EXHIBIT 10(d)
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Amended and Restated
Operating Agreement
of
PJM Interconnection, L.L.C.
Please Note: This document does not include certain
-----------
Operating Agreement revisions that are pending FERC approval.
Dated June 2, 1997
(Revised December 31, 1997, January 26, 1998, January 30, 1998,
March 17, 1998, May 15, 1998, June 26, 1998, September 24, 1998,
October 14, 1998, October 15, 1998, November 19, 1998, January 29, 1999
February 12, 1999, March 2, 1999, April 27, 1999, March 31, 1999,
May 11, 1999, May 12, 1999, May 25, 1999, June 16, 1999,
July 19, 1999, and September 3, 1999)
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OPERATING AGREEMENT
Table of Contents
1. DEFINITIONS............................................................ 2
1.1 Act............................................................. 2
1.2 Affiliate....................................................... 2
1.3 Agreement....................................................... 2
1.4 Annual Meeting of the Members................................... 2
1.5 Board Member.................................................... 2
1.6 Capacity Resource............................................... 2
1.7 Control Area.................................................... 3
1.8 Electric Distributor............................................ 3
1.9 Effective Date.................................................. 3
1.10 Emergency....................................................... 3
1.11 End-Use Customer................................................ 3
1.12 FERC............................................................ 3
1.13 Finance Committee............................................... 4
1.14 Generation Owner................................................ 4
1.15 Good Utility Practice........................................... 4
1.16 Interconnection................................................. 4
1.17 LLC............................................................. 4
1.18 Load Serving Entity............................................. 4
1.19 Locational Marginal Price....................................... 4
1.20 MAAC............................................................ 4
1.21 Market Buyer.................................................... 5
1.22 Market Participant.............................................. 5
1.23 Market Seller................................................... 5
1.24 Member.......................................................... 5
1.25 Members Committee............................................... 5
1.26 NERC............................................................ 5
1.27 Office of the Interconnection................................... 5
1.28 Operating Reserve............................................... 5
1.29 Original PJM Agreement.......................................... 5
1.30 Other Supplier.................................................. 6
1.31 PJM Board....................................................... 6
1.32 PJM Control Area................................................ 6
1.33 PJM Dispute Resolution Procedures............................... 6
1.34 PJM Interchange Energy Market................................... 6
1.35 PJM Manuals..................................................... 6
1.36 PJM Tariff...................................................... 6
1.37 Planning Period................................................. 6
1.38 President....................................................... 6
1.39 Related Parties................................................. 7
Second Revised: November 19, 1998
Effective: January 19, 1999
i
1.40 Reliability Assurance Agreement................................ 7
1.41 Sector Votes................................................... 7
1.42 State.......................................................... 7
1.43 System......................................................... 7
1.44 Transmission Facilities........................................ 7
1.45 Transmission Owner............................................. 7
1.46 Transmission Owners Agreement.................................. 8
1.47 User Group..................................................... 8
1.48 Voting Member.................................................. 8
1.49 Weighted Interest.............................................. 8
2. FORMATION, NAME; PLACE OF BUSINESS.................................... 8
2.1 Formation of LLC; Certificate of Formation..................... 8
2.2 Name of LLC.................................................... 9
2.3 Place of Business.............................................. 9
2.4 Registered Office and Registered Agent......................... 9
3. PURPOSES AND POWERS OF LLC............................................ 9
3.1 Purposes....................................................... 9
3.2 Powers......................................................... 10
4. EFFECTIVE DATE AND TERMINATION........................................ 10
4.1 Effective Date and Termination................................. 10
4.2 Governing Law.................................................. 10
5. WORKING CAPITAL AND CAPITAL CONTRIBUTIONS............................. 11
5.1 Funding of Working Capital and Capital Contributions........... 11
5.2 Contributions to Association................................... 11
6. TAX STATUS AND DISTRIBUTIONS.......................................... 11
6.1 Tax Status..................................................... 11
6.2 Return of Capital Contributions................................ 12
6.3 Liquidating Distribution....................................... 12
7. PJM BOARD............................................................. 12
7.1 Composition.................................................... 12
7.2 Qualifications................................................. 13
7.3 Term of Office................................................. 13
7.4 Quorum......................................................... 13
7.5 Operating and Capital Budgets.................................. 14
7.5.1 Finance Committee....................................... 14
7.5.2 Adoption of Budgets..................................... 14
7.6 By-laws........................................................ 14
7.7 Duties and Responsibilities of the PJM Board................... 14
8. MEMBERS COMMITTEE..................................................... 16
8.1 Sectors........................................................ 16
8.1.1 Designation............................................. 16
8.1.2 Related Parties......................................... 17
8.2 Representatives................................................ 17
8.2.1 Appointment............................................. 17
8.2.2 Regulatory Authorities.................................. 17
8.2.3 Initial Representatives................................. 17
8.2.4 Change of or Substitution for a Representative.......... 17
Second Revised: November 19, 1998
Effective: January 19, 1999
ii
8.3 Meetings........................................................ 18
8.3.1 Regular and Special Meetings............................. 18
8.3.2 Attendance............................................... 18
8.3.3 Quorum................................................... 18
8.4 Manner of Acting................................................ 18
8.5 Chair and Vice Chair of the Members Committee................... 19
8.5.1 Selection and Term....................................... 19
8.5.2 Duties................................................... 19
8.6 Other Committees................................................ 19
8.7 User Groups..................................................... 20
8.8 Powers of the Members Committee................................. 20
9. OFFICERS............................................................... 21
9.1 Election and Term............................................... 21
9.2 President....................................................... 21
9.3 Secretary....................................................... 21
9.4 Treasurer....................................................... 22
9.5 Renewal of Officers; Vacancies.................................. 22
9.6 Compensation.................................................... 22
10. OFFICE OF THE INTERCONNECTION......................................... 22
10.1 Establishment................................................... 22
10.2 Processes and Organization...................................... 22
10.3 Confidential Information........................................ 23
10.4 Duties and Responsibilities..................................... 23
11. MEMBERS............................................................... 25
11.1 Management Rights............................................... 25
11.2 Other Activities................................................ 25
11.3 Member Responsibilities......................................... 25
11.3.1 General................................................. 25
11.3.2 Facilities Planning and Operation....................... 26
11.3.3 Electric Distributors................................... 27
11.3.4 Reports to the Office of the Interconnection............ 28
11.4 Regional Transmission Expansion Planning Protocol............... 28
11.5 Member Right to Petition........................................ 28
11.6 Membership Requirements......................................... 29
12. TRANSFERS OF MEMBERSHIP INTEREST...................................... 30
13. INTERCHANGE........................................................... 30
13.1 Interchange Arrangements with Non-Members....................... 30
13.2 Energy Market................................................... 30
14. METERING.............................................................. 30
14.1 Installation, Maintenance and Reading of Meters................. 30
14.2 Metering Procedures............................................. 30
14.3 Integrated Megawatt-Hours....................................... 31
14.4 Meter Locations................................................. 31
15. ENFORCEMENT OF OBLIGATIONS............................................ 31
15.1 Failure to Meet Obligations..................................... 31
15.1.1 Termination of Market Buyer Rights...................... 31
15.1.2 Termination of Market Seller Rights..................... 31
Second Revised: November 19, 1998
Effective: January 19, 1999
iii
15.1.3 Payment of Bills........................................ 32
15.2 Enforcement of Obligations...................................... 33
15.3 Obligations to a Member in Default.............................. 33
15.4 Obligations of a Member in Default.............................. 33
15.5 No Implied Waiver............................................... 33
16. LIABILITY AND INDEMNITY............................................... 34
16.1 Members......................................................... 34
16.2 LLC Indemnified Parties......................................... 35
16.3 Worker' Compensation Claims..................................... 36
16.4 Limitation of Liability......................................... 36
16.5 Resolution of Disputes.......................................... 36
16.6 Gross Negligence or Willful Misconduct.......................... 36
16.7 Insurance....................................................... 36
17. MEMBER REPRESENTATIONS, WARRANTIES AND COVENANTS...................... 37
17.1 Representations and Warranties.................................. 37
17.1.1 Organization and Existence.............................. 37
17.1.2 Power and Authority..................................... 37
17.1.3 Authorization and Enforceability........................ 37
17.1.4 No Government Consents.................................. 37
17.1.5 No Conflict or Breach................................... 37
17.1.6 No Proceedings.......................................... 38
17.2 Municipal Electric Systems...................................... 38
17.3 Survival........................................................ 38
18. MISCELLANEOUS PROVISIONS.............................................. 38
18.1 [Reserved]...................................................... 38
18.2 Fiscal and Taxable Year......................................... 38
18.3 Reports......................................................... 38
18.4 Bank Accounts; Checks, Notes and Drafts......................... 39
18.5 Books and Records............................................... 39
18.6 Amendment....................................................... 40
18.7 Interpretation.................................................. 40
18.8 Severability.................................................... 40
18.9 Force Majeure................................................... 41
18.10 Further Assurances............................................. 41
18.11 Seal........................................................... 41
18.12 Counterparts................................................... 41
18.13 Costs of Meetings.............................................. 41
18.14 Notice......................................................... 42
18.15 Headings....................................................... 42
18.16 No Third-Party Beneficiaries................................... 42
18.17 Confidentiality................................................ 42
18.17.1 Party Access.......................................... 42
18.17.2 Required Disclosure................................... 43
18.18 Termination and Withdrawal..................................... 43
18.18.1 Termination........................................... 43
18.18.2 Withdrawal............................................ 43
18.18.3 Winding Up............................................ 44
Second Revised: November 19, 1998
Effective: January 19, 1999
iv
SCHEDULE 1 - PJM INTERCHANGE ENERGY MARKET.............................. 1
1. MARKET OPERATIONS.................................................. 1
1.1 Introduction.................................................. 1
1.2 Cost-based Offers............................................. 1
1.3 Definitions................................................... 1
1.3.1 Dispatch Rate.................................... 1
1.3.2 Equivalent Load.................................. 1
1.3.3 External Market Buyer............................ 1
1.3.4 External Resource................................ 2
1.3.5 Fixed Transmission Right......................... 2
1.3.6 Generating Market Buyer.......................... 2
1.3.7 Generator Forced Outage.......................... 2
1.3.8 Generator Maintenance Outage..................... 2
1.3.9 Generator Planned Outage......................... 2
1.3.10 Internal Market Buyer............................ 2
1.3.11 Inadvertent Interchange.......................... 2
1.3.12 Market Operations Center......................... 3
1.3.13 Maximum Generation Emergency..................... 3
1.3.14 Minimum Generation Emergency..................... 3
1.3.14a NERC Interchange Distribution Calculator......... 3
1.3.15 Network Resource................................. 3
1.3.16 Network Service User............................. 3
1.3.17 Network Transmission Service..................... 3
1.3.18 Normal Maximum Generation........................ 3
1.3.19 Normal Minimum Generation........................ 3
1.3.20 Offer Data....................................... 3a
1.3.21 Office of the Interconnection Control Center..... 4
1.3.22 Operating Day.................................... 4
1.3.23 Operating Margin................................. 4
1.3.24 Operating Margin Customer........................ 4
1.3.25 PJM Interchange.................................. 4
1.3.26 PJM Interchange Export........................... 4
1.3.27 PJM Interchange Import........................... 5
1.3.28 PJM Open Access Same-time Information System..... 5
1.3.29 Point-to-Point Transmission Service.............. 5
1.3.30 Ramping Capability............................... 5
1.3.31 Regulation....................................... 5
1.3.32 Regulation Class................................. 5
1.3.32a Spot Market Backup............................... 5
1.3.33 Spot Market Energy............................... 5a
1.3.34 Transmission Congestion Charge................... 5a
1.3.35 Transmission Congestion Credit................... 6
1.3.36 Transmission Customer............................ 6
1.3.37 Transmission Forced Outage....................... 6
1.3.37a Transmission Loading Relief...................... 6
1.3.37b Transmission Loading Relief Customer............. 6
1.3.38 Transmission Planned Outage...................... 6
Second Revised: November 19, 1998
Effective: January 19, 1999
v
1.4 Market Buyers.................................................... 6
1.4.1 Qualification.......................................... 6
1.4.2 Submission of Information.............................. 7
1.4.3 Fees and Costs......................................... 7
1.4.4 Office of the Interconnection Determination............ 8
1.4.5 Existing Participants.................................. 8
1.4.6 Withdrawal............................................. 8
1.5 Market sellers................................................... 9
1.5.1 Qualification.......................................... 9
1.5.2 Withdrawal............................................. 9
1.6 Office of the Interconnec1.5.2 Withdrawal........................ 9
1.6.1 Operation of the PJM Interchange Energy Market......... 9
1.6.2 Scope of Services...................................... 9
1.6.3 Records and Reports.................................... 10
1.6.4 PJM Manuals............................................ 11
1.7 General.......................................................... 11
1.7.1 Market Sellers......................................... 11
1.7.2 Market Buyers.......................................... 11
1.7.3 Agents................................................. 11
1.7.4 General Obligations of the Market Participants......... 11
1.7.5 Market Operations Center............................... 13
1.7.6 Scheduling and Dispatching............................. 13
1.7.7 Pricing................................................ 13
1.7.8 Generating Market Buyer Resources...................... 13
1.7.9 Delivery to an External Market Buyer................... 13
1.7.10 Other Transactions..................................... 14
1.7.11 Emergencies............................................ 14
1.7.12 Fees and Charges....................................... 14
1.7.13 Relationship to PJM Control Area....................... 14a
1.7.14 PJM Manuals............................................ 15
1.7.15 Corrective Action...................................... 15
1.7.16 Recording.............................................. 15
1.7.17 Operating Reserves..................................... 15
1.7.18 Regulation............................................. 15a
1.7.19 Ramping................................................ 16
1.7.20 Communication and Operating Requirements............... 16
1.7.21 Multi-settlement System................................ 17
1.8 Selection, Scheduling and Dispatch Procedure Adjustment Process.. 17
1.8.1 PJM Dispute Resolution Agreement....................... 17
1.8.2 Market or Control Area Hourly Operational Disputes..... 17
1.9 Prescheduling.................................................... 18
1.9.1 Outage Scheduling...................................... 18
1.9.2 Planned Outages........................................ 18
1.9.3 Generator Maintenance Outages.......................... 19
1.9.4 Forced Outages......................................... 19
1.9.5 Market Participant Responsibilities.................... 20
Third Revised: July 19, 1999
Effective: July 19, 1999
vi
1.9.6 Internal Market Buyer Responsibilities................................ 20
1.9.7 Market Seller Responsibilities........................................ 20
1.9.8 Office of the Interconnection Responsibilities........................ 20
1.10 Scheduling........................................................................ 21
1.10.1 Day-Ahead Scheduling.................................................. 21
1.10.2 Pool-Scheduled Resources.............................................. 23
1.10.3 Self-scheduled Resources.............................................. 24
1.10.4 Capacity Resources.................................................... 24
1.10.5 External Resources.................................................... 25
1.10.6 External Market Buyers................................................ 26
1.10.6A Transmission Loading Relief Customers................................. 26
1.10.7 Bilateral Transactions................................................ 26a
1.10.8 Office of the Interconnection Responsibilities........................ 27
1.10.9 Hourly Scheduling..................................................... 27
1.11 Dispatch.......................................................................... 28
1.11.1 Resource Output....................................................... 28
1.11.2 Operating Basis....................................................... 28
1.11.3 Pool-dispatched Resources............................................. 29
1.11.3a Maximum Generation Emergency.......................................... 29
1.11.4 Regulation............................................................ 29
1.11.5 PJM Open Access Same-time Information System.......................... 29
2. CALCULATION OF LOCATIONAL MARGINAL PRICES................................................ 30
2.1 Introduction....................................................................... 30
2.2 General............................................................................ 30
2.3 Determination of System Conditions Using the State Estimator....................... 31
2.4 Determination of Energy Offers Used in Calculating Locational Marginal Prices...... 31
2.5 Calculation of Locational Marginal Prices.......................................... 32
2.6 Performance Evaluation............................................................. 32
3. ACCOUNTING AND BILLING................................................................... 33
3.1 Introduction....................................................................... 33
3.2 Market Buyers...................................................................... 33
3.2.1 Spot Market Energy.................................................... 33
3.2.2 Regulation............................................................ 34
3.2.3 Operating Reserves.................................................... 35
3.2.4 Transmission Congestion............................................... 35
3.2.5 Transmission Losses................................................... 35
3.2.6 Emergency Energy...................................................... 36
3.2.7 Billing............................................................... 36
3.3 Market Sellers..................................................................... 36
3.3.1 Spot Market Energy.................................................... 37
3.3.2 Regulation............................................................ 37
3.3.3 Operating Reserves.................................................... 37
3.3.4 Emergency Energy...................................................... 37
3.3.5 Billing............................................................... 38
Second Revised: November 19, 1998
Effective: January 19, 1999
vii
3.4 Transmission Customers............................................. 38
3.4.1 Transmission Congestion.................................. 38
3.4.2 Transmission Losses...................................... 38
3.4.3 Billing.................................................. 38
3.5 Other Control Areas................................................ 39
3.5.1 Energy Sales............................................. 39
3.5.2 Operating Margin Sales................................... 39
3.5.3 Transmission Congestion.................................. 39
3.5.4 Billing.................................................. 39
3.6 Metering Reconciliation............................................ 39
3.6.1 Meter Correction Billing................................. 39
3.6.2 Meter Corrections Between Market Participants............ 40
3.6.3 500 kV Meter Errors...................................... 40
3.6.4 Meter Corrections Between Control Areas.................. 40
3.6.5 Meter Correction Data.................................... 40
3.6.6 Correction Limits........................................ 40
4. RATE TABLE............................................................... 41
4.1 Offered Price Rates................................................ 41
4.2 Transmission Losses................................................ 41
4.3 Emergency Energy Purchases......................................... 41
5. CALCULATION OF TRANSMISSION CONGESTION CHARGES AND CREDITS............... 42
5.1 Transmission Congestion Charge Calculation......................... 42
5.1.1 Calculation by Office of the Interconnection............. 42
5.1.2 General.................................................. 42
5.1.3 Network Service User Calculation......................... 42
5.1.4 Transmission Customer Calculation........................ 42
5.1.5 Operating Margin Customer Calculation.................... 42
5.1.6 Transmission Loading Relief Customer Calculation......... 43
5.1.7 Total Transmission Congestion Charges.................... 43
5.2 Transmission Congestion Credit Calculation......................... 43
5.2.1 Eligibility.............................................. 43
5.2.2 Fixed Transmission Rights................................ 43
5.2.3 Target Allocation for Network Service Users.............. 44
5.2.4 Target Allocation for other Holders...................... 44
5.2.5 Calculation of Transmission Congestion Credits........... 44
5.2.6 Distribution of Excess Congestion Charges................ 44
5.3 Unscheduled Transmission Service (Loop Flow)....................... 44a
6. "MUST-RUN" FOR RELIABILITY GENERATION.................................... 45
6.1 Introduction...................................................... 45
6.2 Identification of Facility Outages................................ 45
6.3 Dispatch for Local Reliability.................................... 45
6.3.1 Request and Dispatch.................................... 45
6.3.2 Designation of Facilities............................... 45a
6.4 Price Caps........................................................ 45a
6.4.1 Applicability........................................... 45a
6.4.2 Level................................................... 45b
Fourth Revised: July 19, 1999
Effectivd: July 19, 1999
viii
7. FIXED TRANSMISSION RIGHTS AUCTIONS....................................................................... 46
7.1 Auctions of Fixed Transmission Rights.......................................................... 46
7.1.1 Auction Period and Scope of Auctions................................................ 46
7.1.2 Frequency and Time of Auctions...................................................... 46
7.1.3 Duration of Fixed Transmission Rights................................................ 46
7.2 Fixed Transmission Rights Characteristics...................................................... 47
7.2.1 Reconfiguration of Fixed Transmission Rights........................................ 47
7.2.2 Specified Buses..................................................................... 47
7.2.3 Transmission Congestion Charges.............................................................. 47
7.3 Auction Procedures............................................................................. 47
7.3.1 Role of the Office of the Interconnection........................................... 47
7.3.2 Notice of Offer..................................................................... 48
7.3.3 Pending Applications for Firm Service............................................... 48
7.3.4 On-Peak and Off-Peak Periods........................................................ 48
7.3.5 Offers and Bids..................................................................... 49
7.3.6 Determination of Winning Bids and Clearing Price.................................... 50
7.3.7 Announcements of Winners and Prices................................................. 50
7.3.8 Auction Settlements................................................................. 51
7.3.9 Allocation of Auction Revenues...................................................... 51
7.4 Simultaneous Feasibility....................................................................... 51
SCHEDULE 2 - COMPONENTS OF COST.............................................................................. 1
SCHEDULE 2A - EXPLANATION OF THE TREATMENT OF THE COSTS OF EMISSIONS ALLOWANCES.............................. 1
SCHEDULE 3 - ALLOCATION OF THE COST AND EXPENSES OF THE OFFICE OF THE INTERCONNECTION........................ 1
SCHEDULE 4 - STANDARD FORM OF AGREEMENT TO BECOME A MEMBER OF THE LLC........................................ 1
Second Revised: July 19, 1999
Effective: July 19, 1999
viiia
SCHEDULE 5 - PJM DISPUTE RESOLUTION PROCEDURES............................................................... 1
1. DEFINITIONS............................................................................................... 1
1.1 Alternate Dispute Resolution Committee.......................................................... 1
1.2 MAAC Dispute Resolution Committee............................................................... 1
1.3 Related PJM Agreements.......................................................................... 1
2. PURPOSES AND OBJECTIVES................................................................................... 1
2.1 Common and Uniform Procedures................................................................... 1
2.2 Interpretation.................................................................................. 1
3. NEGOTIATION AND MEDIATION................................................................................. 2
3.1 When Required................................................................................... 2
3.2 Procedures...................................................................................... 2
3.2.1 Initiation........................................................................... 2
3.2.2 Selection of Mediator................................................................ 2
3.2.3 Advisory Mediator.................................................................... 2
3.2.4 Mediation Process.................................................................... 3
3.2.5 Mediator's Assessment................................................................ 3
3.3 Costs........................................................................................... 4
4. ARBITRATION............................................................................................... 4
4.1 When Required................................................................................... 4
4.2 Binding Decision................................................................................ 4
4.3 Initiation...................................................................................... 4
4.4 Selection of Arbitrator(s)...................................................................... 4
4.5 Procedures...................................................................................... 5
4.6 Summary Disposition and Interim Measures........................................................ 5
4.6.1 Lack of Good Faith Basis............................................................. 5
4.6.2 Discovery Limits..................................................................... 5
4.6.3 Interim Decision..................................................................... 5
4.7 Discovery of Facts.............................................................................. 6
4.7.1 Discovery Procedures................................................................. 6
4.7.2 Procedures Arbitrator................................................................ 6
4.8 Evidentiary Hearing............................................................................. 6
4.9 Confidentiality................................................................................. 7
4.9.1 Designation.......................................................................... 7
4.9.2 Compulsory Disclosure................................................................ 7
4.9.3 Public Information................................................................... 7
4.10 Timetable...................................................................................... 8
4.11 Advisory Interpretations....................................................................... 8
4.12 Decisions...................................................................................... 8
4.13 Costs.......................................................................................... 8
4.14 Enforcement.................................................................................... 9
5. ALTERNATE DISPUTE RESOLUTION COMMITTEE.................................................................... 9
5.1 Membership...................................................................................... 9
5.1.1 Representatives...................................................................... 9
5.1.2 Term................................................................................. 9
5.2 Voting Requirements............................................................................. 9
5.3 Officers........................................................................................ 9
5.4 Meetings........................................................................................ 10
Second Revised: November 19, 1998
Effective: January 19, 1999
ix
5.5 Responsibilities................................................................................ 10
SCHEDULE 6 - REGIONAL TRANSMISSION EXPANSION PLANNING PROTOCOL............................................... 1
1. REGIONAL TRANSMISSION EXPANSION PLANNING PROTOCOL......................................................... 1
1.1 Purpose and Objectives.......................................................................... 1
1.2 Conformity with NERC and MAAC Criteria.......................................................... 1
1.3 Establishment of Committees..................................................................... 1
1.4 Contents of the Regional Transmission Expansion Plan............................................ 2
1.5 Procedure for Development of the Regional Transmission Expansion Plan........................... 2
1.5.1 Commencement of the Process.......................................................... 2
1.5.2 Development of Scope, Assumptions and Procedures..................................... 3
1.5.3 Scope of Studies..................................................................... 3
1.5.4 Supply of Data....................................................................... 3
1.5.5 Coordination of the Regional Transmission Expansion Plan............................. 3
1.5.6 Development of the Recommended Regional Transmission Expansion Plan.................. 3a
1.6 Approval of the Final Regional Transmission Expansion Plan...................................... 4
1.7 Obligation to Build............................................................................. 5
1.8 Relationship to the PJM Control Area Open Access Transmission PJM Tariff........................ 5
SCHEDULE 7 - UNDERFREQUENCY RELAY OBLIGATIONS AND CHARGES.................................................... 1
1. UNDERFREQUENCY RELAY OBLIGATION........................................................................... 1
1.1 Application..................................................................................... 1
1.2 Obligations..................................................................................... 1
2. UNDERFREQUENCY RELAY CHARGES.............................................................................. 1
3. DISTRIBUTION OF UNDERFREQUENCY RELAY CHARGES.............................................................. 2
3.1 Share of Charges................................................................................ 2
3.2 Allocation by the Office of the Interconnection................................................. 2
SCHEDULE 8 - DELEGATION OF RELIABILITY RESPONSIBILITIES...................................................... 1
1. DELEGATION................................................................................................ 1
2. NEW PARTIES............................................................................................... 1
3. IMPLEMENTATION OF RELIABILITY ASSURANCE AGREEMENT......................................................... 1
SCHEDULE 9 - EMERGENCY PROCEDURE CHARGES..................................................................... 1
1. EMERGENCY PROCEDURE CHARGE................................................................................ 1
2. DISTRIBUTION OF EMERGENCY PROCEDURE CHARGES............................................................... 1
2.1 Complying Parties............................................................................... 1
2.2 All Parties..................................................................................... 1
SCHEDULE 10 - ACCOUNTING FOR UNSCHEDULED TRANSMISSION
SERVICE COMPENSATION......................................................................................... 1
SCHEDULE 11 - PJM CAPACITY CREDIT MARKETS.................................................................... 1
1. PURPOSES AND OBJECTIVES.................................................................................. 1
1.1 PJM Capacity Credit Markets.................................................................... 1
1.2 Voluntary Use of PJM Capacity Credit Market.................................................... 1
1.3 Use of Capacity Credits........................................................................ 1
2. DEFINITIONS.............................................................................................. 1
2.1 [Reserved.].................................................................................... 1
Third Revised: July 19, 1999
Effective: July 19, 1999
x
2.2 Buy Bid........................................................................................ 1
2.3 Capacity Credit................................................................................ 2
2.4 Capacity Credit Market Implementation Date..................................................... 2
2.5 Capacity Resources............................................................................. 2
2.6 Fixed Block.................................................................................... 2
2.7 Holiday........................................................................................ 2
2.8 PJM Capacity Credit Market..................................................................... 2
2.9 PJM Daily Capacity Credit Market............................................................... 2
2.10 PJM Monthly Capacity Credit Market............................................................ 2
2.11 Sell Offer.................................................................................... 2
2.12 Unforced Capacity............................................................................. 3
2.13 Up-To Block.................................................................................... 3
3. PARTICIPATION IN THE PJM CAPACITY CREDIT MARKET.......................................................... 3
3.1 Eligibility.................................................................................... 3
3.2 Effect of Withdrawal........................................................................... 3
4. RESPONSIBILITIES OF THE OFFICE OF THE INTERCONNECTION.................................................... 3
4.1 Operation of the PJM Capacity Credit Market.................................................... 3
4.2 Records and Reports............................................................................ 4
5. GENERAL PROVISIONS....................................................................................... 4
5.1 Market Sellers................................................................................. 4
5.2 Market Buyers.................................................................................. 4
5.3 Agents......................................................................................... 5
5.4 General Obligations Market Participants........................................................ 5
5.5 Relationship of Capacity Credits to Capacity Obligations Imposed Under the
Reliability Assurance Agreement................................................................ 5
5.6 Deficiency Charges............................................................................. 5
5.7 Fixed Transmission Rights...................................................................... 5
5.8 Confidentiality................................................................................ 6
6. OPERATION OF THE PJM CAPACITY CREDIT MARKETS............................................................. 6
6.1 Content of Sell Offers......................................................................... 6
6.1.1 Specifications...................................................................... 6
6.1.2 Market-based Offers................................................................. 6
6.1.3 Availability of Capacity Credits for Sale........................................... 6
6.2 Content of Buy Bids............................................................................ 7
6.3 Submission of Sell Offers and Buy Bids......................................................... 7
6.4 Conduct of PJM Capacity Credit Markets......................................................... 8
6.4.1 PJM Daily Capacity Credit Markets................................................... 8
6.4.2 PJM Monthly Capacity Credit Markets................................................. 9
6.5 Market Clearing Procedures..................................................................... 9
6.6 Settlement Procedures.......................................................................... 10
6.7 Billing........................................................................................ 10
6.8 Time Standard.................................................................................. 11
Revised: July 19, 1999
Effective: July 19, 1999
xi
7. EFFECTIVE DATE AND TRANSITION............................................................................ 11
7.1 Effective Date................................................................................. 11
7.2 Transition Provisions.......................................................................... 11
7.3 Capacity Credit................................................................................ 11
7.4 Mandatory Sell Offers and Buy Bids............................................................. 11
Revised: July 19, 1999
Effective: July 19, 1999
xii
Amended and Restated
Operating Agreement
of
PJM Interconnection, L.L.C.
This Amended and Restated Operating Agreement of PJM Interconnection,
L.L.C., dated as of this 2/nd/ day of June, 1997, amends and restates as of the
Effective Date the Operating Agreement of PJM Interconnection, L.L.C. filed with
the FERC on April 2, 1997, as amended.
WHEREAS, certain of the Members have previously entered into an agreement,
originally dated September 26, 1956, as amended and supplemented up to and
including December 31, 1996, stating "their respective rights and obligations
with respect to the coordinated operation of their electric supply systems and
the interchange of electric capacity and energy among their systems" (such
agreement as amended and supplemented being referred to as the "Original PJM
Agreement"), and which coordinated operations and interchange came to be known
as the PJM Interconnection (the "Interconnection"); and
WHEREAS, pursuant to a resolution of June 16, 1993, an unincorporated
association comprised of the parties to the Original PJM Agreement was formed
for the purpose of implementation of the Original PJM Agreement as it then
existed and as it subsequently has been amended and supplemented, such
association being known as the "PJM Interconnection Association"; and
WHEREAS, because of changes in federal law and policy, the Original PJM
Agreement, together with other documents and agreements, was amended, restated
and submitted to FERC on December 31, 1996 to restructure fundamental aspects of
the operation of the Interconnection; and
WHEREAS, so that the provisions of the Original PJM Agreement could be
placed into effect consistent with a February 28, 1997 order of FERC, including
those provisions related to the governance of the Interconnection, the parties
to the Original PJM Agreement, along with the other interested parties, approved
the conversion of the PJM Interconnection Association into the LLC pursuant to
the provisions of the Delaware Limited Liability Company Act, as amended (the
"Delaware LLC Act"), pursuant to a Certificate of Formation (the "Certificate of
Formation") and a Certificate of Conversion (the "Certificate of Conversion"),
each filed with the Delaware Secretary of State (the "Recording Office") on
March 31, 1997; and
WHEREAS, the Members wish to amend and restate the Operating Agreement of
PJM Interconnection, L.L.C. adopted in connection with the formation of the LLC
and as in effect immediately prior to the Effective Date in the form set forth
below; and
WHEREAS, the Members intend to form an Independent System Operator in
accordance with the regulations of the Federal Energy Regulatory Commission; and
Now, therefore, in consideration of the foregoing, and of the covenants and
agreements hereinafter set forth, the Members hereby agree as follows:
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DEFINITIONS
Unless the context otherwise specifies or requires, capitalized terms used
in this Agreement shall have the respective meanings assigned herein or in the
Schedules hereto for all purposes of this Agreement (such definitions to be
equally applicable to both the singular and the plural forms of the terms
defined). Unless otherwise specified, all references herein to Sections,
Schedules, Exhibits or Appendices are to Sections, Schedules, Exhibits or
Appendices of this Agreement. As used in this Agreement:
1.1 Act.
"Act" shall mean the Delaware Limited Liability Company Act, Title 6,
(S) (S) 18-101 to 18-1109 of the Delaware Code.
