March 21, 2008—PJM Interconnection’s wholesale electric energy markets produced competitive results last year, according to the 2007 State of the Market Report, released by the independent Market Monitoring Unit for PJM.
PJM Market Monitor Joseph Bowring discussed findings of the report during a briefing in Washington, D.C. The report is the Market Monitoring Unit’s annual assessment of the competitiveness of the wholesale electricity markets managed by PJM in 13 states and the District of Columbia. It analyzes market structure, participant behavior and market performance.
“Our analysis concludes that the results of the PJM markets in 2007 were competitive and that locational prices sent appropriate signals and incentives for investment in resources,” Bowring said. “At the same time, the report recommends rules and rule changes required for continued competitive results and for continued improvements in the functioning of the markets.”
Among the recommendations are enhancements to PJM’s scarcity pricing rules to create stages of scarcity and corresponding stages of locational scarcity pricing; implementation of targeted, flexible real- time market power mitigation in the Regulation Market; and consistent application of local market power rules to all constraints and to all generating units, including those currently exempt from offer capping.
The Market Monitoring Unit evaluates the operation of PJM’s wholesale markets to identify ineffective market rules and tariff provisions, identifies potential anticompetitive behavior by market participants and provides the comprehensive market analysis critical for informed policy decision making. Bowring, the market monitor, ensures the independence and objectivity of the monitoring program. The Market Monitoring Unit submits the State of the Market Report to the PJM Board and to the Federal Energy Regulatory Commission.
For a copy of the State of the Market Report, go to the PJM Web site.
