Price differentials persist at interties between the PJM Interconnection and the neighboring New York state grid even though the grid operators last November enabled coordination in cross-border transaction scheduling.
Average real-time hourly price differentials between New York and PJM were $1.48/MWh in January and the direction of flow was consistent with price spreads in 54pc of hourly intervals, according to the latest monthly operations report by PJM. The trend means that electricity half the time was flowing from the higher-priced to the lower-priced area, an indicator of market inefficiency.
Last year PJM was a net exporter to New York through the main interface between the grids even though PJM real-time price on average were higher.
The grids last November allowed market participants in either area to submit intra-hour bids to their respective dispatchers to move electricity on interfaces connecting PJM and New York. The coordinated transaction scheduling should have allowed for better correlation between cross-border flows and prices, making more efficient use of transmission resources.
But so far the new scheduling tool has not yielded the expected results, according to the PJM market monitor's annual State of the Markets report. A key problem is the insufficient accuracy of PJM's economic dispatch tool, which was only 60pc successful in predicting the PJM-New York interface settlement price within a $5/MWh range. New York dispatchers rely on PJM's dispatch tool predictions to approve the spread bid trades under the coordinated transaction scheduling. So the initially inaccurate price predictions will result in bids being approved that do not reflect real-time price differentials.
The PJM market monitor has cautioned against reaching conclusions based on data for the first two months but noted that insufficient inaccuracy of dispatch tools limits the effectiveness of coordinated scheduling.
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