Market Monitor Finds PJM Wholesale Electricity Markets Competitive
EAGLEVILLE, Pa., Nov. 12, 2015 /PRNewswire/ — PJM Interconnection’s wholesale electric energy, capacity and regulation markets produced competitive results during the first nine months of 2015, according to the 2015 Quarterly State of the Market Report for PJM: January through September, released today by Monitoring Analytics, LLC, the Independent Market Monitor for PJM.
The Independent Market Monitor, Joseph Bowring, announced findings of the report today. The report is the Independent 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.
“Our analysis concludes that the results of the PJM Energy, Capacity and Regulation Markets in the first nine months of 2015 were competitive,” Bowring said.
Energy market prices decreased significantly from the first nine months of 2014 as a combined result of lower fuel prices and lower demand. The load-weighted average real-time LMP was 33.5 percent lower in the first nine months of 2015 than in the first nine months of 2014, $38.94 per MWh versus $58.60 per MWh.
Energy prices in PJM in the first nine months of 2015 were set, on average, by units operating at, or close to, their short run marginal costs, although this was not always the case during the high demand hours in February. This is evidence of generally competitive behavior and resulted in a competitive market outcome.
Net revenue is a key measure of overall market performance as well as a measure of the incentive to invest in new generation to serve PJM markets. While net revenues were uniformly lower for new entrant units in the first nine months of 2015 than in the first nine months of 2014, the comparison to the first nine months of 2014 reflects the very high net revenues in January 2014. In the first nine months of 2015, average energy market net revenues decreased by 13 percent for a new combustion turbine, 18 percent for a new combined cycle, 53 percent for a new coal plant, 64 percent for a new diesel unit, 39 percent for a new nuclear plant, 20 percent for a new wind installation, and 5 percent for a new solar installation.