October 8, 2002—Above normal temperatures that continued into October have tested wholesale electric markets and proved that they work, says PJM Interconnection, operator of North America’s largest electric power grid.
This summer, the 25 million people in PJM’s region broke the electricity use record they set in 2001. PJM operates the electric grid in all or parts of seven states and the District of Columbia and administers the world’s largest competitive wholesale electricity market.
Record electric use was driven by high heat and humidity. July and August were 25 percent warmer than normal in much of the PJM region, according to National Weather Service data. Temperatures in PJM’s area were 90 degrees or higher on more than half the days in those two hottest months of summer. Warm weather continued into autumn with much of the region seeing temperatures well above normal as October opened.
“The competitive wholesale electric market worked to attract the generation needed to supply customers at a reasonable cost during repeated periods of record electric demand,” said Phillip G. Harris, president and chief executive officer of PJM. “Our market’s performance this summer and autumn is proof of many of the elements of the standard market design proposed by the Federal Energy Regulatory Commission.”
PJM’s Emergency Load Response Program pays customers a market-based price for voluntarily reducing their electricity consumption. A customer makes an economic decision to reduce based on the wholesale price for electricity. Reducing demand can reduce the market price of electricity.
During peak days this summer, the maximum average price in PJM was around $150 per megawatt-hour compared to more than $900 last year. PJM said its demand-reduction program together with additional generation contributed to the lower wholesale prices.
For more information, contact PJM.
