PJM Interconnection
| Company type | Limited liability company |
|---|---|
| Industry | Electric power transmission |
| Founded | 1927 |
| Headquarters | Valley Forge, Pennsylvania , United States |
Area served | Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, District of Columbia |
| Products | Electric power transmission and wholesale electricity market operation |
| Website | pjm |
PJM Interconnection LLC (PJM) functions as a regional transmission organization within the United States, overseeing an electric transmission network that spans portions of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the District of Columbia. As the nation's largest power grid operator, PJM provides service to 65 million customers stretching from Chicago to New Jersey.
Based in Valley Forge, Pennsylvania, PJM held the position of the world's largest competitive wholesale electricity market until the establishment of the European Integrated Energy Market in the early 2000s. The organization comprises more than 1,000 member entities and manages a generating capacity totaling 185 gigawatts. In 2021, PJM operated 1,436 electric power generators and maintained 85,103 miles of transmission infrastructure, delivering 783 terawatt-hours of electricity.
Originating in 1927 and adopting the name Pennsylvania-New Jersey-Maryland Interconnection in 1956, PJM has continually grown by incorporating additional utility transmission systems.
The entity operates under the oversight of the Federal Energy Regulatory Commission (FERC), which authorizes its open access transmission tariff governing the wholesale electricity market.
History
The inception of the Pennsylvania-New Jersey Interconnection occurred in 1927 when the Public Service Electric and Gas Company, Philadelphia Electric Company, and Pennsylvania Power & Light Company collaborated to create a power pool. This initiative aimed to dispatch electric generation plants based on minimizing costs, thereby lowering electricity expenses for participating members.
In 1956, with the inclusion of Baltimore Gas and Electric Company and General Public Utilities, the pool was renamed to Pennsylvania-New Jersey-Maryland Interconnection, commonly referred to as PJM.
FERC Orders 888, 889 and 2000
From 1996 through 1999, FERC implemented orders that restructured the U.S. electric utility sector by opening wholesale power markets to new competitors. These reforms were intended to generate annual consumer savings estimated between $4 and $5 billion while promoting innovation.
Order No. 888 required owners of interstate transmission lines to offer open and non-discriminatory access under approved tariffs. Additionally, it mandated utilities to separate their transmission functions from generation and marketing activities to mitigate conflicts of interest.
Order No. 889 introduced an electronic platform designed to provide all market participants with equal access to transmission capacity information and pricing data.
FERC supported the creation of independent system operators (ISOs) to manage power system operations traditionally controlled by vertically integrated utilities; PJM transitioned to an ISO in 1997. This concept later expanded into regional transmission organizations (RTOs), with FERC encouraging all interstate transmission owners to transfer control of their facilities to RTOs.
Under Order No. 2000 issued in 1999, FERC established minimum capability requirements for RTOs necessary to support competitive generation markets. Subsequently, PJM received official designation as an RTO from FERC in 2001.
Deregulation and Growth, 2002
In April 2002, Allegheny Power (AP) became the first external control area to participate in the PJM RTO market. Operating jointly as a unified control area with "PJM Classic," AP assumed responsibilities including balancing authority, interchange authority, market operations, and transmission oversight.
The 2003 Northeast Blackout
Throughout the Northeast Blackout of 2003, most transmission infrastructure within PJM's jurisdiction remained stable. However, a segment of the Public Service Electric & Gas territory in New Jersey disconnected electrically from the Eastern Interconnection due to activation of over-frequency protection relays.
Deregulation and Expansion, 2004 to Present
In May 2004, Commonwealth Edison (ComEd) entered PJM as an independent balancing authority within the RTO framework. Energy transfers between ComEd and eastern PJM markets were facilitated via "the pathway," which utilized firm contracts to move power through intermediary regions. Later that year, in October 2004, American Electric Power (AEP) and Dayton Power & Light (DPL) joined PJM, enabling the organization to reunify into a single control area.
Further expansions followed: Duquesne Light Co. (DLCO) joined in January 2005; Dominion Virginia Power integrated in May 2005, extending PJM’s southern boundary to North Carolina; FirstEnergy became part of PJM in June 2011, broadening coverage from northern Ohio into Michigan; and service areas near Cincinnati operated by Duke Energy were incorporated in January 2012. The Ohio Valley Electric Corporation (OVEC) joined PJM in 2018. By December of that year, PJM shared borders with 22 balancing authorities across eleven distinct market interfaces.
