Impact assessment of expanding PJM market area by incorporating incremental loss model

Since the Federal Energy Regulatory Commission (FERC) issued order 2000, in December 1999, on the formation of regional transmission organizations (RTOs), Midwest Independent Transmission System Operator, Inc. (Midwest ISO) and PJM RTO (parts of Pennsylvania, New Jersey and Maryland) have become the first two RTOs, unconditionally approved by FERC. Recently, electric utility, Commonwealth Edison (ComEd), serving electrical load in greater Chicago metropolitan area, has been accepted to PJM RTO to integrate their control area into PJM´s market area. The integrated market has been operational since May 1, 2004. PJM market monitoring unit (MMU) is charged with the task of evaluating the competitiveness of that expanded market area. As control areas of ComEd and PJM are not contiguous, a dedicated transmission pathway with 500 MW firm capacity between ComEd and PJM through American Electric Power (AEP) is also assumed in the study. There are numerous benefits to count, associated with that expanded market, particularly to consumers in Illinois. This paper presents the assessment of system-wide economic and cost impact if both PJM and Comed are operated as a single market area using incremental loss model. The results are shown for pre- and post-integration market conditions, using security-constrained unit commitment and economic dispatch algorithm model with locational marginal pricing (LMP) calculation.