1.2 Affiliate.
"Affiliate" shall mean any two or more entities, one of which controls the
other or that are under common control. "Control" shall mean the possession,
directly or indirectly, of the power to direct the management or policies of an
entity. Ownership of publicly-traded equity securities of another entity shall
not result in control or affiliation for purposes of this Agreement if the
securities are held as an investment, the holder owns (in its name or via
intermediaries) less than 10 percent of the outstanding securities of the
entity, the holder does not have representation on the entity's board of
directors (or equivalent managing entity) or vice versa, and the holder does not
in fact exercise influence over day-to-day management decisions. Unless the
contrary is demonstrated to the satisfaction of the Members Committee, control
shall be presumed to arise from the ownership of or the power to vote, directly
or indirectly, ten percent or more of the voting securities of such entity.
1.3 Agreement.
"Agreement" shall mean this Amended and Restated Operating Agreement of PJM
Interconnection, L.L.C., including all Schedules, Exhibits, Appendices, addenda
or supplements hereto, as amended from time to time.
1.4 Annual Meeting of the Members.
"Annual Meeting of the Members" shall mean the meeting specified in Section
8.3.1 of this Agreement.
1.5 Board Member.
"Board Member" shall mean a member of the PJM Board.
1.6 Capacity Resource.
"Capacity Resource" shall mean the net capacity from owned or contracted
for generating facilities all of which (i) are accredited to a Load Serving
Entity pursuant to the procedures set forth in the Reliability Assurance
Agreement and (ii) are committed to satisfy that Load Serving Entity's
obligations under the Reliability Assurance Agreement and this Agreement.
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1.7 Control Area.
"Control Area" shall mean an electric power system or combination of
electric power systems bounded by interconnection metering and telemetry to
which a common automatic generation control scheme is applied in order to:
(a) match the power output of the generators within the electric power
system(s) and energy purchased from entities outside the electric power
system(s), with the load within the electric power system(s);
(b) maintain scheduled interchange with other Control Areas, within the
limits of Good Utility Practice;
(c) maintain the frequency of the electric power system(s) within
reasonable limits in accordance with Good Utility Practice and the criteria of
NERC and the applicable regional reliability council of NERC;
(d) maintain power flows on transmission facilities within appropriate
limits to preserve reliability; and
(e) provide sufficient generating capacity to maintain operating reserves
in accordance with Good Utility Practice.
1.8 Electric Distributor.
"Electric Distributor" shall mean a Member that owns or leases with rights
equivalent to ownership electric distribution facilities that are used to
provide electric distribution service to electric load within the PJM Control
Area.
1.9 Effective Date.
"Effective Date" shall mean August 1, 1997, or such later date that FERC
permits this Agreement to go into effect.
1.10 Emergency.
"Emergency" shall mean: (i) an abnormal system condition requiring manual
or automatic action to maintain system frequency, or to prevent loss of firm
load, equipment damage, or tripping of system elements that could adversely
affect the reliability of an electric system or the safety of persons or
property; or (ii) a fuel shortage requiring departure from normal operating
procedures in order to minimize the use of such scarce fuel; or (iii) a
condition that requires implementation of emergency procedures as defined in the
PJM Manuals.
1.11 End-Use Customer.
"End-Use Customer" shall mean a Member that is a retail end-user of
electricity within the PJM Control Area.
1.12 FERC.
"FERC" shall mean the Federal Energy Regulatory Commission or any successor
federal agency, commission or department exercising jurisdiction over this
Agreement.
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1.13 Finance Committee.
"Finance Committee" shall mean the body formed pursuant to Section 7.5.1 of
this Agreement.
1.14 Generation Owner.
"Generation Owner" shall mean a Member that owns or leases with rights
equivalent to ownership facilities for the generation of electric energy that
are located within the PJM Control Area. Purchasing all or a portion of the
output of a generation facility shall not be sufficient to qualify a Member as a
Generation Owner.
1.15 Good Utility Practice.
"Good Utility Practice" shall mean any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or any of the practices, methods and acts
which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practice is not intended to be
limited to the optimum practice, method, or act to the exclusion of all others,
but rather is intended to include acceptable practices, methods, or acts
generally accepted in the region.
1.16 Interconnection.
"Interconnection" shall mean the coordinated operations and interchange
resulting from the Original PJM Agreement as continued in this Agreement.
1.17 LLC.
"LLC" shall mean PJM Interconnection, L.L.C., a Delaware limited liability
company.
1.18 Load Serving Entity.
"Load Serving Entity" shall mean an entity, including a load aggregator or
power marketer, (1) serving end-users within the PJM Control Area, and (2) that
has been granted the authority or has an obligation pursuant to state or local
law, regulation or franchise to sell electric energy to end-users located within
the PJM Control Area, or the duly designated agent of such an entity.
1.19 Locational Marginal Price.
"Locational Marginal Price" shall mean the hourly integrated market
clearing marginal price for energy at the location the energy is delivered or
received, calculated as specified in Section 2 of Schedule 1 of this Agreement.
1.20 MAAC.
"MAAC" shall mean the Mid-Atlantic Area Council, a reliability council
under (S) 202 of the Federal Power Act established pursuant to the MAAC
Agreement dated August 1, 1994, or any successor thereto.
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1.21 Market Buyer.
"Market Buyer" shall mean a Member that has met reasonable creditworthiness
standards established by the Office of the Interconnection and that is otherwise
able to make purchases in the PJM Interchange Energy Market or PJM Capacity
Credit Market.
1.22 Market Participant.
"Market Participant" shall mean a Market Buyer or a Market Seller, or both.
1.23 Market Seller.
"Market Seller" shall mean a Member that has met reasonable
creditworthiness standards established by the Office of the Interconnection and
that is otherwise able to make sales in the PJM Interchange Energy Market or PJM
Capacity Credit Market.
1.24 Member.
"Member" shall mean an entity that satisfies the requirements of
Section 11.6 of this Agreement and that (i) is a member of the LLC immediately
prior to the Effective Date, or (ii) has executed an Additional Member Agreement
in the form set forth in Schedule 4 hereof.
1.25 Members Committee.
"Members Committee" shall mean the committee specified in Section 8 of this
Agreement composed of representatives of all the Members.
1.26 NERC.
"NERC" shall mean the North American Electric Reliability Council, or any
successor thereto.
1.27 Office of the Interconnection.
"Office of the Interconnection" shall mean the employees and agents of the
LLC engaged in implementation of this Agreement and administration of the PJM
Tariff, subject to the supervision and oversight of the PJM Board acting
pursuant to this Agreement.
1.28 Operating Reserve.
"Operating Reserve" shall mean the amount of generating capacity scheduled
to be available for a specified period of an Operating Day to ensure the
reliable operation of the PJM Control Area, as specified in the PJM Manuals.
1.29 Original PJM Agreement.
"Original PJM Agreement" shall mean that certain agreement between certain
of the Members, originally dated September 26, 1956, and as amended and
supplemented up to and including December 31, 1996, relating to the coordinated
operation of their electric supply systems and the interchange of electric
capacity and energy among their systems.
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1.30 Other Supplier.
"Other Supplier" shall mean a Member that is (i) a seller, buyer or
transmitter of electric capacity or energy in, from or through the PJM Control
Area, and (ii) is not a Generation Owner, Electric Distributor, Transmission
Owner or End-Use Customer.
1.31 PJM Board.
"PJM Board" shall mean the Board of Managers of the LLC, acting pursuant to
this Agreement.
1.32 PJM Control Area.
"PJM Control Area" shall mean the Control Area recognized by NERC as the
PJM Control Area.
1.33 PJM Dispute Resolution Procedures
"PJM Dispute Resolution Procedures" shall mean the procedures for the
resolution of disputes set forth in Schedule 5 of this Agreement.
1.34 PJM Interchange Energy Market.
"PJM Interchange Energy Market" shall mean the regional competitive market
administered by the Office of the Interconnection for the purchase and sale of
spot electric energy at wholesale in interstate commerce and related services
established pursuant to Schedule 1 to this Agreement.
1.35 PJM Manuals.
"PJM Manuals" shall mean the instructions, rules, procedures and guidelines
established by the Office of the Interconnection for the operation, planning,
and accounting requirements of the PJM Control Area and the PJM Interchange
Energy Market.
1.36 PJM Tariff.
"PJM Tariff" shall mean the PJM Open Access Transmission Tariff providing
transmission service within the PJM Control Area, including any schedules,
appendices, or exhibits attached thereto, as in effect from time to time.
1.37 Planning Period.
"Planning Period" shall initially mean the 12 months beginning June 1 and
extending through May 31 of the following year, or such other period established
by the Reliability Committee established under the Reliability Assurance
Agreement.
1.38 President.
"President" shall have the meaning specified in Section 9.2.
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1.39 Related Parties.
"Related Parties" shall mean, solely for purposes of the governance
provisions of this Agreement: (i) any generation and transmission cooperative
and one of its distribution cooperative members; and (ii) any joint municipal
agency and one of its members. For purposes of this Agreement, representatives
of state or federal government agencies shall not be deemed Related Parties with
respect to each other, and a public body's regulatory authority, if any, over a
Member shall not be deemed to make it a Related Party with respect to that
Member.
1.40 Reliability Assurance Agreement.
"Reliability Assurance Agreement" shall mean that certain agreement, dated
June 2, 1997 and as amended from time to time, establishing obligations,
standards and procedures for maintaining the reliable operation of the PJM
Control Area.
1.41 Sector Votes.
"Sector Votes" shall mean the affirmative and negative votes of each sector
on the Members Committee, as specified in Section 8.4.
1.42 State.
"State" shall mean the District of Columbia and any State or Commonwealth
of the United States.
1.43 System.
"System" shall mean the interconnected electric supply system of a Member
and its interconnected subsidiaries exclusive of facilities which it may own or
control outside of the PJM Control Area. Each Member may include in its system
the electric supply systems of any party or parties other than Members which are
within the PJM Control Area, provided its interconnection agreements with such
other party or parties do not conflict with such inclusion.
1.44 Transmission Facilities.
"Transmission Facilities" shall mean facilities that: (i) are within the
PJM Control Area; (ii) meet the definition of transmission facilities pursuant
to FERC's Uniform System of Accounts or have been classified as transmission
facilities in a ruling by FERC addressing such facilities; and (iii) have been
demonstrated to the satisfaction of the Office of the Interconnection to be
integrated with the PJM Control Area transmission system and integrated into the
planning and operation of the PJM Control Area to serve all of the power and
transmission customers within the PJM Control Area.
1.45 Transmission Owner.
"Transmission Owner" shall mean a Member that owns or leases with rights
equivalent to ownership Transmission Facilities. Taking transmission service
shall not be sufficient to qualify a Member as a Transmission Owner.
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1.46 Transmission Owners Agreement.
"Transmission Owners Agreement" shall mean that certain agreement, dated
June 2, 1997 and as amended from time to time, by and among Transmission Owners
in the PJM Control Area providing for an open-access transmission tariff in the
PJM Control Area, and for other purposes.
1.47 User Group.
"User Group" shall mean a group formed pursuant to Section 8.7 of this
Agreement.
1.48 Voting Member
"Voting Member" shall mean (i) a Member as to which no other Member is an
Affiliate or Related Party, or (ii) a Member together with any other Members as
to which it is an Affiliate or Related Party.
1.49 Weighted Interest.
"Weighted Interest" shall be equal to (0.1(1/N) + 0.5(B/C) + 0.2(D/E) +
0.2(F/G)), where:
N = the total number of Members
B = the Member's internal peak demand for the previous calendar year
C = the sum of factor B for all Members
D = the Member's net installed generating capacity located in the
PJM Control Area as of January 1 of the current calendar year
E = the sum of factor D for all Members
F = the sum of the Member's circuit miles of transmission facilities
multiplied by the respective operating voltage for facilities 100
kV and above as of January 1 of the current calendar year
G = the sum of factor F for all Members
2. FORMATION, NAME; PLACE OF BUSINESS
2.1 Formation of LLC; Certificate of Formation.
The Members of the LLC hereby:
(a) acknowledge the conversion of the PJM Interconnection Association into
the LLC, a limited liability company pursuant to the Act, by virtue of the
filing of both the Certificate of Formation and the Certificate of Conversion
with the Recording Office, effective as of March 31, 1997;
(b) confirm and agree to their status as Members of the LLC;
(c) enter into this Agreement for the purpose of amending and restating
the rights, duties, and relationship of the Members; and
(d) agree that if the laws of any jurisdiction in which the LLC transacts
business so require, the PJM Board also shall file, with the appropriate office
in that jurisdiction, any documents necessary for the LLC to qualify to
transact business under such laws; and (ii) agree
8
and obligate themselves to execute, acknowledge, and cause to be filed for
record, in the place or places and manner prescribed by law, any amendments to
the Certificate of Formation as may be required, either by the Act, by the laws
of any jurisdiction in which the LLC transacts business, or by this Agreement,
to reflect changes in the information contained therein or otherwise to comply
with the requirements of law for the continuation, preservation, and operation
of the LLC as a limited liability company under the Act.
2.2 Name of LLC.
The name under which the LLC shall conduct its business is "PJM
Interconnection, L.L.C."
2.3 Place of Business.
The location of the principal place of business of the LLC shall be 000
Xxxxxxxxx Xxxxxx, Xxxxxx Forge Corporate Center, Norristown, Pennsylvania 19403-
2497. The LLC may also have offices at such other places both within and without
the State of Delaware as the PJM Board may from time to time determine or the
business of the LLC may require.
2.4 Registered Office and Registered Agent.
The street address of the initial registered office of the LLC shall be
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and the LLC's registered agent
at such address shall be The Corporation Trust Company. The registered office
and registered agent may be changed by resolution of the PJM Board.
3. PURPOSES AND POWERS OF LLC
3.1 Purposes.
The purposes of the LLC shall be:
(a) to operate in accordance with FERC requirements as an Independent
System Operator, comprised of the PJM Board, the Office of the Interconnection,
and the Members Committee, with the authorities and responsibilities set forth
in this Agreement;
(b) as necessary for the operation of the Interconnection as specified
above: (i) to acquire and obtain licenses, permits and approvals, (ii) to own or
lease property, equipment and facilities, and (iii) to contract with third
parties to obtain goods and services, provided that, the L.L.C. may procure
goods and services from a Member only after open and competitive bidding; and
(c) to engage in any lawful business permitted by the Act or the laws of
any jurisdiction in which the LLC may do business and to enter into any lawful
transaction and engage in any lawful activities in furtherance of the foregoing
purposes and as may be necessary, incidental or convenient to carry out the
business of the LLC as contemplated by this Agreement.
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3.2 Powers.
The LLC shall have the power to do any and all acts and things necessary,
appropriate, advisable, or convenient for the furtherance and accomplishment of
the purposes of the LLC, including, without limitation, to engage in any kind of
activity and to enter into and perform obligations of any kind necessary to or
in connection with, or incidental to, the accomplishment of the purposes of the
LLC, so long as said activities and obligations may be lawfully engaged in or
performed by a limited liability company under the Act.
4. EFFECTIVE DATE AND TERMINATION
4.1 Effective Date and Termination.
(a) The existence of the LLC commenced on March 31, 1997, as provided in
the Certificate of Formation and Certificate of Conversion which were filed with
the Recording Office on March 31, 1997. This Agreement shall amend and restate
the Operating Agreement of PJM Interconnection, L.L.C. as of the Effective Date.
(b) The LLC shall continue in existence until terminated in accordance
with the terms of this Agreement. The withdrawal or termination of any Member is
subject to the provisions of Section 18.18 of this Agreement.
(c) Any termination of this Agreement or withdrawal of any Member from the
Agreement shall be filed with the FERC and shall become effective only upon the
FERC's approval.
Governing Law.
This Agreement and all questions with respect to the rights and obligations
of the Members, the construction, enforcement and interpretation hereof, and the
formation, administration and termination of the LLC shall be governed by the
provisions of the Act and other applicable laws of the State of Delaware, and
the Federal Power Act.
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5. WORKING CAPITAL AND CAPITAL CONTRIBUTIONS
5.1 Funding of Working Capital and Capital Contributions.
(a) The Office of the Interconnection shall attempt to obtain financing of
up to twenty-five percent (25%) of the approved annual operating budget of the
LLC adopted by the PJM Board pursuant to (S) 7.5.2 of this Agreement to meet the
working capital needs of the LLC, which shall be limited to such working capital
needs that arise from timing in cash flows from interchange accounting, tariff
administration and payment of the operating costs of the Office of the
Interconnection. Such financing, which shall be non-recourse to the Members of
the LLC and which shall be for a stated term without penalty for prepayment, may
be obtained by borrowing the amount required at market-based interest rates,
negotiated on an arm's length basis, (i) from a Member or Members or (ii) from a
commercial lender, supported, if necessary, by credit enhancements provided by a
Member or Members; provided, however, no Member shall be obligated to provide
such financing or credit enhancements. The LLC shall make such filings and seek
such approvals as necessary in order for the principal, interest and fees
related to any such borrowing to be repaid through charges under the PJM Tariff
as appropriate under Schedule 3 of this Agreement.
(b) In the event financing of the working capital needs of the Office of
the Interconnection is unavailable on commercially reasonable terms, the PJM
Board may require the Members to contribute capital in the aggregate up to five
million two hundred thousand dollars ($5,200,000) for the working capital needs
that could not be financed; provided that in such event each Member's obligation
to contribute additional capital shall be in proportion to its Weighted
Interest, multiplied by the amount so requested by the PJM Board. Each Member
that contributes such capital shall be entitled to earn a return on the
contribution to the extent such contribution has not been repaid, which return
shall be at a fair market rate as determined by the PJM Board but in no event
less than the current interest rate established pursuant to 18 C.F.R. (S)
35.19a(a)(2)(iii); provided further, that any Member not wanting to contribute
the requested capital contribution may withdraw from the LLC upon 90 days
written notice as provided in Section 18.18.2 of this Agreement.
(c) Authority to borrow capital for LLC Operations. Nothing in
Section 5.1(a) and (b) shall be construed to restrict the authority of the PJM
Board to authorize the LLC to borrow or raise capital in excess of twenty-five
percent of the approved annual operating budget of the LLC, for working capital
or otherwise, as the PJM Board deems appropriate to fund the operations of the
LLC, in accordance with the general powers of the LLC under Section 3.2 to enter
into obligations of any kind to accomplish the purposes of the LLC. Nor shall
anything in Section 5.1(a) and (b) in any way restrict the authority of the PJM
Board to authorize the LLC to grant to lenders such security interests or other
rights in assets or revenues received under the PJM Tariff with respect to the
costs of operating the LLC and the Office of the Interconnection and to take
such other actions as it deems necessary and appropriate to obtain such
financing in accordance with such general powers of the LLC under Section 3.2.
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5.2 Contributions to Association.
All contributions prior to the Effective Date of the original Operating
Agreement of PJM Interconnection, L.L.C. of cash or other assets to the PJM
Interconnection Association by persons who are now or in the future may become
Members of the LLC shall be deemed contributions by such Members to the LLC.
6. TAX STATUS AND DISTRIBUTIONS
6.1 Tax Status.
The LLC shall make all necessary filings under the applicable Treasury
Regulations to have the LLC taxed as a corporation.
11a
6.2 Return of Capital Contributions.
(a) In the event Members are required to contribute capital to the LLC in
accordance with Section 5.1 herein, the LLC shall request the Transmission
Owners to recover such working capital through charges under the PJM Tariff as
provided in Schedule 3 of this Agreement. In the event all or a portion of the
working capital is recovered pursuant to the PJM Tariff, such amount(s) shall be
returned to the Members in accordance with their actual contributions.
(b) Except for return of capital contributions and liquidating
distributions as provided in the foregoing section and Section 6.3 herein,
respectively, the LLC does not intend to make any distributions of cash or other
assets to its Members.
6.3 Liquidating Distribution.
Upon termination or liquidation of the LLC, the cash or other assets of the
LLC shall be distributed as follows:
(a) first, in the event the LLC has any liabilities at the time of its
termination or dissolution, the LLC shall liquidate such of its assets as is
necessary to satisfy such liabilities;
(b) second, any capital contribution in cash or in kind by any Member of
the PJM Interconnection Association prior to the Effective Date shall be
distributed by the LLC back to such Member in the form received by the PJM
Interconnection Association; and
(c) third, any remaining assets of the LLC shall be distributed to the
Members in proportion to their Weighted Interests.
7. PJM BOARD
7.1 Composition.
There shall be an LLC Board of Managers, referred to herein as the "PJM
Board," composed of seven voting members, with the President as a non-voting
member. The seven voting Board Members shall be elected by the Members Committee
from a slate of candidates for the then-existing vacancies or expiring terms on
the PJM Board. An independent consultant, retained by the Office of the
Interconnection upon consideration of the advice and recommendations of the
Members Committee, shall be directed to prepare a list of persons qualified and
willing to serve on the PJM Board. Not later than 30 days prior to each Annual
Meeting of the Members, the Office of the Interconnection shall distribute to
the representatives on the Members Committee a slate from among the list
proposed by the independent consultant, along with information on the background
and experience of the persons on the slate appropriate to evaluating their
fitness for service on the PJM Board. Elections for the PJM Board shall be held
at each Annual Meeting of the Members, for the purpose of selecting the initial
PJM Board in accordance with the provisions of Section 7.3(a), or selecting a
person to fill the seat of a Board Member whose term is expiring. Should the
Members Committee fail to elect a full PJM Board from the slate proposed by the
independent consultant, the Office of the Interconnection shall direct the
independent consultant, or a replacement consultant selected by the Office of
the Interconnection, to propose a list for a slate of nominees for any vacancies
on the PJM Board for consideration by the Members at the next regular meeting of
the Members Committee.
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7.2 Qualifications.
A Board Member shall not be, and shall not have been at any time within
five years of election to the PJM Board, a director, officer or employee of a
Member or of an Affiliate or Related Party of a Member. Except as provided in
the LLC's Standards of Conduct filed with the FERC, at any time while serving on
the PJM Board, a Board Member shall have no direct business relationship or
other affiliation with any Member or its Affiliates or Related Parties. Of the
seven Board Members, four shall have expertise and experience in the areas of
corporate leadership at the senior management or board of directors level, or in
the professional disciplines of finance or accounting, engineering, or utility
laws and regulation. Of the other three Board Members, one shall have expertise
and experience in the operation or concerns of transmission dependent utilities,
one shall have expertise and experience in the operation or planning of
transmission systems, and one shall have expertise and experience in the area of
commercial markets and trading and associated risk management.
7.3 Term of Office.
(a) The persons serving as the Board of Managers of the LLC immediately
prior to the Effective Date shall continue in office until the first Annual
Meeting of the Members. At the first Annual Meeting of the Members, the then
current members of the PJM Board who desire to continue in office shall be
elected by the Members to serve until the second Annual Meeting of the Members
or until their successors are elected, along with such additional persons as
necessary to meet the composition requirements of Section 7.1 and the
qualification requirements of Section 7.2.
(b) A Board Member shall serve for a term of three years commencing with
the Annual Meeting of the Members at which the Board Member was elected;
provided, however, that two of the Board Members elected at the first Annual
Meeting of the Members following the Effective Date shall be chosen by lot to
serve a term of one year, three of such Board Members shall be chosen by lot to
serve a term of two years and the final two such Board Members shall serve a
term of three years.
(c) Vacancies on the PJM Board occurring between Annual Meetings of the
Members shall be filled by vote of the then remaining Board Members; a Board
Member so selected shall serve until the next Annual Meeting at which time a
person shall be elected to serve the balance of the term of the vacant Board
Seat. Removal of a Board Member shall require the approval of the Members
Committee.
7.4 Quorum.
The presence in person or by telephone or other authorized electronic means
of a majority of the voting Board Members shall constitute a quorum at all
meetings of the PJM Board for the transaction of business except as otherwise
provided by statute. If a quorum shall not be present, the Board Members then
present shall have the power to adjourn the meeting from time to time, until a
quorum shall be present. Provided a quorum is present at a meeting, the PJM
Board shall act by majority vote of the Board Members present.
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7.5 Operating and Capital Budgets.
7.5.1 Finance Committee.
Not later than February 1 of each year, the entities specified below
shall select the members of a Finance Committee. The Finance Committee shall be
composed of one representative of the parties to the Reliability Assurance
Agreement chosen by the parties to that agreement, one representative of the
parties to the Transmission Owners Agreement chosen by the parties to that
agreement, two representatives of the Members Committee chosen by the Members
Committee and that are not representatives of an entity that is a party to the
Transmission Owners Agreement or an Affiliate or Related Party of such an
entity, one representative of the Office of the Interconnection selected by the
President, and two Board Members selected by the PJM Board. The Members
Committee shall endeavor to elect members of the Finance Committee that are
broadly representative of the diversity of interests among the Members. The
Office of the Interconnection shall prepare annual budgets in accordance with
processes and procedures established by the PJM Board, and shall timely submit
its budgets to the Finance Committee for review. The Finance Committee shall
submit its analysis of and recommendations on the budgets to the PJM Board, with
copies to the Members Committee. The Finance Committee shall also review and
comment upon any additional or amended budgets prepared by the Office of the
Interconnection at the request of the PJM Board or the Members Committee.
7.5.2 Adoption of Budgets.
The PJM Board shall adopt, upon consideration of the advice and
recommendations of the Finance Committee, operating and capital budgets for the
LLC, and shall distribute to the Members for their information final annual
budgets for the following fiscal year not later than 60 days prior to the
beginning of each fiscal year of the LLC.
7.6 By-laws.
To the extent not inconsistent with any provision of this Agreement, the
PJM Board shall adopt such by-laws establishing procedures for the
implementation of this Agreement as it may deem appropriate, including but not
limited to by-laws governing the scheduling, noticing and conduct of meetings of
the PJM Board, selection of a Chair and Vice Chair of the PJM Board, action by
the PJM Board without a meeting, and the organization and responsibilities of
standing and special committees of the PJM Board. Such by-laws shall not modify
or be inconsistent with any of the rights or obligations established by this
Agreement.
7.7 Duties and Responsibilities of the PJM Board.
In accordance with this Agreement, the PJM Board shall supervise and
oversee all matters pertaining to the Interconnection and the LLC, and carry out
such other duties as are herein specified, including but not limited to the
following duties and responsibilities:
i) As its primary responsibility, ensure that the President, the
other officers of the LLC, and Office of the Interconnection
perform the duties and responsibilities set forth in this
Agreement, including but not limited to those set forth in
Sections 9.2 through 9.4 and Section 10.4 in a manner
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consistent with (A) the safe and reliable operation of the
Interconnection, (B) the creation and operation of a robust,
competitive, and non-discriminatory electric power market in the
PJM Control Area, and (C) the principle that a Member or group
of Members shall not have undue influence over the operation of
the Interconnection;
ii) Select the Officers of the LLC;
iii) Adopt budgets for the LLC;
iv) Approve the Regional Transmission Expansion Plan in accordance
with the provisions of the Regional Transmission Expansion
Planning Protocol set forth in Schedule 6 of this Agreement.
v) On its own initiative or at the request of a User Group as
specified herein, submit to the Members Committee such proposed
amendments to this Agreement or any Schedule hereto, or a
proposed new Schedule, as it may deem appropriate;
vi) Petition FERC to modify any provision of this Agreement or any
Schedule or practice hereunder that the PJM Board believes to be
unjust, unreasonable, or unduly discriminatory under Section 206
of the Federal Power Act, subject to the right of any Member or
the Members to intervene in any resulting proceedings;
vii) Review for consistency with the creation and operation of a
robust, competitive and non-discriminatory electric power market
in the PJM Control Area any change to rate design or to non-rate
terms and conditions proposed by Transmission Owners for filing
under Section 205 of the Federal Power Act.
viii) If and to the extent it shall deem appropriate, intervene in any
proceeding at FERC initiated by the Members in accordance with
Section 11.5(b), and participate in other state and federal
regulatory proceedings relating to the interests of the LLC;
ix) Review, in accordance with Section 15.1.3, determinations of the
Office of the Interconnection with respect to events of default;
x) Assess against the other Members in proportion to their Weighted
Interest an amount equal to any payment to the Office of the
Interconnection, including interest thereon, as to which a
Member is in default;
xi) Establish reasonable sanctions for failure of a Member to comply
with its obligations under this Agreement;
xii) Direct the Office of the Interconnection on behalf of the LLC to
take appropriate legal or regulatory action against a Member (A)
to recover any unpaid amounts due from the Member to the Office
of the Interconnection under this Agreement and to make whole
any Members subject to an assessment as a result of such unpaid
amount, or (B) as may otherwise be
15
necessary to enforce the obligations of this Agreement;
xiii) Resolve claims by a Member that the Reliability Committee
established by the Reliability Assurance Agreement has exercised
its responsibilities in a manner inconsistent with the creation
and operation of a robust, competitive and non-discriminatory
electric power market in the PJM Control Area, upon due
consideration of the views of the Member and of the Reliability
Committee, and of the need to preserve the reliability of
electric service in the PJM Control Area.
xiv) Solicit the views of Members on, and commission from time to
time as it shall deem appropriate independent reviews of, (A)
the performance of the PJM Interchange Energy Market, (B)
compliance by Market Participants with the rules and
requirements of the PJM Interchange Energy Market, and (C) the
performance of the Office of the Interconnection under
performance criteria proposed by the Members Committee and
approved by the PJM Board; and
xv) Terminate a Member as may be appropriate under the terms of this
Agreement.
8. MEMBERS COMMITTEE
8.1 Sectors.
8.1.1 Designation.
Voting on the Members Committee shall be by sectors. The Members
Committee shall be composed of five sectors, one for Generation Owners, one for
Other Suppliers, one for Transmission Owners, one for Electric Distributors, and
one for End-Use Customers, provided that there are at least five Members in each
Sector. Except as specified in Section 8.1.2, each Voting Member shall have one
vote. Each Voting Member shall, within thirty (30) days after the Effective Date
or, if later, thirty (30) days after becoming a Member, and thereafter not later
than 10 days prior to the Annual Meeting of the Members for each annual period
beginning with the Annual Meeting of the Members, submit to the President a
sealed notice of the sector in which it is qualified to vote or, if qualified to
participate in more than one sector, its rank order preference of the sectors in
which it wishes to vote, and shall be assigned to its highest-ranked sector that
has the minimum number of Members specified above. If a Member is assigned to a
sector other than its highest-ranked sector in accordance with the preceding
sentence, its higher sector preference or preferences shall be honored as soon
as a higher-ranked sector has five or more Members. A Voting Member may
designate as its voting sector any sector for which it or its Affiliate or
Related Party Members is qualified. The sector designations of the Voting
Members shall be announced by the President at the Annual Meeting.
