The transmission constraint penalty factors used by PJM in the market clearing software for day ahead and real time markets affect market prices. The current practice is to modify the market clearing so that the transmission constraint penalty factors do not directly set the constraint shadow price. The resulting clearing prices are inefficient and do not accurately reflect market conditions.
Additionally, transmission constraint penalty factors and the process used by PJM in applying transmission constraint penalty factors are not included in the PJM Tariff or Manuals.