PJM Interconnection

Abstract: Deregulation is intended to encourage competition among utilities and power marketers to reduce energy prices. The pricing system is very critical in restructuring the electrical industry and depends upon market rules and the function of the independent system operator (ISO). The locational marginal pricing (LMP) system is in use in the Pennsylvania, New Jersey, Maryland (PJM) Interconnection ISO and is proposed for the New York ISO, which is expected to be in operation in 1999. This article provides fundamental concepts of the LMP and outlines the basic requirements for a computer simulation tool to accurately forecast prices in an LMP-based market. Examples are used to demonstrate the concepts, and some preliminary results for the Eastern Interconnection are presented.

Abstract: The paper presents the functions of the Integration of Variable Generation Task Force (IVGTF) created by the planning and operating committees of the North American Electric Reliability Corporation (NERC) in 2008. This is in anticipation of the substantial growth of renewable variable generation such as wind and solar resources.

Abstract: A method of calculating available transfer capability and the exploration of the first order effects of certain power system network variables are described. The Federal Energy Regulatory Commission has ordered that bulk electrical control areas must provide to market participants a "commercially viable" network transfer capability for the import, export and throughput of energy. A practical method for deriving this transfer capability utilizing both linear and nonlinear power flow analysis methods is developed that acknowledges both thermal and voltage system limitations. The available transfer capability is the incremental transfer capability derived by the method reduced by margins. A procedure for quantifying the first order effect of network uncertainties such as load forecast error and simultaneous transfers on the calculated transfer capability of a power system snapshot are explored. The quantification of these network uncertainties can provide information necessary for system operation, planning and energy market participation.

Abstract: Because of high generation adequacy standards in the power industry, some peaking capacity operates for a limited time during the year and may not receive sufficient energy revenues to meet its fixed costs. This is particularly true when energy prices are capped in order to mitigate market power. The northeastern U.S. independent system operators (ISOs) have responded to this issue by establishing capacity obligations for loads and markets for installed capacity, thus providing a capacity revenue stream to generators. The installed capacity (ICAP) markets in the northeastern U.S. markets are a response to this need for additional incentives to construct generation. The Federal Energy Regulatory Commission (FERC) has accepted the PJM Interconnection's (PJM) proposal to replace the present fixed ICAP requirement that is placed upon load serving entities (LSEs) with a demand curve-based system in which the ISO would be responsible for acquiring "residual" capacity on behalf of LSEs. The demand curve approach pays more when reserve margins are smaller and provides a reduced incentive for investment when installed reserves are above the target. Another goal is to make revenues more predictable for generators, making investment less costly and, ultimately, lowering prices for consumers. A dynamic representative agent model is presented for projecting effects upon reserve margins, generator profitability, and consumer costs and is applied to alternative demand curves proposed for the PJM market. The consumer costs resulting from a sloped demand curve are robustly lower compared to the present fixed requirement under a wide range of assumptions concerning behavior of generation owners, including risk attitudes, bidding behavior, and willingness to build capacity as a function of forecast profit. The cost savings arise from lower capital costs to generators due to reduced risk and risk premiums. Also, average installed capacity is less for the same level of reliability because of reduced fluctuations in installed reserves