Becoming a PRL: Understand the Risks Before You Switch

Becoming a PRL: Understand the Risks Before You Switch

Some large electricity consumers in Ontario can now opt into a different pricing structure when purchasing power from the grid. Most pay a province-wide price that is set the day before, but non-dispatchable loads (NDLs) now have the option to settle at a price specific to their location.

Since MRP launched on May 1, 2025, NDLs that are IESO market participants have had the option to register as a Price Responsive Load (PRL). A PRL is settled at its Locational Marginal Price (LMP) instead of the Ontario Zonal Price (OZP) and allows large electricity consumers to bid their expected usage into the Day-Ahead Market to secure financial schedules. This approach can make sense for some facilities, but the risks should be fully understood before committing. There are some instances where becoming a PRL may look attractive, but savings end up being modest or potentially negative.

How PRL settlements work

NDLs are either IESO market participants, billed by the IESO directly, or non-market participants billed by a Local Distribution Company (LDC). To be eligible to become a PRL, the NDL must be an IESO market participant.

An eligible NDL can opt to change its registration to the PRL participant type. By changing registration, the facility is opting to be settled at its LMP, instead of the day-ahead OZP that makes up the majority of what other NDLs pay.

As a PRL, the facility must submit its hourly bids into the Day-Ahead Market (DAM). Bids are structured to set out how much the site is willing to pay to consume power at various load points. Where the bid clears, the facility receives a DAM schedule that it is financially bound to.

In real time, if consumption matches the DAM schedule, the facility pays the day-ahead LMP settled price. If actual consumption differs from the schedule, the facility pays or gets paid the difference at the real-time LMP at its node.

When does being a PRL make sense?

If you have reliable insight into your next-day consumption, there are two questions that can help determine whether becoming a PRL is worth a more detailed look:

1. Is your DA-LMP on average less than the DA-OZP? The DA-OZP is the load-weighted average of day-ahead LMPs at non-dispatchable load locations across Ontario, so some nodes price above it and some below.
2. Do you have a responsive load, independent of demand response obligations, that can support some level of load shifting, displacement, or curtailment?

If the answer to these questions is yes, a detailed analysis of the potential benefits is worth consideration. If any answer is no, the facility is likely better off remaining an NDL.

The risks

Even if you’ve answered yes to the above questions, there are still risks to consider:

Real-time deviation exposure: Real-time LMPs are more volatile than day-ahead prices. A facility that runs above its DAM schedule during a real-time price spike pays for the excess at those prices. Real-time prices can spike sharply, and in May 2026 alone there were 61 hours where real-time prices at various nodes exceeded the DA-OZP by more than $100/MWh, with the average gap across those 61 hours being $265/MWh. The largest gap seen that month was on May 20 where Ottawa’s real-time price hit $994.83/MWh, while the DA-OZP sat at $30.89/MWh. Being a PRL exposes businesses to this volatility and if your facility needs to consume above its DAM schedule during these hours, months of accumulated PRL savings could be eroded.

Nodal price risk: The OZP averages out local congestion and losses across the province, but a PRL chooses to settle at its nodal price, so a facility can see its LMP diverge sharply from the zonal price during transmission outages or local congestion events. Since local congestion can change as new generation, storage, and transmission upgrades come online, a spread resulting in a sustained benefit today may not necessarily be there tomorrow.

Demand Response: A facility can both register as a PRL and participate in the Capacity Auction, however there are then limitations on how it can bid.

During Demand Response obligation hours, the facility will have to purchase its DR committed quantity at its day-ahead LMP, meaning the price responsive flexibility gained from being a PRL does not apply to the MWs committed in DR. The facility can bid its entire load as PRL only in those hours when it is not obligated to offer its committed capacity as a DR resource.

Commitment: Your facility must first be authorized as an IESO market participant, which involves a registration process, posting prudential support, and moving to direct IESO billing. Being billed directly by the IESO means that facilities must pay their IESO invoice within two business days of receipt, and any dispute over billing errors still requires payment upfront, followed by a formal process that can take weeks to resolve. You must also provide the IESO with at least 75 days’ notice of your intention to become a PRL and once registered as PRL you must remain one for at least 180 days.

Operational workload: A service provider can handle bid submission on the backend, but only someone inside the facility knows the next day’s production plan and what prices make financial sense for operations. Daily administrative work is required.

Before you commit

Even if becoming a PRL looks favourable, there are a lot of factors to consider. Workbench Energy can help you assess whether this is the right option for your facility by running a detailed analysis, comparing your nodal DA-LMP against the DA-OZP over a full year to confirm the discount is persistent across seasons, as well as modelling your historical forecast error against real-time nodal prices to quantify what deviations would have cost. If conditions look favourable, our team can help you implement and operate this for you. If the analysis shows a narrow gap or unfavourable results, remaining an NDL is likely the better position.