Common use of ARR Reassignment for Retail Load Switching Clause in Contracts

ARR Reassignment for Retail Load Switching. PJM rules provide that when load switches between LSEs during the planning period, a proportional share of associated ARRs that sink into a given control or load aggregation zone is automatically reassigned to follow that load.23 ARR reassignment occurs daily only if the LSE losing load has ARRs with a net positive economic value to that control zone. An LSE gaining load in the same control zone is allocated a proportional share of positively valued ARRs within the control zone based on the shifted load. ARRs are reassigned to the nearest 0.001 MW and any MW of load may be reassigned multiple times over a planning period. Residual ARRs are also subject to the rules of ARR reassignment. This practice supports competition by ensuring that the offset to congestion follows load, thereby removing a barrier to competition among LSEs and, by ensuring that only ARRs with a positive value are reassigned, preventing an LSE from assigning poor ARR choices to other LSEs. However, when ARRs are self scheduled as FTRs, these underlying self-scheduled FTRs do not follow load that shifts while the ARRs do follow load that shifts, and this may diminish the value of the ARRs for the receiving LSE compared to the total value held by the original ARR holder. There were 52,825 MW of ARRs associated with approximately $498,800 of revenue that were reassigned in the 2012 to 2013 planning period. In the first four months of the 2013 to 2014 planning period, there were 25,157 MW of ARRs associated with approximately $125,800 of revenue. Table 13-23 summarizes ARR MW and associated revenue automatically reassigned for network load in each control zone where changes occurred between June 2012 and September 2013. Table 13‑23 ARRs and ARR revenue automatically reassigned for network load changes by control zone: June 1, 2012, through September 30, 2013 ARRs Reassigned (MW‑day) ARR Revenue Reassigned [Dollars (Thousands) per MW‑day] Control Zone 2012/2013 (12 months) 2013/2014 (4 months)* 2012/2013 (12 months) 2013/2014 (4 months)* AECO 581 597 $3.0 $2.3 AEP 4,656 1,617 $58.9 $14.2 AP 3,518 876 $84.3 $19.0 ATSI 5,314 2,437 $8.3 $2.6 BGE 3,203 2,056 $37.3 $14.6 ComEd 11,824 5,114 $170.9 $21.1 DAY 589 164 $0.9 $0.3 DEOK 2,979 2,126 $1.6 $2.9 DLCO 2,708 2,996 $19.1 $6.7 DPL 1,989 1,071 $11.5 $7.4 Dominion 0 5 $0.0 $0.1 EKPC NA 0 NA $0.0 JCPL 1,373 710 6 $3.3 Met-Ed 1,107 393 9 $3.1 PECO 3,416 494 23 $4.1 PENELEC 920 408 8 $4.6 PPL 3,198 1,395 21 $5.3 PSEG 2,313 1,044 17 $10.1 Pepco 3,073 1,474 21 $4.2 RECO 67 179 0 $0.1 Total 52,825 25,157 $499.8 $125.8 * Through 30-Sep-2013 23 See PJM. “Manual 6: Financial Transmission Rights,” Revision 12 (July 1, 2009), p. 28. Residual ARRs Only ARR holders that had their Stage 1A or Stage 1B ARRs prorated are eligible to receive residual ARRs. Residual ARRs are available if additional transmission system capability is added during the planning period after the annual ARR allocation. This additional transmission system capability would not have been accounted for in the initial annual ARR allocation, but it enables the creation of residual ARRs. Residual ARRs are effective on the first day of the month in which the additional transmission system capability is included in FTR auctions and exist until the end of the planning period. For the following planning period, any residual ARRs are available as ARRs in the annual ARR allocation. Stage 1 ARR holders have a priority right to ARRs. Residual ARRs are a separate product from incremental ARRs. Effective August 1, 2012, as ordered by FERC in Docket No. EL12-50-000, in addition to new transmission, residual ARRs are now available for eligible participants when a transmission outage was modeled in the Annual ARR Allocation, but the transmission facility becomes available during the modeled year. These residual ARRs are determined the month before the effective date, are only available on paths prorated in Stage 1 of the Annual ARR Allocation and are allocated automatically to participants. Residual ARRs are effective for single, whole months and cannot be self scheduled. ARR target allocations are based on the clearing prices from FTR obligations in the effective monthly auction, may not exceed zonal Network Services Peak Load or Firm Transmission Reservation Levels and are only available up to the prorated ARR MW capacity as allocated in the Annual ARR Allocation. Table 13-24 shows the Residual ARRs automatically allocated to eligible participants, along with the target allocations from the effective month. Table 13‑24 Residual ARR allocation volume and target allocation January 2013 through September 2013 Month Bid and Requested Volume (MW) Cleared Volume (MW) Cleared Volume Target Allocation Jan-13 6,773.0 1,547.2 22.8 $488,251 Feb-13 1,567.4 1,493.7 95.3 $229,856 Mar-13 5,351.2 1,522.7 28.5 $286,193 Apr-13 5,452.1 1,608.9 29.5 $325,662 May-13 6,054.7 1,647.4 27.2 $282,425 Jun-13 10,864.1 1,272.7 11.7 $667,291 Jul-13 10,936.9 1,323.7 12.1 $714,675 Aug-13 9,357.2 767.2 8.2 $236,885 Sep-13 1,855.0 402.9 21.7 $85,884 Total 58,211.6 11,586.4 19.9 $3,317,123 Market Performance Revenue As ARRs are allocated to qualifying customers rather than sold, there is no ARR revenue comparable to the revenue that results from the FTR auctions.

