By Andy Ott, president and chief executive officer
This week PJM Interconnection will celebrate 90 years of improving electric reliability and lowering electricity costs. We are noting both our 90th anniversary and 20 years as a federally-recognized independent system operator.
In 1927, PECO, PSE&G and PP&L agreed to an interconnection to form a power pool to share generation. They saw that coordination among their systems would produce benefits greater than any of them could achieve individually. Their objective was to improve reliability and lower costs.
That original power pool became the PJM Interconnection.
Over the past 90 years, PJM and its members have faced and met many challenges and have changed, adapted and improved in response to the demands on us.
One of the first challenges to hit the newly forming power pool, for example, was the Great Depression. Can you imagine the courage and conviction of the people who, at the height of the Depression, decided to move ahead with construction of the major transmission lines that would connect the three utility systems?
Rapid growth in demand for electricity challenged the PJM utilities to make significant investments in the 1960s in major coal-fired generators and the PJM 500-kilovolt backbone transmission system. In the 1970s, we had to learn careful scheduling of generating units to manage limited fuel supplies at power plants during coal and oil shortages.
Anticipating, preparing and adapting have distinguished PJM. In the 1990s, the PJM member utilities prepared PJM for coming electric competition and choice. As a result of those efforts, this year we’re observing the 20th anniversary of one of the most significant transformations: the conversion of PJM from a power pool to an independent system operator with competitive electricity markets.
Wholesale power markets have unleashed the power of innovation, brought cost-efficiencies from competition, and aligned risk with rewards. When the original power pool was founded, its estimated annual savings were about $3 million. Today, we estimate the annual savings PJM produces at about $3 Billion.
The way that we operate and the tools that we use have changed since 1927. And, what we need to do is shifting, too. Yes, our primary task absolutely still is ensuring the safety, reliability and security of the transmission grid. However, while PJM’s founders were challenged to improve reliability, we are challenged both to ensure reliability and to improve resilience.
Finally, on a personal note, I am continually proud to be a part of this organization and to work alongside so many topnotch fellow PJM employees and with our members and stakeholders. The creativity of our collaborative process keeps PJM strong and helps maintain and grow the value PJM has brought for 90 years.