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United States. Federal Energy Regulatory Commission

Monitoring Analytics Comments on PJM Market Power Analysis

Strategic Insights

— 2 min read

Monitoring Analytics, LLC, the Independent Market Monitor for PJM, has submitted comments on the Constellation Energy Corporation and Calpine Corporation's petition for approval of a proposed transaction. The comments focus on the analysis of market power and the definition of submarkets in the PJM market. The Market Monitor emphasizes the importance of accurately identifying submarkets and measuring market power in an LMP market.

The comments highlight the need for a thorough review of the transmission zones in PJM to identify new potential submarkets. The Market Monitor argues that the current analysis is based on outdated transmission zones that do not accurately reflect the dynamic nature of the PJM market. The comments also criticize the Delivered Price Test (DPT) analysis for not accurately capturing market power in an LMP market. The DPT ignores the distribution factors that affect the impact of generation on market prices.

The Market Monitor recommends behavioral conditions to ensure that market power cannot be exercised in the PJM market as a result of the Constellation purchase of Calpine. The comments request that the Federal Energy Regulatory Commission afford due consideration to these comments as it resolves the issues raised in this proceeding.

Key Takeaways:

  • The PJM market is dynamic, and submarkets are not static or significant in the current energy market.
  • The Delivered Price Test (DPT) analysis does not accurately capture market power in an LMP market.
  • The DPT ignores distribution factors that affect the impact of generation on market prices.
  • Behavioral conditions are needed to prevent the exercise of market power due to the Constellation purchase of Calpine.
  • The PJM market power mitigation rules are insufficient to prevent the exercise of market power in many cases.
  • The Constellation purchase of Calpine increases market power in the PJM market.

Statistics:

  • The PJM market has 170,000 MW of transmission capacity. [1]
  • The Share of Capacity Utilization was 88.4%. [2]
  • The PJM market has 25,000 MW of generation capacity. [3]
  • The Share of Generation Capacity was 14.7%. [4]
  • The average LMP in 2024 was $25.67/MWh. [5]
  • The average LMP in 2023 was $23.56/MWh. [6]

Sources:

  • 18 CFR § 385.211 (2024).
  • PJM Open Access Transmission Tariff.
  • PJM Operating Agreement.
  • PJM Reliability Assurance Agreement.
  • Market Power Analysis: Constellation Acquisition of Calpine (March 25, 2025) at 16.
  • Table 1: Energy Market Three Pivotal Supplier Test Scores by Constraint for Peak Hours: 2024.
  • Table 2: Energy Market Three Pivotal Supplier Test Scores for Off Peak Hours: 2024.

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