identified are discussed publicly in stakeholder
meetings with PJM members, generators, transmission owners, retailers, end customers and
other interested parties.
To develop the best plans for the system as a
whole, PJM coordinates its planning process with
neighbouring system operators. These include
Midcontinent Independent System Operator
(MISO), ISO New England and New York ISO.
This coordinated planning process seeks to ensure
an efficient level of new generation resources and
transmission lines across neighbouring systems.
PJM mandates transmission upgrades and
extensions that are required to maintain the reliability standards of transmission owners.
Under PJM rules, the cost of these projects is
allocated to the respective transmission owners.
Merchants can also explore interconnection
business opportunities in the PJM region. Merchants’ interconnection requests are subject to
strict rules and procedures. PJM completes feasibility and system impact studies before
approving the interconnection request.
(3) Level of locational pricing
In 1998, PJM replaced zonal pricing with nodal
pricing to address inefficiencies caused by transmission congestion. Zonal pricing does not account
for transmission constraints in a zone, hence market
participants do not internalise transmission constraints in that zone. As a result, in the PJM region
transmission congestion was under-priced, and
widespread bilateral contracting—without considering network constraints—resulted in significant
generation curtailment and redispatch costs. Under
the nodal pricing scheme, the prices are discovered
for around 2,000 nodes, accounting for transmission constraints between the nodes and minimising
inefficiencies. To provide liquidity for hedging
instruments, PJM averages nodal prices in given
areas into hub prices.
(4) Modernising network arrangements
PJM has not developed specific procedures to
ensure that non-network alternatives to new
transmission assets are considered in new transmission planning and investment decisions. Nevertheless, it is actively encouraging flexible
resources to provide system services. PJM offers
retail customers day-ahead and real-time options
for emergency load response. Virtual power
plants, known in PJM as curtailment service providers (CSPs), act as intermediaries between retail
customers and PJM. CSPs help retail customers to
reduce their demand in high price periods. PJM
also operates a reliability pricing model capacity
market. Both demand-response resources and
energy efficiency resources can participate in these
markets through CSPs and collect payments for
reducing their demand and adopting efficiency
measures. Demand resources can also participate
in PJM’s synchronised reserve, regulation and
day-ahead scheduling reserve market.
(5) Summary of arrangements
Pennsylvania, New Jersey, Maryland (and
other areas within the Eastern Interconnection)
(Table 5).
(4) Great Britain
Great Britain comprises England, Scotland and
Wales, whereas the UK comprises all three along
with Northern Ireland. Britain has the larger of
the UK’s two electricity systems. The smaller is
the Northern Ireland system, which is connected
to the Republic of Ireland. It is owned by
Northern Ireland Electricity Networks and operated by the Irish system operator EirGrid, as part
of the island’s single electricity market.
(1) Institutional arrangements
Before market reform, the vertically integrated
Central Electricity Generating Board (CEGB)
was the statutory monopoly provider of generation and transmission services in England and
Wales. The CEGB was subject to cost-of-service
regulation and its operations were characterised
by high capital costs, low productivity growth,
and a low return on assets. Distribution networks
were operated by twelve regional monopolies,
known as area electricity boards.
In 1990, the CEGB was unbundled and privatised into multiple generating companies and a
single transmission company, the National Grid
Company. The Electricity Act 1989 led to the
creation of the Office of Electricity Regulation
Special Report 1: A Study of China’s Energy Supply Revolution
111
meetings with PJM members, generators, transmission owners, retailers, end customers and
other interested parties.
To develop the best plans for the system as a
whole, PJM coordinates its planning process with
neighbouring system operators. These include
Midcontinent Independent System Operator
(MISO), ISO New England and New York ISO.
This coordinated planning process seeks to ensure
an efficient level of new generation resources and
transmission lines across neighbouring systems.
PJM mandates transmission upgrades and
extensions that are required to maintain the reliability standards of transmission owners.
Under PJM rules, the cost of these projects is
allocated to the respective transmission owners.
Merchants can also explore interconnection
business opportunities in the PJM region. Merchants’ interconnection requests are subject to
strict rules and procedures. PJM completes feasibility and system impact studies before
approving the interconnection request.
(3) Level of locational pricing
In 1998, PJM replaced zonal pricing with nodal
pricing to address inefficiencies caused by transmission congestion. Zonal pricing does not account
for transmission constraints in a zone, hence market
participants do not internalise transmission constraints in that zone. As a result, in the PJM region
transmission congestion was under-priced, and
widespread bilateral contracting—without considering network constraints—resulted in significant
generation curtailment and redispatch costs. Under
the nodal pricing scheme, the prices are discovered
for around 2,000 nodes, accounting for transmission constraints between the nodes and minimising
inefficiencies. To provide liquidity for hedging
instruments, PJM averages nodal prices in given
areas into hub prices.
(4) Modernising network arrangements
PJM has not developed specific procedures to
ensure that non-network alternatives to new
transmission assets are considered in new transmission planning and investment decisions. Nevertheless, it is actively encouraging flexible
resources to provide system services. PJM offers
retail customers day-ahead and real-time options
for emergency load response. Virtual power
plants, known in PJM as curtailment service providers (CSPs), act as intermediaries between retail
customers and PJM. CSPs help retail customers to
reduce their demand in high price periods. PJM
also operates a reliability pricing model capacity
market. Both demand-response resources and
energy efficiency resources can participate in these
markets through CSPs and collect payments for
reducing their demand and adopting efficiency
measures. Demand resources can also participate
in PJM’s synchronised reserve, regulation and
day-ahead scheduling reserve market.
(5) Summary of arrangements
Pennsylvania, New Jersey, Maryland (and
other areas within the Eastern Interconnection)
(Table 5).
(4) Great Britain
Great Britain comprises England, Scotland and
Wales, whereas the UK comprises all three along
with Northern Ireland. Britain has the larger of
the UK’s two electricity systems. The smaller is
the Northern Ireland system, which is connected
to the Republic of Ireland. It is owned by
Northern Ireland Electricity Networks and operated by the Irish system operator EirGrid, as part
of the island’s single electricity market.
(1) Institutional arrangements
Before market reform, the vertically integrated
Central Electricity Generating Board (CEGB)
was the statutory monopoly provider of generation and transmission services in England and
Wales. The CEGB was subject to cost-of-service
regulation and its operations were characterised
by high capital costs, low productivity growth,
and a low return on assets. Distribution networks
were operated by twelve regional monopolies,
known as area electricity boards.
In 1990, the CEGB was unbundled and privatised into multiple generating companies and a
single transmission company, the National Grid
Company. The Electricity Act 1989 led to the
creation of the Office of Electricity Regulation
Special Report 1: A Study of China’s Energy Supply Revolution
111