ARR Reassignment for Retail Load Switching. PJM rules provide that when load switches between LSEs during the planning period, a proportional share of associated ARRs that sink into a given control or load aggregation zone is automatically reassigned to follow that load.23 load.24 ARR reassignment occurs daily only if the LSE losing load has ARRs with a net positive economic value to that control zone. An LSE gaining load in the same control zone is allocated a proportional share of positively valued ARRs within the control zone based on the shifted load. ARRs are reassigned to the nearest 0.001 MW and any MW of load may be reassigned multiple times over a planning period. Residual ARRs are also subject to the rules of ARR reassignment. This practice supports competition by ensuring that the offset to congestion follows load, thereby removing a barrier to competition among LSEs and, by ensuring that only ARRs with a positive value are reassigned, preventing an LSE from assigning poor ARR choices to other LSEs. However, when ARRs are self scheduled as FTRs, these underlying self-scheduled FTRs do not follow load that shifts while the ARRs do follow load that shifts, and this may diminish the value of the ARRs for the receiving LSE compared to the total value held by the original ARR holder. There were 52,825 MW of ARRs associated with approximately $498,800 of revenue that were reassigned in the 2012 to 2013 planning period. In There were 53,988 MW of ARRs associated with approximately $309,200 of revenue that were reassigned for the first four ten months of the 2013 to 2014 planning period, there were 25,157 MW of ARRs associated with approximately $125,800 of revenue. Table 13-23 22 summarizes ARR MW and associated revenue automatically reassigned for network load in each control zone where changes occurred between June 2012 and September 2013. Table 13‑23 ARRs and ARR revenue automatically reassigned for network load changes by control zone: June 1, 2012, through September 30, 2013 ARRs Reassigned (MW‑day) ARR Revenue Reassigned [Dollars (Thousands) per MW‑day] Control Zone 2012/2013 (12 months) 2013/2014 (4 months)* 2012/2013 (12 months) 2013/2014 (4 months)* AECO 581 597 $3.0 $2.3 AEP 4,656 1,617 $58.9 $14.2 AP 3,518 876 $84.3 $19.0 ATSI 5,314 2,437 $8.3 $2.6 BGE 3,203 2,056 $37.3 $14.6 ComEd 11,824 5,114 $170.9 $21.1 DAY 589 164 $0.9 $0.3 DEOK 2,979 2,126 $1.6 $2.9 DLCO 2,708 2,996 $19.1 $6.7 DPL 1,989 1,071 $11.5 $7.4 Dominion 0 5 $0.0 $0.1 EKPC NA 0 NA $0.0 JCPL 1,373 710 6 $3.3 Met-Ed 1,107 393 9 $3.1 PECO 3,416 494 23 $4.1 PENELEC 920 408 8 $4.6 PPL 3,198 1,395 21 $5.3 PSEG 2,313 1,044 17 $10.1 Pepco 3,073 1,474 21 $4.2 RECO 67 179 0 $0.1 Total 52,825 25,157 $499.8 $125.8 * Through 30-Sep-2013 23 See PJM. “Manual 6: Financial Transmission Rights,” Revision 12 (July 1, 2009), p. 28. Residual ARRs Only ARR holders that had their Stage 1A or Stage 1B ARRs prorated are eligible to receive residual ARRs. Residual ARRs are available if additional transmission system capability is added during the planning period after the annual ARR allocation. This additional transmission system capability would not have been accounted for in the initial annual ARR allocation, but it enables the creation of residual ARRs. Residual ARRs are effective on the first day of the month in which the additional transmission system capability is included in FTR auctions and exist until the end of the planning period. For the following planning period, any residual ARRs are available as ARRs in the annual ARR allocation. Stage 1 ARR holders have a priority right to ARRs. Residual ARRs are a separate product from incremental ARRs. Effective August 1, 2012, as ordered by FERC in Docket No. EL12-50-000, in addition to new transmission, residual ARRs are now available for eligible participants when a transmission outage was modeled in the Annual ARR Allocation, but the transmission facility becomes available during the modeled year. These residual ARRs are determined the month before the effective date, are only available on paths prorated