FAQ: PJM Interconnection – Multiple Initiatives

PJM PJM is the electricity system operator for the mid-Atlantic region of the US and parts of the Midwest, and operator of the world’s largest electricity spot market. Market Reform has conducted a number of initiatives for PJM, including:

Settlement Formulation Review

Market Reform was engaged to conduct a review of the specification/formulation of PJM’s market settlement system against the provisions of its tariff and operating agreement (i.e. market rules), identify issues and recommend remedial measures.

Credit and Clearing Analysis

Following some significant financial defaults by participants in its markets, PJM engaged Market Reform to provide advice concerning how it could improve its management of credit risk. A benchmarking study of credit risk management practices in a range of spot electricity and other markets was also conducted.

Comparative Commodity Market Analysis

Market Reform analyzed a range of existing forward markets in commodities and securities, in aid of PJM’s efforts to examine how it could do more to encourage and facilitate robust forward market activity in electricity.

Forward Energy Reserve Market

Market Reform investigated the design, structure and mechanics of a proposed ‘Forward Energy Reserve Market’ – a call option market aimed at encouraging greater demand-side participation./td>