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Overview of PJM Wholesale Electric Energy Market

According to the latest 2025 Quarterly State of the Market Report, released by Monitoring Analytics, LLC, PJM Interconnection's wholesale electric market has exhibited competitive dynamics throughout the initial three quarters of 2025. The assessment, led by Independent Market Monitor Joseph Bowring, elaborates on the market structures, participant behaviors, and overall performance for the electricity markets governed by PJM across 13 states and the District of Columbia.

Market Competitiveness

In this report, it is highlighted that the PJM Energy Market yielded competitive results during the first nine months of the year. Despite the positive assessment, the capacity market auctions for the upcoming delivery years of 2025/2026 and 2026/2027 were observed to lack competitiveness. This disparity raises concerns regarding potential market inefficiencies that need to be addressed as the industry evolves.

The report indicates a significant rise in energy prices compared to the preceding year. The real-time load-weighted average Locational Marginal Pricing (LMP) surged by $16.20 per MWh, marking a 47.2 percent increase from $34.31 per MWh in the first nine months of 2024 to $50.51 per MWh in the same period of 2025. This price growth can largely be attributed to higher fuel costs and transmission constraints, with a notable 60.8 percent increase in the fuel and consumables components.

Factors Influencing Price Trends

Breaking down the LMP increase, the report details that:

• - $9.85 per MWh (60.8 percent) arose from escalating fuel and consumables costs,
• - $2.07 per MWh (12.8 percent) was attributed to transmission constraint penalties,
• - Market power adjustments added $0.85 per MWh (5.2 percent), while emissions costs had a negligible impact with a decrease of -$0.16 per MWh.

It’s worth noting that customer demand played a crucial role in the dynamics of energy pricing. There was a 3.0 percent increase in the real-time hourly average load from 90,917 MWh to 93,683 MWh when comparing the first nine months of 2025 with the same timeframe in 2024.

Generational Shifts and Performance Metrics

The report also emphasizes fluctuations in power generation sources, noting that coal generation grew by 16.1 percent, while natural gas production saw a slight decrease of 1.6 percent. On a positive note, renewable energy sources showed healthy increases, with solar generation skyrocketing by 46.4 percent. This uptick aligns with the industry’s broader shift towards more sustainable energy practices.

Key performance indicators reveal a discernible improvement in theoretical net revenues across various energy generation technologies:

• - New combustion turbines (CT) enjoyed a 30 percent rise,
• - New combined cycles (CC) jumped 35 percent,
• - New coal plants (CP) saw an impressive 148 percent increase in revenues.

Even onshore and offshore wind installations and solar plants experienced substantial revenue increases of 52 percent, 49 percent, and 42 percent respectively.

Concerns Over Congestion Revenue

Despite these promising metrics, challenges remain, particularly regarding congestion revenues. The report highlights a massive rise of $848 million (61.2 percent), indicating a concerning trend in overall congestion costs that customers bear. As such, it underscores that insufficient returns from congestion revenues detract from customer satisfaction and may erode trust in the market's efficiency.

Conclusion and Future Recommendations

The study conducted by Monitoring Analytics serves a critical role in illuminating the complexities of PJM’s wholesale electricity markets. Looking forward, the Independent Market Monitor will need to address the persistent issues around market design flaws that lead to diminished returns on congestion revenues, advocating for reforms that grant consumers rightful compensation.

In conclusion, the early months of 2025 showcase a competitive landscape for the PJM electricity market, albeit mixed with rising prices and congestion challenges. Continuous monitoring and legislative attention to market design are essential to ensuring this essential service remains reliable and economically efficient for all stakeholders involved.