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Increases in PJM’s Transmission Costs and Your Energy Bill

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Posted September 5, 2014 | By Direct Energy Business

This post was written by Marjorie Philips and David Scarpignato of the Direct Energy Government & Regulatory Affairs team.

Recently, it has been noted that PJM’s transmission costs have gone up exponentially. Some resources have implied this is due to generation retirements, such as coal plant retirement, when actually, there are a number of causes of increased transmission costs, particularly over the last few years due to the need to upgrade aging infrastructure.

A major component of these transmission costs are known as Network Integration Transmission Service rates or NITs.

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How to Manage Your Capacity Costs in PJM

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Posted September 27, 2013 | By Randy Burns

Several weeks ago, we posted an article describing how the PJM Capacity Markets affects your overall retail energy price. This is a follow up to that article.

In general, capacity costs make up approximately a quarter of a customer’s total energy spend, which is the second highest contribution after the underlying wholesale energy portion of your electric bill. Unfortunately, consumers are price takers when it comes to capacity prices, meaning they can’t participate in the auctions that set the price for capacity.

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Natural Gas/Electricity Price Correlations

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Posted January 16, 2013 | By Lars Cleath

In the electricity business, we talk A LOT about natural gas market. Where is the market going? What affects the market? If our business is mostly about electricity, why do we talk so much about natural gas? Simply put, the greatest driver of electricity prices is the price of natural gas. Let’s take a look at why this important correlation exists.

First, a significant amount of electricity that is generated in the U.S. comes from the burning of natural gas - historically it’s been about 20%. The rest comes from coal (about 50%), nuclear (about 20%), hydro-electric (about 8%) and renewable (about 1%). If 50% of all electricity generated in the U.S. comes from coal, why is the correlation between natural gas more important?  To answer that question, you’ll need to understand the order in which electricity generators are dispatched and how prices for electricity are set.

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Summer Energy Outlook

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Be ready for warmer weather. See what weather is trending for summer months and find out how this might impact energy prices

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Cheap Electricity But High Bills?

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Wholesale power prices have dropped between 25-40% of the past 5 years. But the average price consumers pay for electricity has increased by 8% over the same time. Download this free report to learn why.

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