The Pennsylvania-New

Jersey-Maryland (PJM)
Interconnection LLC

By: Edu Daryl C. Maceren MSEE-1

Outline:
Overview
1997

and History

FERC Order 880, 888 and 889

Deregulation

and Expansion, 2002

Deregulation

and Expansion, 2004-present

Transmission

System Planning and Upgrades

Highlights
Current

States: Energy supply and demand for

electricity

Overview and History

PJM is the worlds largest competitive wholesale electricity market.

It is the Regional Transmission Organization (RTO) in Eastern Connection of

the US grid.

Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey,

North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia,
and the District of Columbia.

1927: Public Service Electric & Gas Company and Philadelphia Electric
Company formed a partnership named Pennsylvania New Jersey
Interconnection

1956: Baltimore Gas and Electric Company and General Public Utilities joined
the pool; the company renamed to Pennsylvania-New Jersey-Maryland
Interconnection

1997 FERC Order 880, 888 and 889

FERC regulates PJM and approves its open access transmission tariff for wholesale electricity
market

1997 FERC 880: Federal Energy Regulatory Commission (FERC) began to set up Independent
System Operator (ISO) |for third parties|

Order No. 888: to remedy opportunities for undue discrimination and address deficiencies in
the pro form a open access transmission (OATT) that have become apparent since the issuance
of these orders

Order No. 889: each public utility is required to participate Open-Access Same-time
Information System (OASIS) that will provide open access transmission about transmission
capacity, prices, and other information to obtain non-discriminatory transmission system.

FERC established Regional Transmission Organization (RTO) |multi-state transmission projects|

2001: PJM designated an RTO by the FERC

Deregulation and Expansion, 2002

April 2002: Allegheny Power (AP) was the first external

control area to join the PJM RTO as a market participant
a

single control area, filling the roles of balancing

authority, interchange authority, market operator
and transmission operator

Deregulation and Expansion, 2004-present

May 2004: Commonwealth Edison (ComEd) joined PJM as a separate balancing

authority operating under the RTO

October 2004: American Electric Power (AEP) and Dayton Power & Light (DPL)
joined PJM, which allowed PJM to collapse back into a single control area.

January 2005: Duquesne Light Co. (DLCO) joined PJM.

May 2005: Dominion Virginia Power joined PJM, extending the southern border
to North Carolina.

June 2011: expanding the footprint across northern Ohio to the Michigan
border

January 2012: Areas of Ohio and Kentucky near Cincinnati covered by Duke
Energy joined the PJM footprint

Transmission System Planning and Upgrades

PJM uses a fifteen-year planning horizon for planning transmission

system upgrades under its Regional Transmission Expansion Planning
(RTEP)

forecasts of load growth and additions of demand response

interconnection requests for new and planned retirements of

existing generating plants

possible solutions to mitigate congestion on the transmission system

More than 900 members: Billings in PJM-administered markets total

more than $110 billion since the regional markets opened (as of 2012)

Highlights

Energy Market Operator: PJM balances the needs of suppliers, wholesale customers and other
market participants and monitors market activities to ensure open, fair and equitable access.

Financial Transmission Rights: PJM Interconnection auctions Financial Transmission Rights

(FTRs) to assist market participants in hedging price risk when delivering energy on the grid. FTRs
are financial instruments that entitle the holder to a stream of revenues (or charges) based on
the hourly energy-price differences across the transmission path in the Day-Ahead Market.

Demand Response: a planned reduction in electricity use during times of high demand, helps
maintain grid reliability by reducing the stress on the system. PJM encourages demand response
activity in the PJM grid to help reduce wholesale electricity prices and reduce electricity usage to
address environmental concerns.

Monitoring Analytics: (Financial) established in 2008 and serves as the Independent Market
Monitor for PJM under a long-term contract. Monitoring Analytics also has extensive experience
producing market-related reports, including the PJM State of the Market Report.

Current States: Energy supply and

demand for electricity

Generation/Supply:
Marginal fuel type: Coal (74%) and natural gas (22%)
Generating capacity (summer 2009): 167,454 MW
Capacity reserve (summer 2009): 40,649 MW
Reserve margin (summer 2009): 32%

Demand

All time peak demand: 144,644 MW (set August 2, 2006)

Summer Peak Demand (MW):
2006: 144,644
2007: 139,428
2008: 130,100
2009: 126,805

Current States: Energy supply and

demand for electricity (cont.)

Prices:

Annual Average Day-Ahead Price All Hours (MWh):

PJM Western Hub - A basket of 109 buses from Erie PA to Washington DC (Derived from
Energy Velocity data)
2006: $50.07/MWh
2007: $57.00/MWh
2008: $69.88/MWh
2009: $38.71/MWh

Demand Response: Demand response (also known as load response) is end-use customers
reducing their use of electricity in response to power grid needs, economic signals from a
competitive wholesale market or special retail rates.

important because it is another competitive resource that can be used to maintain

demand and supply in balance for grid operations and the associated wholesale markets.

Current States: Energy supply and

demand for electricity (cont.)

Current States: Energy supply and

demand for electricity (cont.)

Current States: Energy supply and

demand for electricity (cont.)

PJM sees an opportunity for far more participation,

especially since the majority of emergency demand
response resources have not yet participated in the
economic demand response market.