Sensitivity Factors

• Sensitivity Factors calculate the price to deliver power to every location in PJM in the least expensive way

• Based on System impedance
  • “Big pipe” = lower impedance = more power flow
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  • “Garden hose” = high impedance = less power flow

• Based on impact of marginal generators on transmission constraint and generator price

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• The LPA calculates the LMP for each bus, by supplying 1 MW to each bus from a combination of the two marginal units and then determining the cost to serve that 1 MW, based on the prices and contributions of each marginal unit.