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8.1.2 Related Parties.
The Members in a group of Related Parties shall each be entitled to a
vote, provided that all the Members in a group of Related Parties that chooses
to exercise such rights shall be assigned to the Electric Distributor sector.
8.2 Representatives.
8.2.1 Appointment.
Each Member may appoint a representative to serve on the Members
Committee, with authority to act for that Member with respect to actions or
decisions by the Members Committee. Each Member may appoint an alternate
representative to act for that Member at meetings of the Members Committee in
the absence of the representative. A Member participating in the PJM Interchange
Energy Market through an agent may be represented on the Members Committee by
that agent. A Member shall appoint its representative by giving written notice
identifying its representative and alternate representative to the Office of the
Interconnection. Members that are Affiliates or Related Parties may each appoint
a representative and alternate representative to the Members Committee, but
shall vote as specified in Section 8.1.
8.2.2 Regulatory Authorities.
FERC and any other federal agency with regulatory authority over a
Member, each State electric utility regulatory commission with regulatory
jurisdiction within the PJM Control Area, and each office of consumer advocate
from each State all or any part of the territory of which is within the PJM
Control Area, may nominate one representative to serve as an ex officio non-
voting member of the Members Committee.
8.2.3 Initial Representatives.
Initial representatives to the Members Committee shall be appointed no
later than 30 days after the Effective Date; provided, however, that each
representative to the Management Committee under the Operating Agreement of PJM
Interconnection, L.L.C. as in effect immediately prior to the Effective Date
shall automatically become a representative to the Members Committee on the
Effective Date unless replaced as specified in Section 8.2.4. An entity becoming
a Member shall appoint a representative to the Members Committee no later than
30 days after becoming a Member.
8.2.4 Change of or Substitution for a Representative.
Any Member may change its representative or alternate on the Members
Committee at any time by providing written notice to the Office of the
Interconnection identifying its replacement representative or alternate. Any
representative to the Members Committee may, by written notice to the Chair,
designate a substitute representative from that Member to act for him or her
with respect to any matter specified in such notice.
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8.3 Meetings.
8.3.1 Regular and Special Meetings.
The Members Committee shall hold regular meetings, no less frequently
than once each calendar quarter at such time and at such place as shall be fixed
by the Chair. The Members Committee shall hold an Annual Meeting of the Members
each calendar year at such time and place as shall be specified by the Chair. At
the Annual Meeting of the Members, Board Members as necessary, officers of the
Members Committee, and representatives to the Finance Committee shall be
elected. The Members Committee may hold special meetings for one or more
designated purposes within the scope of the authority of the Members Committee
when called by the Chair on the Chair's own initiative, or at the request of
five or more representatives on the Members Committee. The notice of a regular
or special meeting shall be distributed to the representatives as specified in
Section 18.13 of this Agreement not later than seven days prior to the meeting,
shall state the time and place of the meeting, and shall include an agenda
sufficient to notify the representatives of the substance of matters to be
considered at the meeting; provided, however, that meetings may be called on
shorter notice at the discretion of the Chair as the Chair shall deem necessary
to deal with an emergency or to meet a deadline for action.
8.3.2 Attendance.
Regular and special meetings may be conducted in person or by
telephone, or other electronic means as authorized by the Members Committee.
The attendance in person or by telephone or other electronic means of a
representative or a duly designated substitute shall be required in order to
vote.
8.3.3 Quorum.
The attendance as specified in Section 8.3.2 of a majority of the
Voting Members from each of at least three sectors that each have at least five
Members shall constitute a quorum, however, a quorum shall only require one-
third of the Voting Members, but not less than ten, from any sector that has
more than 20 Voting Members. No action may be taken by the Members Committee at
a meeting unless a quorum is present; provided, however, that if a quorum is not
present, the Voting Members then present shall have the power to adjourn the
meeting from time to time until a quorum shall be present.
8.4 Manner of Acting.
(a) All matters brought up for a vote or approval by the Members Committee
shall be stated in the form of a motion, which must be seconded. Only one motion
may be pending at one time.
(b) Each Sector shall be entitled to cast one and zero one-hundredths
(1.00) Sector Votes. Each Voting Member shall be entitled to cast one (1) non-
divisible vote in its sector. In the case of a Voting Member comprised of
Affiliates or Related Parties, any representative, alternate or substitute of
any of the Affiliated or Related Parties may cast the vote of the Voting Member.
The Sector Vote of each sector shall be split into an affirmative component
based on votes for the pending motion, and a negative component based on votes
against the pending motion, in direct proportion to the votes cast within the
sector for and against the pending motion, rounded to two decimal places.
(c) The sum of affirmative Sector Votes necessary to pass the pending
motion shall be
Revised: November 19, 1998
Effective: January 14, 1999
18
greater than (but not merely equal to) the product of .667 multiplied by the
number of sectors that have at least five Members and that participated in the
vote.
(d) Voting Members not in attendance at the meeting as specified in
Section 8.3.2 of this Agreement or abstaining shall not be counted as
affirmative or negative votes.
8.5 Chair and Vice Chair of the Members Committee.
8.5.1 Selection and Term.
The representatives or their alternates or substitutes on the Members
Committee shall elect from among the representatives a Chair and a Vice Chair.
The offices of Chair and Vice Chair shall be held for a term of one year and
until succession to the office occurs as specified herein. Except as specified
below, at each Annual Meeting of the Members the Vice Chair shall succeed to the
office of Chair, and a new Vice Chair shall be elected. If the office of Chair
becomes vacant, or the Chair leaves the employment of the Member for whom the
Chair is the representative, or the Chair is no longer the representative of
such Member, the Vice Chair shall succeed to the office of Chair, and a new Vice
Chair shall be elected at the next regular or special meeting of the Members
Committee, both such officers to serve until the second Annual Meeting of the
Members following such succession or election to a vacant office. If the office
of Vice Chair becomes vacant, or the Vice Chair leaves the employment of the
Member for whom the Vice Chair is the representative, or the Vice Chair is no
longer the representative of such Member, a new Vice Chair shall be elected at
the next regular or special meeting of the Members Committee.
8.5.2 Duties.
The Chair shall call and preside at meetings of the Members Committee,
and shall carry out such other responsibilities as the Members Committee shall
assign. The Chair shall cause minutes of each meeting of the Members Committee
to be taken and maintained, and shall cause notices of meetings of the Members
Committee to be distributed. The Vice Chair shall preside at meetings of the
Members Committee in the absence of the Chair, and shall otherwise act for the
Chair at the Chair's request.
8.6 Other Committees.
(a) The Members Committee may form, select the membership, and oversee the
activities, of an Operating Committee, a Planning Committee, and an Energy
Market Committee as standing committees, and such other committees,
subcommittees, task forces, working groups or other bodies as it shall deem
appropriate, to provide advice and recommendations to the Members Committee or
to the Office of the Interconnection as directed by the Members Committee.
(b) The Members Committee shall elect representatives to the Alternate
Dispute Resolution Committee as specified in the PJM Dispute Resolution
Procedures.
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8.7 User Groups.
(a) Any five or more Members sharing a common interest may form a User
Group, and may invite such other Members to join the User Group as the User
Group shall deem appropriate. Notification of the formation of a User Group
shall be provided to all members of the Members Committee.
(b) The Members Committee shall create a User Group composed of
representatives of bona fide public interest and environmental organizations
that are interested in the activities of the LLC and are willing and able to
participate in such a User Group.
Meetings of User Groups shall be open to all Members and the Office of the
Interconnection. Notices and agendas of meetings of a User Group shall be
provided to all Members that ask to receive them.
(d) Any recommendation or proposal for action adopted by affirmative vote
of three-fourths or more of the members of a User Group shall be circulated by
the Office of the Interconnection to the representatives on the Members
Committee and shall be considered by the Members Committee at its next regular
meeting occurring not earlier than 30 days after the circulation of such notice.
(e) If the Members Committee does not adopt a recommendation or proposal
submitted to it by a User Group, upon vote of nine-tenths or more of the members
of the User Group the recommendation or proposal may be submitted to the PJM
Board for its consideration in accordance with Section 7.7(v).
8.8 Powers of the Members Committee.
The Members Committee, acting by adoption of a motion as specified in
Section 8.4, shall have the power to take the actions specified in this
Agreement, including:
i) Elect the members of the PJM Board;
ii) In accordance with the provisions of Section 18.6 of this
Agreement, amend any portion of this Agreement, including the
Schedules hereto, or create new Schedules, and file any such
amendments or new Schedules with FERC or other regulatory body of
competent jurisdiction;
iii) Terminate this Agreement; and
iv) Provide advice and recommendations to the PJM Board and the
Office of the Interconnection.
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9. OFFICERS
9.1 Election and Term.
The officers of the LLC shall consist of a President, a Secretary and a
Treasurer. The PJM Board may elect such other officers as it deems necessary to
carry out the business of the LLC. All officers shall be elected by the PJM
Board and shall hold office until the next annual meeting of the PJM Board and
until their successors are elected. Any number of offices may be held by the
same person, except that the offices of the President and Treasurer may not be
held by the same person.
9.2 President.
The PJM Board shall appoint a President and Chief Executive Officer of the
LLC (the "President"). The President shall direct and supervise the day-to-day
operation of the LLC, and shall report to the PJM Board. The President shall be
responsible for directing and supervising the Office of the Interconnection in
the performance of the duties and responsibilities specified in Section 10.4.
The President shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the LLC, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the board to some other officer or agent of the
LLC. In the absence of the President or in the event of his or her inability or
refusal to act, and if a vice president has been appointed by the PJM Board, the
Vice President (or in the event there be more than one Vice President, the Vice
Presidents in the order designated by the PJM Board in its Minutes) shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The Vice
President shall perform such other duties and have such other powers as the PJM
Board may from time to time prescribe.
9.3 Secretary.
The Secretary shall attend all meetings of the PJM Board and record all the
proceedings of the meetings of the PJM Board in a minute book to be kept for
that purpose and shall perform like duties for the standing committees or
special committees when required. He or she shall give, or cause to be given,
notice of all special meetings of the PJM Board, and shall perform such other
duties as may be prescribed by the PJM Board or President, under whose
supervision he or she shall be. He or she shall have custody of the corporate
seal of the LLC, and he or she, or an assistant secretary, shall have authority
to affix the same to any instrument requiring it and, when so affixed, it may be
attested by his or her signature or by the signature of such assistant
secretary. The PJM Board may give general authority to any other officer to
affix the seal of the LLC and to attest the affixing by his or her signature.
21
9.4 Treasurer.
The Treasurer shall have or arrange for the custody of the LLC's funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belongings to the LLC and shall deposit all moneys and
other valuable effects in the name and to the credit of the LLC in such
depositories as may be designated by the PJM Board. The Treasurer shall disburse
the funds of the LLC as may be ordered by the PJM Board, taking proper vouchers
for such disbursements, and shall render to the President and PJM Board at its
regular meetings, or when the PJM Board so requires, an account of his or her
transactions as Treasurer and of the financial condition of the LLC. If required
by the Board, the Treasurer shall give the LLC a bond (which shall be renewed
periodically) in such sum and with such surety or sureties as shall be
satisfactory to the PJM Board for the faithful performance of the duties of his
office and of the restoration to the LLC, in case of his or her death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his or her possession or under his
or her control belonging to the LLC.
9.5 Renewal of Officers; Vacancies.
Any officer elected or appointed by the PJM Board may be removed at any
time by the affirmative vote of a majority of the PJM Board eligible to vote.
Any vacancy occurring in any office of the LLC shall be filled by the PJM Board.
9.6 Compensation.
The salaries of all officers and agents of the LLC, and the reasonable
compensation of the PJM Board, shall be fixed by the PJM Board.
10. OFFICE OF THE INTERCONNECTION.
10.1 Establishment.
The Office of the Interconnection shall implement this Agreement,
administer the PJM Tariff, and undertake such other responsibilities as set
forth herein. All personnel of the Office of the Interconnection shall be
employees of the LLC or under contract thereto. The cost of the Office of the
Interconnection and expenses associated therewith, including salaries and
expenses of said personnel, space and any necessary facilities or other capital
expenditures, shall be recovered in accordance with Schedule 3. The Office of
the Interconnection shall adopt, publish and comply with standards of conduct
that satisfy the regulations of FERC.
10.2 Processes and Organization.
In order to carry out the responsibilities of the Office of the
Interconnection for the safe and reliable operation of the Interconnection, the
President may establish processes and organization for operating personnel and
facilities as the President shall deem appropriate, and shall request such
Members as the President shall deem appropriate to participate in such processes
and organization. All such processes and organization shall be carried out in
accordance with all applicable code of conduct or other functional separation
requirements of FERC.
22
10.3 Confidential Information.
The Office of the Interconnection shall comply with the requirements of
Section 18.17 with respect to any proprietary or confidential information
received from or about any Member.
10.4 Duties and Responsibilities.
The Office of the Interconnection, under the direction of the President as
supervised and overseen by the PJM Board, shall carry out the following duties
and responsibilities, in accordance with the provisions of this Agreement:
i) Administer and implement this Agreement;
ii) Perform such functions in furtherance of this Agreement as the
PJM Board, acting within the scope of its duties and
responsibilities under this Agreement, may direct;
iii) Prepare, maintain, update and disseminate the PJM Manuals;
iv) Comply with MAAC and NERC operation and planning standards,
principles and guidelines;
v) Maintain an appropriately trained workforce, and such equipment
and facilities, including computer hardware and software and
backup power supplies, as necessary or appropriate to implement
or administer this Agreement;
vi) Direct the operation and coordinate the maintenance of the
facilities of the Interconnection used for both load and
reactive supply, so as to maintain reliability of service and
obtain the benefits of pooling and interchange consistent with
this Agreement and the Reliability Assurance Agreement;
vii) Direct the operation and coordinate the maintenance of the bulk
power supply facilities of the Interconnection with such
facilities and systems of others not party to this Agreement in
accordance with agreements between the LLC and such other
systems to secure reliability and continuity of service and
other advantages of pooling on a regional basis;
viii) Perform interchange accounting and maintain records pertaining
to the operation of the PJM Interchange Energy Market and the
Interconnection;
ix) Notify the Members of the receipt of any application to become a
Member, and of the action of the Office of the Interconnection
on such application, including but not limited to the completion
of integration of a new Member's system into the PJM Control
Area as specified in Section 11.6(f);
x) Calculate the Weighted Interest of each Member;
xi) Maintain accurate records of the sectors in which each Voting
Member is entitled to vote, and calculate the results of any
vote taken in the Members Committee;
23
xii) Furnish appropriate information and reports as are required to
keep the Members regularly informed of the outlook for, the
functioning of, and results achieved by the Interconnection;
xiii) File with FERC on behalf of the Members any amendments to this
Agreement or the Schedules hereto, any new Schedules hereto,
and make any other regulatory filings on behalf of the Members
or the LLC necessary to implement this Agreement;
xiv) At the direction of the PJM Board, submit comments to
regulatory authorities on matters pertinent to the
Interconnection;
xv) Consult with the standing or other committees established
pursuant to Section 8.6(a) on matters within the responsibility
of the committee;
xvi) Perform operating studies of the bulk power supply facilities
of the Interconnection and make such recommendations and
initiate such actions as may be necessary to maintain reliable
operation of the Interconnection;
xvii) Accept, on behalf of the Members, notices served under this
Agreement;
xviii) Perform those functions and undertake those responsibilities
transferred to it under the Transmission Owners Agreement,
including (A) direct the operation of the transmission
facilities of the parties to the Transmission Owners Agreement,
(B) administer the PJM Tariff, and (C) administer the Regional
Transmission Expansion Planning Protocol set forth as
Schedule 6 to this Agreement.
xix) Perform those functions and undertake those responsibilities
transferred to it under the Reliability Assurance Agreement, as
specified in Schedule 8 of this Agreement.
xx) Monitor the operation of the PJM Control Area, ensure that
appropriate Emergency plans are in place and appropriate
Emergency drills are conducted, declare the existence of an
Emergency, and direct the operations of the Members as
necessary to manage, alleviate or end an Emergency;
xxi) Incorporate the grid reliability requirements applicable to
nuclear generating units in the PJM Control Area planning and
operating principles and practices; and
xxii) Initiate such legal or regulatory proceedings as directed by
the PJM Board to enforce the obligations of this Agreement.
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11. MEMBERS
11.1 Management Rights.
The Members or any of them shall not take part in the management of the
business of, and shall not transact any business for, the LLC in their capacity
as Members, nor shall they have power to sign for or to bind the LLC.
11.2 Other Activities.
Except as otherwise expressly provided herein, any Member may engage in or
possess any interest in another business or venture of any nature and
description, independently or with others, even if such activities compete
directly with the business of the LLC, and neither the LLC nor any Member hereof
shall have any rights in or to any such independent ventures or the income or
profits derived therefrom.
11.3 Member Responsibilities.
11.3.1 General.
To facilitate and provide for the work of the Office of the
Interconnection and of the several committees appointed by the Members
Committee, each Member shall, to the extent applicable;
(a) Maintain adequate records and, subject to the provisions of this
Agreement for the protection of the confidentiality of proprietary or
commercially sensitive information, provide data required for (i) coordination
of operations, (ii) accounting for all interchange transactions, (iii)
preparation of required reports, (iv) coordination of planning, including those
data required for capacity accounting, (v) preparation of maintenance schedules,
(vi) analysis of system disturbances, and (vii) such other purposes, including
those set forth in Schedule 2, as will contribute to the reliable and economic
operation of the Interconnection;
(b) Provide such recording, telemetering, communication and control
facilities as are required for the coordination of its operations with the
Office of the Interconnection and those of the other Members and to enable the
Office of the Interconnection to operate the PJM Control Area and otherwise
implement and administer this Agreement, including equipment required in normal
and Emergency operations and for the recording and analysis of system
disturbances;
(c) Provide adequate and properly trained personnel to (i) permit
participation in the coordinated operation of the Interconnection, (ii) meet its
obligation on a timely basis for supply of records and data, (iii) serve on
committees and participate in their investigations, and (iv) share in the
representation of the Interconnection in inter-regional and national reliability
activities;
(d) Share in the costs of committee activities and investigations
(including costs of consultants, computer time and other appropriate items),
communication facilities used by all the Members (in addition to those provided
in the Office of the Interconnection), and such other expenses as are approved
for payment by the PJM Board, such costs to be recovered as provided in
Schedule 3;
25
(e) Comply with the requirements of the PJM Manuals and all
directives of the Office of the Interconnection to take any action for the
purpose of managing, alleviating or ending an Emergency, and authorize the
Office of the Interconnection to direct the transfer or interruption of the
delivery of energy on their behalf to meet an Emergency and to implement
agreements with other Control Areas interconnected with the PJM Control Area for
the mutual provision of service to meet an Emergency, and be subject to the
emergency procedure charges specified in Schedule 9 of this Agreement for any
failure to follow the Emergency instructions of the Office of the
Interconnection.
11.3.2 Facilities Planning and Operation.
Consistent with and subject to the requirements of this Agreement, the
PJM Tariff, the MAAC Agreement, the Reliability Assurance Agreement, the
Transmission Owners Agreement, and the PJM Manuals, each Member shall cooperate
with the other Members in the coordinated planning and operation of the
facilities of its System within the PJM Control Area so as to obtain the
greatest practicable degree of reliability, compatible economy and other
advantages from such coordinated planning and operation. In furtherance of such
cooperation each Member shall, as applicable:
(a) Consult with the other Members and the Office of the
Interconnection, and coordinate the installation of its electric generation and
Transmission Facilities with those of such other Members so as to maintain
reliable service in the PJM Control Area;
(b) Coordinate with the other Members, the Office of the
Interconnection and with others in the planning and operation of the regional
facilities to secure a high level of reliability and continuity of service and
other advantages;
(c) Cooperate with the other Members and the Office of the
Interconnection in the implementation of all policies and procedures established
pursuant to this Agreement for dealing with Emergencies, including but not
limited to policies and procedures for maintaining or arranging for a portion of
a Member's Capacity Resources at least equal to the level established pursuant
to the Reliability Assurance Agreement to have the ability to go from a shutdown
condition to an operating condition and start delivering power without
assistance from the power system;
(d) Cooperate with the members of MAAC to augment the reliability of
the bulk power supply facilities of the region and comply with MAAC and NERC
operating and planning standards, principles and guidelines and the PJM Manuals;
(e) Obtain or arrange for transmission service as appropriate to
carry out this Agreement;
(f) Cooperate with the Office of the Interconnection's coordination
of the operating and maintenance schedules of the Member's generating and
Transmission Facilities with the facilities of other Members to maintain
reliable service to its own customers and those of the other Members and to
obtain economic efficiencies consistent therewith;
(g) Cooperate with the other Members and the Office of the
Interconnection in the analysis, formulation and implementation of plans to
prevent or eliminate conditions that
26
impair the reliability of the Interconnection; and
(h) Adopt and apply standards adopted pursuant to this Agreement
and conforming to MAAC and NERC standards, principles and guidelines and the PJM
Manuals, for system design, equipment ratings, operating practices and
maintenance practices.
11.3.3 Electric Distributors.
In addition to any of the foregoing responsibilities that may be
applicable, each Member that is an Electric Distributor, whether or not that
Member votes in the Members Committee in the Electric Distributor sector or
meets the eligibility requirements for any other sector of the Members
Committee, shall:
(a) Accept, comply with or be compatible with all standards
applicable within the PJM Control Area with respect to system design, equipment
ratings, operating practices and maintenance practices as set forth in the PJM
Manuals, or be subject to an interconnected Member's requirements relating to
the foregoing, so that sufficient electrical equipment, control capability,
information and communication are available to the Office of the Interconnection
for planning and operation of the PJM Control Area;
(b) Assure the continued compatibility of its local system energy
management system monitoring and telecommunications systems to satisfy the
technical requirements of interacting automatically or manually with the Office
of the Interconnection as it directs the operation of the PJM Control Area;
(c) Maintain or arrange for a portion of its connected load to be
subject to control by automatic underfrequency, under-voltage, or other load-
shedding devices at least equal to the levels established pursuant to the
Reliability Assurance Agreement, or be subject to another Member's control for
these purposes;
(d) Provide or arrange for sufficient reactive capability and
voltage control facilities to conform to Good Utility Practice and (i) to meet
the reactive requirements of its system and customers and (ii) to maintain
adequate voltage levels and the stability required by the bulk power supply
facilities of the Interconnection;
(e) Shed connected load, share Capacity Resources, initiate active
load management programs, and take such other coordination actions as may be
necessary in accordance with the directions of the Office of the Interconnection
in Emergencies;
(f) Maintain or arrange for a portion of its Capacity Resources at
least equal to the level established pursuant to the Reliability Assurance
Agreement to have the ability to go from a shutdown condition to an operating
condition and start delivering power without assistance from the power system;
(g) Provide or arrange through another Member for the services of
a 24-hour local control center to coordinate with the Office of the
Interconnection, each such control center to be furnished with appropriate
telemetry equipment as specified in the PJM Manuals, and to be staffed by system
operators trained and delegated sufficient authority to take any action
necessary to assure that the system for which the operator is responsible is
operated in a stable and reliable manner;
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(h) Provide to the Office of the Interconnection all System,
accounting, customer tracking, load forecasting and other data necessary or
appropriate to implement or administer this Agreement or the Reliability
Assurance Agreement; and
(i) Comply with the underfrequency relay obligations and charges
specified in Schedule 7 of this Agreement.
11.3.4 Reports to the Office of the Interconnection.
Each Member shall report as promptly as possible to the Office of the
Interconnection any changes in its operating practices and procedures relating
to the reliability of the bulk power supply facilities of the Interconnection.
The Office of the Interconnection shall review such reports, and if any change
in an operating practice or procedure of the Member is not in accord with the
established operating principles, practices and procedures for the
Interconnection and such change adversely affects the Interconnection and
regional reliability, it shall so inform such Member, and the other Members
through their representative on the Operating Committee, and shall direct that
such change be modified to conform to the established operating principles,
practices and procedures.
11.4 Regional Transmission Expansion Planning Protocol.
The Members shall participate in regional transmission expansion planning
in accordance with the Regional Transmission Expansion Planning Protocol set
forth in Schedule 6 to this Agreement.
11.5 Member Right to Petition.
(a) Nothing herein shall deprive any Member of the right to petition FERC
to modify any provision of this Agreement or any Schedule or practice hereunder
that the petitioning Member believes to be unjust, unreasonable, or unduly
discriminatory under Section 206 of the Federal Power Act, subject to the right
of any other Member (a) to oppose said proposal, or (b) to withdraw from the LLC
pursuant to Section 4.1.
(b) Nothing herein shall be construed as affecting in any way the right of
the Members, acting pursuant to a vote of the Members Committee as specified in
Section 8.4, unilaterally to make an application to FERC for a change in any
rate, charge, classification, tariff or service, or any rule or regulation
related thereto, under section 205 of the Federal Power Act and pursuant to the
rules and regulations promulgated by FERC thereunder, subject to the right of
any Member that voted against such change in any rate, charge, classification,
tariff or service, or any rule or regulation related thereto, in intervene in
opposition to any such application.
(c) Nothing in this Agreement shall preclude those Members joining in the
proposal to utilize Locational Marginal Prices to deal with transmission
congestion from (i) filing amendments to the Agreement necessary to implement
the use of Locational Marginal Prices in the PJM Control Area in accordance with
such orders or other directives as may be issued by FERC relating thereto, or
(ii) implementing the provisions of Sections 1.7.21 and 5.2.2(d) of Schedule 1
to this Agreement, without further authorization or approval by the Members
Committee.
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11.6 Membership Requirements.
(a) To qualify as a Member, an entity shall:
i) Be a Transmission Owner within the PJM Control Area or an
Eligible Customer under the PJM Tariff;
ii) If not a Transmission Owner, be a Generation Owner, an Other
Supplier, an Electric Distributor, or an End-Use Consumer;
iii) Be engaged in buying, selling or transmitting electric energy in
or through the Interconnection or have a good faith intent to do
so; and
iv) Accept the obligations set forth in this Agreement.
(b) Certain Members that are Load Serving Entities are parties to the
Reliability Assurance Agreement. Upon becoming a Member, any entity that is a
Load Serving Entity and that wishes to become a Market Buyer shall also
simultaneously execute the Reliability Assurance Agreement.
(c) An entity that wishes to become a party to this Agreement shall apply,
in writing, to the President setting forth its request, its qualifications for
membership, its agreement to supply data as specified in this Agreement, its
agreement to pay all costs and expenses in accordance with Schedule 3, and
providing all information specified pursuant to the Schedules to this Agreement
for entities that wish to become Market Participants. Any such application that
meets all applicable requirements shall be approved by the President within
sixty (60) days.
(d) Nothing in this Section 11 is intended to remove, in any respect, the
choice of participation by other utility companies or organizations in the
operation of the Interconnection through inclusion in the System of a Member.
(e) An entity whose application is accepted by the President pursuant to
Section 11.6(c) shall execute a supplement to this Agreement in substantially
the form prescribed in Schedule 4, which supplement shall be countersigned by
the President and tendered for filing with FERC by the President. The entity
shall become a Member effective on the date specified by FERC when accepting the
supplement for filing.
(f) Entities whose applications contemplate expansion or rearrangement of
the PJM Control Area may become Members promptly as described in Sections
11.6(c) and 11.6(e) above, but the integration of the applicant's system into
all of the operation and accounting provisions of this Agreement and the
Reliability Assurance Agreement shall occur only after completion of all
required installations and modifications of metering, communications, computer
programming, and other necessary and appropriate facilities and procedures, as
determined by the Office of the Interconnection. The Office of the
Interconnection shall notify the other Members when such integration has
occurred.
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12. TRANSFERS OF MEMBERSHIP INTEREST
The rights and obligations created by this Agreement shall inure to and
bind the successors and assigns of such Member; provided, however, that the
rights and obligations of any Member hereunder shall not be assigned without the
approval of the Members Committee except as to a successor in operation of a
Member's electric operating properties by reason of a merger, consolidation,
reorganization, sale, spinoff, or foreclosure, as a result of which
substantially all such electric operating properties are acquired by such a
successor, and such successor becomes a Member.
13. INTERCHANGE
13.1 Interchange Arrangements with Non-Members.
Any Member may enter into interchange arrangements with others who are not
Members with respect to the delivery or receipt of capacity and energy to
fulfill its obligations hereunder or for any other purpose, subject to the
standards and requirements established in or pursuant to this Agreement.
13.2 Energy Market.
The Office of the Interconnection shall administer an efficient energy
market within the Interconnection, to be known as the PJM Interchange Energy
Market, in which Members may buy and sell energy. The Office of the
Interconnection will schedule in advance and dispatch generation on the basis of
least-cost, security-constrained dispatch and the prices and operating
characteristics offered by sellers within and into the Interconnection,
continuing until sufficient generation is dispatched to serve the energy
purchase requirements of the Interconnection and buyers out of the
Interconnection, as well as the requirements of the Interconnection for
ancillary services provided by such generation. Scheduling and dispatch shall be
conducted in accordance with applicable schedules to the PJM Tariff and the
Schedules to this Agreement.
14. METERING
14.1 Installation, Maintenance and Reading of Meters.
The quantities of electric energy involved in determination of the amounts
of the billing rendered hereunder shall be ascertained by means of meters
installed, maintained and read either at the expense of the party on whose
premises the meters are located or as otherwise provided for by agreement
between the parties concerned.
14.2 Metering Procedures.
Procedures with respect to maintenance, testing, calibrating, correction
and registration records, and precision tolerance of all metering equipment
shall be in accordance with Good Utility Practice. The expense of testing any
meter shall be borne by the party owning such meter, except that when a meter
tested upon request of another party is found to register within the established
tolerance the party making the request shall bear the expense of such test.
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14.3 Integrated Megawatt-Hours
All metering of energy required herein shall be the integration of megawatt
hours in the clock hour, and the quantities thus obtained shall constitute the
megawatt load for such clock hour; provided, however, that adjustment shall be
made for other contractual obligations of any Member as may be required to
determine the quantity to be accounted for hereunder, and for transmission
losses.
14.4 Meter Locations.
The meter locations to be used by the Members in determining their energy
transactions on the Interconnection shall be as reasonably determined from time
to time by the Member or the Office of the Interconnection.
15. ENFORCEMENT OF OBLIGATIONS
15.1 Failure to Meet Obligations.
15.1.1 Termination of Market Buyer Rights.
The Office of the Interconnection shall terminate a Market Buyer's
right to make purchases from the PJM Interchange Energy Market and PJM Capacity
Credit Market if it determines that the Market Buyer does not continue to meet
the obligations set forth in this Agreement, provided that the Office of the
Interconnection has notified the Market Buyer of any such deficiency and
afforded the Market Buyer a reasonable opportunity to cure it. The Office of the
Interconnection shall reinstate a Market Buyer's right to make purchases from
the PJM Interchange Energy Market and PJM Capacity Credit Market upon
demonstration by the Market Buyer that it has come into compliance with the
obligations set forth in this Agreement.
