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PJM market monitor: Real-time prices up 10% YOY in H1'17

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PJM market monitor: Real-time prices up 10% YOY in H1'17

As a result of higher fuel prices, real-time energy market prices in the PJM Interconnection rose by more than 10% on the year during the first six months of 2017, according to the grid operator's independent market monitor.

Monitoring Analytics LLC said load-weighted average real-time locational marginal prices averaged $29.81/MWh in the first six months of the year, up 10.1% from an average price of $27.09/MWh during the same period in 2016.

The "2017 Quarterly State of the Market Report for PJM: January through June" found that PJM's wholesale electric energy, capacity and regulation markets produced competitive results in the first half.

"One of the benefits of competitive power markets is that changes in input prices and changes in the balance of supply and demand are reflected immediately in energy prices," the report said.

Net revenue, which can measure both overall market performance and the incentive to invest in new generation, was mixed due to higher energy prices and fuel prices. Energy market net revenues for a new combustion turbine and a new combined cycle plant, the most commonly built type of new unit in PJM, declined 59% and 26%, respectively, as gas prices increased more than energy prices. For coal and nuclear plants, net revenues increased 16% for a new coal plant or 18% for a new nuclear plant due to the higher energy prices.

Total energy uplift charges decreased by $14.4 million, or 22.6%, in the first six months of 2017 compared to the same period in 2016, from $63.9 million to $49.5 million.

Total payments for demand response programs, most of which come from the capacity market, were down $178.6 million, or 42.8%, from $417.3 million in the first six months of 2016 to $238.7 million in the first two quarters of 2017. The report noted that not all demand response activities in the first six months of this year had been reported to PJM at the time of publication.

Congestion costs dropped by $193.6 million, or 40.4%, from $479.1 million in the first six months of 2016 to $285.5 million during the same time frame in 2017.

Total Auction Revenue Rights and self-scheduled Financial Transmission Rights revenues offset 98.1% of total congestion costs in the 2016/2017 planning period and 73.3% of total congestion costs for the last six planning periods. The goal of the market design should be to return 100% of the congestion revenues to the load, the report said.