THE PJM TRADEOFF: HIGHER POWER PRICES FOR GREATER GRID RELIABILITY
Consumers and businesses will pay more in the future for the electricity they need, but the regional power grid should be more reliable — especially at times of peak demand or during extreme weather.
That is the takeaway from a meeting with power plant operators, consumer advocates, and PJM Interconnection executives to discuss a new system for ensuring that there’s enough electricity to keep the lights on.
By increasing financial incentives to power suppliers, PJM is looking to secure enough capacity to increase the reliability of the regional power grid, which serves 61 million people from the Eastern Seaboard to Illinois.
PJM had the opportunity to put its new system to the test with the beginning of new auctions to buy needed capacity. As expected, they resulted in higher prices, which attracted a great deal of interest from power suppliers — one of PJM’s goals.
“Two consecutive cold winters with natural gas interruptions and the rapid pace of coal retirements have put considerable pressure on the system,’’ said PJM CEO Terry Boston. PJM had to act decisively to ensure firmer fuel supplies and other improvements for continued reliability of the grid, according to Boston.