PJM Interconnection

PJM Interconnection is a regional transmission organization (RTO) responsible for coordinating the high-voltage electricity system and wholesale power markets across a large portion of the eastern United States. Its service territory extends from the Chicago area and Illinois through the Mid-Atlantic and into parts of North Carolina and Tennessee. The organization operates the transmission system independently from the companies that own most of the generation and distribution assets, while the Federal Energy Regulatory Commission (FERC) regulates its wholesale tariff and market rules. PJM traces its origins to 1927, when Public Service Electric and Gas, Philadelphia Electric, and Pennsylvania Power & Light formed the Pennsylvania-New Jersey Interconnection power pool. The original objective was operational and economic: coordinate generation dispatch so that participating utilities could meet demand at lower cost. Baltimore Gas and Electric and General Public Utilities joined in 1956, and the pool adopted the Pennsylvania-New Jersey-Maryland name that produced the PJM abbreviation. The organization changed substantially during the restructuring of the U.S. electricity industry in the 1990s. PJM became an independent system operator in 1997 and was designated a regional transmission organization by FERC in 2001. This transformation placed system control and market administration at arm's length from individual utilities and created a platform through which generators, transmission owners, marketers, load-serving entities, and other participants could transact under common rules. PJM operates two principal wholesale markets. Its energy market uses locational marginal pricing to determine the cost of electricity at different points on the transmission network. Its capacity market, known as the Reliability Pricing Model, compensates resources for committing to be available in a future delivery period, including generators and qualified demand-response resources. PJM also manages reliability, coordinates interchange with neighboring systems, administers transmission service, and conducts long-range planning through its Regional Transmission Expansion Planning process. The organization expanded through the addition of major utility territories and balancing authorities. Allegheny Power joined in 2002, Commonwealth Edison in 2004, American Electric Power and Dayton Power & Light later in 2004, Duquesne Light in 2005, Dominion Virginia Power in 2005, FirstEnergy in 2011, portions of the Duke Energy territory in 2012, and Ohio Valley Electric Corporation in 2018. PJM now coordinates a system with more than 1,000 members, approximately 1,436 generators, and about 88,333 miles of transmission lines. The reference material reports that the system served approximately 67 million customers indirectly and delivered more than 800 terawatt-hours of electricity in 2024. PJM's public role has grown as the electricity sector has faced generator retirements, renewable development, transmission constraints, electrification, and rapidly increasing demand from hyperscale data centers. Its strategic priorities include reliability, market efficiency, and facilitating decarbonization. At the same time, stakeholders have criticized the pace of generation interconnection, the design and cost of the capacity market, and the transparency of PJM's governance. FERC and state authorities have increasingly scrutinized these issues. PJM therefore functions both as an operational control center for a major portion of the Eastern Interconnection and as a central market institution whose rules influence investment, reliability, consumer costs, and the transition toward lower-carbon power.

