Where Deregulation Isn't a Disaster

Kahn, Jeremy
March 2001
Fortune;3/19/2001, Vol. 143 Issue 6, p40
This article illustrates the significance of electricity deregulation in the case of PJM Interconnect, a company based in Valley Forge, Pennsylvania that runs the power grid and electricity market for the Middle Atlantic States. Here, deregulation worked by increasing competition and lowering prices without any blackouts. In Pennsylvania alone, consumers have saved $3 billion on their electricity bills since utilities were deregulated three years ago. PJM (which stands for Pennsylvania, New Jersey and Maryland, but currently covers Delaware, northern Virginia and Washington, D.C.) is the largest power grid operator in North America, handling more electricity than California. PJM owes some of its success to the fact that demand for electricity in the Mid-Atlantic has not grown at nearly the pace it has in the homeland of the power-hungry information-technology industry. Deregulation has benefits for PJM. For instance, Pennsylvania's utilities were able to protect themselves from price hikes because they were free to hold on to their power plants or enter into long-term contracts with generating companies. Some 80 percent of the power supplied over the power grid of PJM is either self-generated or provided through long-term contracts.


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