It is part of the Eastern Interconnection grid operating an electric transmission system serving 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.

The Federal Energy Regulatory Commission (FERC) regulates PJM[6] and approves its open access transmission tariff for the wholesale electricity market.

[8] After Baltimore Gas and Electric Company and General Public Utilities joined in 1956, the pool was renamed the Pennsylvania-New Jersey-Maryland Interconnection, or PJM.

The FERC's intention in doing so was to open the wholesale power market to new players, with the hope that spurring competition would save consumers $4 to $5 billion per year and encourage technical innovation in the industry.

This unbundling of functions was aimed at eliminating conflicts of interest that might exist when the same company owned both the transmission system and the generating plants.

It required the creation of an electronic system to ensure that all participants in the wholesale power market - new players and traditional electric utilities - had access to the same information about available transmission capacity and prices.

[12] FERC also endorsed the concept of appointing independent system operators (ISOs) to coordinate, control, and monitor the operation of electrical power systems, often within a single US state - a function that was traditionally the responsibility of vertically integrated electric utility companies.

FERC's intention was that all U.S. companies owning interstate electric transmission lines would place those facilities under the control of an RTO.

2000 (Regional Transmission Organizations), issued in 1999, FERC specified the minimum capabilities that an RTO should possess in order for the competitive generation market to function as intended.

Areas of Ohio and Kentucky near Cincinnati covered by Duke Energy joined the PJM footprint in January 2012.

Under PJM's Regional Transmission Expansion Planning (RTEP) process, PJM considers forecasts of load growth and additions of demand response, interconnection requests for new and planned retirements of existing generating plants, and possible solutions to mitigate congestion on the transmission system.

As the largest RTO in North America, PJM has a significant role to play in reducing grid emissions.

In an August 2021 letter, the PJM PIEOUG (Public Interest and Environmental Organizations User Group) expressed concern that the capacity market resulted in “unintentional subsidies for fossil fueled resources or barriers to low carbon supply.”[26] Further, PJM has significantly increased interconnection charges.

capacity market and how best to guarantee it achieves the objective of ensuring resource adequacy at just and reasonable rates.” In response to this stated  FERC intent, and in the belief “near-term changes to the Reliability Pricing Model (RPM) are necessary to ensure that PJM can maintain resource adequacy into the future”, the PJM board “decided to implement the Critical Issue Fast Path (CIFP) accelerated stakeholder process mechanism to further pursue stakeholder consensus that would inform a PJM Board decision on a potential FERC filing targeted for October 1, 2023.”[36] The amount of capacity PJM purchases (and passes costs along to customers) is the amount it needs to serve expected peak load plus a margin to cover possible delivery interruptions such as generator or transmission outages.