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Study: PJM electricity market competitive

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PJM Interconnection's wholesale electric energy and capacity markets produced competitive results in 2013, according to the report released by independent market monitor Monitoring Analytics LLC.

PJM is the regional transmission organization whose service area includes Central Pennsylvania.

Monitoring Analytics’ Joseph Bowring said energy prices in PJM in 2013 were set on average by units operating at, or close to, their short run marginal costs. This is evidence of competitive behavior and resulted in a competitive market outcome.

The report is Monitoring Analytics’ assessment of the competitiveness of the wholesale electricity markets managed by PJM in 13 states and the District of Columbia, according to a news release. It analyzes market structure, participant behavior and market performance for each of the PJM markets.

A combination of increased demand spurred by weather and higher fuel costs led to an increase in energy prices compared to 2012. The load-weighted average cost of energy increased 9.7 percent in 2013 compared to 2012, from $35.23 per MWh to $38.66 per MWh. The price of capacity increased 17.8 percent in 2013, from $6.05 to $7.13 per MWh of load.

The price of natural gas was higher and the price of coal was relatively flat in 2013 compared with 2012, according to the report. As a result of the relative changes in fuel costs, coal-fired units were more competitive with gas-fired units, coal output increased by 6.2 percent in 2013 and gas output decreased by 12.2 percent in the same period, continuing the short term reversal of the trend toward reduced coal output.

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