Finally, nascent efforts are ones where the details of the multilateral trading regime are still under development. ASEAN would fall into this category, but there are many initiatives in other regions that can provide useful lessons.

Primary power trading arrangements

Four of the case studies in this section are primary power trading arrangements: PJM and ISO New England in the United States, Nord Pool in Europe, and India (which has a fully unified domestic power system).

PJM

Today, the PJM Interconnection in the United States (US) co-ordinates the movement of electricity in all or parts of 13 states (Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia) and the District of Columbia, serving 65 million customers with 178 564 MW of generating capacity. A brief summary of key statistics on the portion of the US bulk electric grid under PJM operating control is depicted inTable 6.

Source: PJM, (2018a), 2018 PJM Annual Report.

Figure 34. PJM’s service territory within the Eastern Interconnection

Note:This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Source: PJM.

PJM is the largest regional transmission organisation in the United States in terms of load served.

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Power pooling in PJM’s eastern territory

The concept of forming a power pool was originally centred on the benefits of optimising the dispatch of a shared hydroelectric plant located in the original PJM footprint. That hydroelectric plant had more capacity than was needed by any one owner. As a result, an agreement was reached among the co-owners of the hydro facility to share generation reserves from the plant as well as jointly plan and build transmission lines in order to maximise utilisation of the facility among the three co-owners.

Figure 35. PJM’s eastern territory

Note:This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Source: PJM.

PJM’s earliest members were all located in its eastern territory.

From these early initiatives, the concept of neighbouring utilities operating through a “power pool” was born. In addition to sharing the costs of such large infrastructure investments, the pool also took advantage of differences in load profiles and weather conditions to realise the advantages of diversity of demand over a larger footprint. However, this structure minimised competition as it was closed to any IPPs.

The pool operated successfully as an agreement among its utility members from 1927 to the mid-1990s. Although there was limited access to move power through the PJM transmission grid through negotiated wheeling contracts, it was not until Congressional passage of the Energy Policy Act of 1992 that new merchant entities got access to both to the transmission grid and to the pool itself, where they were able to buy and sell power.

In essence, the move toward competition in the United States in the mid-1990s drove the transformation of the “closed” power pool into a regional non-discriminatory market for energy, capacity and ancillary services.

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