PJM began in 1927 as the Pennsylvania-New Jersey Interconnection, a power pool created by three utilities: Public Service Electric and Gas, Philadelphia Electric, and Pennsylvania Power & Light. The pool coordinated the dispatch of participating generating plants, allowing members to use the least-cost available generation and share operating resources. Baltimore Gas and Electric and General Public Utilities joined in 1956, prompting the name Pennsylvania-New Jersey-Maryland Interconnection, abbreviated PJM. For much of its early history, PJM operated within a vertically integrated utility structure. That model changed during the federal restructuring of wholesale electricity markets in the 1990s. FERC Orders 888 and 889 promoted open, nondiscriminatory transmission access and common information systems, while encouraging separation of transmission operations from generation and power marketing. PJM became an independent system operator in 1997. FERC Order 2000, issued in 1999, established the broader RTO framework, and PJM received RTO designation in 2001. The new structure supported substantial geographic and organizational expansion. Allegheny Power became the first external control area to join in 2002. Commonwealth Edison joined in 2004 as a separate balancing authority, with PJM using contractual transmission arrangements to connect its territory to the eastern portion of the market. American Electric Power and Dayton Power & Light joined later in 2004, allowing PJM to return to a unified control-area arrangement. Duquesne Light and Dominion Virginia Power joined in 2005. FirstEnergy's 2011 integration extended PJM across northern Ohio toward Michigan, while portions of Duke Energy's Ohio and Kentucky territory joined in 2012. Ohio Valley Electric Corporation was integrated in 2018. PJM's operational importance was demonstrated during the 2003 Northeast Blackout. Most of the PJM system remained operating, although a limited portion of the Public Service Electric & Gas New Jersey zone separated from the Eastern Interconnection after over-frequency relay operations. PJM's responsibilities now include balancing supply and demand, managing transmission congestion, coordinating emergency procedures, administering wholesale energy and capacity markets, and publishing operational and pricing information. The energy market uses locational marginal pricing, which reflects the cost of serving an additional unit of demand at particular network locations while accounting for transmission constraints. The capacity market, or Reliability Pricing Model, purchases commitments for future availability so that the system maintains a reserve above projected peak demand. Both markets have attracted debate. Critics have argued that some capacity-market outcomes retain uneconomic older resources, procure more capacity than necessary, or impose excessive costs on consumers. PJM's independent market monitor reported noncompetitive outcomes and substantial customer overcharges in the years covered by its 2022 market report. FERC has continued to review market rules and resource-adequacy arrangements. Transmission planning is conducted through a fifteen-year Regional Transmission Expansion Planning horizon. PJM considers load forecasts, demand response, new interconnection requests, generation retirements, and congestion-mitigation alternatives. The organization has also faced a large backlog of proposed generation projects, particularly renewable projects. PJM proposed replacing its serial interconnection queue with a cycle-based process designed to prioritize projects that are sufficiently ready to proceed; FERC approved the reform in November 2022. In the 2020s, PJM's planning environment became more difficult. Coal and other fossil-fuel units have retired or faced economic and environmental pressures, while renewable projects have encountered transmission and interconnection constraints. At the same time, data centers and other large loads have contributed to renewed demand growth after a long period of relatively flat consumption. PJM has warned that these factors could create future supply shortages. Rising capacity prices, delayed interconnections, and the need for new transmission have led to increased scrutiny from FERC, state governments, utilities, consumer advocates, environmental organizations, and market participants. PJM remains an active institution, but its future development is closely tied to how effectively it reconciles reliability, affordability, market competition, and decarbonization.

• 2022

  FERC approves interconnection-process reform

  [4]FERC approves interconnection-process reformpjm.com

  The regulator approved a shift toward readiness-based interconnection cycles to address the generation queue backlog.

• 2018

  Ohio Valley Electric Corporation integrates into PJM

  [1]PJM Interconnectionen.wikipedia.org

  OVEC became part of the PJM operating footprint.

• 2012

  Duke Energy territory joins

  [1]PJM Interconnectionen.wikipedia.org

  Parts of Ohio and Kentucky near Cincinnati entered the PJM footprint.

• 2011

  FirstEnergy joins PJM

  [1]PJM Interconnectionen.wikipedia.org

  FirstEnergy's integration extended the PJM footprint across northern Ohio toward the Michigan border.

• 2005

  Duquesne Light and Dominion Virginia Power join

  [1]PJM Interconnectionen.wikipedia.org

  These additions expanded PJM's reach in Pennsylvania and southward through Virginia toward North Carolina.

• 2004

  Commonwealth Edison, AEP, and Dayton Power & Light expand PJM

  [1]PJM Interconnectionen.wikipedia.org

  The additions connected major Midwestern territories to the PJM market and enabled a unified control-area arrangement.

• 2002

  Allegheny Power joins

  [1]PJM Interconnectionen.wikipedia.org

  Allegheny Power became the first external control area to join the PJM RTO as a market participant.

• 2001

  PJM receives RTO designation

  [1]PJM Interconnectionen.wikipedia.org

  FERC designated PJM as a regional transmission organization under the federal RTO framework.