in Stage 1 of the Annual ARR Allocation and are allocated automatically to participants. Residual ARRs are effective for single, whole months and cannot be self scheduled. ARR target allocations are based on the clearing prices from FTR obligations in the effective monthly auction, may not exceed zonal Network Services Peak Load or Firm Transmission Reservation Levels and are only available up to the prorated ARR MW capacity as allocated in the Annual ARR Allocation. Table 13-24 shows the Residual ARRs automatically allocated to eligible participants, along with the target allocations from the effective month. Table 13‑24 Residual ARR allocation volume and target allocation January 2013 through September 2013 Month Bid and Requested Volume (MW) Cleared Volume (MW) Cleared Volume Target Allocation Jan-13 6,773.0 1,547.2 22.8 $488,251 Feb-13 1,567.4 1,493.7 95.3 $229,856 Mar-13 5,351.2 1,522.7 28.5 $286,193 Apr-13 5,452.1 1,608.9 29.5 $325,662 May-13 6,054.7 1,647.4 27.2 $282,425 Jun-13 10,864.1 1,272.7 11.7 $667,291 Jul-13 10,936.9 1,323.7 12.1 $714,675 Aug-13 9,357.2 767.2 8.2 $236,885 Sep-13 1,855.0 402.9 21.7 $85,884 Total 58,211.6 11,586.4 19.9 $3,317,123 Market Performance Revenue As ARRs are allocated to qualifying customers rather than sold, there is no ARR revenue comparable to the revenue that results from the FTR auctionsMarch 2014.

ARR Reassignment for Retail Load Switching. Current PJM rules provide that when load switches between LSEs during the planning period, a proportional share of associated ARRs that sink into a given control or load aggregation zone is automatically reassigned to follow that load.23 load.17 ARR reassignment occurs daily only if the LSE losing load has ARRs with a net positive economic value to that control zone. An LSE gaining load in the same control zone is allocated a proportional share of positively valued ARRs within the control zone based on the shifted load. ARRs are reassigned to the nearest 0.001 MW and any MW of load may be reassigned multiple times over a planning period. Residual ARRs are also subject to the rules of ARR reassignment. This practice supports competition by ensuring that the offset to congestion follows load, thereby removing a barrier to competition among LSEs and, by ensuring that only ARRs with a positive value are reassigned, preventing an LSE from assigning poor ARR choices to other LSEs. However, when ARRs are self scheduled as FTRs, these underlying self-self scheduled FTRs do not follow load that shifts while the ARRs do follow load that shifts, and this may diminish the value of the ARRs for the receiving LSE compared to the total value held by the original ARR holder. There were 52,825 MW of ARRs associated with approximately $498,800 of revenue that were reassigned in the 2012 to 2013 planning period. In the first four months of the 2013 to 2014 planning period, there were 25,157 MW of ARRs associated with approximately $125,800 of revenue. Table 13-23 summarizes ARR MW and associated revenue automatically reassigned for network load in each control zone where changes occurred between June 2012 and September 2013. Table 13‑23 ARRs and ARR revenue automatically reassigned for network load changes by control zone: June 1, 2012, through September 30, 2013 ARRs Reassigned (MW‑day) ARR Revenue Reassigned [Dollars (Thousands) per MW‑day] Control Zone 2012/2013 (12 months) 2013/2014 (4 months)* 2012/2013 (12 months) 2013/2014 (4 months)* AECO 581 597 $3.0 $2.3 AEP 4,656 1,617 $58.9 $14.2 AP 3,518 876 $84.3 $19.0 ATSI 5,314 2,437 $8.3 $2.6 BGE 3,203 2,056 $37.3 $14.6 ComEd 11,824 5,114 $170.9 $21.1 DAY 589 164 $0.9 $0.3 DEOK 2,979 2,126 $1.6 $2.9 DLCO 2,708 2,996 $19.1 $6.7 DPL 1,989 1,071 $11.5 $7.4 Dominion 0 5 $0.0 $0.1 EKPC NA 0 NA $0.0 JCPL 1,373 710 6 $3.3 Met-Ed 1,107 393 9 $3.1 PECO 3,416 494 23 $4.1 PENELEC 920 408 8 $4.6 PPL 3,198 1,395 21 $5.3 PSEG 2,313 1,044 17 $10.1 Pepco 3,073 1,474 21 $4.2 RECO 67 179 0 $0.1 Total 52,825 25,157 $499.8 $125.8 * Through 30-Sep-2013 23 See PJM. “Manual 6: Financial Transmission Rights,” Revision 