15.1.2 Termination of Market Seller Rights.
The Office of the Interconnection shall not accept offers from a
Market Seller that has not complied with the prices, terms, or operating
characteristics of any of its prior scheduled transactions in the PJM
Interchange Energy Market, unless such Market Seller has taken appropriate
measures to the satisfaction of the Office of the Interconnection to ensure
future compliance.
Revised: January 29, 1999
Effective: March 31, 1999
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15.1.3 Payment of Bills.
(a) A Member shall make full and timely payment, in accordance with
the terms specified by the Office of the Interconnection, of all bills rendered
in connection with or arising under or from this Agreement, any service or rate
schedule, any tariff, or any services performed by the Office of the
Interconnection, notwithstanding any disputed amount, but any such payment shall
not be deemed a waiver of any right with respect to such dispute. With respect
to any payment that the LLC is required to make to a Member in connection with
or arising under this Agreement, any service or rate schedule, or any tariff,
the LLC shall have a right of setoff equal to any amount that the Member is
required to pay the LLC in connection with or arising under or from this
Agreement, any service or rate schedule, any tariff, or any services performed
by the Office of the Interconnection. Any Member that fails to make full and
timely payment to the LLC, or otherwise fails to meet its financial or other
obligations to a Member, the Office of the Interconnection or the LLC under this
Agreement, shall upon expiration of the 10 day period specified below be in
default. If the Office of the Interconnection concludes, upon its own initiative
or the recommendation of or complaint by the Members Committee or any Member,
that a Member is in breach of any obligation under this Agreement, the Office of
the Interconnection shall so notify such Member and inform all other Members.
The notified Member may remedy such asserted breach by: (i) paying all amounts
assertedly due, along with interest on such amounts calculated in accordance
with the methodology specified for interest on refunds in FERC's regulations at
18 C.F.R. (S) 35.19a(a)(2)(iii); and (ii) demonstration to the satisfaction of
the Office of the Interconnection that the Member has taken appropriate measures
to meet any other obligation of which it was deemed to be in breach; provided,
however, that any such payment or demonstration may be subject to a reservation
of rights, if any, to subject such matter to the PJM Dispute Resolution
Procedures; and provided, further, that any such determination by the Office of
the Interconnection may be subject to review by the PJM Board upon request of
the Member involved or the Office of the Interconnection. If a Member has not
remedied a breach by the 10th business day following receipt of the Office of
the Interconnection's notice, or receipt of the PJM Board's decision on review,
if applicable, then the Member shall be in default and, in addition to such
other remedies as may be available to the LLC:
i) A defaulting Market Participant shall be precluded from buying or
selling energy in the PJM Interchange Energy Market until the
default is remedied as set forth above.
ii) A defaulting Member shall not be entitled to participate in the
activities of any committee or other body established by the
Members Committee or the Office of the Interconnection.
iii) A defaulting Member shall not be entitled to vote on the Members
Committee or any other committee or other body established
pursuant to this Agreement.
Revised: January 29, 1999
Effective: March 31, 1999
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15.2 Enforcement of Obligations.
If the Office of the Interconnection sends a notice to the PJM Board that a
Member has failed to perform an obligation under this Agreement, the PJM Board
shall initiate such action against such Member to enforce such obligation as the
PJM Board shall deem appropriate. Subject to the procedures specified in Section
15.1, a Member's failure to perform such obligation shall be deemed to be a
default under this Agreement. In order to remedy a default, but without limiting
any rights the LLC may have against the defaulting Member, the PJM Board may
assess against, and collect from, the Members not in default, in proportion to
their Weighted Interest, an amount equal to the amount that the defaulting
Member has failed to pay to the Office of the Interconnection, along with
appropriate interest, but such assessment shall in no way relieve the defaulting
Member of its obligations, and shall confer upon the Members Committee the right
to recover the assessed amounts from the defaulting Member. In addition to any
amounts in default, the defaulting Member shall be liable to the LCC for
reasonable costs incurred in enforcing the defaulting Member's obligations.
15.3 Obligations to a Member in Default.
The Members have no continuing obligation to provide the benefits of
interconnected operations to a Member in default.
15.4 Obligations of a Member in Default.
A Member found to be in default shall take all possible measures to
mitigate the continued impact of the default on the Members not in default,
including, but not limited to, loading its own generation to supply its own load
to the maximum extent possible.
15.5 No Implied Waiver.
A failure of a Member, the PJM Board, or the LLC to insist upon or enforce
strict performance of any of the provisions of this Agreement shall not be
construed as a waiver or relinquishment to any extent of such entity's right to
assert or rely upon any such provisions, rights and remedies in that or any
other instance; rather, the same shall be and remain in full force and effect.
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16. LIABILITY AND INDEMNITY
16.1 Members.
(a) As between the Members, except as may be otherwise agreed upon between
individual Members with respect to specified interconnections, each Member will
indemnify and hold harmless each of the other Members, and its directors,
officers, employees, agents, or representatives, of and from any and all
damages, losses, claims, demands, suits, recoveries, costs and expenses
(including all court costs and reasonable attorneys' fees), caused by reason of
bodily injury, death or damage to property of any third party, resulting from or
attributable to the fault, negligence or willful misconduct of such Member, its
directors, officers, employees, agents, or representatives, or resulting from,
arising out of, or in any way connected with the performance of its obligations
under this Agreement, excepting only, and to the extent, such cost, expense,
damage, liability or loss may be caused by the fault, negligence or willful
misconduct of any other Member. The duty to indemnify under this Agreement will
continue in full force and effect notwithstanding the expiration or termination
of this Agreement or the withdrawal of a Member from this Agreement, with
respect to any loss, liability, damage or other expense based on facts or
conditions which occurred prior to such termination or withdrawal.
(b) The amount of any indemnity payment arising hereunder shall be reduced
(including, without limitation, retroactively) by any insurance proceeds or
other amounts actually recovered by the Member seeking indemnification in
respect of the indemnified action, claim, demand, costs, damage or liability. If
any Member shall have received an indemnity payment for an action, claim,
demand, cost, damage or liability and shall subsequently actually receive
insurance proceeds or other amounts for such action, claim, demand, cost, damage
or liability, then such Member shall pay to the Member that made such indemnity
payment the lesser of the amount of such insurance proceeds or other amounts
actually received and retained or the net amount of the indemnity payments
actually received previously.
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16.2 LLC Indemnified Parties.
(a) The LLC will indemnify and hold harmless the PJM Board, the LLC's
officers, employees and agents, and any representatives of the Members serving
on the Members Committee and any other committee created under Section 8 of this
Agreement (all such Board Members, officers, employees, agents and
representatives for purposes of this Section 16 being referred to as "LLC
Indemnified Parties"), of and from any and all actions, claims, demands, costs
(including consequential or indirect damages, economic losses and all court
costs and reasonable attorneys' fees) and liabilities to any third parties,
arising from, or in any way connected with, the performance of the LLC under
this Agreement, or the fact that such LLC Indemnified Party was serving in such
capacity, except to the extent that such action, claim, demand, cost or
liability results from the willful misconduct of any LLC Indemnified Party with
respect to participation in the misconduct. To the extent any dispute arises
between any Member and the LLC arising from, or in any way connected with, the
performance of the LLC under this Agreement, the Member and the LLC shall follow
the PJM Dispute Resolution Procedures. To the extent that any such action,
claim, demand, cost or liability arises from a Member's contractual or other
obligation to provide electric service directly or indirectly to said third
party, which obligation to provide service is limited by the terms of any
tariff, service agreement, franchise, statute, regulatory requirement, court
decision or other limiting provision, the Member designates the LLC and each LLC
Indemnified Party a beneficiary of said limitation.
(b) An LLC Indemnified Party shall not be personally liable for monetary
damages for any breach of fiduciary duty by such LLC Indemnified Party, except
that an LLC Indemnified Party shall be liable to the extent provided by
applicable law (i) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, or (ii) for any
transaction from which the LLC Indemnified Party derived an improper personal
benefit. Notwithstanding (i) and (ii), indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable to the LLC if and to the extent that the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper. If applicable law is hereafter construed or
amended to authorize the further elimination or limitation of the liability of
LLC Indemnified Parties, then the liability of the LLC Indemnified Parties, in
addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by law. No amendment to or repeal of
this section shall apply to or have any effect on the liability or alleged
liability of any LLC Indemnified Party or with respect to any acts or omissions
occurring prior to such amendment or repeal. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the LLC,
and with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
(c) The LLC may pay expenses incurred by an LLC Indemnified Party in
defending a civil, criminal, administrative or investigative action, suit or
proceeding in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of
35
such LLC Indemnified Party to repay such amount if it shall ultimately be
determined that such LLC Indemnified Party is not entitled to be indemnified by
the LLC as authorized in this Section.
(d) In the event the LLC incurs liability under this Section 16.2 that is
not adequately covered by insurance, such amounts shall be recovered pursuant to
the PJM Tariff as provided in Schedule 3 of this Agreement.
16.3 Worker' Compensation Claims.
Each Member shall be solely responsible for all claims of its own
employees, agents and servants growing out of any Worker's Compensation Law.
16.4 Limitation of Liability.
No Member or its directors, officers, employees, agents, or representatives
shall be liable to any other Member or its directors, officers, employees,
agents, or representatives, whether liability arises out of contract, tort
(including negligence), strict liability, or any other cause of or form of
action whatsoever, for any indirect, incidental, consequential, special or
punitive cost, expense, damage or loss, including but not limited to loss of
profits or revenues, cost of capital of financing, loss of goodwill or cost of
replacement power, arising from such Member's performance or failure to perform
any of its obligations under this Agreement or the ownership, maintenance or
operation of its System; provided, however, that nothing herein shall be deemed
to reduce or limit the obligations of any Member with respect to the claims of
persons or entities that are not parties to this Agreement.
16.5 Resolution of Disputes.
To the extent any dispute arises between one or more Members regarding any
issue covered by this Agreement, the Members shall follow the dispute resolution
procedures set forth in the PJM Dispute Resolution Procedures.
16.6 Gross Negligence or Willful Misconduct.
Neither the LLC nor the LLC Indemnified Parties shall be liable to the
Members or any of them for any claims, demands or costs arising from, or in any
way connected with, the performance of the LLC under this Agreement other than
actions, claims or demands based on gross negligence or willful misconduct;
provided, however, that nothing herein shall limit or reduce the obligations of
the LLC to the Members or any of them under the express terms of this Agreement
or the PJM Tariff, including, but not limited to, those set forth in Sections
6.2 and 6.3 of this Agreement.
16.7 Insurance.
The PJM Board shall be authorized to procure insurance against the risks
borne by the LLC and the LLC Indemnified Parties, the cost of which shall be
treated as a cost and expense of the LLC.
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17. MEMBER REPRESENTATIONS, WARRANTIES AND COVENANTS
17.1 Representations and Warranties.
Each Member makes the following representations and warranties to the LLC
and each other Member, as of the Effective Date or such later date as such
Member shall become admitted as a Member of the LLC.
17.1.1 Organization and Existence.
Such Member is an entity duly organized, validly existing and in
good standing under the laws of the state of its organization.
17.1.2 Power and Authority.
Such Member has the full power and authority to execute, deliver and
perform this Agreement and to carry out the transactions contemplated hereby.
17.1.3 Authorization and Enforceability.
The execution and delivery of this Agreement by such Member and the
performance of its obligations hereunder have been duly authorized by all
requisite action on the part of the Member, and do not conflict with any
applicable law or with any other agreement binding upon the Member. The
Agreement has been duly executed and delivered by such Member and constitutes
the legal, valid and binding obligation of such Member, enforceable against it
in accordance with the terms thereof, except insofar as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and to general principles of equity whether such
principles are considered in proceedings in law or in equity.
17.1.4 No Government Consents.
No authorization, consent, approval or order of, notice to or
registration, qualification, declaration or filing with, any governmental
authority is required for the execution, delivery and performance by such Member
of this Agreement or the carrying out by such Member of the transactions
contemplated hereby other than such authorization, consent, approval or order
of, notice to or registration, qualification, declaration or filing that is
pending before such governmental authority.
17.1.5 No Conflict or Breach.
None of the execution, delivery and performance by such Member of
this Agreement, the compliance with the terms and provisions hereof and the
carrying out of the transactions contemplated hereby, conflicts or will conflict
with or will result in a breach or violation of any of the terms, conditions or
provisions of any law, governmental rule or regulation or the charter documents
or bylaws of such Member or any applicable order, writ, injunction, judgment or
decree of any court or governmental authority against such Member or by which it
or any of its properties, is bound, or any loan agreement, indenture, mortgage,
bond, note, resolution, contract or other agreement or instrument to which such
Member is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or will result in the
imposition of any lien upon any of its properties.
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17.1.6 No Proceedings.
There are no actions at law, suits in equity, proceedings or claims
pending or, to the knowledge of the Member, threatened against the Member before
any federal, state, foreign or local court, tribunal or government agency or
authority that might materially delay, prevent or hinder the performance by the
Member of its obligations hereunder.
17.2 Municipal Electric Systems.
Any provisions of Section 17.1 notwithstanding, if any Member that is a
municipal electric system believes in good faith that the provisions of Sections
5.1(b) and 16.1 of this Agreement may not lawfully be applied to that Member
under applicable state law governing municipal activities, the Member may
request a waiver of the pertinent provisions of the Agreement. Any such request
for waiver shall be supported by an opinion of counsel for the Member to the
effect that the provision of the Agreement as to which waiver is sought may not
lawfully be applied to the Member under applicable state law. The PJM Board
shall have the right to have the opinion of the Member's counsel reviewed by
counsel to the LLC. If the PJM Board concludes that either or both of Sections
5.1(b) and 16.1 of this Agreement may not lawfully be applied to a municipal
electric system Member, it shall waive the application of the affected provision
or provisions to such municipal Member. Any Member not permitted by law to
indemnify the other Members shall not be indemnified by the other Members.
17.3 Survival.
All representations and warranties contained in this Section 17 shall
survive the execution and delivery of this Agreement.
18. MISCELLANEOUS PROVISIONS
18.1 [Reserved.]
18.2 Fiscal and Taxable Year.
The fiscal year and taxable year of the LLC shall be the calendar year.
18.3 Reports.
Each year prior to the Annual Meeting of the Members, the PJM Board shall
cause to be prepared and distributed to the Members a report of the LLC's
activities since the prior report.
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18.4 Bank Accounts; Checks, Notes and Drafts.
(a) Funds of the LLC shall be deposited in an account or accounts of a
type, in form and name and in a bank(s) or other financial institution(s) which
are participants in federal insurance programs as selected by the PJM Board.
The PJM Board shall arrange for the appropriate conduct of such accounts. Funds
may be withdrawn from such accounts only for bona fide and legitimate LLC
purposes and may from time to time be invested in such short-term securities,
money market funds, certificates of deposit or other liquid assets as the PJM
Board deems appropriate. All checks or demands for money and notes of the LLC
shall be signed by any officer or by any other person designated by the PJM
Board.
(b) The Members acknowledge that the PJM Board may maintain LLC funds in
accounts, money market funds, certificates of deposit, other liquid assets in
excess of the insurance provided by the Federal Deposit Insurance Corporation,
or other depository insurance institutions and that the PJM Board shall not be
accountable or liable for any loss of such funds resulting from failure or
insolvency of the depository institution.
(c) Checks, notes, drafts and other orders for the payment of money shall
be signed by such persons as the PJM Board from time to time may authorize.
When the PJM Board so authorizes, the signature of any such person may be a
facsimile.
18.5 Books and Records.
(a) At all times during the term of the LLC, the PJM Board shall keep, or
cause to be kept, full and accurate books of account, records and supporting
documents, which shall reflect, completely, accurately and in reasonable detail,
each transaction of the LLC. The books of account shall be maintained and tax
returns prepared and filed on the method of accounting determined by the PJM
Board. The books of account, records and all documents and other writings of the
LLC shall be kept and maintained at the principal office of the Interconnection.
(b) The PJM Board shall cause the Office of the Interconnection to keep at
its principal office the following:
i) A current list in alphabetical order of the full name and last
known business address of each Member, the Weighted Interest of
each Member, and the Members Committee sector of each Voting
Member;
ii) A copy of the Certificate of Formation and the Certificate of
Conversion, and all Certificates of Amendment thereto;
iii) Copies of the LLC's federal, state, and local income tax returns
and reports, if any, for the three most recent years; and
iv) Copies of the Operating Agreement, as amended, and of any
financial statements of the LLC for the three most recent years.
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18.6 Amendment.
(a) Except as provided by law or otherwise set forth herein, this
Agreement, including any Schedule hereto, may be amended, or a new Schedule may
be created, only upon: (i) submission of the proposed amendment to the PJM Board
for its review and comments; (ii) approval of the amendment or new Schedule by
the Members Committee, after consideration of the comments of the PJM Board, in
accordance with Section 8.4, or written agreement to an amendment of all Members
not in default at the time the amendment is agreed upon; and (iii) approval
and/or acceptance for filing of the amendment by FERC and any other regulatory
body with jurisdiction thereof as may be required by law. If and as necessary,
the Members Committee may file with FERC or other regulatory body of competent
jurisdiction any amendment to this Agreement or to its Schedules or a new
Schedule not filed by the Office of the Interconnection.
(b) Notwithstanding the foregoing, an applicant eligible to become a
Member in accordance with the procedures specified in this Agreement shall
become a Member by executing a counterpart of this Agreement without the need
for amendment of this Agreement or execution of such counterpart by any other
Member.
(c) Each of the following fundamental changes to the LLC shall require or
be deemed to require an amendment to this Agreement and shall require the prior
approval of FERC:
i) Adoption of any plan of merger or consolidation;
ii) Adoption of any plan of sale, lease or exchange of assets
relating to all, or substantially all, of the property and assets
of the LLC;
iii) Adoption of any plan of division relating to the division of the
LLC into two or more corporations or other legal entities;
iv) Adoption of any plan relating to the conversion of the LLC into a
stock corporation;
v) Adoption of any proposal of voluntary dissolution; or
vi) Taking any action which has the purpose or effect of the adoption
of any plan or proposal described in items (i), (ii), (iii), (iv)
or (v) above.
18.7 Interpretation.
Wherever the context may require, any noun or pronoun used herein shall
include the corresponding masculine, feminine or neuter forms. The singular
form of nouns, pronouns and verbs shall include the plural and vice versa.
18.8 Severability.
Each provision of this Agreement shall be considered severable and if for
any reason any provision is determined by a court or regulatory authority of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated, and such invalid, void or
unenforceable provision shall be replaced with valid and enforceable provision
or provisions which otherwise give effect to the original intent of the invalid,
void or unenforceable provision.
40
18.9 Force Majeure.
No Member shall be liable to any other Member for damages or otherwise be
in breach of this Agreement to the extent and during the period such Member's
performance is prevented by any cause or causes beyond such Member's control and
without such Member's fault or negligence, including but not limited to any act,
omission, or circumstance occasioned by or in consequence of any act of God,
labor disturbance, act of the public enemy, war, insurrection, riot, fire, storm
or flood, explosion, breakage or accident to machinery or equipment, or
curtailment, order, regulation or restriction imposed by governmental, military
or lawfully established civilian authorities; provided, however, that any such
foregoing event shall not excuse any payment obligation. Upon the occurrence of
an event considered by a Member to constitute a force majeure event, such Member
shall use due diligence to endeavor to continue to perform its obligations as
far as reasonably practicable and to remedy the event, provided that no Member
shall be required by this provision to settle any strike or labor dispute.
18.10 Further Assurances.
Each Member hereby agrees that it shall hereafter execute and deliver such
further instruments, provide all information and take or forbear such further
acts and things as may be reasonably required or useful to carry out the intent
and purpose of this Agreement and as are not inconsistent with the terms hereof.
18.11 Seal.
The seal of the LLC shall have inscribed thereon the name of the LLC, the
year of its organization and the words "Corporate Seal, Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
18.12 Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which together will constitute one instrument,
binding upon all parties hereto, notwithstanding that all of such parties may
not have executed the same counterpart.
18.13 Costs of Meetings.
Each Member shall be responsible for all costs of its representative,
alternate or substitute in attending any meeting. The Office of the
Interconnection shall pay the other reasonable costs of meetings of the PJM
Board and the Members Committee, and such other committees, subcommittees, task
forces, working groups, User Groups or other bodies as determined to be
appropriate by the Office of the Interconnection, which costs otherwise shall be
paid by the Members attending. The Office of the Interconnection shall
reimburse all Board Members for their reasonable costs of attending meetings.
41
18.14 Notice.
(a) Except as otherwise expressly provided herein, notices required
under this Agreement shall be in writing and shall be sent to a Member by
overnight courier, hand delivery, telecopier or other reliable electronic means
to the representative on the Members Committee of such Member at the address for
such Member previously provided by such Member to the other Members or as
otherwise directed by the Members Committee. Any such notice so sent shall be
deemed to have been given (i) upon delivery if given by overnight couriers or
hand delivery, or (ii) upon confirmation if given by telecopier or other
reliable electronic means.
(b) Notices, as well as copies of the agenda and minutes of all meetings
of committees, subcommittees, task forces, working groups, User Groups, or other
bodies formed under this Agreement, shall be posted in a timely fashion on and
made available for downloading from the PJM website.
18.15 Headings.
The section headings used in this Agreement are for convenience only and
shall not affect the construction or interpretation of any of the provisions of
this Agreement.
18.16 No Third-Party Beneficiaries.
This Agreement is intended to be solely for the benefit of the Members and
their respective successors and permitted assigns and, unless expressly stated
herein, is not intended to and shall not confer any rights or benefits on any
third party (other than successors and permitted assigns) not a signatory
hereto.
18.17 Confidentiality.
18.17.1 Party Access.
No Member shall have a right hereunder to receive or review any
documents, data or other information of another Member, including documents,
data or other information provided to the Office of the Interconnection, to the
extent such documents, data or information have been designated as confidential
pursuant to the procedures adopted by the Office of the Interconnection or to
the extent that they have been designated as confidential by such other Member;
provided, however, a Member may receive and review any composite documents, data
and other information that may be developed based on such confidential
documents, data or information if the composite does not disclose any individual
Member's confidential data or information.
42
18.17.2 Required Disclosure.
(a) Notwithstanding anything in the foregoing Section to the
contrary, if a Member or the Office of the Interconnection is required by
applicable law, or in the course of administrative or judicial proceedings, to
disclose information that is otherwise required to be maintained in confidence
pursuant to this Agreement, that Member or the Office of the Interconnection may
make disclosure of such information; provided, however, that as soon as the
Member or the Office of the Interconnection learns of the disclosure requirement
and prior to making disclosure, that Member or the Office of the Interconnection
shall notify the affected Member or Members of the requirement and the terms
thereof and the affected Member or Members may direct, at their sole discretion
and cost, any challenge to or defense against the disclosure requirement. The
disclosing Member and the Office of the Interconnection shall cooperate with
such affected Members to the maximum extent practicable to minimize the
disclosure of the information consistent with applicable law. Each Member and
the Office of the Interconnection shall cooperate with the affected Members to
obtain proprietary or confidential treatment of such information by the person
to whom such information is disclosed prior to any such disclosure.
(b) The Office of the Interconnection shall endeavor to impose on
any contractors retained to provide technical support or otherwise to assist
with the implementation or administration of this Agreement a contractual duty
of confidentiality consistent with this Agreement. A Member shall not be
obligated to provide confidential or proprietary information to any contractor
that does not assume such a duty of confidentiality, and the Office of the
Interconnection shall not provide any such information to any such contractor
without the express written permission of the Member providing the information.
18.18 Termination and Withdrawal.
18.18.1 Termination.
Upon termination of this Agreement, final settlement for obligations
under this Agreement shall include the accounting for the period ending with the
last day of the last month for which the Agreement was effective.
18.18.2 Withdrawal.
Subject to the requirements of Section 4.1(c) of this Agreement and
Section 1.4.6 of the Schedule 1 to this Agreement, any Member may withdraw from
this Agreement upon 90 days notice to the Office of the Interconnection.
43
18.18.3 Winding Up.
Any provision of this Agreement that expressly or by implication comes
into or remains in force following the termination or expiration of this
Agreement shall survive such termination or expiration. The surviving provisions
shall include, but shall not be limited to: (i) those provisions necessary to
permit the orderly conclusion, or continuation pursuant to another agreement, of
transactions entered into prior to the decision to terminate this Agreement,
(ii) those provisions necessary to conduct final billing, collection, and
accounting with respect to all matters arising hereunder, and (iii) the
indemnification provisions as applicable to periods prior to such termination or
expiration.
IN WITNESS whereof, the Members have caused this Agreement to be executed by
their duly authorized representatives.
44
SCHEDULE 1
----------
PJM INTERCHANGE ENERGY MARKET
-----------------------------
(Revises and replaces former Schedules 7.01 and 7.03)
Issued: June 2, 1997
Effective: April 1, 1998
1. MARKET OPERATIONS
1.1 Introduction.
This Schedule sets forth the scheduling, other procedures, and certain
general provisions applicable to the operation of the PJM Interchange Energy
Market within the PJM Control Area. This Schedule addresses each of the three
time-frames pertinent to the daily operation of the PJM Interchange Energy
Market: Prescheduling, Scheduling, and Dispatch.
1.2 Cost-based Offers.
Unless and until the FERC shall authorize the use of market-based prices in
the PJM Interchange Energy Market, all offers for energy or other services to be
sold on the PJM Interchange Energy Market from generating resources located
within the PJM Control Area shall not exceed the variable cost of producing such
energy or other service, as determined in accordance with Schedule 2 to this
Agreement and applicable regulatory standards, requirements and determinations;
provided that, a Market Seller may offer to the PJM Interchange Energy Market
the right to call on energy from a resource the output of which has been sold on
a bilateral basis, with the rate for such energy if called equal to the
curtailment rate specified in the bilateral contract.
1.3 Definitions.
1.3.1 Dispatch Rate.
"Dispatch Rate" shall mean the control signal, expressed in dollars
per megawatt-hour, calculated and transmitted continuously and dynamically to
direct the output level of all generation resources dispatched by the Office of
the Interconnection in accordance with the Offer Data.
1.3.2 Equivalent Load.
"Equivalent Load" shall mean the sum of a Market Participant's net
system requirements to serve its customer load in the PJM Control Area, if any,
plus its net bilateral transactions.
1.3.3 External Market Buyer.
"External Market Buyer" shall mean a Market Buyer making purchases of
energy from the PJM Interchange Energy Market for consumption by end-users
outside the PJM Control Area, or for load in the Control Area that is not served
by Network Transmission Service.
Revised: June 26, 1998
Effective: September 17, 1998
1.3.4 External Resource.
"External Resource" shall mean a generation resource located outside
the metered boundaries of the PJM Control Area.
1.3.5 Fixed Transmission Right.
"Fixed Transmission Right" shall mean a right to receive Transmission
Congestion Credits as specified in Section 5.2.2 of this Schedule.
1.3.6 Generating Market Buyer.
"Generating Market Buyer" shall mean an Internal Market Buyer that is
a Load Serving Entity that owns or has contractual rights to the output of
generation resources capable of serving the Market Buyer's load in the PJM
Control Area, or of selling energy or related services in the PJM Interchange
Energy Market or elsewhere.
1.3.7 Generator Forced Outage.
"Generator Forced Outage" shall mean an immediate reduction in output
or capacity or removal from service, in whole or in part, of a generating unit
by reason of an Emergency or threatened Emergency, unanticipated failure, or
other cause beyond the control of the owner or operator of the facility, as
specified in the relevant portions of the PJM Manuals. A reduction in output or
removal from service of a generating unit in response to changes in market
conditions shall not constitute a Generator Forced Outage.
1.3.8 Generator Maintenance Outage.
"Generator Maintenance Outage" shall mean the scheduled removal from
service, in whole or in part, of a generating unit in order to perform necessary
repairs on specific components of the facility, if removal of the facility meets
the guidelines specified in the PJM Manuals.
1.3.9 Generator Planned Outage.
"Generator Planned Outage" shall mean the scheduled removal from
service, in whole or in part, of a generating unit for inspection, maintenance
or repair with the approval of the Office of the Interconnection in accordance
with the PJM Manuals.
1.3.10 Internal Market Buyer.
"Internal Market Buyer" shall mean a Market Buyer making purchases of
energy from the PJM Interchange Energy Market for ultimate consumption by end-
users inside the PJM Control Area that are served by Network Transmission
Service.
1.3.11 Inadvertent Interchange.
"Inadvertent Interchange" shall mean the difference between net actual
energy flow and net scheduled energy flow into or out of the PJM Control Area,
as determined and allocated each hour by the Office of the Interconnection in
accordance with the procedures set forth in the PJM Manuals to each Electric
Distributor that reports to the Office of the Interconnection its hourly net
energy flows from metered tie lines.
Third Revised: March 2, 1999
Effective: April 13, 1999
2
1.3.12 Market Operations Center.
"Market Operations Center" shall mean the equipment, facilities and
personnel used by or on behalf of a Market Participant to communicate and
coordinate with the Office of the Interconnection in connection with
transactions in the PJM Interchange Energy Market or the operation of the PJM
Control Area.
1.3.13 Maximum Generation Emergency.
"Maximum Generation Emergency" shall mean an Emergency declared by the
Office of the Interconnection in which the Office of the Interconnection
anticipates requesting one or more Capacity Resources to operate at its maximum
net or gross electrical power output, subject to the equipment stress limits for
such Capacity Resource, in order to manage, alleviate, or end the Emergency.
1.3.14 Minimum Generation Emergency.
"Minimum Generation Emergency" shall mean an Emergency declared by the
Office of the Interconnection in which the Office of the Interconnection
anticipates requesting one or more generating resources to operate at or below
Normal Minimum Generation, in order to manage, alleviate, or end the Emergency.
1.3.14a NERC Interchange Distribution Calculator.
"NERC Interchange Distribution Calculator" shall mean the NERC
mechanism that is in effect and being used to calculate the distribution of
energy, over specific transmission interfaces, from energy transactions.
1.3.15 Network Resource.
"Network Resource" shall have the meaning specified in the PJM Tariff.
1.3.16 Network Service User.
"Network Service User" shall mean an entity using Network Transmission
Service.
1.3.17 Network Transmission Service.
"Network Transmission Service" shall mean transmission service
provided pursuant to the rates, terms and conditions set forth in Part III of
the PJM Tariff, or transmission service comparable to such service that is
provided to a Load Serving Entity that is also a Regional Transmission Owner as
that term is defined in the PJM Tariff.
1.3.18 Normal Maximum Generation.
"Normal Maximum Generation" shall mean the highest output level of a
generating resource under normal operating conditions.
1.3.19 Normal Minimum Generation.
"Normal Minimum Generation" shall mean the lowest output level of a
generating resource under normal operating conditions.
Revised: November 19, 1998
Effective: January 19, 1999
3
1.3.20 Offer Data.
"Offer Data" shall mean the scheduling, operations planning, dispatch,
new resource, and other data and information necessary to schedule and dispatch
generation resources for the provision of energy and other services and the
maintenance of the reliability and security of the transmission system in the
PJM Control Area, and specified for submission to the PJM Interchange Energy
Market for such purposes by the Office of the Interconnection.
Revised: November 19, 1998
Effective: January 19, 1999
3a
1.3.21 Office of the Interconnection Control Center.
"Office of the Interconnection Control Center" shall mean the
equipment, facilities and personnel used by the Office of the Interconnection to
coordinate and direct the operation of the PJM Control Area and to administer
the PJM Interchange Energy Market, including facilities and equipment used to
communicate and coordinate with the Market Participants in connection with
transactions in the PJM Interchange Energy Market or the operation of the PJM
Control Area.