• 1997

  PJM becomes an independent system operator

  [1]PJM Interconnectionen.wikipedia.org

  PJM assumed an independent system-operator role during the restructuring of U.S. wholesale electricity markets.

• 1956

  Pool renamed PJM

  [1]PJM Interconnectionen.wikipedia.org

  After Baltimore Gas and Electric and General Public Utilities joined, the organization adopted the Pennsylvania-New Jersey-Maryland Interconnection name.

• 1927

  Pennsylvania-New Jersey Interconnection power pool formed

  [1]PJM Interconnectionen.wikipedia.org

  Three utilities established a coordinated power pool to dispatch generation economically and reduce members' operating costs.

An independent, member-based grid operator and competitive wholesale-market administrator focused on reliability, efficient dispatch, transparent pricing, and regional coordination.

• Wholesale electricity market

  Energy Market

  PJM's energy market coordinates the purchase and sale of electricity across its operating territory. Generators submit offers and buyers obtain energy through market mechanisms that account for network constraints. Locational marginal prices are calculated at points across the transmission system, allowing prices to reflect the cost of serving demand at specific locations and the effect of congestion and losses.

• Capacity market

  Reliability Pricing Model

  The Reliability Pricing Model is PJM's forward capacity market. It compensates generators and eligible demand-response resources for commitments to be available during a future delivery period. The design is intended to secure enough supply to meet forecast peak demand plus a reliability reserve, although its pricing, procurement levels, and treatment of existing resources remain subjects of regulatory and stakeholder debate.

• Transmission planning

  Regional Transmission Expansion Planning

  PJM's long-range transmission-planning process uses a fifteen-year horizon. It evaluates expected load growth, demand response, generator additions and retirements, interconnection requests, congestion, and reliability needs. Recommended upgrades are developed regionally, while specific line routes and local siting decisions are generally handled by transmission owners and state authorities.

• Grid connection service

  Generation Interconnection Process

  PJM evaluates requests from proposed generators and storage projects seeking connection to the regional transmission system. In response to a substantial backlog, PJM developed reforms intended to replace a serial queue with readiness-based processing cycles. The process determines required studies, network upgrades, costs, and conditions for connecting new resources.

• System operations and information services

  Grid Operations and Market Data

  PJM operates the bulk-power system continuously and publishes operational information including system conditions, load data, generation by fuel type, transmission information, and energy-price maps. These tools support market participants, regulators, researchers, and the public in monitoring the regional electricity system.

• 2023

  Regulatory scrutiny of PJM capacity-market outcomes

  FERC cited continuing disputes and frequent complaints concerning PJM's capacity market and opened an examination of how the market could better support resource adequacy at just and reasonable rates. The issue involved market design and stakeholder disagreement rather than a finding of criminal misconduct.

  Source

Read more

• 2023

  Launch an accelerated capacity-market stakeholder processStrategy

  Background

  FERC announced an examination of PJM's capacity market amid disputes over resource adequacy, pricing, and the treatment of existing and prospective resources.

  Action taken

  The PJM board initiated a Critical Issue Fast Path process to seek stakeholder consensus on near-term Reliability Pricing Model changes and inform a possible FERC filing.

  Aftermath

  The process increased formal stakeholder and regulatory attention to capacity-market design and future reliability requirements.

  Source

• 2022

  Replace the generation interconnection queue with readiness-based cyclesStrategy

  Background

  PJM faced a large backlog of proposed generation projects and concerns that a serial first-come-first-served process was delaying new supply, including renewable resources.

  Action taken

  PJM proposed a first-ready-first-served cycle approach and requested FERC approval of comprehensive interconnection reforms.

  Aftermath

  FERC approved the new process on November 29, 2022. State and market stakeholders broadly supported reform, while some commenters said additional measures would be needed to accelerate connections.

  Source

1. 1PJM Interconnectionen.wikipedia.org
2. 2PJM Interconnection official websitepjm.com
3. 3Federal Energy Regulatory Commissionferc.gov
4. 4FERC approves interconnection-process reformpjm.com
5. 5Launch an accelerated capacity-market stakeholder processferc.gov