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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.
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