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PJM Expects to Meet this Winter's Peak Demand. Here’s Why.

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The Electric Reliability Council of Texas (ERCOT) recently announced that it expects to meet this winter’s peak energy demand.

Now, PJM Interconnection – the regional transmission organization (RTO) that manages the world’s largest wholesale electricity market, spanning 13 states and the District of Columbia – reports that the region should have sufficient resources to meet this winter’s peak energy demand.

According to PJM projections, the grid operator is expected to have 177,628 megawatts (MW) of electric capacity resources available to meet the forecasted winter demand of 131,720 MW, and will have important additional reductions through demand response. The forecasted demand is less than last year’s winter peak electricity use of 143,295 MW.

PJM’s report echoes the findings of other assessments released by ERCOT and the Federal Energy Regulatory Commission (FERC). Nationwide, FERC's analysis found that grid operators and power markets should meet this winter's energy demand, thanks to a well-supplied gas market, milder winter temperatures, numerous pipeline expansions, and demand response programs. 

What does it all mean for customers? 

While PJM is expected to meet demand, that does not necessarily mean there won't be periods of elevated pricing. Since the polar vortex of January 2014 – when a staggering 22 percent of PJM Inteconnection's generation resources were knocked offline extreme weather – improvements in winter reliability have come as an increasing cost to customers in PJM's footprint. As we've covered before, PJM's new Capacity Performance market structure, which was recently approved by FERC, is overpriced, costly to customers, and unlikely to achieve its intended results. 

Stay tuned to the Direct Energy Business Blog for more information on how demand response can help grid operators scale this winter's peak demand and boost the bottom line for businesses. Also, check out why Direct Energy Business is opposed to PJM's Capacity Performance plan.

Posted: November 19, 2015