1.3.22 Operating Day.
"Operating Day" shall mean the daily 24 hour period beginning at
midnight for which transactions on the PJM Interchange Energy Market are
scheduled.
1.3.23 Operating Margin.
"Operating Margin" shall mean the incremental adjustments, measured in
megawatts, required in PJM Control Area operations in order to accommodate, on a
first contingency basis, an operating contingency in the PJM Control Area
resulting from operations in an interconnected Control Area. Such adjustments
may result in constraints causing Transmission Congestion Charges, or may result
in Ancillary Services charges pursuant to the PJM Tariff.
1.3.24 Operating Margin Customer.
"Operating Margin Customer" shall mean a Control Area purchasing
Operating Margin pursuant to an agreement between such other Control Area and
the LLC.
1.3.25 PJM Interchange.
"PJM Interchange" shall mean the following, as determined in
accordance with the Schedules to this Agreement: (a) for a Market Participant
that is a Network Service User, the amount by which its hourly Equivalent Load
exceeds, or is exceeded by, the sum of the hourly outputs of its operating
generating resources; or (b) for a Market Participant that is not a Network
Service User, the amount of its Spot Market Backup; or (c) the hourly scheduled
deliveries of Spot Market Energy by a Market Seller from an External Resource;
or (d) the hourly net metered output of any other Market Seller; or (e) the
hourly scheduled deliveries of Spot Market Energy to an External Market Buyer;
or (f) the hourly scheduled deliveries to an Internal Market Buyer that is not a
Network Service User.
1.3.26 PJM Interchange Export.
"PJM Interchange Export" shall mean the following, as determined in
accordance with the Schedules to this Agreement: (a) for a Market Participant
that is a Network Service User, the amount by which its hourly Equivalent Load
is exceeded by the sum of the hourly outputs of its operating generating
resources; or (b) for a Market Participant that is not a Network Service User,
the amount of its Spot Market Backup sales; or (c) the hourly scheduled
deliveries of Spot Market Energy by a Market Seller from an External Resource;
or (d) the hourly net metered output of any other Market Seller.
Revised: June 26, 1998
Effective: September 17, 1998
4
1.3.27 PJM Interchange Import.
"PJM Interchange Import" shall mean the following, as determined in
accordance with the Schedules to this Agreement: (a) for a Market Participant
that is a Network Service User, the amount by which its hourly Equivalent Load
exceeds the sum of the hourly outputs of its operating generating resources; or
(b) for a Market Participant that is not a Network Service User, the amount of
its Spot Market Backup purchases; or (c) the hourly scheduled deliveries of Spot
Market Energy to an External Market Buyer; or (d) the hourly scheduled
deliveries to an Internal Market Buyer that is not a Network Service User.
1.3.28 PJM Open Access Same-time Information System.
"PJM Open Access Same-time Information System" shall mean the
electronic communication system for the collection and dissemination of
information about transmission services in the PJM Control Area, established and
operated by the Office of the Interconnection in accordance with FERC standards
and requirements.
1.3.29 Point-to-Point Transmission Service.
"Point-to-Point Transmission Service" shall mean transmission service
provided pursuant to the rates, terms and conditions set forth in Part II of the
PJM Tariff.
1.3.30 Ramping Capability.
"Ramping Capability" shall mean the sustained rate of change of
generator output, in megawatts per minute.
1.3.31 Regulation.
"Regulation" shall mean the capability of a specific generating unit
with appropriate telecommunications, control and response capability to increase
or decrease its output in response to a regulating control signal, in accordance
with the specifications in the PJM Manuals.
1.3.32 Regulation Class.
"Regulation Class" shall mean a subset of the generation units capable
of providing Regulation to the PJM Control Area determined by a range of costs
for providing Regulation as specified by the Office of the Interconnection using
procedures specified in the PJM Manuals.
1.3.32a Spot Market Backup.
"Spot Market Backup" shall mean the purchase of energy from, or the
delivery of energy to, the PJM Interchange Energy Market in quantities
sufficient to complete the delivery or receipt obligations of a bilateral
contract that has been curtailed or interrupted for any reason.
Revised: June 26, 1998
Effective: September 17, 1998
5
1.3.33 Spot Market Energy.
"Spot Market Energy" shall mean energy bought or sold by Market
Participants through the PJM Interchange Energy Market at Locational Marginal
Prices determined as specified in Section 2 of this Schedule.
1.3.34 Transmission Congestion Charge.
"Transmission Congestion Charge" shall mean a charge attributable to
the increased cost of energy delivered at a given load bus when the transmission
system serving that load bus is operating under constrained conditions, which
shall be calculated and allocated as specified in Section 5.1 of this Schedule.
Revised: June 26, 1998
Effective: September 17, 1998
5a
1.3.35 Transmission Congestion Credit.
"Transmission Congestion Credit" shall mean the allocated share of
total Transmission Congestion Charges credited to each holder of Fixed
Transmission Rights, calculated and allocated as specified in Section 5.2 of
this Schedule.
1.3.36 Transmission Customer.
"Transmission Customer" shall mean an entity using Point-to-Point
Transmission Service.
1.3.37 Transmission Forced Outage.
"Transmission Forced Outage" shall mean an immediate removal from
service of a transmission facility by reason of an Emergency or threatened
Emergency, unanticipated failure, or other cause beyond the control of the owner
or operator of the transmission facility, as specified in the relevant portions
of the PJM Manuals. A removal from service of a transmission facility at the
request of the Office of the Interconnection to improve transmission capability
shall not constitute a Forced Transmission Outage.
1.3.37a Transmission Loading Relief.
"Transmission Loading Relief" shall mean NERC's procedures for
preventing operating security limit violations, as implemented by PJM as the
security coordinator responsible for maintaining transmission security for the
PJM Control Area.
1.3.37b Transmission Loading Relief Customer.
"Transmission Loading Relief Customer" shall mean an entity that, in
accordance with Section 1.10.6A, has elected to pay Transmission Congestion
Charges during Transmission Loading Relief in order to continue energy schedules
over contract paths outside the PJM Control Area that are increasing the cost of
energy in the PJM Control Area.
1.3.38 Transmission Planned Outage.
"Transmission Planned Outage" shall mean any transmission outage
scheduled in advance for a pre-determined duration and which meets the
notification requirements for such outages specified in the PJM Manuals.
1.4 Market Buyers.
1.4.1 Qualification.
(a) To become a Market Buyer, an entity shall submit an application to
the Office of the Interconnection, in such form as shall be established by the
Office of the Interconnection.
(b) An applicant that is a Load Serving Entity or that will purchase
on behalf of or for ultimate delivery to a Load Serving Entity shall establish
to the satisfaction of the Office of the Interconnection that the end-users that
will be served through energy and related services purchased in the PJM
Interchange Energy Market, are located electrically within the PJM Control Area,
or will be brought within the PJM Control Area prior to any purchases from the
PJM Interchange Energy Market. Such applicant shall further demonstrate that:
Fourth Revised: February 12, 1999
Effective: January 19, 1999
6
i) The Load Serving Entity for the end users is obligated to meet
the requirements of the Reliability Assurance Agreement; and
ii) The Load Serving Entity for the end users has arrangements in
place for Network Transmission Service or Point-To-Point
Transmission Service for all PJM Interchange Energy Market
purchases.
(c) An applicant that is not a Load Serving Entity or purchasing on
behalf of or for ultimate delivery to a Load Serving Entity shall demonstrate
that:
i) The applicant has obtained or will obtain Network Transmission
Service or
Revised: November 19, 1998
Effective: January 19, 1999
6a
Point-to-Point Transmission Service for all PJM Interchange
Energy Market purchases; and
ii) The applicant's PJM Interchange Energy Market purchases will
ultimately be delivered to a load in another Control Area that
is recognized by NERC and that complies with NERC's standards
for operating and planning reliable bulk electric systems.
(d) All applicants shall demonstrate that:
i) The applicant is capable of complying with all applicable
metering, data storage and transmission, and other reliability,
operation, planning and accounting standards and requirements
for the operation of the PJM Control Area and the PJM
Interchange Energy Market;
ii) The applicant meets the creditworthiness standards established
by the Office of the Interconnection, or has provided a letter
of credit or other form of security acceptable to the Office of
the Interconnection; and
iii) The applicant has paid all applicable fees and reimbursed the
Office of the Interconnection for all unusual or extraordinary
costs of processing and evaluating its application to become a
Market Buyer, and has agreed in its application to subject any
disputes arising from its application to the PJM Dispute
Resolution Procedures.
(e) The applicant shall become a Market Buyer upon a final favorable
determination on its application by the Office of the Interconnection as
specified below, and execution by the applicant of counterparts of this
Agreement.
1.4.2 Submission of Information.
The applicant shall furnish all information reasonably requested by
the Office of the Interconnection in order to determine the applicant's
qualification to be a Market Buyer. The Office of the Interconnection may waive
the submission of information relating to any of the foregoing criteria, to the
extent the information in the Office of the Interconnection's possession is
sufficient to evaluate the application against such criteria.
1.4.3 Fees and Costs.
The Office of the Interconnection shall require all applicants to
become a Market Buyer to pay a uniform application fee, initially in the amount
of $1,500, to defray the ordinary costs of processing such applications. The
application fee shall be revised from time to time as the Office of the
Interconnection shall determine to be necessary to recover its ordinary costs of
processing applications. Any unusual or extraordinary costs incurred by the
Office of the Interconnection in processing an application shall be reimbursed
by the applicant.
7
1.4.4 Office of the Interconnection Determination.
Upon submission of the information specified above, and such other
information as shall reasonably be requested by the Office of the
Interconnection, the Office of the Interconnection shall undertake an evaluation
and investigation to determine whether the applicant meets the criteria
specified above. As soon as practicable, but in any event not later than 60
days after submission of the foregoing information, or such later date as may be
necessary to satisfy the requirements of the Reliability Assurance Agreement,
the Office of the Interconnection shall notify the applicant and the members of
the Members Committee of its determination, along with a written summary of the
basis for the determination. The Office of the Interconnection shall respond
promptly to any reasonable and timely request by a Member for additional
information regarding the basis for the Office of the Interconnection's
determination, and shall take such action as it shall deem appropriate in
response to any request for reconsideration or other action submitted to the
Office of the Interconnection not later than 30 days from the initial
notification to the Members Committee.
1.4.5 Existing Participants.
Any entity that was qualified to participate as a Market Buyer in the
PJM Interchange Energy Market under the Operating Agreement of PJM
Interconnection L.L.C. in effect immediately prior to the Effective Date shall
continue to be qualified to participate as a Market Buyer in the PJM Interchange
Energy Market under this Agreement.
1.4.6 Withdrawal.
(a) An Internal Market Buyer that is a Load Serving Entity may
withdraw from this Agreement by giving written notice to the Office of the
Interconnection specifying an effective date of withdrawal not earlier than the
effective date of (i) its withdrawal from the Reliability Assurance Agreement,
or (ii) the assumption of its obligations under the Reliability Assurance
Agreement by an agent that is a Market Buyer.
(b) An External Market Buyer or an Internal Market Buyer that is
not a Load Serving Entity may withdraw from this Agreement by giving written
notice to the Office of the Interconnection specifying an effective date of
withdrawal at least one day after the date of the notice.
(c) Withdrawal from this Agreement shall not relieve a Market Buyer
of any obligation to pay for electric energy or related services purchased from
the PJM Interchange Energy Market prior to such withdrawal, to pay its share of
any fees and charges incurred or assessed by the Office of the Interconnection
prior to the date of such withdrawal, or to fulfill any obligation to provide
indemnification for the consequences of acts, omissions or events occurring
prior to such withdrawal; and provided, further, that withdrawal from this
Agreement shall not relieve any Market Buyer of any obligations it may have
under, or constitute withdrawal from, any other Related PJM Agreement.
(d) A Market Buyer that has withdrawn from this Agreement may
reapply to become a Market Buyer in accordance with the provisions of this
Section 1.4, provided it is not in default of any obligation incurred under this
Agreement.
Revised: June 26, 1998
Effective: September 17, 1998
8
1.5 Market Sellers.
1.5.1 Qualification.
A Member that demonstrates to the Office of the Interconnection that
the Member meets the standards for the issuance of an order mandating the
provision of transmission service under section 211 of the Federal Power Act, as
amended by the Energy Policy Act of 1992, may become a Market Seller upon
execution of this Agreement and submission to the Office of the Interconnection
of the applicable Offer Data in accordance with the provisions of this Schedule.
All Members that are Market Buyers shall become Market Sellers upon submission
to the Office of the Interconnection of the applicable Offer Data in accordance
with the provisions of this Schedule.
1.5.2 Withdrawal.
(a) A Market Seller may withdraw from this Agreement by giving
written notice to the Office of the Interconnection specifying an effective date
of withdrawal at least one day after the date of the notice; provided, however,
that withdrawal shall not relieve a Market Seller of any obligation to deliver
electric energy or related services to the PJM Interchange Energy Market
pursuant to an offer made prior to such withdrawal, to pay its share of any fees
and charges incurred or assessed by the Office of the Interconnection prior to
the date of such withdrawal, or to fulfill any obligation to provide
indemnification for the consequences of acts, omissions, or events occurring
prior to such withdrawal; and provided, further, that withdrawal shall not
relieve any entity that is a Market Seller and is also a Market Buyer of any
obligations it may have as a Market Buyer under, or constitute withdrawal as a
Market Buyer from, this Agreement or any other Related PJM Agreement.
(b) A Market Seller that has withdrawn from this Agreement may
reapply to become a Market Seller at any time, provided it is not in default
with respect to any obligation incurred under this Agreement.
1.6 Office of the Interconnection.
1.6.1 Operation of the PJM Interchange Energy Market
The Office of the Interconnection shall operate the PJM Interchange
Energy Market in accordance with this Agreement.
1.6.2 Scope of Services.
The Office of the Interconnection shall, on behalf of the Market
Participants, perform the services pertaining to the PJM Interchange Energy
Market specified in this Agreement, including but not limited to the following:
i) Administer the PJM Interchange Energy Market as part of the PJM
Control Area, including scheduling and dispatching of
generation resources, accounting for transactions, rendering
bills to the Market Participants, receiving payments from and
disbursing payments to the Market Participants, maintaining
appropriate records, and monitoring the compliance of Market
Participants with the provisions of this Agreement, all in
accordance with applicable provisions of the Office of the
Interconnection Agreement, and the Schedules to this Agreement;
Revised: June 26, 1998
Effective: September 17, 1998
9
ii) Review and evaluate the qualification of entities to be Market
Buyers or Market Sellers under applicable provisions of this
Agreement;
iii) Coordinate, in accordance with applicable provisions of this
Agreement, the Reliability Assurance Agreement, and the
Transmission Owners Agreement, maintenance schedules for
generation and transmission resources operated as part of the
PJM Control Area;
iv) Provide or coordinate the provision of ancillary services
necessary for the operation of PJM Control Area or the PJM
Interchange Energy Market;
v) Determine and declare that an Emergency is expected to exist,
exists, or has ceased to exist, in all or any part of the PJM
Control Area, or in another Control Area interconnected directly
or indirectly with the PJM Control Area, and serve as a primary
point of contact for interested state or federal agencies;
vi) Enter into (a) agreements for the transfer of energy in
conditions constituting an Emergency in the PJM Control Area or
in a Control Area interconnected with it, and the mutual
provision of other support in such Emergency conditions with
other Control Areas interconnected with the PJM Control Area,
and (b) purchases of Emergency energy offered by Members from
resources that are not Capacity Resources in conditions
constituting an Emergency in the PJM Control Area;
vii) Coordinate the curtailment or shedding of load, or other
measures appropriate to alleviate an Emergency, in order to
preserve reliability in accordance with NERC and MAAC
principles, guidelines and standards, and to ensure the
operation of the PJM Control Area in accordance with Good
Utility Practice and the this Agreement;
viii) Protect confidential information as specified in this
Agreement; and
ix) Send a representative to meetings of the Members Committee or
other Committees, subcommittees, or working groups specified in
this Agreement or formed by the Members Committee when requested
to do so by the chair or other head of such committee or other
group.
1.6.3 Records and Reports.
The Office of the Interconnection shall prepare and maintain such
records and prepare such reports, including, but not limited to quarterly budget
reports, as are required to document the performance of its obligations to the
Market Participants hereunder in a form adopted by the Office of the
Interconnection upon consideration of the advice and recommendations of the
Members Committee. The Office of the Interconnection shall also produce special
reports reasonably requested by the Members Committee and consistent with FERC's
standards of conduct; provided, however, the Market Participants shall reimburse
the Office of the Interconnection for the costs of producing any such report.
Notwithstanding the foregoing, the Office of the Interconnection shall not be
required to disclose confidential or commercially sensitive information in any
such report.
Revised: January 30, 1998
Effective: April 17, 1998
10
1.6.4 PJM Manuals.
The Office of the Interconnection shall prepare, maintain and update
the PJM Manuals consistent with this Agreement. The PJM Manuals shall be
available for inspection by the Market Participants, regulatory authorities with
jurisdiction over the LLC or any Member, and the public.
1.7 General.
1.7.1 Market Sellers.
Only Market Sellers shall be eligible to submit offers to the Office
of the Interconnection for the sale of electric energy or related services in
the PJM Interchange Energy Market. Market Sellers shall comply with the prices,
terms, and operating characteristics of all Offer Data submitted to and accepted
by the PJM Interchange Energy Market.
1.7.2 Market Buyers.
Only Market Buyers shall be eligible to purchase energy or related
services in the PJM Interchange Energy Market. Market Buyers shall comply with
all requirements for making purchases from the PJM Interchange Energy Market.
1.7.3 Agents.
A Market Participant may participate in the PJM Interchange Energy
Market through an agent, provided that the Market Participant informs the Office
of the Interconnection in advance in writing of the appointment of such agent.
A Market Participant participating in the PJM Interchange Energy Market through
an agent shall be bound by all of the acts or representations of such agent with
respect to transactions in the PJM Interchange Energy Market, and shall ensure
that any such agent complies with the requirements of this Agreement.
1.7.4 General Obligations of the Market Participants.
(a) In performing its obligations to the Office of the
Interconnection hereunder, each Market Participant shall at all times (i) follow
Good Utility Practice, (ii) comply with all applicable laws and regulations,
(iii) comply with the applicable principles, guidelines, standards and
requirements of FERC, NERC and MAAC, (iv) comply with the procedures established
for operation of the PJM Interchange Energy Market and PJM Control Area and (v)
cooperate with the Office of the Interconnection as necessary for the operation
of the PJM Control Area in a safe, reliable manner consistent with Good Utility
Practice.
(b) Market Participants shall undertake all operations in or
affecting the PJM Interchange Energy Market and the PJM Control Area, including
but not limited to compliance with all Emergency procedures, in accordance with
the power and authority of the Office of the Interconnection with respect to the
operation of the PJM Interchange Energy Market and the PJM Control Area as
established in this Agreement, and as specified in the Schedules to this
Agreement and the PJM Manuals. Failure to comply with the foregoing operational
requirements shall subject a Market Participant to such reasonable charges or
other remedies or sanctions for non-compliance as may be established by the PJM
Board, including legal or regulatory proceedings as authorized by the PJM Board
to enforce the obligations of this Agreement.
(c) The Office of the Interconnection may establish such committees
with a
11
representative of each Market Participant, and the Market Participants agree to
provide appropriately qualified personnel for such committees, as may be
necessary for the Office of the Interconnection to perform its obligations
hereunder.
(d) All Market Participants shall provide to the Office of the
Interconnection the scheduling and other information specified in the Schedules
to this Agreement, and such other information as the Office of the
Interconnection may reasonably require for the reliable and efficient operation
of the PJM Control Area and the PJM Interchange Energy Market, and for
compliance with applicable regulatory requirements for posting market and
related information. Such information shall be provided as much in advance as
possible, but in no event later than the deadlines established by the Schedules
to this Agreement, or by the Office of the Interconnection in conformance with
such Schedules. Such information shall include, but not be limited to,
maintenance and other anticipated outages of generation or transmission
facilities, scheduling and related information on bilateral transactions and
self-scheduled resources, and implementation of active load management,
interruption of load, and other load reduction measures. The Office of the
Interconnection shall abide by appropriate requirements for the non-disclosure
and protection of any confidential or proprietary information given to the
Office of the Interconnection by a Market Participant. Each Market Participant
shall maintain or cause to be maintained compatible information and
communications systems, as specified by the Office of the Interconnection,
required to transmit scheduling, dispatch, or other time-sensitive information
to the Office of the Interconnection in a timely manner.
(e) Each Market Participant shall install and operate, or shall
otherwise arrange for, metering and related equipment capable of recording and
transmitting all voice and data communications reasonably necessary for the
Office of the Interconnection to perform the services specified in this
Agreement. A Market Participant that elects to be separately billed for its PJM
Interchange shall, to the extent necessary, be individually metered in
accordance with Section 14 of this Agreement, or shall agree upon an allocation
of PJM Interchange between it and the Market Participant through whose meters
the unmetered Market Participant's PJM Interchange is delivered. The Office of
the Interconnection shall be notified of the allocation by the foregoing Market
Participants.
(f) Each Market Participant shall operate, or shall cause to be
operated, any generating resources owned or controlled by such Market
Participant that are within the PJM Control Area or otherwise supplying energy
to or through the PJM Control Area in a manner that is consistent with the
standards, requirements or directions of the Office of the Interconnection and
that will permit the Office of the Interconnection to perform its obligations
under this Agreement; provided, however, no Market Participant shall be required
to take any action that is inconsistent with Good Utility Practice or applicable
law.
(g) Each Market Participant shall follow the directions of the Office
of the Interconnection to take actions to prevent, manage, alleviate or end an
Emergency in a manner consistent with this Agreement and the procedures of the
PJM Control Area as specified in the PJM Manuals.
(h) Each Market Participant shall obtain and maintain all permits,
licenses or approvals required for the Market Participant to participate in the
PJM Interchange Energy Market in the manner contemplated by this Agreement.
Revised: June 26, 1998
Effective: September 17, 1998
12
1.7.5 Market Operations Center.
Each Market Participant shall maintain a Market Operations Center, or
shall make appropriate arrangements for the performance of such services on its
behalf. A Market Operations Center shall meet the performance, equipment,
communications, staffing and training standards and requirements specified in
this Agreement for the scheduling and completion of transactions in the PJM
Interchange Energy Market and the maintenance of the reliable operation of the
PJM Control Area, and shall be sufficient to enable (i) a Market Seller to
perform all terms and conditions of its offers to the PJM Interchange Energy
Market, and (ii) a Market Buyer to conform to the requirements for purchasing
from the PJM Interchange Energy Market.
1.7.6 Scheduling and Dispatching.
(a) The Office of the Interconnection shall schedule and dispatch
generation economically on the basis of least-cost, security-constrained
dispatch and the prices and operating characteristics offered by Market Sellers,
continuing until sufficient generation is dispatched to serve the PJM
Interchange Energy Market energy purchase requirements under normal system
conditions of the Market Buyers, as well as the requirements of the PJM Control
Area for ancillary services provided by such generation, in accordance with this
Agreement. Scheduling and dispatch shall be conducted in accordance with this
Agreement.
(b) The Office of the Interconnection shall undertake to identify
any conflict or incompatibility between the scheduling or other deadlines or
specifications applicable to the PJM Interchange Energy Market, and any relevant
procedures of another Control Area, or any tariff (including the PJM Tariff).
Upon determining that any such conflict or incompatibility exists, the Office of
the Interconnection shall propose tariff or procedural changes, and undertake
such other efforts as may be appropriate, to resolve any such conflict or
incompatibility.
1.7.7 Pricing.
The price paid for energy bought and sold in the PJM Interchange
Energy Market will reflect the hourly Locational Marginal Price at each load and
generation bus, determined by the Office of the Interconnection in accordance
with this Agreement. Transmission Congestion Charges, which shall be determined
by differences in Locational Marginal Prices in an hour caused by transmission
constraints, shall be calculated and collected, and the revenues therefrom shall
be disbursed, by the Office of the Interconnection in accordance with this
Schedule.
1.7.8 Generating Market Buyer Resources.
A Generating Market Buyer may elect to self-schedule its generation
resources up to that Generating Market Buyer's Equivalent Load, in accordance
with and subject to the procedures specified in this Schedule, and the
accounting and billing requirements specified in Section 3 to this Schedule.
1.7.9 Delivery to an External Market Buyer.
A purchase of Spot Market Energy by an External Market Buyer shall be
delivered to a bus or busses at the border of the PJM Control Area specified by
the Office of the Interconnection, or to load in the Control Area that is not
served by Network Transmission Service, using Point-to-Point Transmission
Service paid for by the External Market Buyer. Further delivery of such energy
shall be the responsibility of the External Market Buyer.
13
1.7.10 Other Transactions.
(a) Market Participants may enter into bilateral contracts for the
purchase or sale of electric energy to or from each other or any other entity,
subject to the obligations of Market Participants to make Capacity Resources
available for dispatch by the Office of the Interconnection. Bilateral
arrangements that contemplate the physical transfer of energy to or from a
Market Participant shall be reported to and coordinated with the Office of the
Interconnection in accordance with this Schedule.
(b) Market Participants shall have Spot Market Backup with respect
to all bilateral transactions that are not dynamically scheduled pursuant to
Section 1.12 and that are curtailed or interrupted for any reason (except for
curtailments or interruptions through active load management for load located
within the PJM Control Area).
(c) To the extent the Office of the Interconnection dispatches a
Generating Market Buyer's generation resources, such Generating Market Buyer may
elect to net the output of such resources against its hourly Equivalent Load.
Such a Generating Market Buyer shall be deemed a buyer from the PJM Interchange
Energy Market to the extent of its PJM Interchange Imports, and shall be deemed
a seller to the PJM Interchange Energy Market to the extent of its PJM
Interchange Exports.
1.7.11 Emergencies.
The Office of the Interconnection, with the assistance of the Members'
dispatchers as it may request, shall be responsible for monitoring the operation
of the PJM Control Area, for declaring the existence of an Emergency, and for
directing the operations of Market Participants as necessary to manage,
alleviate or end an Emergency. The standards, policies and procedures of the
Office of the Interconnection for declaring the existence of an Emergency,
including but not limited to a Minimum Generation Emergency, and for managing,
alleviating or ending an Emergency, shall apply to all Members on a non-
discriminatory basis. Actions by the Office of the Interconnection and the
Market Participants shall be carried out in accordance with this Agreement, the
NERC Operating Policies, MAAC reliability principles and standards, Good Utility
Practice, and the PJM Manuals. A declaration that an Emergency exists or is
likely to exist by the Office of the Interconnection shall be binding on all
Market Participants until the Office of the Interconnection announces that the
actual or threatened Emergency no longer exists. Consistent with existing
contracts, all Market Participants shall comply with all directions from the
Office of the Interconnection for the purpose of managing, alleviating or ending
an Emergency. The Market Participants shall authorize the Office of the
Interconnection to purchase or sell energy on their behalf to meet an Emergency,
and otherwise to implement agreements with other Control Areas interconnected
with the PJM Control Area for the mutual provision of service to meet an
Emergency, in accordance with this Agreement.
1.7.12 Fees and Charges.
Each Market Participant shall pay all fees and charges of the Office
of the Interconnection for operation of the PJM Interchange Energy Market as
determined by and allocated to the Market Participant by the Office of the
Interconnection in accordance with Schedule 3.
Revised: June 16, 1999
Effective: August 16, 1999
14
1.7.13 Relationship to PJM Control Area.
The PJM Interchange Energy Market operates within and subject to the
requirements for the operation of the PJM Control Area.
Revised: June 26, 1998
Effective: September 17, 1998
14a
1.7.14 PJM Manuals.
The Office of the Interconnection shall be responsible for
maintaining, updating, and promulgating the PJM Manuals as they relate to the
operation of the PJM Interchange Energy Market. The PJM Manuals, as they relate
to the operation of the PJM Interchange Energy Market, shall conform and comply
with this Agreement, NERC operating policies, and MAAC reliability principles,
guidelines and standards, and shall be designed to facilitate administration of
an efficient energy market within industry reliability standards and the
physical capabilities of the PJM Control Area.
1.7.15 Corrective Action.
Consistent with Good Utility Practice, the Office of the
Interconnection shall be authorized to direct or coordinate corrective action,
whether or not specified in the PJM Manuals, as necessary to alleviate unusual
conditions that threaten the integrity or reliability of the PJM Control Area or
the regional power system.
1.7.16 Recording.
Subject to the requirements of applicable State or federal law, all
voice communications with the Office of the Interconnection Control Center may
be recorded by the Office of the Interconnection and any Market Participant
communicating with the Office of the Interconnection Control Center, and each
Market Participant hereby consents to such recording.
1.7.17 Operating Reserves.
(a) The following procedures shall apply to any generation unit
subject to the dispatch of the Office of the Interconnection for which
construction commenced before July 9, 1996.
(b) The Office of the Interconnection shall schedule to the Operating
Reserve and load-following objectives of the PJM Control Area and the PJM
Interchange Energy Market in scheduling resources pursuant to this Schedule. A
table of Operating Reserve objectives is calculated seasonally for various peak
load levels and eight weekly periods and is published in the PJM Manuals.
Reserve levels are probabilistically determined based on the season's historical
load forecasting error and expected generation mix (including typical Planned
and Forced/Unplanned Outages). Generating Units with quick start capability, as
specified in the PJM Manuals, that are dispatched to maintain reliability by
providing or maintaining spinning reserves or providing load following
capability shall receive energy payments at the levels specified below. The
energy payments specified below shall be considered the offered price for Spot
Market Energy for purposes of Section 3.2.3(b) of this Schedule. The price
offered or paid for the energy of units so dispatched shall not be considered in
determining Locational Marginal Prices.
Second Revised: April 27, 1999
Effective: April 1, 1999
15
(c) Payments for energy produced by a quick start generating unit
dispatched as specified above shall be at the higher of the applicable
Locational Marginal Price or one of the amounts specified below, as specified in
advance by the Market Seller for the affected unit:
(i) The weighted average Locational Marginal Price at the generation
bus at which energy from the capped resource was delivered
during a specified number of hours during which the resource was
dispatched for energy in economic merit order, the specified
number of hours to be determined by the Office of the
Interconnection and to be a number of hours sufficient to result
in a price cap that reflects reasonably contemporaneous
competitive market conditions for that unit;
(ii) The incremental operating cost of the generation resource as
determined in accordance with Schedule 2 of this Agreement and
the PJM Manuals, plus 10% of such costs; or
(iii) An amount determined by agreement between the Office of the
Interconnection and the Market Seller.
1.7.18 Regulation.
(a) Regulation shall be supplied from generators located within the
metered electrical boundaries of the PJM Control Area. Generating Market
Buyers, and Market Sellers offering Regulation, shall comply with applicable
standards and requirements for Regulation capability and dispatch specified in
the PJM Manuals.
(b) The Office of the Interconnection shall obtain and maintain an
amount of Regulation equal to the PJM Control Area Regulation objective as
specified in the PJM Manuals.
(c) The Regulation range of a unit shall be at least twice the amount
of Regulation assigned.