12 (July 1, 2009), p. 28. Residual load that shifts, and this may diminish the value of the ARR for the receiving LSE compared to the total value held by the original ARR holder. There were 41,069 MW of ARRs Only ARR holders associated with approximately $753,500 of revenue that had their Stage 1A or Stage 1B ARRs prorated are eligible to receive residual ARRs. Residual ARRs are available if additional transmission system capability is added during the planning period after the annual ARR allocation. This additional transmission system capability would not have been accounted for were reassigned in the initial annual ARR allocation, but it enables the creation of residual ARRs. Residual ARRs are effective on the first day ten months of the month in which the additional transmission system capability is included in FTR auctions and exist until the end of the 2011 to 2012 planning period. For There were 56,296 MW of ARRs associated with approximately $1,043,700 of revenue that were reassigned for the following full twelve months of the 2010 to 2011 planning period, any residual . Table 12-15 summarizes ARR MW and associated revenue automatically reassigned for network load in each control zone where changes occurred between June 2010 and March 2012. Table 12‑15 ARRs are available as ARRs in the annual and ARR allocation. Stage 1 ARR holders have a priority right to ARRs. Residual ARRs are a separate product from incremental ARRs. Effective August revenue automatically reassigned for network load changes by control zone: June 1, 20122010, as ordered by FERC in Docket No. EL12through March 31, 2012 (See 2011 SOM, Table 12‑29) ARRs Reassigned (MW‑day) ARR Revenue Reassigned [Dollars (Thousands) per MW‑day] Control Zone 2010/2011 (12 months) 2011/2012 (10 months)* 2010/2011 (12 months) 2011/2012 (10 months)* AECO 887 436 $6.0 $4.7 AEP 961 5,919 $21.4 $117.9 AP 4,992 1,401 $481.1 $319.4 ATSI 0 2,920 $0.0 $13.0 BGE 3,359 2,599 $50.5 $45.6 ComEd 3,064 3,215 $60.2 $58.0 DAY 193 382 $0.6 $0.6 DLCO 5,502 8,213 $25.7 $10.3 DPL 2,252 3,415 $20.4 $15.2 Dominion 0 1 $0.0 $0.0 JCPL 3,490 1,075 $28.8 $9.9 Met-50Ed 3,947 1,178 $51.9 $20.7 PECO 12,284 1,751 $89.2 $21.7 PENELEC 3,745 1,042 $53.5 $21.0 PPL 5,734 3,339 $74.4 $37.6 PSEG 3,416 1,907 $52.8 $30.7 Pepco 2,470 2,277 $27.3 $27.2 RECO 143 57 $0.1 $0.0 Total 56,296 41,069 $1,043.7 $753.5 * Through 31-000, in addition to new transmission, residual ARRs are now available for eligible participants when a transmission outage was modeled in the Annual ARR Allocation, but the transmission facility becomes available during the modeled year. These residual ARRs are determined the month before the effective date, are only available on paths prorated in Stage 1 of the Annual ARR Allocation and are allocated automatically to participants. Residual ARRs are effective for single, whole months and cannot be self scheduled. ARR target allocations are based on the clearing prices from FTR obligations in the effective monthly auction, may not exceed zonal Network Services Peak Load or Firm Transmission Reservation Levels and are only available up to the prorated ARR MW capacity as allocated in the Annual ARR Allocation. Table 13-24 shows the Residual ARRs automatically allocated to eligible participants, along with the target allocations from the effective month. Table 13‑24 Residual ARR allocation volume and target allocation January 2013 through September 2013 Month Bid and Requested Volume (MW) Cleared Volume (MW) Cleared Volume Target Allocation Jan-13 6,773.0 1,547.2 22.8 $488,251 Feb-13 1,567.4 1,493.7 95.3 $229,856 Mar-13 5,351.2 1,522.7 28.5 $286,193 Apr-13 5,452.1 1,608.9 29.5 $325,662 May-13 6,054.7 1,647.4 27.2 $282,425 Jun-13 10,864.1 1,272.7 11.7 $667,291 Jul-13 10,936.9 1,323.7 12.1 $714,675 Aug-13 9,357.2 767.2 8.2 $236,885 Sep-13 1,855.0 402.9 21.7 $85,884 Total 58,211.6 11,586.4 19.9 $3,317,123 Mar-12 Market Performance Revenue As ARRs are allocated to qualifying customers rather than sold, there is no ARR revenue comparable to the revenue that results from the FTR auctions.

