PJM, IMM: Energy Markets Competitive

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PJM released its response Monday, May 6, to the “2018 State of the Market Report,” an assessment of market performance by the independent market monitor for PJM.

Monday, May 6, to the “2018 State of the Market Report,” an assessment of market performance by the independent market monitor for PJM.

PJM and PJM’s independent market monitor, Monitoring Analytics, agree that the PJM markets (including Energy, Regulation, Synchronized Reserve, Day-Ahead Scheduling Reserve and Financial Transmission Rights markets) produced competitive results in 2018.

PJM does not support the IMM’s conclusion that the capacity market results were not competitive, and holds that the IMM’s finding lacks appropriate supporting data. PJM does acknowledge in its response that the capacity market can benefit from new measures to prevent the undue exercise of market power.

The IMM’s 2018 report contains 192 recommendations, 36 of which are new. PJM has conducted an in-depth analysis of each and classified them as actionable, assessment and archived. The market monitor has marked two as adopted.

PJM assigns the highest priority to actionable recommendations, which, when adopted, will have the greatest impact on market performance. PJM plans to take action to address these recommendations in the coming year.

PJM’s response notes that for more than 20 years, PJM markets have consistently produced competitive results, which maintain system reliability, keep system costs low and attract new entry in ways that foster innovation and yield environmental benefits.

In 2018, PJM focused on long-standing price formation issues, studying ways to improve performance in the energy, reserve, capacity and financial transmission rights markets.

Key developments include energy price-formation proposals on fast-start and reserve pricing, proposed changes to the capacity market and enhancements to the financial transmission rights market.

PJM also is exploring ways to incentivize performance and lower entry barriers for competitive resources. To meet future challenges within an increasingly complex environment, PJM is continuing efforts to improve transparency and resilience in PJM’s market design.