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2006-07 Seminars


PJM’s Pricing Allocation Model

Andy Ott,
Vice President, Markets
PJM Interconnection Inc.

Abstract
This presentation will discuss the development of the competitive wholesale electricity market in PJM. The discussion will outline the fundamental features of the PJM Day-ahead Electricity Market and Real-time Electricity Market and will include an introduction to futures and forward markets, discussion of locational pricing concepts, risk management and hedging alternatives. Actual PJM market results will be used to illustrate the concepts and to demonstrate the benefits of transparent and liquid commodity markets in promoting efficient supply of electric generation. The presentation will cover the interaction of the wholesale electricity market with the transmission rights markets that PJM has developed. Finally, the discussion will comment on the measurements of the effectiveness of the market and lessons learned during implementation.

PJM Interconnection ensures the reliability of the high-voltage electric power system serving 51 million people in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. PJM coordinates and directs the operation of the region’s transmission grid, which includes 6,038 substations and 56,070 miles of transmission lines; administers the world’s largest competitive wholesale electricity market; and plans regional transmission expansion improvements to maintain grid reliability and relieve congestion. Visit PJM at www.pjm.com.