ARR Reassignment for Retail Load Switching. PJM rules provide that when load switches between LSEs during the planning period, a proportional share of associated ARRs that sink into a given control or load aggregation zone is automatically reassigned to follow that load.23 load.30 ARR reassignment occurs daily only if the LSE losing load has ARRs with a net positive economic value to that control zone. An LSE gaining load in the same control zone is allocated a proportional share of positively valued ARRs within the control zone based on the shifted load. ARRs are reassigned to the nearest 0.001 MW and any MW of load may be reassigned multiple times over a planning period. Residual ARRs are also subject to the rules of ARR reassignment. This practice supports competition by ensuring that the offset to congestion follows load, thereby removing a barrier to competition among LSEs and, by ensuring that only ARRs with a positive value are reassigned, preventing an LSE from assigning poor ARR choices to other LSEs. However, when ARRs are self scheduled as FTRs, these underlying self-scheduled FTRs do not follow load that shifts while the ARRs do follow load that shifts, and this may diminish the result in lower value of the ARRs for the receiving LSE compared to the total value held by the original ARR holder. There were 52,825 64,086 MW of ARRs associated with approximately $498,800 338,100 of revenue that were reassigned in the 2012 to 2013 planning period. In the first four months of the 2013 to 2014 planning period, there . There were 25,157 57,270 MW of ARRs associated with approximately $125,800 506,000 of revenuerevenue that were reassigned for the 2014 to 2015 planning period. 30 See PJM. “Manual 6: Financial Transmission Rights,” Revision 15 (October 10, 2013), p. 28. Table 13-23 30 summarizes ARR MW and associated revenue automatically reassigned for network load in each control zone where changes occurred between June 2012 2013 and September 2013May 2015. Table 13‑23 13‑30 ARRs and ARR revenue automatically reassigned for network load changes by control zone: June 1, 20122013, through September 30May 31, 2013 2015 Control Zone ARRs Reassigned ARR Revenue Reassigned (MW‑day) ARR Revenue Reassigned [Dollars (Thousands) per MW‑day] Control Zone 2012/2013 2013/2014 2014/2015 2013/2014 2014/2015 (12 months) 2013/2014 (4 12 months)* 2012/2013 (12 months) 2013/2014 (4 12 months)* AECO 581 597 971 608 $3.0 2.5 $2.3 3.1 AEP 4,656 1,617 8,006 2,606 $58.9 28.8 $14.2 39.2 AP 3,518 876 2,618 2,386 $84.3 51.7 $19.0 51.0 ATSI 5,314 2,437 6,792 8,627 $8.3 8.7 $2.6 70.9 BGE 3,203 2,056 3,672 3,264 $37.3 41.9 $14.6 52.7 ComEd 11,824 5,114 9,664 8,576 $170.9 69.9 $21.1 95.2 DAY 589 164 1,100 794 $0.9 2.1 $1.1 DEOK 7,568 6,888 $9.5 $13.9 DLCO 5,248 5,891 $11.1 $10.9 DPL 2,740 2,446 $24.6 $30.5 Dominion 5 20 $0.1 $0.3 DEOK 2,979 2,126 EKPC 0 0 0 $1.6 0.0 JCPL 1,519 1,354 $2.9 DLCO 2,708 2,996 4.5 $19.1 9.5 Met-Ed 1,043 1,018 $6.7 DPL 1,989 1,071 6.8 $11.5 11.2 PECO 2,883 2,949 $7.4 Dominion 0 5 17.3 $27.1 PENELEC 1,265 1,024 $10.0 $15.4 PPL 3,197 3,958 $12.9 $20.6 PSEG 2,441 1,765 $24.2 $36.8 Pepco 3,134 3,046 $11.6 $16.4 RECO 222 49 $0.0 $0.1 EKPC NA 0 NA 0.0 Total 64,086 57,270 $0.0 JCPL 1,373 710 6 338.1 $3.3 Met-Ed 1,107 393 9 $3.1 PECO 3,416 494 23 $4.1 PENELEC 920 408 8 $4.6 PPL 3,198 1,395 21 $5.3 PSEG 2,313 1,044 17 $10.1 Pepco 3,073 1,474 21 $4.2 RECO 67 179 0 $0.1 Total 52,825 25,157 $499.8 $125.8 