2024 Quarterly State of the Market Report for PJM: January
through March
EAGLEVILLE, Pa., May 9, 2024
/PRNewswire/ -- PJM Interconnection's wholesale electric energy
market produced competitive results during the first three months
of 2024, according to the 2024 Quarterly State of the Market
Report for PJM: January through March 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
Market were competitive in the first three months of 2024," Bowring
said.
Energy prices increased in the first three months of 2024 from
the first three months of 2023. The real-time load-weighted average
LMP in the first three months of 2024 increased $0.73 per MWh, or 2.4 percent from the first
three months of 2023, from $30.28 per
MWh to $31.01 per MWh. Of the
$0.73 per MWh increase, there was a
$1.03 decrease in the cost of fuel
and consumables and a $0.55 per MWh
increase in the cost of emissions allowances. The real-time hourly
average load in the first three months of 2024 increased by 2.5
percent from the first three months of 2023, from 87,311 MWh to
89,478 MWh.
The total price of wholesale power decreased from $53.49 per MWh in the first three months of 2023
to $53.48 per MWh in the first three
months of 2024, a decrease of 0.01 percent. Energy, capacity and
transmission charges are the three largest components of the total
price of wholesale power, comprising 96.3 percent of the total
price per MWh in the first three months of 2024. Starting in the
third quarter of 2019, the cost of transmission per MWh of
wholesale power has been higher than the cost of capacity.
Energy prices in PJM in the first three months of 2024 were set,
on average, by units operating at, or close to, their short run
marginal costs, although this was not always the case. This is
evidence of generally competitive behavior and competitive market
outcomes, although high markups for some marginal units did affect
prices.
In the first three months of 2024, generation from coal units
increased 1.6 percent, generation from natural gas units increased
7.7 percent, generation from oil units decreased 0.9 percent,
generation from wind units increased 0.7 percent, and generation
from solar units increased 49.2 percent compared to the first three
months of 2023.
Net revenue is a key measure of overall market performance as
well as a measure of the incentive to invest in generation to serve
PJM markets. Theoretical energy market net revenues increased by
106 percent for a new combustion turbine, increased by 53 percent
for a new combined cycle, increased by 629 percent for a new coal
unit, decreased by 2 percent for a new nuclear plant, decreased by
8 percent for a new onshore wind installation, decreased by 2
percent for a new offshore wind installation and decreased by 15
percent for a new solar installation.
Total energy uplift charges increased by $57.2 million, or 296.9 percent, in the first
three months of 2024 compared to the first three months of 2023,
from $19.3 million to $76.5 million.
When there are binding transmission constraints and locational
energy price differences, customers pay more for energy than
generation is paid to produce that energy. The difference is
congestion revenue. Congestion revenue belongs to customers and
should be returned to customers. Total congestion increased by
$145.5 million or 82.9 percent, from
$175.5 million in the first three
months of 2023 to $321.0 million in
the first three months of 2024. But only 83.4 percent of total
congestion paid by customers for the first ten months of the
2023/2024 planning period was returned to customers through the ARR
and self-scheduled FTR revenues offset. The goal of the FTR market
design should be to ensure that customers have the rights to 100
percent of the congestion that customers pay. Load has received
$4.0 billion less in congestion
revenues than load should have received, from the 2011/2012
planning period through the first ten months of the 2023/2024
planning period, as a result of flaws in the PJM FTR market
design.
The Independent Market Monitor (also known as the IMM, the
Market Monitoring Unit or the MMU) evaluates the operation of PJM's
wholesale markets to identify ineffective market rules and tariff
provisions, proposes improvements to market rules and tariff
provisions when needed, monitors compliance with and implementation
of the market rules, identifies potential anticompetitive behavior
by market participants and provides comprehensive market analysis
critical for informed policy and decision making. Joseph Bowring, the Market Monitor, ensures the
independence and objectivity of the monitoring program.
For a copy of the State of the Market Report, visit Monitoring
Analytics at:
https://www.monitoringanalytics.com/reports/PJM_State_of_the_Market/2024.shtml
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SOURCE Monitoring Analytics, LLC