(d) A unit capable of automatic energy dispatch that is also
providing Regulation shall have its energy dispatch range reduced by twice the
amount of the Regulation provided. The amount of Regulation provided by a unit
shall serve to redefine the Normal Minimum Generation and Normal Maximum
Generation energy limits of that unit, in that the amount of Regulation shall be
added to the unit's Normal Minimum Generation energy limit, and subtracted from
its Normal Maximum Generation energy limit.
Revised: April 27, 1999
Effective: April 1, 1999
15a
(e) Qualified Regulation must satisfy the verification tests
described in the PJM Manuals.
1.7.19 Ramping.
A generator dispatched by the Office of the Interconnection pursuant
to a control signal appropriate to increase or decrease the generator's megawatt
output level shall be able to change output at the ramping rate specified in the
Offer Data submitted to the Office of the Interconnection for that generator.
1.7.20 Communication and Operating Requirements.
(a) Market Participants. Each Market Participant shall have, or shall
arrange to have, its transactions in the PJM Interchange Energy Market subject
to control by a Market Operations Center, with staffing and communications
systems capable of real-time communication with the Office of the
Interconnection during normal and Emergency conditions and of control of the
Market Participant's relevant load or facilities sufficient to meet the
requirements of the Market Participant's transactions with the PJM Interchange
Energy Market, including but not limited to the following requirements as
applicable.
(b) Market Sellers selling from resources within the PJM Control Area
shall: report to the Office of the Interconnection sources of energy available
for operation; supply to the Office of the Interconnection all applicable Offer
Data; report to the Office of the Interconnection units that are self-scheduled;
report to the Office of the Interconnection bilateral sales transactions to
buyers not within the PJM Control Area; confirm to the Office of the
Interconnection bilateral sales to Market Buyers within the PJM Control Area;
respond to the Office of the Interconnection's directives to start, shutdown or
change output levels of generation units, or change scheduled voltages or
reactive output levels; continuously maintain all Offer Data concurrent with on-
line operating information; and ensure that, where so equipped, generating
equipment is operated with control equipment functioning as specified in the PJM
Manuals.
(c) Market Sellers selling from resources outside the PJM Control
Area shall: provide to the Office of the Interconnection all applicable Offer
Data, including offers specifying amounts of energy available, hours of
availability and prices of energy and other services; respond to Office of the
Interconnection directives to schedule delivery or change delivery schedules;
and communicate delivery schedules to the Market Seller's Control Area.
(d) Market Participants that are Load Serving Entities or purchasing
on behalf of Load Serving Entities shall: provide to the Office of the
Interconnection forecasts of load to be served as required by the Office of the
Interconnection; respond to Office of the Interconnection directives for load
management steps; report to the Office of the Interconnection Capacity Resources
to satisfy capacity obligations that are available for pool operation; report to
the Office of the Interconnection all bilateral purchase transactions; respond
to other Office of the Interconnection directives such as those required during
Emergency operation.
(e) Market Participants that are not Load Serving Entities or
purchasing on behalf of Load Serving Entities shall: provide to the Office of
the Interconnection requests to purchase specified amounts of energy for each
hour of the Operating Day during which it intends to purchase from the PJM
Interchange Energy Market, along with Dispatch Rate levels above which it does
not desire to purchase; respond to other Office of the Interconnection
directives such as those required during Emergency operation.
Revised: June 26, 1998
Effective: September 17, 1998
16
1.7.21 Multi-settlement System.
The PJM Interchange Energy Market shall be enhanced by an amendment to
this Schedule, to be filed with FERC not later than December 31, 1997, that will
provide for the implementation of a multi-settlement system as soon thereafter
as shall be determined by the Office of the Interconnection to be reasonably
practical. Such a system will provide an opportunity for Market Participants to
commit and obtain commitments to energy prices and transmission congestion
charges at certain specified deadlines in advance of the Office of the
Interconnection's real-time dispatch. The Members specified in Section 11.5(c)
of the Agreement, working with the Office of the Interconnection, shall develop
the details of the implementation of such a multi-settlement system.
1.8 Selection, Scheduling and Dispatch Procedure Adjustment Process.
1.8.1 PJM Dispute Resolution Agreement.
Subject to the condition specified below, any Member adversely
affected by a decision of the Office of the Interconnection with respect to the
operation of the PJM Interchange Energy Market, including the qualification of
an entity to participate in that market as a buyer or seller, make seek such
relief as may be appropriate under the PJM Dispute Resolution Procedures on the
grounds that such decision does not have an adequate basis in fact or does not
conform to the requirements of this Agreement.
1.8.2 Market or Control Area Hourly Operational Disputes.
(a) Market Participants shall comply with all determinations of the
Office of the Interconnection on the selection, scheduling or dispatch of
resources in the PJM Interchange Energy Market, or to meet the operational
requirements of the PJM Control Area. Complaints arising from or relating to
such determinations shall be brought to the attention of the Office of the
Interconnection not later than the end of the fifth business day after the end
of the Operating Day to which the selection or scheduling relates, or in which
the scheduling or dispatch took place, and shall include, if practicable, a
proposed resolution of the complaint. Upon receiving notification of the
dispute, the Office of the Interconnection and the Market Participant raising
the dispute shall exert their best efforts to obtain and retain all data and
other information relating to the matter in dispute, and to notify other Market
Participants that are likely to be affected by the proposed resolution. Subject
to confidentiality or other non-disclosure requirements, representatives of the
Office of the Interconnection, the Market Participant raising the dispute, and
other interested Market Participants, shall meet within three business days of
the foregoing notification, or at such other or further times as the Office of
the Interconnection and the Market Participants may agree, to review the
relevant facts, and to seek agreement on a resolution of the dispute.
(b) If the Office of the Interconnection determines that the matter
in dispute discloses a defect in operating policies, practices or procedures
subject to the discretion of the Office of the Interconnection, the Office of
the Interconnection shall implement such changes as it deems appropriate and
shall so notify the Members Committee. Alternatively, the Office of the
Interconnection may notify the Members Committee of a proposed change and
solicit the comments or other input of the Members.
(c) If either the Office of the Interconnection, the Market
Participant raising
17
the dispute, or another affected Market Participant believes that the matter in
dispute has not been adequately resolved, or discloses a need for changes in
standards or policies established in or pursuant to the Operating Agreement, any
of the foregoing parties may make a written request for review of the matter by
the Members Committee, and shall include with the request the forwarding party's
recommendation and such data or information (subject to confidentiality or other
non-disclosure requirements) as would enable the Members Committee to assess the
matter and the recommendation. The Members Committee shall take such action on
the recommendation as it shall deem appropriate.
(d) Subject to the right of a Market Participant to obtain correction
of accounting or billing errors, the LLC or a Market Participant shall not be
entitled to actual, compensatory, consequential or punitive damages, opportunity
costs, or other form of reimbursement from the LLC or any other Market
Participant for any loss, liability or claim, including any claim for lost
profits, incurred as a result of a mistake, error or other fault by the Office
of the Interconnection in the selection, scheduling or dispatch of resources.
1.9 Prescheduling.
The following procedures and principles shall govern the prescheduling
activities necessary to plan for the reliable operation of the PJM Control Area
and for the efficient operation of the PJM Interchange Energy Market.
1.9.1 Outage Scheduling.
The Office of the Interconnection shall be responsible for
coordinating and approving requests for outages of generation and transmission
facilities as necessary for the reliable operation of the PJM Control Area, in
accordance with the PJM Manuals. The Office of the Interconnection shall
maintain records of outages and outage requests of these facilities.
1.9.2 Planned Outages.
(a) A Generator Planned Outage shall be included in Generator Planned
Outage schedules established prior to the scheduled start date for the outage,
in accordance with standards and procedures specified in the PJM Manuals.
(b) The Office of the Interconnection shall conduct Generator Planned
Outage scheduling for Capacity Resources in accordance with the Reliability
Assurance Agreement and the PJM Manuals and in consultation with the Members
owning or controlling the output of Capacity Resources. A Market Participant
shall not be expected to submit offers for the sale of energy or other services,
or to satisfy delivery obligations, from all or part of a generation resource
undergoing an approved Generator Planned Outage. If the Office of the
Interconnection determines that approval of a Generator Planned Outage would
significantly affect the reliable operation of the PJM Control Area, the Office
of the Interconnection may withhold approval or withdraw a prior approval.
Approval for a Generator Planned Outage of a Capacity Resource shall be withheld
or withdrawn only as necessary to ensure the adequacy of reserves or the
reliability of the PJM Control Area in connection with anticipated
implementation or avoidance of Emergency procedures. If the Office of the
Interconnection withholds or withdraws approval, it shall coordinate with the
Market Participant owning or controlling the resource to reschedule the
Generator Planned Outage of the Capacity Resource at the earliest practical
time. The Office of the Interconnection shall if possible propose alternative
schedules with the intent of minimizing
18
the economic impact on the Market Participant of a Generator Planned Outage.
(c) The Office of the Interconnection shall conduct Planned
Transmission Outage scheduling in accordance with procedures specified in the
Transmission Owners Agreement and the PJM Manuals. If the Office of the
Interconnection determines that transmission maintenance schedules proposed by
one or more Members would significantly affect the efficient and reliable
operation of the PJM Control Area, the Office of the Interconnection may propose
alternative schedules, but such alternative shall minimize the economic impact
on the Member or Members whose maintenance schedules the Office of the
Interconnection proposes to modify.
The Office of the Interconnection shall coordinate resolution of
outage or other planning conflicts that may give rise to unreliable system
conditions. The Members shall comply with all maintenance schedules established
by the Office of the Interconnection.
1.9.3 Generator Maintenance Outages
A Market Participant may request approval for a Generator Maintenance
Outage of any Capacity Resource from the Office of the Interconnection in
accordance with the timetable and other procedures specified in the PJM Manuals.
The Office of the Interconnection shall approve requests for Generator
Maintenance Outages for a Capacity Resource unless the outage would threaten the
adequacy of reserves in, or the reliability of, the PJM Control Area. A Market
Participant shall not be expected to submit offers for the sale of energy or
other services, or to satisfy delivery obligations, from a generation resource
undergoing an approved full or partial Generator Maintenance Outage.
1.9.4 Forced Outages
(a) Each Market Seller that owns or controls a pool-scheduled
resource, or Capacity Resource whether or not pool-scheduled, shall: (i) advise
the Office of the Interconnection of a Generator Forced Outage suffered or
anticipated to be suffered by any such resource as promptly as possible; (ii)
provide the Office of the Interconnection with the expected date and time that
the resource will be made available; and (iii) make a record of the events and
circumstances giving rise to the Generator Forced Outage. A Market Seller shall
not be expected to submit offers for the sale of energy or other services, or
satisfy delivery obligations, from a generation resource undergoing a Generator
Forced Outage. A Capacity Resource that does not deliver all or part of its
scheduled energy shall be deemed to have experienced a Generator Forced Outage
with respect to such undelivered energy, in accordance with standards and
procedures for full and partial Generator Forced Outages specified in the
Reliability Assurance Agreement and the PJM Manuals.
(b) The Office of the Interconnection shall receive notification of
Forced Transmission Outages, and information on the return to service, of
Transmission Facilities in the PJM Control Area in accordance with standards and
procedures specified in the Transmission Owners Agreement and the PJM Manuals.
19
1.9.5 Market Participant Responsibilities.
Each Market Participant making a bilateral sale covering a period
greater than the following Operating Day from a generating resource located
within the PJM Control Area for delivery outside the PJM Control Area shall
furnish to the Office of the Interconnection, in the form and manner specified
in the PJM Manuals, information regarding the source of the energy, the load
sink, the energy schedule, and the amount of energy being delivered.
1.9.6 Internal Market Buyer Responsibilities.
Each Internal Market Buyer making a bilateral purchase covering a
period greater than the following Operating Day shall furnish to the Office of
the Interconnection, in the form an manner specified in the PJM Manuals,
information regarding the source of the energy, the load sink, the energy
schedule, and the amount of energy being delivered. Each Internal Market Buyer
shall provide the Office of the Interconnection with details of any load
management agreements with customers that allow the Office of the
Interconnection to reduce load under specified circumstances.
1.9.7 Market Seller Responsibilities
(a) Not less than 30 days before a Market Seller's initial offer to
sell energy from a given generation resource on the PJM Interchange Energy
Market, the Market Seller shall furnish to the Office of the Interconnection the
information specified in the Offer Data for new generation resources.
(b) Market Sellers authorized and intending to request market-based
start-up and no-load fees in their Offer Data shall submit a specification of
such fees to the Office of the Interconnection for each generating unit as to
which the Market Seller intends to request such fees. Any such specification
shall be submitted on or before March 31 for the period April 1 through
September 30, and on or before September 30 for the period October 1 through
March 31, and shall remain in effect without change throughout each such period
for which a specification was submitted. The Office of the Interconnection
shall reject any request for start-up and no-load fees in a Market Seller's
Offer Data that does not conform to the Market Seller's specification on file
with the Office of the Interconnection.
1.9.8 Office of the Interconnection Responsibilities
(a) The Office of the Interconnection shall perform seasonal
operating studies to assess the forecasted adequacy of generating reserves and
of the transmission system, in accordance with the procedures specified in the
PJM Manuals.
(b) The Office of the Interconnection shall maintain and update
tables setting forth Operating Reserve and other reserve objectives as specified
in the PJM Manuals.
(c) The Office of the Interconnection shall receive and process
requests for firm and non-firm transmission service in accordance with
procedures specified in the PJM Tariff.
(d) The Office of the Interconnection shall maintain such data and
information relating to generation and transmission facilities in the PJM
Control Area as may be necessary or appropriate to conduct the scheduling and
dispatch of the PJM Interchange Energy Market and PJM Control Area.
20
(e) The Office of the Interconnection shall coordinate with other
interconnected Control Area as necessary to manage, alleviate or end an
Emergency.
1.10 Scheduling.
The following scheduling procedures and principles shall govern the
commitment of resources to the PJM Interchange Energy Market over a period
extending from one week to one day prior to the Operating Day that transactions
are to take place. Scheduling encompasses the day-ahead and hourly scheduling
process, through which the Office of the Interconnection determines, based on
changing forecasts of conditions and actions by Market Participants and system
constraints, a plan to serve the hourly energy and reserve requirements of the
Internal Market Buyers and the purchase requests of the External Market Buyers
in the least costly manner, subject to maintaining the reliability of the PJM
Control Area. Scheduling shall be conducted as specified below, subject to the
following condition. If the Office of the Interconnection's forecast for the
next seven days projects a likelihood of Emergency conditions, the Office of the
Interconnection may commit, for all or part of such seven day period, to the use
of generation resources with notification or start-up times greater than one day
as necessary in order to alleviate or mitigate such Emergency, in accordance
with the Market Sellers' offers for such units for such periods and the
specifications in the PJM Manuals.
1.10.1 Day-Ahead Scheduling.
The following actions shall occur not later than 12:00 noon on the day
before the Operating Day for which transactions are being scheduled.
(a) Each Market Participant that is a Load Serving Entity or
purchasing on behalf of a Load Serving Entity shall submit to the Office of the
Interconnection forecasts of its customer loads for the next Operating Day as
required by the PJM Manuals. If a Market Participant expects to curtail load at
a specific Dispatch Rate, it should specify the Dispatch Rate and estimated load
curtailment.
(b) Each Market Participant that is not a Load Serving Entity or
purchasing on behalf of a Load Serving Entity shall submit to the Office of the
Interconnection requests to purchase specified amounts of energy for each hour
of the Operating Day during which it intends to purchase from the PJM
Interchange Energy Market, along with Dispatch Rate levels above which it does
not desire to purchase, in accordance with the specifications set forth in the
PJM Manuals.
(c) Each Generating Market Buyer shall submit to the Office of the
Interconnection: (i) hourly schedules for resource increments, including
hydropower units, self-scheduled by the Market Buyer to meet its Equivalent
Load; and (ii) the Dispatch Rate at which each such self-scheduled resource will
disconnect or reduce output, or confirmation of the Market Buyer's intent not to
reduce output.
(d) All Market Participants shall submit to the Office of the
Interconnection schedules for any bilateral transactions involving use of
generation or Transmission Facilities as specified below, and shall inform the
Office of the Interconnection if the parties to the transaction are not willing
to incur Transmission Congestion Charges in order to complete any such scheduled
bilateral transaction. Scheduling of bilateral transactions shall be conducted
in accordance with the specifications in the PJM Manuals and the following
requirements:
Revised: June 26, 1998
Effective: September 17, 1998
21
i) Internal Market Buyers shall submit schedules for all bilateral
purchases for delivery within the PJM Control Area, whether from
generation resources inside or outside the PJM Control Area;
ii) Market Sellers shall submit schedules for bilateral sales to
entities outside the PJM Control Area from generation within the
PJM Control Area that is not dynamically scheduled to such
entities pursuant to Section 1.12; and
iii) In addition to the foregoing schedules for bilateral
transactions, Market Participants shall submit confirmations of
each scheduled bilateral transaction from each other party to the
transaction in addition to the party submitting the schedule, or
the adjacent Control Area.
(e) Market Sellers wishing to sell on the PJM Interchange Energy
Market shall submit offers for the supply of energy (including energy from
hydropower units), Regulation, Operating Reserves or other services for the
following Operating Day. Offers shall be submitted to the Office of the
Interconnection in the form specified by the Office of the Interconnection and
shall contain the information specified in the Office of the Interconnection's
Offer Data specification, as applicable. Market Sellers owning or controlling
the output of a Capacity Resource that has not been rendered unavailable by a
Generation Planned Outage, a Generator Maintenance Outage, or a Generation
Forced Outage shall submit offers for the available capacity of such Capacity
Resource, including any portion that is self-scheduled by the Generating Market
Buyer claiming the resource as a Capacity Resource. The submission of offers for
resource increments that are not Capacity Resources shall be optional, but any
such offers must contain the information specified in the Office of the
Interconnection's Offer Data specification, as applicable. Energy offered from
generation resources that are not Capacity Resources shall not be supplied from
resources that are included in or otherwise committed to supply the Operating
Reserves of another Control Area. The foregoing offers:
i) Shall specify the generation resource and energy for each hour in
the offer period;
ii) Shall specify the amounts and prices for the entire Operating Day
for each resource component offered by the Market Seller to the
Office of the Interconnection;
iii) If based on energy from a specific generating unit, may specify
start-up and no-load fees equal to the specification of such fees
for such unit on file with the Office of the Interconnection;
iv) Shall set forth any special conditions upon which the Market
Seller proposes to supply a resource increment, including any
curtailment rate specified in a bilateral contract for the output
of the resource, or any cancellation fees;
Second Revised: June 16, 1999
Effective: August 16, 1999
22
v) May include a schedule of offers for prices and operating data
contingent on acceptance by the deadline specified in this
Schedule, with a second schedule applicable if accepted after the
foregoing deadline;
vi) Shall constitute an offer to submit the resource increment to the
Office of the Interconnection for scheduling and dispatch in
accordance with the terms of the offer, which offer shall remain
open through the Operating Day for which the offer is submitted;
Revised: June 26, 1998
Effective: September 17, 1998
22a
vii) Shall be final as to the price or prices at which the Market
Seller proposes to supply energy or other services to the PJM
Interchange Energy Market, such price or prices being guaranteed
by the Market Seller for the period extending through the end of
the following Operating Day; and
viii) Shall not exceed an energy offer price of $1,000/megawatt-hour.
(f) A Market Seller that wishes to sell Regulation service shall
submit an offer for Regulation that shall specify the MW of Regulation being
offered and the Regulation Class from which such Regulation is being offered.
The range of costs defining Regulation Classes, and the average cost for each
Regulation Class, shall be determined periodically by the Office of the
Interconnection on the basis of prior energy bid prices and appropriate fuel
indices, in accordance with procedures specified in the PJM Manuals. Qualified
Regulation capability must satisfy the verification tests specified in the PJM
Manuals.
(g) Each Market Seller owning or controlling the output of a
Capacity Resource shall submit a forecast of the availability of each such
Capacity Resource for the next seven days. A Market Seller (i) may submit a non-
binding forecast of the price at which it expects to offer a generation resource
increment to the Office of the Interconnection over the next seven days, and
(ii) shall submit a binding offer for energy, along with start-up and no-load
fees, if any, for the next seven days or part thereof, for any generation
resource with minimum notification or start-up requirement greater than 24
hours.
(h) Each offer by a Market Seller of a Capacity Resource shall remain
in effect for subsequent Operating Days until superseded or canceled.
(i) The Office of the Interconnection shall post on the PJM Open
Access Same-time Information System its estimate of the combined hourly load of
the Market Buyers for the next four days, and peak load forecasts for an
additional three days.
1.10.2 Pool-Scheduled Resources.
Pool-scheduled resources shall be governed by the following principles
and procedures.
(a) Pool-scheduled resources shall be selected by the Office of the
Interconnection on the basis of the prices offered for energy and related
services, start-up, no-load and cancellation fees, and the specified operating
characteristics, offered by Market Sellers to the Office of the Interconnection
by the 12:00 noon offer deadline.
(b) A resource that is scheduled by a Market Participant to support a
bilateral sale, or that is self-scheduled by a Generating Market Buyer, shall
not be selected by the Office of the Interconnection as a pool-scheduled
resource except in an Emergency.
(c) Market Sellers offering energy from hydropower or other
facilities with fuel or environmental limitations may submit data to the Office
of the Interconnection that is sufficient to enable the Office of the
Interconnection to determine the available operating hours of such facilities.
(d) The Market Seller of a resource selected as a pool-scheduled
resource shall receive payments or credits for energy or related services, or
for start-up and no-load fees, from the Office of the Interconnection on behalf
of the Market Buyers in accordance with Section 3
Revised: March 17, 1998
Effective: April 1, 1998
23
of this Schedule 1. Alternatively, the Market Seller shall receive, in lieu of
start-up and no-load fees, its actual costs incurred, if any, up to a cap of the
resource's start-up cost, if the Office of the Interconnection cancels its
selection of the resource as a pool-scheduled resource and so notifies the
Market Seller before the resource is synchronized.
(e) Market Participants shall make available their pool-scheduled
resources to the Office of the Interconnection for coordinated operation to
supply the needs of the PJM Control Area for Operating Reserves.
1.10.3 Self-scheduled Resources.
Self-scheduled resources shall be governed by the following principles
and procedures.
(a) Each Generating Market Buyer shall use all reasonable efforts,
consistent with Good Utility Practice, not to self-schedule resources in excess
of its Equivalent Load.
(b) The offered prices of resources that are self-scheduled, or
otherwise not following the dispatch orders of the Office of the
Interconnection, shall not be considered by the Office of the Interconnection in
determining Locational Marginal Prices.
(c) Market Participants shall make available their self-scheduled
resources to the Office of the Interconnection for coordinated operation to
supply the needs of the PJM Control Area for Operating Reserves.
1.10.4 Capacity Resources.
(a) A Capacity Resource selected as a pool-scheduled resource shall
be made available for scheduling and dispatch at the direction of the Office of
the Interconnection. A Capacity Resource that does not deliver energy as
scheduled shall be deemed to have experienced a Generator Forced Outage to the
extent of such energy not delivered.
(b) Energy from a Capacity Resource that has not been selected as a
pool-scheduled resource may be sold on a bilateral basis by the Market Seller,
or may be self-scheduled. A Capacity Resource that has not been selected as a
pool-scheduled resource and that has been sold on a bilateral basis must be made
available upon request to the Office of the Interconnection for scheduling and
dispatch if the Office of the Interconnection declares a Maximum Generation
Emergency. Any such resource so scheduled and dispatched shall receive the
applicable Locational Marginal Price for energy delivered.
(c) A Capacity Resource that has been self-scheduled shall not
receive payments or credits for start-up or no-load fees.
Revised: March 17, 1998
Effective: April 1, 1998
24
1.10.5 External Resources.
(a) External Resources may submit offers to the PJM Interchange Energy
Market, in accordance with the day-ahead scheduling process specified above. An
External Resource selected as a pool-scheduled resource shall be made available
for scheduling and dispatch at the direction of the Office of the
Interconnection, and except as specified below shall be compensated on the same
basis as other pool-scheduled resources. External Resources that are not capable
of dynamic dispatch shall, if selected by the Office of the Interconnection on
the basis of the Market Seller's Offer Data, be block loaded on an hourly
scheduled basis. Market Sellers shall offer External Resources to the PJM
Interchange Energy Market on either a resource-specific or an aggregated
resource basis.
(b) Offers for External Resources from an aggregation of two or more
generating units shall so indicate, and shall specify, in accordance with the
Offer Data requirements specified by the Office of the Interconnection: (i)
energy prices; (ii) hours of energy availability; (iii) a minimum dispatch
level; (iv) a maximum dispatch level; and (v) unless such information has
previously been made available to the Office of the Interconnection, sufficient
information, as specified in the PJM Manuals, to enable the Office of the
Interconnection to model the flow into the PJM Control Area of any energy from
the External Resources scheduled in accordance with the Offer Data. If a Market
Seller submits more than one offer on an aggregated resource basis, the
withdrawal of any such offer shall be deemed a withdrawal of all higher priced
offers for the same period.
(c) Offers for External Resources on a resource-specific basis shall
specify the resource being offered, along with the information specified in the
Offer Data as applicable.
Second Revised: November 19, 1998
Effective: December 1, 1998
25
1.10.6 External Market Buyers.
(a) Deliveries to an External Market Buyer not subject to dynamic
dispatch by the Office of the Interconnection shall be delivered on a block
loaded basis to the load bus or busses at the border of the PJM Control Area, or
in the PJM Control Area with respect to an External Market Buyer's load within
the PJM Control Area not served by Network Service, at which the energy is
delivered to or for the External Market Buyer. External Market Buyers shall be
charged the Locational Marginal Price for energy at the foregoing load bus or
busses.
(b) An External Market Buyer's hourly schedules for energy purchased
from the PJM Interchange Energy Market shall conform to the ramping and other
applicable requirements of the interconnection agreement between the PJM Control
Area and the Control Area to which, whether as an intermediate or final point of
delivery, the purchased energy will initially be delivered.
(c) The Office of the Interconnection shall curtail deliveries to an
External Market Buyer if necessary to maintain appropriate reserve levels for
the PJM Control Area as defined in the PJM Manuals, or to avoid shedding load in
the PJM Control Area.
1.10.6A Transmission Loading Relief Customers.
(a) An entity that desires to elect to pay Transmission Congestion
Charges in order to continue its energy schedules during an Operating Day over
contract paths outside the PJM Control Area in the event that PJM initiates
Transmission Loading Relief that otherwise would cause PJM to request security
coordinators to curtail such Member's energy schedules shall:
(i) enter its election on OASIS by 12:00 p.m. of the day before
the Operating Day, in accordance with procedures established
by PJM, which election shall be applicable for the entire
Operating Day; and
(ii) if PJM initiates Transmission Loading Relief, provide to
PJM, at such time and in accordance with procedures
established by PJM, the hourly integrated energy schedules
that impacted the PJM Control Area (as indicated from the
NERC Interchange Distribution Calculator) during the
Transmission Loading Relief.
Third Revised: February 12, 1999
Effective: January 19, 1999
26
(b) If an entity has made the election specified in Section (a), then
PJM shall not request security coordinators to curtail such entity's energy
transactions, except as may be necessary to respond to Emergencies.
(c) In order to make elections under this Section 1.10.6A, an entity
must (i) have met the creditworthiness standards established by the Office of
the Interconnection or provided a letter of credit or other form of security
acceptable to the Office of the Interconnection, and (ii) have executed either
the Agreement, a Service Agreement under the PJM Tariff, or other agreement
committing to pay all Transmission Congestion Charges incurred under this
Section.
1.10.7 Bilateral Transactions.
Bilateral transactions as to which the parties have notified the
Office of the Interconnection by 12:00 p.m. of the day before the Operating Day
that they are not willing to incur Transmission Congestion Charges shall be
curtailed by the Office of the Interconnection as necessary to reduce or
alleviate transmission congestion. Bilateral transactions willing to incur
congestion charges shall continue to be implemented during periods of
congestion, except as may be necessary to respond to Emergencies.
Second Revised: February 12, 1999
Effective: January 19, 1999
26a
1.10.8 Office of the Interconnection Responsibilities.
(a) The Office of the Interconnection shall use its best efforts to
determine the least-cost means of satisfying the projected hourly requirements
for energy, Operating Reserves, and other ancillary services of the Market
Buyers, including the reliability requirements of the PJM Control Area. In
making this determination, the Office of the Interconnection shall take into
account: (i) the Office of the Interconnection's forecasts of PJM Interchange
Energy Market and PJM Control Area energy requirements, giving due consideration
to the energy requirement forecasts and purchase requests submitted by Market
Buyers; (ii) the offers submitted by Market Sellers; (iii) the availability of
limited energy resources; (iv) the capacity, location, and other relevant
characteristics of self-scheduled resources; (v) the objectives of the PJM
Control Area for Operating Reserves, as specified in the PJM Manuals; (vi) the
requirements of the PJM Control Area for Regulation and other ancillary
services, as specified in the PJM Manuals; (vii) the benefits of avoiding or
minimizing transmission constraint control operations, as specified in the PJM
Manuals; and (viii) such other factors as the Office of the Interconnection
reasonably concludes are relevant to the foregoing determination. The Office of
the Interconnection shall develop a schedule of generation resources based on
the foregoing determination. The Office of the Interconnection shall report the
planned schedule for a hydropower resource to the operator of that resource as
necessary for plant safety and security, and legal limitations on pond
elevations.
(b) Not later than 4:00 p.m. of the day before each Operating Day, or
such earlier deadline as may be specified by the Office of the Interconnection
in the PJM Manuals, the Office of the Interconnection shall: (i) post on the
PJM Open Access Same-time Information System its forecast of the location and
duration of any expected transmission congestion, and of the range of
differences in Locational Marginal Prices between major subareas of the PJM
Control Area expected to result from such transmission congestion; and (ii)
inform each Market Seller whether its offer or offers have been accepted.
(c) The Office of the Interconnection shall revise its schedule of
generation resources to reflect updated projections of load, conditions
affecting electric system operations in the PJM Control Area, the availability
of and constraints on limited energy and other resources, transmission
constraints, and other relevant factors. The Office of the Interconnection
shall post on the PJM Open Access Same-time Information System at times
specified in the PJM Manuals a revised forecast of the location and duration of
any expected transmission congestion, and of the range of differences in
Locational Marginal Prices between major subareas of the PJM Control Area
expected to result from such transmission congestion.
1.10.9 Hourly Scheduling
(a) Following the initial posting of the Office of the
Interconnection's transmission congestion forecast, and subject to the right of
the Office of the Interconnection to schedule and dispatch pool-scheduled
resources and to direct that schedules be changed in an Emergency, a Market
Participant may adjust the schedule of a resource under its dispatch control on
an hour-to-hour basis beginning at 10:00 p.m. of the day before each Operating
Day, provided that the Office of the Interconnection is notified not later than
60 minutes prior to the hour in which the adjustment is to take effect, as
follows:
i) A Generating Market Buyer may self-schedule any of its resource
27
increments, including hydropower resources, not previously
designated as self-scheduled and not selected as a pool-
scheduled resource;
ii) A Market Participant may request the scheduling of a non-firm
bilateral transaction; or
iii) A Market Participant may request the scheduling of deliveries
or receipts of Spot Market Energy; or
iv) A Generating Market Buyer may remove from service a resource
increment, including a hydropower resource, that it had
previously designated as self-scheduled, provided that the
Office of the Interconnection shall have the option to
schedule energy from any such resource increment that is a
Capacity Resource at the price offered in the scheduling
process, with no obligation to pay any start-up fee.