506.0 * Through 3031-Sep-2013 23 See PJM. “Manual 6: Financial Transmission Rights,” Revision 12 May-2015 Incremental ARRs (July 1, 2009), p. 28. Residual ARRs Only IARRs) for RTEP Upgrades Table 13-31 lists the incremental ARR holders that had their Stage 1A or Stage 1B ARRs prorated are eligible allocation volume for the current and previous planning periods from the 2008 to receive residual ARRs. Residual ARRs are available if additional transmission system capability is added during the 2009 planning period after through the annual ARR allocation. This additional transmission system capability would not have been accounted for in the initial annual ARR allocation, but it enables the creation of residual ARRs. Residual ARRs are effective on the first day of the month in which the additional transmission system capability is included in FTR auctions and exist until the end of the 2015 to 2016 planning period. For the following planning period, any residual ARRs are available as ARRs in the annual ARR allocation. Stage 1 ARR holders have a priority right to ARRs. Residual ARRs are a separate product from incremental ARRs. Effective August 1, 2012, as ordered by FERC in Docket No. EL12-50-000, in addition to new transmission, residual ARRs are now available for eligible participants when a transmission outage was modeled in the Annual ARR Allocation, but the transmission facility becomes available during the modeled year. These residual ARRs are determined the month before the effective date, are only available on paths prorated in Stage 1 of the Annual ARR Allocation and are allocated automatically to participants. Residual ARRs are effective for single, whole months and cannot be self scheduled. ARR target allocations are based on the clearing prices from FTR obligations in the effective monthly auction, may not exceed zonal Network Services Peak Load or Firm Transmission Reservation Levels and are only available up to the prorated ARR MW capacity as allocated in the Annual ARR Allocation. Table 13-24 shows the Residual ARRs automatically allocated to eligible participants, along with the target allocations from the effective month. Table 13‑24 Residual 13‑31 Incremental ARR allocation volume and target allocation January 2013 volume: Planning periods 2008 to 2009 through September 2013 Month 2015 to 2016 Planning Period Requested Count Bid and Requested Volume (MW) Cleared Volume (MW) Cleared Volume Target Allocation Jan-13 6,773.0 1,547.2 22.8 $488,251 Feb-13 1,567.4 1,493.7 95.3 $229,856 Mar-13 5,351.2 1,522.7 28.5 $286,193 Apr-13 5,452.1 1,608.9 29.5 $325,662 May-13 6,054.7 1,647.4 27.2 $282,425 Jun-13 10,864.1 1,272.7 11.7 $667,291 Jul-13 10,936.9 1,323.7 12.1 $714,675 Aug-13 9,357.2 767.2 8.2 $236,885 Sep-13 1,855.0 402.9 21.7 $85,884 Total 58,211.6 11,586.4 19.9 $3,317,123 Market Performance Revenue As ARRs are Uncleared Volume (MW) Uncleared Volume 2008/2009 15 890.5 890.5 100% 0 0% 2009/2010 14 530.5 530.5 100% 0 0% 2010/2011 14 531.0 531.0 100% 0 0% 2011/2012 15 595.0 595.0 100% 0 0% 2012/2013 15 687.4 687.4 100% 0 0% 2013/2014 17 1,087.4 1,087.4 100% 0 0% 2014/2015 18 1,447.4 1,447.4 100% 0 0% 2015/2016 18 1,290.5 1,290.5 100% 0 0% Table 13-32 lists the three RTEP upgrade projects that were allocated a total of 678.2 MW of IARRs for the 2015 to qualifying customers rather than sold, there is no ARR revenue comparable to the revenue that results from the FTR auctions2016 planning period.

