The New Jersey Clean Energy Conference September 26, 2005 PJM Overview Kenneth W. Laughlin VP Markets Coordination PJM 2005 2003 PJM PJM 1
PJM as Part of the Eastern Interconnection KEY STATISTICS PJM member companies 350+ millions of people served 51 peak load in megawatts 131,330 MWs of generating capacity 165,738 miles of transmission lines 56,070 GWh of annual energy 700,000 generation sources 1,082 square miles of territory 164,260 area served 13 states + DC 2005 PJM PJM 2003 2
Real Information Government Physics Real Time Real Relationships Real Requirements Owners, Users (i.e. the public) 2005 2003 PJM PJM 3
The Economics Of Power In Balance Meet the Demand By Supply side Meet the Demand at Any Price Supply and Demand Respond to Price 2005 2003 PJM PJM 4
2005 2003 PJM PJM 5 Providing Data to the Market
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Interface Prices LMP ($) 80 70 60 50 40 30 20 10 0-10 -20 0 1 2 3 4 5 6 7 PJM/MISO Real-Time Interface Prices Average for 4/01-8/28, 2005 8 9 10 11 12 13 Hour Ending PJM's Interface for MISO-RT MISO's Interface for PJM-RT Hr. Diff. Average-RT 14 15 16 17 18 19 20 21 22 23 24 On average, PJM and MISO interface prices are tracking very closely. Correlation of interface prices has been increasing month-tomonth. LMP ($) 80 70 60 50 40 30 20 10 0-10 -20 0 1 2 3 4 5 6 PJM/MISO Day-Ahead Interface Prices Average for 4/01-8/28, 2005 7 8 9 10 11 12 13 Hour Ending PJM's Interface for MISO-DA MISO's Interface for PJM-DA Hr. Diff. Average 14 15 16 17 18 19 20 21 22 23 24 Day-ahead prices have been more highly correlated than Realtime. Off-peak prices have been more highly correlated than on-peak. 2005 2003 PJM PJM 7
Retail Price Change (1995-2004) RTO and Non-RTO Eastern Interconnection, US 16.0% 14.0% 14.1% 12.0% 10.0% 8.0% 10.4% 10.4% 8.9% 9.4% 7.1% 10.5% 7.7% 6.0% 4.0% 3.0% 2.0% 0.0% *DOE Energy Information Administration Electric Power Monthly (April 1996, March 2005) Residential Commercial Industrial RTO Average Non-RTO Average Average 2005 2003 PJM PJM 8
PJM s Operational Markets Day-Ahead Energy Market Real-Time Energy Market Capacity Financial Transmission Rights Ancillary Services Markets Regulation Spinning Reserve Market Black Start Services Reactive Services 2005 2003 PJM PJM 9
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Dollars per Million Btu $16 $14 $12 $10 $8 $6 $4 $2 $0 NYMEX Natural Gas Futures Near-Month Contract Settlement Price, West Texas Intermediate Crude Oil Spot Price, and Henry Hub Natural Gas Spot Price NYMEX Natural Gas Settlement Price WTI Spot Price Henry Hub Spot Price Nymex Closing Dates 6/28/2005 7/27/2005 8/29/2005 5/27/2005 6/3/2005 6/10/2005 6/17/2005 2005 2003 PJM PJM 11 6/24/2005 7/1/2005 7/8/2005 7/15/2005 7/22/2005 Note:The West Texas Intermediate crude oil price, in dollars per barrel, is converted to $/MMBtu using a conversion factor of 5.80 MMBtu per barrel. The dates marked by vertical lines are the NYMEX near-month contract settlement dates. Source: NGI's Daily Gas Price Index (http://intelligencepress.com) 7/29/2005 8/5/2005 8/12/2005 8/19/2005 8/26/2005 9/2/2005 9/9/2005 9/16/2005
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NYMEX Forward Contract Prices (September 22, 2005) $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $- Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Forward Month Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 PJM NYISO-A NYISO G NYISO-J 2005 2003 PJM PJM 13
NYMEX PJM Western Hub Contract Open Interest Value $1,000 $900 $800 $700 Million $ $600 $500 $400 $300 $200 $100 $0 4/11/2003 4/25/2003 5/9/2003 5/23/2003 6/6/2003 6/20/2003 7/4/2003 7/18/2003 8/1/2003 Using Average value of $35/MWH 2005 2003 PJM PJM 14 8/15/2003 8/29/2003 9/12/2003 9/26/2003 10/10/2003 10/24/2003 11/7/2003 11/21/2003 12/5/2003 12/19/2003 1/2/2004 1/16/2004 1/30/2004 2/13/2004 2/27/2004 3/12/2004 3/26/2004 4/9/2004 4/23/2004 5/7/2004 5/21/2004 6/4/2004 6/18/2004
PJM Fuel Sources (2004) 60% 50% 40% 30% 20% 10% 0% Coal Gas Nuclear Oil Hydro Other Energy Capacity 2005 2003 PJM PJM 15
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PJM Installed Reserve Requirement 24.0% 22.0% 22.0% 20.0% 18.0% 16.0% 14.0% 15.0% 12.0% 10.0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005 2003 PJM PJM 17
Figure 4-13 - Trends in PJM equivalent demand forced outage rate (EFORd): Calendar years 1994 to 2004 2005 2003 PJM PJM 18
