An overview of PJM energy market design and development

Abstract

The seven Independent System Operators and Regional Transmission Organizations (ISO/RTOs) in the United States coordinate reliable power grid operations for two-thirds of its population and two-thirds of its electric generation. As one of the largest ISO/RTOs, PJM provides regional planning and operation, energy market operation, outage coordination, transactions settlement, billing and collections, risk management, ancillary services, credit risk management, and more services which have broadened significantly in recent years. This paper shows how PJM plays essential roles in managing and improving flow of energy, money and information in energy markets. Market development in recent years in PJM is presented. PJM also implements the planning function through the Regional Transmission Expansion Planning (RTEP) process. This paper also discusses how Financial Transmission Rights (FTRs) are acquired and how the value of FTRs is determined as risk management service in PJM.