Generators in PJM are dispatched based on their cost with the lowest cost generators being dispatched first. One exception to this is when reactive power conditions warrant an “out of economic merit” order dispatch. In PJM, this is known as a reactive “off-cost” operation (PJM, 2005). In this paper, we examine the effect of GICs on the incidence of these reactive “off-cost” operations in PJM using an econometric model. Previous literature has indicated that GIC levels in power grids are closely related to the time derivative of the horizontal component of the geomagnetic field (Bolduc et al. 1998; Coles et al., 1992; Mäkinen , 1993; Viljanen, 1997). Accordingly, GICs in this study are proxied by dH/dt based on local magnetometer data. The econometric model also takes into account the other factors that are believed to contribute to these events.
The analysis also demonstrates that the results of that study are robust by substituting the dH/dt measurements from the geomagnetic observatory closest to PJM with dH/dt measurements from other locations around the world. Finally, the paper estimates the market impact of the reactive “off-cost” operations using a second econometric model.
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