The IESO was established in April 1999 as the Independent Electricity Market Operator (IMO) under the provincial government of premier Mike Harris in preparation for deregulation of the province's electrical supply and transmission system. As part of government plans to privatize the assets of Ontario Hydro, the utility was split into 5 separate Crown corporations with the IMO responsible for directing the flow of electricity across the high-voltage, province-wide network owned by Hydro One and other transmission companies. It was also given the responsibility of managing and operating the competitive wholesale electricity market and working with neighbouring jurisdictions to manage an integrated North American electricity network.
The IMO was renamed to the IESO in January 2005 as a result of the passage of Bill 100, which redefined the direction of deregulation and also lead to the creation of the Ontario Power Authority.
The IESO is an independent, not-for-profit entity. It is governed by a board whose directors are appointed by the government of Ontario, its fees and licences are set by the Ontario Energy Board and, most importantly, it operates independently of all participants in the electricity market.