VALLEY FORGE, Pa., Aug. 17 /PRNewswire/ -- Conservation during heat
waves not only stretches power supplies, it saves money. Reductions in
electricity use during the early August heat wave produced price reductions
estimated to be equivalent to more than $650 million in payments for energy
for the week, according to PJM Interconnection, which operates the regional
Customers in the 13-state PJM region set a new record for power
consumption of 144,796 megawatts on Aug. 2. On that day alone, voluntary
reductions in electricity use, known as demand response, resulted in price
reductions estimated to be equivalent to more than $230 million in payments
"These voluntary curtailments reduced wholesale energy prices by more
than $300 per megawatt-hour during the highest usage hours," said Andrew L.
Ott, PJM vice president - Markets. "While many wholesale customers, such as
utilities, were hedged against high real-time spot-market prices, all
customers will benefit from the dramatic price reductions because future
longer-term electricity sales are based on prices set in the real-time
market, where prices were lower as a result of demand response."
Demand response involves reducing the use of electricity (demand) to
meet a power grid need rather than increasing generation (supply).
Customers offer to reduce their usage of electricity in return for being
paid the market value of the electricity saved. Demand response can lower
the price of electricity by avoiding the use of the most expensive
Customers who curtail their usage receive payments based on the price
to generate an equal amount of electricity. PJM payments to demand response
providers for the heat wave during the first week in August were about $5
"Transmission owners, generation operators and demand response
providers played critical roles in allowing PJM to provide a record amount
of electricity while maintaining reliable grid operations," Ott said.
The increase in peak electricity demand in PJM from the summer of 2005
to this summer was more than 10,000 megawatts, enough electricity to power
a major city.
PJM Interconnection ensures the reliability of the high-voltage
electric power system serving 51 million people in all or parts of
Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey,
North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and
the District of Columbia. PJM coordinates and directs the operation of the
region's transmission grid, which includes 6,038 substations and 56,070
miles of transmission lines; administers the world's largest competitive
wholesale electricity market; and plans regional transmission expansion
improvements to maintain grid reliability and relieve congestion. Visit PJM
SOURCE PJM Interconnection