The argument of the study is that power prices should be higher and reflect the true cost of generating electricity, which they argue is not always achieved in the current structure.
While the intricacies of daily and real-time electricity pricing at the different regional transmission organizations are beyond the scope of this article, it needs to be stated that the dual goals of the RTOs are to provide wholesale power at the lowest cost (essentially LMP) and to ensure grid reliability. PJM is arguing that the current pricing system is not entirely doing that. The current LMP system was adopted at a time when the generation makeup was different with many thermal power plants and not nearly as many renewable, intermittent power plants. At its most basic, PJM is an auction system where generators offer their energy at different prices determined by their production costs and profit margin requirements, while load serving customers bid to purchase energy at different prices dictated by their usage profile. The aforementioned intermittent resources have changed the balance in supply and demand in the auction process because the output of the plants cannot be easily altered to produce at higher or lower levels of output.