ARR Reassignment for Retail Load Switching. Current PJM rules provide that when load switches between LSEs during the planning period, a proportional share of associated ARRs that sink into a given control or load aggregation zone is automatically reassigned to follow that load.23 load.56 ARR reassignment occurs daily only if the LSE losing load has ARRs with a net positive economic value to that control zone. An LSE gaining load in the same control zone is allocated a proportional share of positively valued ARRs within the control zone based on the shifted load. ARRs are reassigned to the nearest 0.001 MW and any MW of load may be reassigned multiple times over a planning period. Residual ARRs are also subject to the rules of ARR reassignment. This practice supports competition by ensuring that the offset to congestion follows load, thereby removing a barrier to competition among LSEs and, by ensuring that only ARRs with a positive value are reassigned, preventing an LSE from assigning poor ARR choices to other LSEs. However, when ARRs are self scheduled as FTRs, these underlying self-self scheduled FTRs do not follow load that shifts while the ARRs do follow load that shifts, and this may diminish the value of the ARRs ARR for the receiving LSE compared to the total value held by the original ARR holder. There were 52,825 MW of ARRs associated with approximately $498,800 of revenue The MMU recommends that were reassigned in when load switches between LSEs during the 2012 to 2013 planning period. In the first four months of the 2013 to 2014 planning period, there were 25,157 MW a proportional share of the underlying self scheduled FTRs follow the load in the same manner that ARRs do. ARRs are assigned to firm transmission service customers because these customers pay the costs of the transmission system that enables firm energy delivery. At the time of the FTR Annual Auction, ARR holders have the ability to acquire FTRs by choosing to self schedule in the annual FTR auction. When load switches among LSEs during the planning period, the LSE gaining load is reassigned its proportional share of the ARRs from the LSE losing load. After the Annual FTR Auction has occurred, the LSE gaining load does not have the ability to self schedule FTRs associated with the reassigned ARRs. The self scheduled FTRs are obtained as the direct result of the ARR assignment and should therefore follow the reassignment of ARRs associated with approximately $125,800 of revenuewhen load switches in order to ensure that the new LSE is in the same competitive position as the LSE that lost load. Table 13-23 summarizes ARR MW and associated revenue automatically reassigned for network load in each control zone where changes occurred between June 2012 and September 2013. Table 13‑23 ARRs and ARR revenue automatically reassigned for network load changes by control zone: June 1, 2012, through September 30, 2013 ARRs Reassigned (MW‑day) ARR Revenue Reassigned [Dollars (Thousands) per MW‑day] Control Zone 2012/2013 (12 months) 2013/2014 (4 months)* 2012/2013 (12 months) 2013/2014 (4 months)* AECO 581 597 $3.0 $2.3 AEP 4,656 1,617 $58.9 $14.2 AP 3,518 876 $84.3 $19.0 ATSI 5,314 2,437 $8.3 $2.6 BGE 3,203 2,056 $37.3 $14.6 ComEd 11,824 5,114 $170.9 $21.1 DAY 589 164 $0.9 $0.3 DEOK 2,979 2,126 $1.6 $2.9 DLCO 2,708 2,996 $19.1 $6.7 DPL 1,989 1,071 $11.5 $7.4 Dominion 0 5 $0.0 $0.1 EKPC NA 0 NA $0.0 JCPL 1,373 710 6 $3.3 Met-Ed 1,107 393 9 $3.1 PECO 3,416 494 23 $4.1 PENELEC 920 408 8 $4.6 PPL 3,198 1,395 21 $5.3 PSEG 2,313 1,044 17 $10.1 Pepco 3,073 1,474 21 $4.2 RECO 67 179 0 $0.1 Total 52,825 25,157 $499.8 $125.8 * Through 30-Sep-2013 23 56 See PJM. “Manual 6: Financial Transmission Rights,” Revision 12 (July 1, 2009), p. 28. Residual Table 12-29 summarizes ARR MW and associated revenue automatically reassigned for network load in each control zone where changes occurred between June 2010 and December 2011. About 24,531 MW of ARRs Only associated with $388,700 per MW-day of revenue were automatically reassigned in the first seven months of the 2010 to 2011 planning period. About 56,296 MW of ARRs with $1,043,700 per MW-day of revenue were reassigned for the entire 12-month 2010 to 2011 planning period. Table 12-29 ARRs and ARR holders that had their Stage 1A or Stage 1B revenue automatically reassigned for network load changes by control zone: June 1, 2010, through December 31, 2011 ARRs prorated are eligible to receive residual ARRs. Residual ARRs are available if additional transmission system capability is added during the planning period after Reassigned (MW-day) ARR Revenue Reassigned [Dollars (Thousands) per MW-day] Control Zone 2010/2011 (12 months) 2011/2012 (7 months)* 2010/2011 (12 months) 2011/2012 (7 months)* AECO 887 345 $6.0 $3.7 AEP 961 3,333 $21.4 $65.6 AP 4,992 961 $481.1 $87.1 ATSI 0 2,474 $0.0 $10.7 BGE 3,359 2,117 $50.5 $37.3 ComEd 3,064 2,271 $60.2 $40.3 DAY 193 318 $0.6 $0.5 DLCO 5,502 2,172 $25.7 $7.9 DPL 2,252 1,364 $20.4 $12.2 Dominion 0 1 $0.0 $0.0 JCPL 3,490 802 $28.8 $7.3 Met-Ed 3,947 877 $51.9 $15.3 PECO 12,284 1,291 $89.2 $15.5 PENELEC 3,745 803 $53.5 $16.3 PPL 5,734 2,518 $74.4 $28.7 PSEG 3,416 1,235 $52.8 $20.4 Pepco 2,470 1,649 $27.3 $20.0 RECO 143 46 $0.1 $0.0 Total 56,296 24,531 $1,043.7 $388.7 * Through 31-Dec-11 Market Performance Volume Table 12-30 lists the annual ARR allocationallocation volume by stage and round for the 2010 to 2011 and the 2011 to 2012 planning periods. This additional transmission system capability would not have For the 2011 to 2012 planning period, there were 64,160 MW (43.2 percent of total demand) bid in Stage 1A, 22,208 MW (18.4 percent of total demand) bid in Stage 1B and 57,053 MW (38.4 percent of total demand) bid in Stage 2. Of 148,538 MW in total ARR requests 64,160 MW were allocated in Stage 1A and 22,208 MW were allocated in Stage 1B while 16,108 MW were allocated in Stage 2 for a total of 102,476 MW (69.0 percent) allocated. Eligible market participants subsequently converted 46,017 MW of these allocated ARRs into Annual FTRs (44.9 percent of total allocated ARRs), leaving 56,459 MW of ARRs outstanding. For the 2010 to 2011 planning period, there had been accounted 61,793 MW (45.6 percent of total demand) bid in Stage 1A 27,850 MW (20.5 percent of total demand) bid in Stage 1B and 45,971 MW (33.9 percent of total demand) bid in Stage 2. Of 135,614 MW in total ARR requests, 61,793 MW were allocated in Stage 1A and 27,850 MW were allocated in Stage 1B while 12,200 MW were allocated in Stage 2 for in the initial annual ARR allocation, but it enables the creation a total of residual ARRs101,842 MW (75.1 percent) allocated. Residual ARRs are effective on the first day There were 46,017 MW or 54.7 percent of the month in which allocated ARRs converted into FTRs. ARR holders did not relinquish any ARRs for the additional transmission system capability is included in FTR auctions and exist until 2010 to 2011 or the end of the 2011 to 2012 planning period. For On June 1, 2011, the following planning periodAmerican Transmission Systems, any residual ARRs are available as ARRs Inc. (ATSI) Control Zone was integrated into PJM. Network Service Users and Firm Transmission Customers in the annual ARR allocation. Stage 1 ARR holders have a priority right to ARRs. Residual ARRs are a separate product from incremental ARRs. Effective August 1, 2012, as ordered by FERC ATSI Control Zone participated in Docket No. EL12-50-000, in addition to new transmission, residual ARRs are now available for eligible participants when a transmission outage was modeled in the Annual ARR Allocation, but the transmission facility becomes available during the modeled year. These residual ARRs are determined the month before the effective date, are only available on paths prorated in Stage 1 of the Annual ARR Allocation and are allocated automatically the Annual FTR Auction for the 2011 to participants2012 planning period. Residual ARRs are effective Table 12-31 separately lists the ARR volume for singlethe ATSI Control Zone, whole months and cannot be self scheduled. ARR target allocations are based on the clearing prices from FTR obligations which is included in the effective monthly auction, may not exceed zonal Network Services Peak Load or Firm Transmission Reservation Levels and are only available up 2011 to the prorated ARR MW capacity as allocated in the Annual ARR Allocation. Table 13-24 shows the Residual ARRs automatically allocated to eligible participants, along with the target allocations from the effective month. Table 13‑24 Residual 2012 ARR allocation volume in Table 12-30. Table 12-32 lists the directly allocated FTR volume for the 2011 to 2012 planning period for the ATSI Control Zone, which is not included in the data in Table 12-30 and target allocation January 2013 through September 2013 Month Bid and Requested Volume (MW) Cleared Volume (MW) Cleared Volume Target Allocation Jan-13 6,773.0 1,547.2 22.8 $488,251 Feb-13 1,567.4 1,493.7 95.3 $229,856 Mar-13 5,351.2 1,522.7 28.5 $286,193 Apr-13 5,452.1 1,608.9 29.5 $325,662 May-13 6,054.7 1,647.4 27.2 $282,425 Jun-13 10,864.1 1,272.7 11.7 $667,291 Jul-13 10,936.9 1,323.7 12.1 $714,675 Aug-13 9,357.2 767.2 8.2 $236,885 Sep-13 1,855.0 402.9 21.7 $85,884 Total 58,211.6 11,586.4 19.9 $3,317,123 Market Performance Table 12-31. Revenue As ARRs are allocated to qualifying customers rather than sold, there is no ARR revenue comparable to the revenue that results from the FTR auctions.