered
markets and of the IESO-controlled grid.
1.2
Subject to section 1.3, conduct that the market participant knew or ought
reasonably to have known would undermine, or likely undermine, the efficient,
fair, competitive or reliable operation of the IESO-administered markets or of
the IESO-controlled grid is a breach of section 1.1. This includes, without
limiting the generality of the foregoing, conduct, whether taken directly or
indirectly, by a market participant acting alone or with another person, that
1.2.1
exploits or attempts to exploit any of the market rules,
including any gap or defect in the market rules;
1.2.2
circumvents or attempts to circumvent any of the market rules;
1.2.3
undermines or attempts to undermine through any means the
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PART 4 – PROPOSAL (BY SUBMITTER)
ability of the IESO to carry out its powers, duties and
functions under the Electricity Act, 1998 and the market rules;
or
1.2.4
through manipulation, abuse of market power or other means,
undermines or attempts to undermine the determination of a
market price or dispatch outcome by competitive market
forces.
1.3
Where a market participant establishes that its conduct was carried out entirely or
predominantly for a legitimate business purpose consistent with the efficient, fair,
competitive and reliable operation of the IESO-administered markets and of the IESOcontrolled grid, the conduct will be deemed to be consistent with the requirement set
out in section 1.1.
1.4
For the purposes of this section “conduct” includes acts and omissions; and
“undermine” means to damage, defeat, disrupt, harm, hinder, impair, interfere, injure,
lessen, obstruct, prevent or subvert.
PART 5 – FOR IESO USE ONLY
Technical Panel Decision on Rule Amendment Submission:
MR Number:
Date Submitted to Technical Panel:
Accepted by Technical Panel as: (please indicate with x)
General
Urgent
Minor
Date:
Criteria for Acceptance:
Priority:
Criteria for Assigning Priority:
Not Accepted (please indicate with x):
Clarification/Interpretation Required (please indicate with x):
Technical Panel Minutes Reference:
Technical Panel Comments:
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