(b) An External Market Buyer may refuse delivery of some or all of
the energy it requested to purchase by notifying the Office of the
Interconnection of the adjustment in deliveries not later than 60 minutes prior
to the hour in which the adjustment is to take effect.
1.11 Dispatch.
The following procedures and principles shall govern the dispatch of the
resources available to the Office of the Interconnection.
1.11.1 Resource Output.
The Office of the Interconnection shall have the authority to direct
any Market Seller to adjust the output of any pool-scheduled resource increment
within the operating characteristics specified in the Market Seller's offer.
The Office of the Interconnection may cancel its selection of, or otherwise
release, pool-scheduled resources, subject to an obligation to pay any
applicable start-up, no-load or cancellation fees. The Office of the
Interconnection shall adjust the output of pool-scheduled resource increments as
necessary: (a) to maintain reliability, and subject to that constraint, to
minimize the cost of supplying the energy, reserves, and other services required
by the Market Buyers and the operation of the PJM Control Area; (b) to balance
load and generation, maintain scheduled tie flows, and provide frequency support
within the PJM Control Area; and (c) to minimize unscheduled interchange not
frequency related between the PJM Control Area and other Control Areas.
1.11.2 Operating Basis.
In carrying out the foregoing objectives, the Office of the
Interconnection shall conduct the operation of the PJM Control Area in
accordance with the PJM Manuals, and shall: (i) utilize available generating
reserves and obtain required replacements; and (ii) monitor the availability of
adequate reserves.
Revised: November 19, 1998
Effective: December 1, 1998
28
1.11.3 Pool-dispatched Resources
(a) The Office of the Interconnection shall implement the dispatch
of energy from pool-scheduled resources with limited energy by direct request.
In implementing mandatory or economic use of limited energy resources, the
Office of the Interconnection shall use its best efforts to select the most
economic hours of operation for limited energy resources, in order to make
optimal use of such resources consistent with the dynamic load-following
requirements of the PJM Control Area and the availability of other resources to
the Office of the Interconnection.
(b) The Office of the Interconnection shall implement the dispatch
of energy from other pool-dispatched resource increments, including generation
increments from Capacity Resources the remaining increments of which are self-
scheduled, by sending appropriate signals and instructions to the entity
controlling such resources, in accordance with the PJM Manuals. Each Market
Seller shall ensure that the entity controlling a pool-dispatched resource
offered or made available by that Market Seller complies with the energy
dispatch signals and instructions transmitted by the Office of the
Interconnection.
1.11.3a Maximum Generation Emergency
If the Office of the Interconnection declares a Maximum Generation
Emergency, all deliveries to load that is served by Point-to-Point Transmission
Service outside the PJM Control Area from Capacity Resources may be interrupted
in order to serve load in the PJM Control Area.
1.11.4 Regulation
(a) A Market Buyer may satisfy its Regulation obligation from its
own resources capable of performing Regulation service, by contractual
arrangements with other Market Participants able to provide Regulation service,
or by purchases from the PJM Interchange Energy Market.
(b) The Office of the Interconnection shall obtain Regulation
service from the least-cost alternatives available from either pool-scheduled or
self-scheduled resources as needed to meet PJM Control Area requirements not
otherwise satisfied by the Market Buyers.
(c) The Office of the Interconnection shall dispatch resources for
Regulation by sending Regulation signals and instructions to resources from
which Regulation service has been offered by Market Sellers, in accordance with
the PJM Manuals. Market Sellers shall comply with Regulation dispatch signals
and instructions transmitted by the Office of the Interconnection and, in the
event of conflict, Regulation dispatch signals and instructions shall take
precedence over energy dispatch signals and instructions. Market Sellers shall
exert all reasonable efforts to operate, or ensure the operation of, their
resources supplying load in the PJM Control Area as close to desired output
levels as practical, consistent with Good Utility Practice.
1.11.5 PJM Open Access Same-time Information System.
The Office of the Interconnection shall update the information posted
on the PJM Open Access Same-time Information System to reflect its dispatch of
generation resources.
Revised: June 26, 1998
Effective: September 17, 1998
29
1.12 Dynamic Scheduling.
(a) An entity that owns or controls a generating resource in the PJM
Control Area may electrically remove all or part of the generating resource's
output from the PJM Control Area through dynamic scheduling of the output to
load outside the PJM Control Area. Such output shall not be available for
economic dispatch by the Office of the Interconnection.
(b) An entity requesting dynamic scheduling shall be responsible for
arranging for the provision of signal processing and communications from the
generator to the Office of the Interconnection and the other participating
control area and complying with any other procedures established by the Office
of the Interconnection regarding dynamic scheduling as set forth in the PJM
Manuals.
(c) An entity requesting dynamic scheduling shall be responsible for
reserving amounts of firm transmission service necessary to deliver the range of
the dynamic transfer and any required ancillary services.
Revised: June 16, 1999
Effective: August 16, 1999
29a
2. CALCULATION OF LOCATIONAL MARGINAL PRICES
2.1 Introduction.
The Office of the Interconnection shall calculate the price of energy at
the load busses and generation busses in the PJM Control Area and at the
interface busses between the PJM Control Area and adjacent Control Areas on the
basis of Locational Marginal Prices. Locational Marginal Prices determined in
accordance with this Section shall be calculated every five minutes and
integrated hourly values of such calculations shall be the basis of sales and
purchases of energy in the PJM Interchange Energy Market and of Transmission
Congestion Charges under the PJM Tariff.
2.2 General.
The Office of the Interconnection shall determine the least cost security-
constrained dispatch, which is the least costly means of serving load at
different locations in the PJM Control Area based on actual operating conditions
existing on the power grid and on the prices at which Market Sellers have
offered to supply energy in the PJM Interchange Energy Market. Locational
Marginal Prices for the generation and load busses in the PJM Control Area,
including interconnections with other Control Areas, will be calculated based on
the actual economic dispatch and the prices of energy offers. The process for
the determination of Locational Marginal Prices shall be as follows:
(a) To determine actual operating conditions on the power grid in the PJM
Control Area, the Office of the Interconnection shall use a computer model of
the interconnected grid that uses available metered inputs regarding generator
output, loads, and power flows to model remaining flows and conditions,
producing a consistent representation of power flows on the network. The
computer model employed for this purpose, referred to as the State Estimator
program, is a standard industry tool and is described in Section 2.3 below. It
will be used to obtain information regarding the output of generation supplying
energy to the PJM Control Area, loads at buses in the PJM Control Area,
transmission losses, and power flows on binding transmission constraints for use
in the calculation of Locational Marginal Prices. Additional information used
in the calculation, including Dispatch Rates and real time schedules for
external transactions between PJM and other Control Areas, will be obtained from
the Office of the Interconnection's dispatchers.
(b) Using the prices at which energy is offered by Market Sellers to the
PJM Interchange Energy Market, the Office of the Interconnection shall determine
the offers of energy that will be considered in the calculation of Locational
Marginal Prices. As described in Section 2.4 below, every offer of energy by a
Market Seller from a resource that is following economic dispatch instructions
of the Office of the Interconnection will be utilized in the calculation of
Locational Marginal Prices.
(c) Based on the system conditions on the PJM power grid, determined as
described in (a), and the eligible energy offers, determined as described in
(b), the Office of the Interconnection shall determine the least costly means of
obtaining energy to serve the next increment of load at each bus in the PJM
Control Area, in the manner described in Section 2.5 below. The result of that
calculation shall be a set of Locational Marginal Prices based on the system
conditions at the time.
30
2.3 Determination of System Conditions Using the State Estimator.
Power system operations, including, but not limited to, the determination
of the least costly means of serving load, depend upon the availability of a
complete and consistent representation of generator outputs, loads, and power
flows on the network. In calculating Locational Marginal Prices, the Office of
the Interconnection shall obtain a complete and consistent description of
conditions on the electric network in the PJM Control Area by using the most
recent power flow solution produced by the State Estimator, which is also used
by the Office of the Interconnection for other functions within power system
operations. The State Estimator is a standard industry tool that produces a
power flow model based on available real-time metering information, information
regarding the current status of lines, generators, transformers, and other
equipment, bus load distribution factors, and a representation of the electric
network, to provide a complete description of system conditions, including
conditions at busses for which real-time information is unavailable. The
current version of the State Estimator includes over 1600 busses in the PJM
Control Area, as well as interface busses with adjacent Control Areas. The
Office of the Interconnection shall obtain a State Estimator solution every five
minutes, which shall provide the megawatt output of generators and the loads at
busses in the PJM Control Area, transmission line losses, and actual flows or
loadings on constrained transmission facilities. External transactions between
PJM and other Control Areas shall be included in the Locational Marginal Price
calculation on the basis of the real time transaction schedules implemented by
the Office of the Interconnection's dispatcher.
2.4 Determination of Energy Offers Used in Calculating Locational
Marginal Prices.
(a) To determine the energy offers submitted to the PJM Interchange
Energy Market that shall be used to calculate the Locational Marginal Prices,
the Office of the Interconnection shall determine which resources are following
its economic dispatch instructions. A resource will be considered to be
following economic dispatch instructions and shall be included in the
calculation of Locational Marginal Prices if:
i) the price bid by a Market Seller for energy from the resource is
less than or equal to the Dispatch Rate for the area of the PJM
Control Area in which the resource is located; or
ii) the resource is specifically requested to operate by the Office
of the Interconnection's dispatcher.
(b) In determining whether a resource satisfies the condition described in
(a), the Office of the Interconnection will determine the bid price associated
with an energy offer by comparing the actual megawatt output of the resource
with the Market Seller's offer price curve. Because of practical generator
response limitations, a resource whose megawatt output is not ten percent more
than the megawatt level specified on the offer price curve for the applicable
Dispatch Rate shall be deemed to be following economic dispatch instructions,
but the energy price offer used in the calculation of Locational Marginal Prices
shall not exceed the applicable Dispatch Rate. Units that must be run for local
area protection shall not be considered in the calculation of Locational
Marginal Prices.
31
2.5 Calculation of Locational Marginal Prices.
(a) The Office of the Interconnection shall determine the least costly
means of obtaining energy to serve the next increment of load at each bus in the
PJM Control Area represented in the State Estimator and each interface bus
between the PJM Control Area and an adjacent Control Area, based on the system
conditions described by the most recent power flow solution produced by the
State Estimator program and the energy offers determined to be eligible for
consideration under Section 2.4. This calculation shall be made by applying an
incremental linear optimization method to minimize energy costs, given actual
system conditions, a set of energy offers, and any binding transmission
constraints that may exist. In performing this calculation, the Office of the
Interconnection shall calculate the cost of serving an increment of load at each
bus from each resource associated with an eligible energy offer as the sum of:
(1) the price at which the Market Seller has offered to supply an additional
increment of energy from the resource, and (2) the effect on transmission
congestion costs (whether positive or negative) associated with increasing the
output of the resource, based on the effect of increased generation from that
resource on transmission line loadings. The energy offer or offers that can
serve an increment of load at a bus at the lowest cost, calculated in this
manner, shall determine the Locational Marginal Price at that bus.
(b) The calculation set forth in (a) shall be performed every five
minutes, using the Office of the Interconnection's Locational Marginal Price
program, producing a set of Locational Marginal Prices based on system
conditions during the preceding interval. The prices produced at five-minute
intervals during an hour will be integrated to determine the Locational Marginal
Prices for that hour, which will determine prices in the PJM Interchange Energy
Market and Transmission Congestion Costs under the PJM Tariff.
2.6 Performance Evaluation.
The Office of the Interconnection shall undertake an evaluation of the
foregoing procedures for the determination of Locational Marginal Prices, as
well as the procedures for determining and allocating Fixed Transmission Rights
and associated Transmission Congestion Charges and Credits, not less often than
every two years, in accordance with the PJM Manuals. To the extent practical,
the Office of the Interconnection shall retain all data needed to perform
comparisons and other analyses of locational marginal pricing. The Office of
the Interconnection shall report the results of its evaluation to the Market
Participants, along with its recommendations, if any, for changes in the
procedures.
32
3. ACCOUNTING AND BILLING
3.1 Introduction.
This schedule sets forth the accounting and billing principles and
procedures for the purchase and sale of services on the PJM Interchange Energy
Market and for the operation of the PJM Control Area.
3.2 Market Buyers.
3.2.1 Spot Market Energy.
(a) At the end of each hour during an Operating Day, the Office of
the Interconnection shall calculate the load payment for each Market Buyer's
load bus. The load payment at each bus shall be the product of the Market
Buyer's megawatts of load at such load bus in the hour times the Locational
Marginal Price at the bus. The megawatts of load at each load bus shall be the
sum of the megawatts of load for that bus of that Market Buyer as determined by
the State Estimator, plus an allocated share of transmission losses, plus any
megawatts of that Market Buyer's bilateral sales to purchasers outside the PJM
Control Area attributable to that bus. The total load payment for each Market
Buyer shall be the sum of the load payments for each of a Market Buyer's load
busses.
(b) At the end of each hour during an Operating Day, the Office of
the Interconnection shall calculate the generation revenue for each Generating
Market Buyer's generation bus. The generation revenue at each generation bus
shall be the product of the Generating Market Buyer's megawatts of generation at
such generation bus in the hour times the Locational Marginal Price at the bus.
The megawatts of generation at each generation bus shall be the sum of the
megawatts of generation for that bus of that Generating Market Buyer as
determined by the State Estimator, plus any megawatts of bilateral purchases of
that Generating Market Buyer from sellers outside the PJM Control Area
attributable to that bus. The total generation revenue for each Generating
Market Buyer shall be the sum of the generation revenues for each of the
Generating Market Buyer's generation busses.
(c) At the end of each hour during an Operating Day, the Office of
the Interconnection shall calculate a net xxxx for each Market Buyer, determined
as the difference between its total load payment and its total generation
revenue. The portions of the net xxxx attributable to net hourly PJM Interchange
and to Transmission Congestion Charges shall be determined as set forth below.
(d) At the end of each hour during an Operating Day, the Office of
the Interconnection shall calculate the total amount of net hourly PJM
Interchange for each Market Buyer, including Generating Market Buyers, in
accordance with the PJM Manuals. For Internal Market Buyers that are Load
Serving Entities or purchasing on behalf of Load Serving Entities, this
calculation shall include determination of the net energy flows from: (i) tie
lines; (ii) any generation resource the output of which is controlled by the
Market Buyer but delivered to it over another entity's Transmission Facilities;
(iii) any generation resource the output of which is controlled by another
entity but which is directly interconnected with the Market Buyer's transmission
system; (iv) deliveries pursuant to bilateral energy sales; (v) receipts
pursuant to bilateral energy purchases; and (vi) the Market Buyer's allocated
share of energy purchased from another Control Area in connection with a Minimum
Generation
Second Revised: September 24, 1998
Effective: January 1, 1999
33
Emergency in such other Control Area as specified in Section 3.2.6(c). For
Electric Distributors that report hourly net energy flows from metered tie
lines, this calculation also shall include 500 kV transmission losses and
Inadvertent Interchange allocated to the Electric Distributor and shall exclude
the energy delivered to load of other Network Customers and Transmission
Customers. For External Market Buyers and Internal Market Buyers that are not
Load Serving Entities or purchasing on behalf of Load Serving Entities, this
calculation shall determine the energy delivered pursuant to the Market Buyer's
purchase requests.
(e) The Office of the Interconnection shall calculate Locational
Marginal Prices for each load and generation bus in the PJM Control Area, in
accordance with Section 2 of this Schedule.
(f) An Internal Market Buyer shall be charged for Spot Market
Energy purchases to the extent of its hourly net PJM Interchange Imports,
determined as specified above. An External Market Buyer shall be charged for its
Spot Market Energy purchases based on the energy delivered to it, determined as
specified above. The Office of the Interconnection shall calculate an hourly
weighted average Locational Marginal Price for each such Market Buyer, based on
the Locational Marginal Price at each load bus and the Market Buyer's load at
that bus. The total charge shall be the Market Buyer's total net PJM Interchange
Imports times the weighted average Locational Marginal Price.
(g) A Generating Market Buyer shall be credited as a Market Seller
for sales of Spot Market Energy to the extent of its hourly net PJM Interchange
Exports, determined as specified above. The total credit shall be the sum of the
credits determined by the product of (i) the hourly net amount of energy of PJM
Interchange Exports at the applicable generation bus from each of the Generating
Market Buyer's generation resources determined to be making such deliveries,
times (ii) the hourly Locational Marginal Price at that generation bus. The
generation resources determined to be making deliveries into PJM Interchange of
such Generating Market Buyer shall be those that have the highest Locational
Marginal Prices of the Market Seller's generation resources.
3.2.2 Regulation.
(a) Each Internal Market Buyer that is a Load Serving Entity shall
have an hourly Regulation objective equal to its pro rata share of the PJM
Control Area Regulation requirements for the hour, based on the Market Buyer's
total load in the PJM Control Area for the hour.
(b) A Generating Market Buyer supplying Regulation at the direction
of the Office of the Interconnection in excess of its hourly Regulation
obligation shall be credited for each increment of such Regulation at the price
in that hour for the Regulation Class from which
Third Revised: November 19, 1998
Effective: December 1, 1998
34
the Regulation was supplied, as determined by the Office of the Interconnection
in accordance with procedures specified in the PJM Manuals. An Internal Market
Buyer that does not meet its hourly Regulation obligation shall be charged for
Regulation dispatched by the Office of the Interconnection to meet such
obligation at the average price paid by the Office of the Interconnection for
Regulation.
3.2.3 Operating Reserves.
(a) A Market Seller's pool-scheduled resources capable of providing
operating reserves shall be credited as specified below based on the prices
offered for the operation of such resource, provided that the resource was
available for the entire time specified in the Offer Data for such resource.
(b) At the end of each Operating Day, the following determination
shall be made for each synchronized pool-scheduled resource of each Market
Seller: the total offered price for start-up and no-load fees and Spot Market
Energy, determined on the basis of the resource's actual output or available and
requested time and type of operation, shall be compared to the total value of
that resource's Spot Market Energy. If the total offered price exceeds the
total value, the difference shall be credited to the Market Seller. Market
Sellers shall also be credited on the basis of their offered prices for
synchronized condensing for any hydropower or combustion turbine units operated
as synchronous condensers at the request of Office of the Interconnection but
producing no energy.
(c) A Market Seller's pool scheduled resource the output of which
is reduced or suspended at the request of the Office of the Interconnection for
the purpose of maintaining reliability within the PJM Control Area, shall be
credited in an amount equal to (PAG - AG) x LT x (ULMP - UB) where:
PAG equals the actual generation of the unit for the five minute
period preceding the request;
AG equals the actual generation of the unit until PJM cancels the
request to reduce output;
LT equals the length of time that the request to reduce output was
effective;
ULMP equals the LMP at the unit's bus;
UB equals the unit bid for that unit whose output is reduced or
suspended; and
where ULMP - UB shall not be negative.
(d) The sum of the foregoing credits, plus any cancellation fees
paid in accordance with Section 1.10.2(d), less any payments received from
another Control Area for Operating Reserves, shall be the cost of Operating
Reserves for the PJM Control Area for each Operating Day.
Fifth Revised: September 3, 1999
Effective: September 4, 1999
35
(e) The cost of Operating Reserves for each Operating Day shall be
allocated and charged to each Market Participant in proportion to the sum of its
(i) deliveries of energy to load in the PJM Control Area in megawatt-hours
during that Operating Day; and (ii) deliveries of energy sales from within the
PJM Control Area to load outside the PJM Control Area in megawatt-hours during
that Operating Day, but not including its bilateral transactions that are
dynamically scheduled to load outside the PJM Control Area pursuant to Section
1.12.
3.2.4 Transmission Congestion.
Each Market Buyer shall be charged or credited for Transmission
Congestion Charges as specified in Section 5 of this Schedule.
3.2.5 Transmission Losses.
(a) Whenever the Office of the Interconnection has in place
appropriate computer hardware, software, and other necessary resources to
account for marginal losses in the dispatch of energy and the calculation of
Locational Marginal Prices, loss accounting shall be determined on that basis,
and the provisions of this Section shall be revised accordingly. Until such
time, the following accounting provisions for losses shall apply.
(b) Each Internal Market Buyer that is a Load Serving Entity or
purchasing on behalf of a Load Serving Entity shall be credited in an amount
equal to its pro rata share of the hourly total amounts collected from
Transmission Customers either as charges for transmission losses in the PJM
Control Area as specified in Section 3.4.2 or for transmission losses supplied
in kind in accordance with Section 3.4.2(c) based on the Locational
Marginal
Second Revised: September 3, 1999
Effective: September 4, 1999
35a
Price at the interface where such losses were delivered. This credit shall be
determined by the ratio of the Internal Market Buyer's total hourly load,
divided by the total hourly load in the PJM Control Area.
(c) PJM Control Area 500 kV losses shall be allocated to each
Electric Distributor that reports hourly net energy flows from metered tie lines
in proportion to its hourly load in the PJM Control Area.
3.2.6 Emergency Energy.
(a) Internal Market Buyers shall be allocated a proportionate share
of the net cost of Emergency energy purchased by the Office of the
Interconnection. Such allocated share shall be determined in proportion to the
amount of net PJM Interchange Imports by each Internal Market Buyer during the
hour of each such energy purchase.
(b) Net revenues in excess of Locational Marginal Prices
attributable to sales of energy in connection with Emergencies to other Control
Areas shall be credited to Internal Market Buyers in proportion to the amount of
net PJM Interchange Imports by each Internal Market Buyer during each hour of
such energy sales.
(c) The costs, revenues, and energy associated with hourly energy
purchased from another Control Area in connection with a Minimum Generation
Emergency in such other Control Area, shall be allocated to each Internal Market
Buyer in proportion to its load in the PJM Control Area during the hour of such
purchases.
3.2.7 Billing.
(a) The Office of the Interconnection shall prepare a billing
statement each billing cycle for each Market Buyer in accordance with the
charges and credits specified in Sections 3.2.1 through 3.2.6 of this Schedule,
and showing the net amount to be paid or received by the Market Buyer. Billing
statements shall provide sufficient detail, as specified in the PJM Manuals, to
allow verification of the billing amounts and completion of the Market Buyer's
internal accounting.
(b) If deliveries to a Market Buyer that has PJM Interchange meters
in accordance with Section 14 of the Operating Agreement include amounts
delivered for a Market Participant that does not have PJM Interchange meters
separate from those of the metered Market Buyer, the Office of the
Interconnection shall prepare a separate billing statement for the unmetered
Market Participant based on the allocation of deliveries agreed upon between the
Market Buyer and the unmetered Market Participant specified by them to the
Office of the Interconnection.
3.3 Market Sellers.
Except as provided in the following sentence, the accounting and billing
principles and procedures applicable to Generating Market Buyers functioning as
Market Sellers shall be as set forth in Section 3.2. This Section sets forth
the accounting and billing principles and procedures applicable to all other
Market Sellers, and to Generating Market Buyers functioning as Market Sellers
with respect to any matters not specified in Section 3.2.
Second Revised: September 24, 1998
Effective: January 1, 1999
36
3.3.1 Spot Market Energy.
(a) At the end of each hour during an Operating Day, the Office of
the Interconnection shall determine the total net amount of hourly energy
delivered to the PJM Control Area by each pool-scheduled or pool-dispatched
resource of each Market Seller, in accordance with the PJM Manuals and the
calculation described in Section 3.2.1(d).
(b) The Office of the Interconnection shall calculate Locational
Marginal Prices for each generation and load bus in the PJM Control Area,
including the bus at each point of interconnection between the PJM Control Area
and each adjacent Control Area, in accordance with Section 2 of this Schedule.
(c) A Market Seller shall be credited for sales of Spot Market
Energy to the extent of its hourly net deliveries of energy to the PJM Control
Area from the Market Seller's pool-scheduled or pool-dispatched resources. For
pool-scheduled resources that are External Resources, the Office of the
Interconnection shall model, based on an appropriate flow analysis, the hourly
amounts delivered from each such resource to the corresponding interface point
between the PJM Control Area and adjacent Control Areas. The total credit for
each Market Seller shall be the sum of its credits determined by the product of
(i) the hourly net amount of energy delivered to the PJM Control Area at the
applicable generation or interface bus from each of the Market Seller's pool-
scheduled or pool-dispatched resources, times (ii) the hourly Locational
Marginal Price at that bus.
3.3.2 Regulation.
Each Market Seller that is also an Internal Market Buyer shall have an
hourly Regulation objective as specified in Section 3.2.2(a), and shall be
credited or charged in connection therewith as specified in Section 3.2.2(b).
All other Market Sellers supplying Regulation at the direction of the Office of
the Interconnection shall be credited for each increment of such Regulation at
the price in that hour for the Regulation Class from which the Regulation was
supplied, as determined by the Office of the Interconnection in accordance with
procedures specified in the PJM Manuals.
3.3.3 Operating Reserves.
A Market Seller shall be credited for its pool-scheduled resources
based on the prices offered for the operation of such resource, provided that
the resource was available for the entire time specified in the Offer Data for
such resource, in accordance with the procedures set forth in Section 3.2.3(b).
3.3.4 Emergency Energy.
The costs and net revenues associated with hourly energy sales to
other Control Areas in connection with a Minimum Generation Emergency in the PJM
Control Area shall be allocated to Market Sellers in proportion to their sales
to the PJM Interchange Energy Market from generation resources within the
metered boundaries of the PJM Control Area in each hour in which such energy was
sold to other Control Areas.
Revised: November 19, 1998
Effective: November 1, 1998
37
3.3.5 Billing.
The Office of the Interconnection shall prepare a billing statement
each billing cycle for each Market Seller in accordance with the charges and
credits specified in Sections 3.3.1 through 3.3.4 of this Schedule, and showing
the net amount to be paid or received by the Market Seller. Billing statements
shall provide sufficient detail, as specified in the PJM Manuals, to allow
verification of the billing amounts and completion of the Market Seller's
internal accounting.
3.4 Transmission Customers.
3.4.1 Transmission Congestion.
Each Transmission Customer shall be charged and credited for
Transmission Congestion Charges as specified in Section 5 of this Schedule.
3.4.2 Transmission Losses
(a) Whenever the Office of the Interconnection has in place
appropriate computer hardware, software, and other necessary resources to
account for marginal losses in the dispatch of energy and the calculation of
Locational Marginal Prices, loss accounting shall be determined on that basis,
and the provisions of this Section shall be revised accordingly. Until such
time, the following accounting provisions for losses shall apply.
(b) Transmission Customers shall be charged for transmission losses
in an amount equal to the product of (i) the Transmission Customer's megawatt-
hours of deliveries using Point-to-Point Transmission Service, times (ii) the
appropriate loss factor for deliveries using Point-to-Point Transmission
Service, times (iii) the weighted average Locational Marginal Price for all load
busses in the PJM Control Area. The foregoing average hourly loss factor shall
be: (i) determined by the Office of the Interconnection from time to time as
conditions affecting losses shall warrant; and (ii) calculated separately for
on-peak and off-peak hours on the basis of the average ratio of losses to load
served in each such period.
(c) A Transmission Customer may elect to pay for losses in kind,
rounded off to the nearest whole megawatt, rather than as specified above if its
total deliveries in an hour using Point-to-Point Transmission Service are
greater than 200 megawatts. If it so elects, the Transmission Customer's
specified source for the energy to be delivered using Point-to-Point
Transmission Service may be scheduled to supply to the PJM Control Area boundary
an amount of energy equal to the delivery schedule plus the amount of losses
determined by applying the appropriate hourly loss factor as specified above to
the delivered amount.
3.4.3 Billing.
The Office of the Interconnection shall prepare a billing statement
each billing cycle for each Transmission Customer in accordance with the charges
and credits specified in Sections 3.4.1 through 3.4.2 of this Schedule, and
showing the net amount to be paid or received by the Transmission Customer.
Billing statements shall provide sufficient detail, as specified in the PJM
Manuals, to allow verification of the billing amounts and completion of the
Transmission Customer's internal accounting.
Revised: June 26, 1998
Effective: September 1, 1998
38
3.5 Other Control Areas.
3.5.1 Energy Sales.
To the extent appropriate in accordance with Good Utility Practice,
the Office of the Interconnection may sell energy to an interconnected Control
Area as necessary to alleviate or end an Emergency in that Control Area. Such
sales shall be made (i) only to Control Areas that have undertaken a commitment
pursuant to a written agreement with the LLC to sell energy on a comparable
basis to the PJM Control Area, and (ii) only to the extent consistent with the
maintenance of reliability in the PJM Control Area. The Office of the
Interconnection may decline to make such sales to a Control Area that the Office
of the Interconnection determines does not have in place and implement Emergency
procedures that are comparable to those followed in the PJM Control Area. If
the Office of the Interconnection sells energy to an interconnected Control Area
as necessary to alleviate or end an Emergency in that Control Area, such energy
shall be sold at 150% of the Locational Marginal Price at the bus or busses at
the border of the PJM Control Area at which such energy is delivered.
3.5.2 Operating Margin Sales.
The extent appropriate in accordance with Good Utility Practice, the
Office of the Interconnection may sell Operating Margin to an interconnected
Control Area as requested to alleviate an operating contingency resulting from
the affect of the purchasing Control Area's operations on the dispatch of
resources in the PJM Control Area. Such sales shall be made only to Control
Areas that have undertaken a commitment pursuant to a written agreement with the
Office of the Interconnection (i) to purchase Operating Margin whenever the
purchasing Control Area's operations will affect the dispatch of resources in
the PJM Control Area, and (ii) to sell Operating Margin on a comparable basis to
the LLC.
3.5.3 Transmission Congestion.
Each Control Area purchasing Operating Margin shall be assessed
Transmission Congestion Charges as specified in Section 5.1.5 of this Schedule.
3.5.4 Billing.
The Office of the Interconnection shall prepare a billing statement
each billing cycle for each Control Area to which Emergency energy or Operating
Margin was sold, and showing the net amount to be paid by such Control Area.
Billing statements shall provide sufficient detail, as specified in the PJM
Manuals, to allow verification of the billing amounts.
3.6 Metering Reconciliation.
3.6.1 Meter Correction Billing.
Metering errors and corrections will be reconciled at the end of each
month by a meter correction charge or credit. The monthly meter correction
charge or credit shall be determined by the product of the positive or negative
deviation in energy amounts, times the weighted average Locational Marginal
Price for all load busses in the PJM Control Area.
Revised: March 17, 1998
Effective: April 1, 1998
39
3.6.2 Meter Corrections Between Market Participants.
If a Market Participant or the Office of the Interconnection discovers
a meter error affecting an interchange of energy with another Market Participant
and makes the error known to such other Market Participant prior to the
completion by the Office of the Interconnection of the accounting for the
interchange, and if both Market Participants are willing to adjust hourly load
records to compensate for the error and such adjustment does not affect other
parties, an adjustment in load records may be made by the Market Participants in
order to correct for the meter error, provided corrected information is
furnished to the Office of the Interconnection in accordance with the Office of
the Interconnection's accounting deadlines. No such adjustment may be made if
the accounting for the Operating Day in which the interchange occurred has been
completed by the Office of the Interconnection.
3.6.3 500 kV Meter Errors.
Billing cycle accounting for 500 kV transmission losses shall be
adjusted to account for errors in meters on 500 kV Transmission Facilities.
