Abstract
This chapter discusses the PJM Interconnection, L.L.C. (PJM), considered by many as a role model for an efficient, centrally managed electricity market. PJM manages the largest centrally dispatched control area in North America and operates the largest competitive wholesale electricity market in the world. The PJM market comprises, as of mid-2005, generating capacity of approximately 164,000 MW, and about 330 market buyers, sellers, and traders of electricity serving more than 51 million people. PJM was created as a power pool in 1927 by Public Service Electric & Gas, Philadelphia Electric Company, and Pennsylvania Power & Light, three utilities in Pennsylvania and New Jersey. The experience of PJM demonstrates that competitive wholesale power markets can work if properly designed and managed. PJM provides an example of the successful creation and growth of a market and market institutions. This success began with a history of cooperation among members and the creation of a power pool, but success required PJM and its members to meet significant challenges in the transition from pool to energy market and from energy market to a complete set of markets with complex but consistent interactions.
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