PJM has released its response to the 2017 State of the Market Report, produced by Monitoring Analytics, the independent market monitor (IMM) for PJM. The 2017 State of the Market Report provides an assessment of market performance and recommendations aimed at enhancing PJM’s market design and market performance.
PJM and the IMM agree that the PJM markets have produced competitive results.
This report is organized into two main sections. The first section provides a broad PJM view of the state of the market, covering three topics: (1) setting the stage, (2) key developments in 2017 and (3) going forward. The second section provides PJM’s response to each of the IMM recommendations contained in the 2017 State of the Market Report for PJM, paralleling the IMM’s report structure in each subject area.
First Quarter 2018 IMM report finds PJM wholesale electricity markets competitive
PJM Interconnection’s wholesale electric energy and capacity markets produced competitive results during the first three months of 2018, according to the 2018 Quarterly State of the Market Report for PJM: January through March released by Monitoring Analytics, LLC, the independent market monitor for PJM.
“The PJM markets bring customers the benefits of competition,” the report said.
The report is the market monitor’s assessment of the competitiveness of the wholesale electricity markets managed by PJM in 13 states and the District of Columbia. The report includes analysis of market structure, participant behavior and market performance for each of the PJM markets.
Energy prices were significantly higher as a result of cold weather in early January and related higher natural gas costs, the report said. The load-weighted average real-time locational marginal pricing (LMP) was 63.3 percent higher in the first three months of 2018 than in the first three months of 2017, $49.45 per MWh versus $30.28 per MWh.
The report found that energy prices in PJM in the first three months of 2018 were set, on average, by units operating at, or close to, their short-run marginal costs, although this was not always the case. This is evidence of generally competitive behavior and resulted in a competitive energy market outcome, according to the report.
Energy net revenues, an indicator of market performance and investment incentive, were also significantly higher in the first quarter than in the first quarter of 2017.