PJM Generation Additions 6,000 25,000 5,000 20,000 4,000 MW 3,000 15,000 10,000 Cumulative MW GAS Wind Oil Waste Coal Total 2,000 1,000 5,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 2005 2003 PJM PJM 19
Liquidity at U.S. Hubs 2004 January 2005 90,000 80,000 70,000 60,000 GWH 50,000 40,000 30,000 20,000 10,000 0 PJM-W Hub** Mid Columbia* * Dow Jones Electricity Index ** PJM Settlements Data Palo Verde* Cinergy* COB* Four Corners* Mead/Marketplace* 2005 2003 PJM PJM 20
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PJM Fuel Sources (2004) 250,000 Capacity (MW), Energy (GWH) 200,000 150,000 100,000 50,000 - Coal Gas Nuclear Oil Hydro Other Energy Capacity 2005 2003 PJM PJM 22
2004 PJM Energy Market Self-Supplied 4% Net Imports 5% Spot Market 38% Bilateral Transactions 53% Capacity by Fuel Type 2005 2003 PJM PJM 23
NYMEX Forward Contract Prices (September 17, 2005) $200.00 $180.00 $160.00 $140.00 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $- Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Forward Month PJM NYISO A NYISO G NYISO J Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 2005 2003 PJM PJM 24
Generation By Fuel Source 2003 (312,000 GWH) Oil 2% Solid Waste 1% Nuclear 33% Coal 53% Hydro 2% Gas 9% 2005 2003 PJM PJM 25
PJM generation by fuel source (GWh): Calendar year 2004 Hydro, 10,303, 2.3% Solid Waste, 2,781, 0.6% Wind, 379, 0.1% Nuclear, 165,128, 36.9% Coal, 233,217, 52.1% Gas, 31,411, 7.0% 2005 2003 PJM PJM 26 Oil, 4,738, 1.1%
Joint and Common Market Initiatives Commercial 1 2 Price Rationalization and Convergence at the Border 3 Reduce Hurdle Rate 4 5 6 FTR Market Convergence Broader Price Transparency and Common Reporting Increased Market Opportunities Operational Consistancy Alignment of FTR Timelines and Products (Note: All MISO cost) PJM implementation of marginal losses (Note: All PJM costs) Alignment of PJM Operating Reserves and MISO Revenue Sufficiency Guarantee (Note: All MISO cost) Existing MISO & PJM Websites Linking of sites Common Search Capabilities Data Available at Both Sites (LMPs, Tie Flows, Loads) New Joint Website to Host Joint meeting and Events Calendar, Joint Documents and Reports 2006 2007 $600,000 $600,000 $600,000 $500,000 $200,000 $600,000 Alternative Border Pricing Point Calculation $200,000 Depancaking of PTP ancillary services (Control Area Services, T.O. Control Center Services, Reactive, Black Start) $400,000 Standard Data Exchange (Web Services) LMPs, Contingencies, Loads, Dispatch Signals, Outages, Emergency Event/Notifications $3,000,000 2008 Cross Border FTRs in the allocations $4,000,000 Cross border FTRs in auctions $8,000,000 Implementation of single MISO & PJM Website (Websites for individual RTOs go away) $750,000 Moving JOUs between markets $100,000 Shared Regulation Market $8,000,000 Common Long Term Transmission Queue $200,000 MISO Ramp Viewer (under way) Alignment of OASIS Business Practices Coordinated OASIS $1,200,000 Common Time Zones (Note: All PJM cost) $5,000,000 Central location to view both ramp viewers $500,000 Reserve Sharing $8,000,000 Standard Data Visualization and Reporting Portal Create a single MISO & PJM Data and Report Portal $8,500,000 Single Resource Adequacy Solution $8,000,000 $100,000 Common Ramp Portal $750,000 Reliability 7 Single Market 1 Emergency Energy Agreement Single OASIS $8,000,000 Common Treatment of Dynamic Schedules/Pseudo-Ties $200,000 Year 1 - Rule Alignment & Market Portal Design $15,000,000 Alignment of Agreements and Practices $100,000 Year 2 - Initial Market Portal Implementation $40,000,000 Black Start and 2 Alignment of Agreements and Practices $500,000 Restoration Year 3-5 - Implementation of Single Market $50,000,000 Plan 1 Joint Expansion Planning and Common Deliverability Studies Alignment of Agreements and Practices $120,000 Total 2006 $4,320,000 2007 $600,000 2008 $750,000 2005 2003 PJM PJM 27
Public Benefits of PJM Consumer Goals Supported by Thriving Wholesale Markets Enabled by PJM Reliable Supply of Power Fair Price for Electricity Customer Choice Regional Scope Many Buyers and Sellers Participant Choices: Futures Contract Financial Hedge Self-Schedule Resources Long Term Contracts Day Ahead Market Real-Time Market Retail Adjustments Reliability Assurance Collaborative Stakeholder Process for Improvement Independence and Neutrality Infrastructure for Business 11 etools Retail Market Wholesale Market Market Information 2005 2003 PJM PJM 28