What is the function of market settlements in the PJM system?

The function of market settlements in the PJM system is primarily to facilitate financial transactions in the market. This involves the calculation and distribution of payments and charges based on market operations, ensuring that participants receive compensation for the energy they provide and are charged for their consumption or usage of the grid.

Market settlements ensure that all transactions are settled accurately, reflecting the supply and demand dynamics that occur during each market interval. This includes the clearing of bids, ensuring that generators are paid for the energy they supply and that demand resources are compensated appropriately for their contributions. Proper market settlements are vital for maintaining the financial integrity of the market and incentivizing efficient energy production and consumption.

While monitoring generation capacity, managing demand response programs, and regulating emissions can be important functions within the wider PJM framework, they do not directly pertain to the financial transaction aspect that market settlements specifically address. Hence, the focus on financial transactions is what makes this option the correct answer.