Transmission System Planning and Enhancements
PJM utilizes a fifteen-year outlook for transmission system improvements through its Regional Transmission Expansion Planning (RTEP) process. This planning includes projections of load growth, incorporation of demand response resources, evaluation of interconnection requests, scheduled retirements of generation facilities, and strategies to mitigate transmission congestion. When new transmission lines are necessary, routing decisions are made by the line owners working collaboratively with state regulatory bodies.
Generation Portfolio
As North America’s largest RTO, PJM is instrumental in advancing grid decarbonization efforts—identified as one of its three core strategic objectives.
PJM provides a real-time hourly breakdown of its energy mix along with access to an archival database detailing generation by fuel type. Data from 2022 indicates:
| Carbon-Based Generation | Non-Carbon-Based Generation | ||
| 167,111,041 | Coal | 15,964,309 | Hydroelectric |
| 331,532,269 | Natural Gas | 271,360,198 | Nuclear |
| 4,055,748 | Multiple Fuels | 5,383,905 | Other Renewables |
| 2,796,223 | Oil | 7,153,851 | Solar Power |
| 1,376,685 | Other Sources | 32,161,464 | Wind Power |
| 506,871,966 | Total Carbon-Based Generation | 332,023,727 | Total Non-Carbon-Based Generation |
| 60.4% | Percentage from Carbon-Based Sources | 39.6% | Percentage from Non-Carbon Sources |
Despite its extensive size and influence, PJM trails behind in renewable energy integration. While wind and solar accounted for 12% of total U.S. electricity generation nationwide in 2021, these sources represented only approximately 4.7% of PJM’s output in 2022 (6.8% according to the PJM Independent Market Monitor), significantly underperforming relative to the national average.
Renewable capacity expansion within PJM remains sluggish; notably in 2022 it was the sole RTO where additions of fossil fuel generation outpaced those of renewable resources.
Renewable energy backlog
By 2022, PJM encountered significant obstacles in incorporating new renewable energy projects, leading to delays that impede the advancement toward President Biden’s objective of achieving 100% carbon-free electricity by 2035. Criticism has been directed at PJM’s pricing structure for inadvertently favoring fossil fuel generation and obstructing the integration of low-carbon resources.
Interconnection fees have surged sharply due to project postponements—since 2019, these costs have nearly tripled, rising from below $100 per kilowatt to more than $200 per kilowatt. A report published in 2025 projected that the sluggish pace of PJM’s interconnection process could impose up to $7 billion in additional expenses on consumers through increased capacity auction prices.
To address this backlog, PJM introduced a major overhaul of its interconnection procedures, transitioning from a sequential "first-come, first-served" queue to a cyclical "first-ready, first-served" method employed by other regional transmission organizations (RTOs). Following extensive engagement with stakeholders, FERC approved this revised approach in November 2022. Nonetheless, certain groups such as the Organization of PJM States have expressed concerns that the process remains too protracted and demands further enhancements to expedite project connections.
In 2025, multiple states enacted legislation requiring greater openness concerning PJM’s operations and utility voting practices within the organization.
Pricing
PJM determines prices through two distinct markets: the energy market and the capacity market.
Energy market
The energy market sets the rates paid to electricity producers and charged to consumers for power delivered over the PJM grid. These prices are calculated using nodal pricing or locational marginal pricing. PJM offers a map that illustrates energy price variations throughout its service territory.
Capacity market
Known as the Reliability Pricing Model (RPM), PJM’s capacity market guarantees long-term grid reliability by remunerating participants who commit to generating electricity or reducing demand three years in advance. FERC approved modifications proposed by PJM in December 2022 aimed at refining capacity market operations but acknowledged ongoing disputes and complaints. Consequently, FERC announced it would review whether the market effectively ensures resource adequacy at just and reasonable rates. In response, PJM launched an expedited stakeholder process targeting potential filings with FERC by October 1, 2023.
The capacity procured is designed to cover forecasted peak demand plus an additional margin for contingencies such as unforeseen outages. Peak load reached 147,820 MW in 2022 and is projected to increase to 160,971 MW by 2033 and further to 167,567 MW by 2038. As of June 2022, PJM’s total available capacity was 198,152 MW—substantially exceeding both historical and anticipated peak load levels. Analyses reveal that PJM has been acquiring surplus capacity, resulting in consumer overpayments, continued operation of outdated plants, and procurement of unnecessary new facilities. According to the PJM Independent Market Monitor, noncompetitive results within the capacity market led to customer overcharges amounting to $1.454 billion over a two-year period.