3.6.4 Meter Corrections Between Control Areas.
An error between accounted for and metered interchange between a Party
in the PJM Control Area and an entity in another Control Area shall be corrected
by adjusting the hourly meter readings. If this is not practical, the error
shall be accounted for by a correction at the end of the billing cycle. The
Market Participant with ties to such other Control Area experiencing the error
shall account for the full amount of the discrepancy and an appropriate debit or
credit shall be applied equally among all Market Buyers. The Office of the
Interconnection will adjust the actual interchange between the PJM Control Area
and the other Control Area to maintain a proper record of inadvertent energy
flow. Meter corrections on the 500 kV system between the PJM Control Area and
other Control Areas shall be accounted for through the internal 500 kV system
meter error allocation at the end of the billing cycle.
3.6.5 Meter Correction Data.
Meter error data shall be submitted to the Office of the
Interconnection not later than noon on the second working day of the Office of
the Interconnection after the end of the billing cycle applicable to the meter
correction.
3.6.6 Correction Limits.
A Market Participant may not assert a claim for an adjustment in
billing as a result of a meter error for any error discovered more than two
years after the date on which the metering occurred. Any claim for an
adjustment in billing as a result of a meter error shall be limited to bills for
transactions occurring in the most recent annual accounting period of the
billing Market Participant in which the meter error occurred, and the prior
annual accounting period.
40
4. RATE TABLE
4.1 Offered Price Rates.
Spot Market Energy, Regulation, Operating Reserve, and Transmission
Congestion are based on offers to the Office of the Interconnection specified in
this Agreement.
4.2 Transmission Losses.
Average loss factors shall be as specified in the PJM Tariff.
4.3 Emergency Energy Purchases.
The pricing for Emergency energy purchases will be determined by the Office
of the Interconnection and: (a) an adjacent Control Area, in accordance with an
agreement between the Office of the Interconnection and such adjacent Control
Area, or (b) a Member, in accordance with arrangements made by the Office of
Interconnection to purchase energy offered by such Member from resources that
are not Capacity Resources.
Revised: January 30, 1998
Effective: April 1, 1998
41
5. CALCULATION OF TRANSMISSION CONGESTION CHARGES AND CREDITS
5.1 Transmission Congestion Charge Calculation
5.1.1 Calculation by Office of the Interconnection.
When the transmission system is operating under constrained
conditions, the Office of the Interconnection shall calculate Transmission
Congestion Charges for each Network Service User, the PJM Interchange Energy
Market, and each Transmission Customer.
5.1.2 General.
The basis for the Transmission Congestion Charges shall be the
Locational Marginal Prices determined in accordance with Section 2 of this
Schedule.
5.1.3 Network Service User Calculation.
Each Network Service User shall be charged for the increased cost of
energy incurred by it during each constrained hour to deliver the output of its
firm Capacity Resources or other owned or contracted for resources, its firm
bilateral purchases, and its non-firm bilateral purchases as to which it has
elected to pay Transmission Congestion Charges. The Transmission Congestion
Charge for deliveries from each such source shall be the Network Service User's
hourly net xxxx less its hourly net PJM Interchange payments or sales as
determined in accordance with Section 3.2.1 or Sections 3.3 and 3.3.1 of this
Schedule.
5.1.4 Transmission Customer Calculation.
Each Transmission Customer using Firm Point-to-Point Transmission
Service (as defined in the PJM Tariff), and each Transmission Customer using
Non-Firm Point-to-Point Transmission Service (as defined in the PJM Tariff) that
has elected to pay Transmission Congestion Charges, shall be charged for the
increased cost of energy during constrained hours for the delivery of energy
using Point-to-Point Transmission Service. The Transmission Congestion Charge
for each such delivery shall be the delivery amount multiplied by the difference
between the Locational Marginal Price at the delivery interface and the
Locational Marginal Price at the source interface, or for Market Sellers using
point-to-point transmission service for deliveries out of the PJM Control Area
from generating resources within the PJM Control Area shall be the amount of its
net xxxx less its net hourly PJM Interchange payments or sales as determined in
accordance with Section 3.3 of this Schedule.
5.1.5 Operating Margin Customer Calculation.
Each Control Area purchasing Operating Margin shall be assessed
Transmission Congestion Charges for any the increase in the cost of energy
resulting from the provision of Operating Margin. The Transmission Congestion
Charge shall be the amount of Operating Margin purchased in an hour multiplied
by the difference in the Locational Marginal Price at what would be the delivery
interface and the Locational Marginal Price at what would be the source
interface, if the operating contingency that was the basis for the purchase of
Operating Margin had occurred in that hour. Operating Margin may be allocated
among multiple source and delivery interfaces in accordance with an applicable
load flow study.
42
5.1.6 Transmission Loading Relief Customer Calculation
(a) Each Transmission Loading Relief Customer shall be assessed
Transmission Congestion Charges for any increase in the cost of energy in the
PJM Control Area resulting from its energy schedules over contract paths outside
the PJM Control Area during Transmission Loading Relief.
(b) The Transmission Congestion Charge shall be the total amount of energy
specified in such energy schedules multiplied by the difference between a
Locational Marginal Price calculated by the Office of the Interconnection for
the energy schedule source location specified in the NERC Interchange
Distribution Calculator and a Locational Marginal Price calculated by the Office
of the Interconnection for the energy schedule sink location specified in the
NERC Interchange Distribution Calculator. Transmission Congestion Charges that
are less than zero shall be set equal to zero for Transmission Loading Relief
Customers.
(c) The Office of the Interconnection will determine the Locational
Marginal Prices at the energy schedule source and sink locations external to PJM
with reference to and based solely on the prices of energy in the PJM Control
Area and at the interface buses between the PJM Control Area and adjacent
Control Areas and the system conditions and actual power flow distributions as
described by the PJM State Estimator program. The Office of the Interconnection
will determine the Locational Marginal Prices at the external energy schedule
source and sink locations and the resulting Congestion Charge based on the
portion of the energy schedule that flows through the PJM Control Area as
reflected by the flow distributions from the PJM State Estimator program.
5.1.7 Total Transmission Congestion Charges.
The total Transmission Congestion Charges collected by the Office of
the Interconnection each hour will be the sum of the amounts determined as
specified in this Schedule. The Office of the Interconnection shall collect
Transmission Congestion Charges for each hour the transmission system operates
under constrained conditions.
5.2 Transmission Congestion Credit Calculation.
5.2.1 Eligibility.
Each holder of a Fixed Transmission Right shall receive as a
Transmission Congestion Credit a proportional share of the total Transmission
Congestion Charges collected for each constrained hour.
5.2.2 Fixed Transmission Rights.
(a) Transmission Congestion Credits will be calculated based upon the
Fixed Transmission Rights held at the time of the constrained hour. Initial
assignments of Fixed Transmission Rights shall be made to each Network Service
User and Transmission Customer as specified below.
43
(b) On a periodic schedule established by the Office of the
Interconnection, each Network Service User shall designate a subset of its
Network Resources for which Fixed Transmission Rights will be assigned. Fixed
Transmission Rights shall be assigned for each Network Resource in a number of
megawatts equal to or less than the installed capacity summer megawatt rating of
each designated Network Resource, determined at the PJM Control Area
transmission bus at which the designated Network Resource is connected. Each
Fixed Transmission Right shall be to the aggregate load busses of the Network
Service User in a Zone or, with respect to Non-Zone Network Load, to the border
of the PJM Control Area. The sum of each Network Service User's assigned Fixed
Transmission Rights for a Zone must be equal to or less than the Network Service
User's peak load for that Zone as determined under Section 34.1 of the Tariff.
The sum of each Network Service User's Fixed Transmission Rights for Non-Zone
Network Load must be equal to or less than the Network Service User's
transmission responsibility for Non-Zone Network Load as determined under
Section 34.1 of the Tariff.
(c) Each Transmission Customer receiving firm Point-to-Point
Transmission Service shall be assigned Fixed Transmission Rights; provided,
however, that a Transmission Customer may notify the Office of Interconnection
that it does not wish to receive any FTRs or wishes to receive FTRs only for
certain Point or Points of Receipt and Point or Points of Delivery, in which
event no FTRs or such reduced amount of FTRs shall be issued to the Transmission
Customer. The Fixed Transmission Right for each instance of Point-to-Point
Transmission Service shall be a number of megawatts equal to the megawatts of
firm service being provided between the receipt and delivery points as to which
the Transmission Customer has firm Point-to-Point Transmission Service.
(d) A Fixed Transmission Right, or the right to Transmission
Congestion Credits attributable to a Fixed Transmission Right, may be sold or
otherwise transferred by agreement, subject to compliance with such procedures
as may be established by the Office of the Interconnection for verification of
the rights of the purchaser or transferee.
43a
5.2.4 Target Allocation for Network Service Users.
A target allocation of Transmission Congestion Credits for each
Network Service User shall be determined for each of its Fixed Transmission
Rights. Each Fixed Transmission Right shall be multiplied by the percent of the
Network Service User's annual peak load assigned to each load bus multiplied by
the difference calculated as the Network Service User's load bus Locational
Marginal Price minus the generation bus Locational Marginal Price of the Network
Resource associated with the Fixed Transmission Right. The total target
allocation for each Fixed Transmission Right is the sum of the target
allocations for each load bus. The total target allocation for each Network
Service User for each hour is the sum of the total target allocations for each
of the Network Service User's Fixed Transmission Rights.
5.2.4 Target Allocation for other Holders.
A target allocation of Transmission Congestion Credits for each
Transmission Customer or entity holding an FTR acquired by other means shall be
determined for each Fixed Transmission Right. Each Fixed Transmission Right
shall be multiplied by the hourly Locational Marginal Price differences for the
receipt and delivery points associated with the Fixed Transmission Right,
calculated as the Locational Marginal Price at the delivery point(s) minus the
Locational Marginal Price at the receipt point(s). The total target allocation
for the Transmission Customer for each hour shall be the sum of the target
allocations associated with all of the Transmission Customer's Fixed
Transmission Rights.
5.2.5 Calculation of Transmission Congestion Credits
(a) The total of all the target allocations determined as specified
above shall be compared to the total Transmission Congestion Charges in each
hour. If the total of the target allocations is less than the total of the
Transmission Congestion Charges, the Transmission Congestion Credit for each
Network Service User and Transmission Customer shall be equal to its target
allocation. All remaining Transmission Congestion Charges shall be distributed
as described below in Section 5.2.6 "Distribution of Excess Congestion Charges."
(b) If the total of the target allocations is greater than the total
Transmission Congestion Charges for the hour, each holder of Fixed Transmission
Rights shall receive a share of the total Transmission Congestion Charges in
proportion to its target allocations.
5.2.6 Distribution of Excess Congestion Charges
(a) Excess Transmission Congestion Charges accumulated in a month
shall be distributed to each holder of Fixed Transmission Rights in proportion
to, but not more than, any deficiency in the share of Transmission Congestion
Charges received by the holder during that month as compared to its total target
allocations for the month.
(b) Any excess Transmission Congestion Charges remaining at the end
of a month shall be distributed to Network Service Users and Transmission
Customers purchasing Firm Point-to-Point Transmission Service in proportion to
their Demand Charges for Network Service and their charges for Reserved Capacity
for Firm Point-to-Point Transmission Service.
44
5.3 Unscheduled Transmission Service (Loop Flow)
(a) When there are agreements between the Members (or the Office of
the Interconnection on behalf of the Members) and others for compensation to be
paid or received for unscheduled transmission service (loop flow) into or out of
the PJM Control Area, the net compensation received shall be included in the
total Transmission Congestion Charges that are distributed in accordance with
Section 5.2.
(b) With respect to payments by the Office of the Interconnection to
the New York Power Pool for the installation and operation of phase angle
regulating facilities at Ramapo to control or limit unscheduled transmission
service (loop flow), each Transmission Owner with revenue requirements under the
PJM Tariff shall pay a share of the charges on a transmission revenue
requirements ratio share basis.
44a
6. "MUST-RUN" FOR RELIABILITY GENERATION
6.1 Introduction.
The following procedures shall apply to any generation resource subject to
the dispatch of the Office of the Interconnection that (a) is a generation
resource for which construction commenced before July 9, 1996, and (b) as a
result of transmission constraints, the Office of the Interconnection
determines, in the exercise of Good Utility Practice, must be run in order to
maintain the reliability of service in the PJM Control Area. The provisions of
this Schedule shall otherwise apply to the scheduling, dispatch, operation and
accounting treatment of such resources, to the extent not inconsistent with the
provisions of this Section 6.
6.2 Identification of Facility Outages.
Not later than one hour prior to the deadline specified in Section 1.10.1
of this Schedule, the Office of the Interconnection shall identify on the PJM
Open Access Same-Time Information System any facility outage or other system
condition which it has determined may give rise to a transmission constraint
that may require, in order to maintain system reliability, the dispatch of one
or more generation resources that otherwise would not be dispatched based on the
merits of their offers to the PJM Interchange Energy Market.
6.3 Dispatch for Local Reliability.
6.3.1 Request and Dispatch.
In addition to the dispatch of generation by the Office of the
Interconnection to maintain reliability on transmission facilities directly
monitored by it, a Member that owns or leases with rights equivalent to
ownership Transmission Facilities as defined in this Agreement or the
Transmission Owners Agreement and that operates a local control center in
accordance with Section 11.3.3 of this Agreement or a Market Operations Center
in accordance with Section 1.7.5 of this Schedule, may request the Office of the
Interconnection to dispatch generation in order to maintain reliability on any
such Transmission Facilities that are not then directly monitored by the Office
of the Interconnection, subject to the rules and procedures in Section 6.3.2.
The Office of the Interconnection shall dispatch generation to maintain
reliability on such Transmission Facilities by incorporating the facilities in
the State Estimator program described in Section 2.3 as set forth below, unless
the Office of the Interconnection determines that such dispatch would adversely
affect reliability in the PJM Control Area or would otherwise not be in
accordance with Good Utility Practice.
45
6.3.2 Designation of Facilities.
The following rules and procedures shall apply to a Member request
that the Office of the Interconnection dispatch generation on one or more
Transmission Facilities that are not then directly monitored by the Office of
the Interconnection.
a) The Transmission Facilities that are the subject of the request must
be among the facilities that comprise the Transmission System under
the PJM Tariff;
b) The Member shall provide modeling information for such Transmission
Facilities and provide sufficient telemetry to the Office of the
Interconnection such that power flows are observable by the State
Estimator program described in Section 2.3; provided, however, that if
an unreliable constrained condition exists and time does not permit
such modeling and telemetry, the Member and the Office of the
Interconnection may agree to use a representative surrogate for such
Transmission Facilities in order to allocate the costs of the dispatch
of generation using Locational Marginal Prices to maintain reliability
on such Transmission Facilities, provided further that the Member
shall expeditiously provide the modeling data and install the
necessary facilities to incorporate the Transmission Facilities into
the State Estimator program;
c) The request shall constitute a request that such Transmission
Facilities become and remain monitored by the Office of the
Interconnection and subject to its dispatch control for a period of
not less than ninety (90) days;
d) The Member shall comply with all other operating procedures
established by the Office of the Interconnection regarding dispatch
for local reliability as set forth in the PJM Manuals.
6.4 Price Caps.
6.4.1 Applicability.
(a) Except as specified below, if in the day-ahead schedule
determined by the Office of the Interconnection in accordance with
Sections 1.10.8(a) and (b) of this Schedule any generation resource may be
dispatched out of economic merit order to maintain system reliability as a
result of limits on transmission capability, the prices for energy offered by
such resource shall be capped at the levels specified below. If the Office of
the Interconnection is able to do so, such prices shall be capped only during
each hour when the transmission limit affects the schedule of the affected
resource, and otherwise shall be capped for the entire Operating Day. The energy
prices as capped shall be used to determine any Locational Marginal Price
affected by the price of such resource.
45a
(b) The energy bid price offered by any generation resource
requested to be dispatched in accordance with Section 6.3 of this Schedule shall
be capped at the levels specified below. If the Office of the Interconnection is
able to do so, such prices shall be capped only during each hour when the
affected resource is so scheduled, and otherwise shall be capped for the entire
Operating Day. The energy prices as capped shall be used to determine any
Locational Marginal Price affected by the price of such resource.
(c) Generation resources subject to a price cap shall be paid for
energy at the applicable Locational Marginal Price.
(d) Price caps shall not be applicable to generation resources used
to relieve the Western, Central and Eastern reactive limits in the PJM Control
Area. In addition, price caps shall not be applicable to generation resources
used to relieve any other transmission limit as to which the FERC has authorized
the use of market based rates.
6.4.2 Level.
The price cap shall be one of the amounts specified below, as
specified in advance by the market Seller for the affected unit:
(i) The weighted average Locational Marginal Price at the generation
bus at which energy from the capped resource was delivered
during a specified number of hours during which the resource was
dispatched for energy in economic merit order, the specified
number of hours to be determined by the Office of the
Interconnection and to be a number of hours sufficient to result
in a price cap that reflects reasonably contemporaneous
competitive market conditions for that unit;
(ii) The incremental operating cost of the generation resource as
determined in accordance with Schedule 2 of this Agreement and
the PJM Manuals, plus 10% of such costs; or
(iii) An amount determined by agreement between the Office of the
Interconnection and the Market Seller.
45b
7. FIXED TRANSMISSION RIGHTS AUCTIONS
7.1 Auctions of Fixed Transmission Rights.
Periodic auctions to allow Market Participants to acquire or sell Fixed
Transmission Rights shall be conducted by the Office of the Interconnection in
accordance with the provisions of this Section.
7.1.1 Auction Period and Scope of Auctions.
The period covered by an auction shall be the one-month period next
following the date that the auction is conducted. The Office of the
Interconnection shall offer for sale in the auction any remaining Fixed
Transmission Rights capability for the month after taking into account all of
the Fixed Transmission Rights already outstanding at the time of the auction. In
addition, any holder of a Fixed Transmission Right for the period covered by an
auction may offer such Fixed Transmission Right for sale in such auction. Each
monthly auction will consist of a separate auction for on-peak Fixed
Transmission Rights and a separate auction for off-peak Fixed Transmission
Rights. Market Participants may bid for and acquire any number of Fixed
Transmission Rights, provided that all Fixed Transmission Rights awarded are
simultaneously feasible with each other and with all Fixed Transmission Rights
outstanding at the time of the auction and not sold into the auction.
7.1.2 Frequency and Time of Auctions.
Fixed Transmission Rights auctions shall be held monthly. The bid and
offer period shall open at 12:00 midnight (Eastern Prevailing Time) on the
fifteenth (15th) business day preceding the month for which Fixed Transmission
Rights are being auctioned and shall close at 12:00 midnight (Eastern Prevailing
Time) on the tenth (10th) business day preceding the month for which Fixed
Transmission Rights are being auctioned.
7.1.3. Duration of Fixed Transmission Rights.
Each Fixed Transmission Right acquired in a Fixed Transmission Rights
auction shall entitle the holder to credits of Transmission Congestion Charges
for the one-month period for which the Fixed Transmission Rights were auctioned.
46
7.2 Fixed Transmission Rights Characteristics.
7.2.1 Reconfiguration of Fixed Transmission Rights.
Through an appropriate linear programming model, the Office of the
Interconnection shall reconfigure the Fixed Transmission Rights offered or
otherwise available for sale in any auction to maximize the value to the bidders
of the Fixed Transmission Rights sold, provided that any Fixed Transmission
Rights acquired at auction shall be simultaneously feasible in combination with
those Fixed Transmission Rights outstanding at the time of the auction and not
sold in the auction. The linear programming model shall, while respecting
transmission constraints and the maximum MW quantities of the bids and offers,
select the set of simultaneously feasible Fixed Transmission Rights with the
highest net total auction value as determined by the bids of buyers and taking
into account the reservation prices of the sellers.
7.2.2 Specified Buses.
Auction bids for Fixed Transmission Rights may specify any combination
of receipt and delivery buses represented in the State Estimator model for which
the Office of the Interconnection calculates and posts Locational Marginal
Prices. Auction bids may specify receipt and delivery points from locations
outside of the PJM Control Area to locations inside the PJM Control Area, from
locations within the PJM Control Area to locations outside of the PJM Control
Area, or to and from locations within the PJM Control Area.
7.2.3 Transmission Congestion Charges.
Fixed Transmission Rights, whether acquired at auction or otherwise,
shall entitle holders thereof to credits only for Transmission Congestion
Charges, and shall not confer a right to credits for payments arising from or
relating to transmission congestion made to any entity other than the Office of
the Interconnection.
7.3 Auction Procedures.
7.3.1 Role of the Office of the Interconnection.
Fixed Transmission Rights auctions shall be conducted by the Office of
the Interconnection in accordance with standards and procedures set forth in the
PJM Manuals, such standards and procedures to be consistent with the
requirements of this Schedule.
47
7.3.2 Notice of Offer.
A holder of a Fixed Transmission Right wishing to offer the Fixed
Transmission Right for sale shall notify the Office of the Interconnection of
any Fixed Transmission Rights to be offered. Each Fixed Transmission Right sold
in an auction shall, at the end of the period for which the Fixed Transmission
Rights were auctioned, revert to the offering holder or the entity to which the
offering holder has transferred such Fixed Transmission Right, subject to the
term of the Fixed Transmission Right itself and to the right of such holder or
transferee to offer the Fixed Transmission Right in the next or any subsequent
auction during the term of the Fixed Transmission Right.
7.3.3 Pending Applications for Firm Service.
(a) Prior to the start of each auction bidding period, the Office
of the Interconnection shall exert reasonable effort to complete its review of
pending applications for Network Transmission Service and Firm Point-to-Point
Transmission Service and to ascertain the corresponding Fixed Transmission
Rights to be assigned to the entities receiving such service, subject to
compliance with all applicable deadlines and other procedures by the applicant.
Fixed Transmission Rights so assigned shall be included in the simultaneous
feasibility test performed by the Office of the Interconnection for the auction.
(b) Fixed Transmission Rights may be assigned to entities
requesting Network Transmission Service or Firm Point-to-Point Transmission
Service only if such Fixed Transmission Rights are simultaneously feasible with
all outstanding Fixed Transmission Rights, including Fixed Transmission Rights
effective for the then-current auction period. If an assignment of Fixed
Transmission Rights pursuant to a pending application for Network Transmission
Service or Firm Point-to-Point Transmission Service cannot be completed prior to
an auction, Fixed Transmission Rights attributable to such transmission service
shall not be assigned for the then-current auction period. If a Fixed
Transmission Right cannot be assigned for this reason, the applicant may
withdraw its application, or request that the Fixed Transmission Right be
assigned effective with the start of the next auction period.
7.3.4 On-Peak and Off-Peak Periods.
The Office of the Interconnection will conduct separate auctions
simultaneously for on-peak and off-peak periods. On-Peak Fixed Transmission
Rights shall cover the periods from 7:00 a.m. up to the hour ending at 11:00
p.m. on Mondays through Fridays, except holidays as defined in the PJM Manuals.
Off-Peak Fixed Transmission Rights shall cover the periods from 11:00 p.m. up to
the hour ending 7:00 a.m. on Mondays through Fridays and all hours on Saturdays,
Sundays, and holidays as defined in the PJM Manuals. Each bid shall specify
whether it is for an on-peak or off-peak period.
48
7.3.5 Offers and Bids.
(a) Offers to sell and bids to purchase Fixed Transmission Rights
shall be submitted during the period set forth in Section 7.1.2, and shall be in
the form specified by the Office of the Interconnection in accordance with the
requirements set forth below.
(b) Offers to sell shall identify the specific Fixed Transmission
Right, by megawatt quantity and receipt and delivery points, offered for sale.
An offer to sell a specified megawatt quantity of Fixed Transmission Rights
shall constitute an offer to sell a quantity of Fixed Transmission Rights equal
to or less than the specified quantity. An offer to sell may not specify a
minimum quantity being offered. Each offer may specify a reservation price,
below which the offeror does not wish to sell the Fixed Transmission Right.
Offers submitted by entities holding rights to Fixed Transmission Rights
acquired other than by assignment in connection with reservations of Network
Transmission Service or Firm Point-to-Point Transmission Service shall be
subject to such reasonable standards for the verification of the rights of the
offeror as may be established by the Office of the Interconnection. Offers shall
be subject to such reasonable standards for the creditworthiness of the offeror
or for the posting of security for performance as the Office of the
Interconnection shall establish.
(c) Bids to purchase shall specify the megawatt quantity, price per
megawatt, and receipt and delivery points of the Fixed Transmission Right that
the bidder wishes to purchase. A bid to purchase a specified megawatt quantity
of Fixed Transmission Rights shall constitute a bid to purchase a quantity of
Fixed Transmission Rights equal to or less than the specified quantity. A bid to
purchase may not specify a minimum quantity that the bidder wishes to purchase.
A bid may specify as receipt or delivery points any bus for which the Office of
the Interconnection calculates and posts Locational Marginal Prices in
accordance with Section 2 of this Schedule and may include Fixed Transmission
Rights for which the associated Transmission Congestion Credits may have
negative values. Bids shall be subject to such reasonable standards for the
creditworthiness of the bidder or for the posting of security for performance as
the Office of the Interconnection shall establish.
(d) Bids and offers shall be specified to the nearest tenth of a
megawatt and shall be greater than zero.
49
7.3.6 Determination of Winning Bids and Clearing Price.
(a) At the close of the bidding period each month, the Office of the
Interconnection will create a base Fixed Transmission Rights power flow model
that includes all outstanding Fixed Transmission Rights that have been approved
and confirmed for any portion of the month for which the auction was conducted
and that were not offered for sale in the auction. The base Fixed Transmission
Rights model also will include estimated uncompensated parallel flows into each
interface point of the PJM Control Area and estimated scheduled transmission
outages.
(b) In accordance with the requirements of Section 7.4 of this
Schedule and subject to all applicable transmission constraints and reliability
requirements, the Office of the Interconnection shall determine the simultaneous
feasibility of all outstanding Fixed Transmission Rights not offered for sale in
the auction and of all Fixed Transmission Rights that could be awarded in the
auction for which bids were submitted. The winning bids shall be determined from
an appropriate linear programming model that, while respecting transmission
constraints and the maximum MW quantities of the bids and offers, selects the
set of simultaneously feasible Fixed Transmission Rights with the highest net
total auction value as determined by the bids of buyers and taking into account
the reservation prices of the sellers. In the event that there are two or more
identical bids for the selected Fixed Transmission Rights and there are
insufficient Fixed Transmission Rights to accommodate all of the identical bids,
then each such bidder will receive a pro rata share of the Fixed Transmission
Rights that can be awarded.
(c) Fixed Transmission Rights shall be sold at the market-clearing
price for Fixed Transmission Rights between specified pairs of receipt and
delivery points, as determined by the bid value of the marginal Fixed
Transmission Right that could not be awarded because it would not be
simultaneously feasible. The linear programming model shall determine the
clearing prices of all Fixed Transmission Rights paths based on the bid value of
the marginal Fixed Transmission Rights, which are those Fixed Transmission
Rights with the highest bid values that could not be awarded fully because they
were not simultaneously feasible, and based on the flow sensitivities of each
Fixed Transmission Rights path relative to the marginal Fixed Transmission
Rights paths flow sensitivities on the binding transmission constraints.
7.3.7 Announcement of Winners and Prices.
Within two (2) business days after the close of an auction, the Office
of the Interconnection shall post the winning bidders, the megawatt quantity,
and the receipt and delivery points for each Fixed Transmission Right awarded in
the auction and the price at which each Fixed Transmission Right was awarded.
Results of the on-peak auction and off-peak auction will be posted separately.
The Office of the Interconnection shall not disclose the price specified in any
bid to purchase or the reservation price specified in any offer to sell.
50
7.3.8 Auction Settlements.
All buyers and sellers of Fixed Transmission Rights between the same
points of receipt and delivery shall pay or be paid the market-clearing price,
as determined in the auction, for such Fixed Transmission Rights.
7.3.9 Allocation of Auction Revenues.
All auction revenues, net of payments to entities selling Fixed
Transmission Rights into the auction, shall be allocated among the Regional
Transmission Owners in proportion to their respective transmission revenue
requirements.
7.4 Simultaneous Feasibility.
The Office of the Interconnection shall make the simultaneous feasibility
determinations specified herein using appropriate powerflow models of
contingency-constrained dispatch. Such determinations shall take into account
outages of both individual generation units and transmission facilities and
shall be based on reasonable assumptions about the configuration and
availability of transmission capability during the period covered by the auction
that are not inconsistent with the determination of the deliverability of
Capacity Resources under the Reliability Assurance Agreement. The goal of the
simultaneous feasibility determination shall be to ensure that there are
sufficient revenues from Transmission Congestion Charges to satisfy all Fixed
Transmission Rights obligations for the auction period under expected
conditions.
51
SCHEDULE 2
----------
Revision No. 2
COMPONENTS OF COST
------------------
Issued: June 2, 1997
Effective: January 1, 1998
(a) Each Market Participant obligated to sell operating capacity on the
PJM Interchange Energy Market at cost-based rates shall include the following
components or their equivalent in the determination of costs for operating
capacity supplied to or from the Interconnection:
(1) Boilers
-------
Firing-up cost;
No-load cost during period of operation;
Peak-prepared-for maintenance cost;
Incremental labor cost; and
Other incremental operating costs.
(2) Machines
--------
Starting cost from cold to synchronized operation;
No-load cost during period of operation;
Incremental labor cost; and
Other incremental operating costs.
(b) Each Member obligated to sell energy on the PJM Interchange Energy
Market at cost-based rates shall include the following components or their
equivalent in the determination of costs for energy supplied to the
Interconnection:
Incremental fuel cost;
Incremental maintenance cost;
Incremental labor cost; and
Other incremental operating costs.
(c) All fuel costs shall employ the marginal fuel price experienced by the
Member.
(d) The PJM Board, upon consideration of the advice and recommendations of
the Members Committee, shall from time to time define in detail the method of
determining the costs entering into the said components, and the Members shall
adhere to such definitions in the preparation of incremental costs used on the
Interconnection.
1
SCHEDULE 2 -- EXHIBIT A
---------- ---------
EXPLANATION OF THE TREATMENT OF THE COSTS OF
--------------------------------------------
EMISSION ALLOWANCES
-------------------
Issued: June 2, 1997
Effective: January 1, 1998
The cost of emission allowances is included in "Other Incremental Operating
Costs" pursuant to Schedule 2. The replacement cost of emission allowances will
be used to recover the cost of emission allowances consumed as a result of
producing energy for the Interconnection.
Index
-----
Consistent with definitions promulgated by the PJM Board upon consideration
of the advice and recommendations of the Members Committee under Schedule 2,
each Member subject to Schedule 2 will determine and provide to the
Interconnection its replacement cost of emission allowances, such cost to be an
amount not exceeding the market price index published by Xxxxxx-Xxxxxxxxxx
Environmental Brokerage Services ("EBS"), or a PJM Board approved index in the
event that EBS should cease publication of such index. As with all other
components of cost required for accounting under this Agreement, each Member
subject to Schedule 2 will use the same replacement cost of emissions
allowances, so determined, as it uses for coordinating operation of its
generating facilities hereunder.
For each Member subject to Schedule 2, the cost of emissions allowances is
included in the cost of energy supplied to or received from the Interconnection.
Payment
-------
The Members subject to Schedule 2 waive the right of payment-in-kind for
emission allowances for transactions wholly between the parties. Cash payments
for emission allowances consumed in providing energy for the Interconnection
shall be incorporated into and conducted pursuant to the billing procedures for
energy prescribed by this Agreement.
Calculation of Emission Allowance Amount and Cost
-------------------------------------------------
Pursuant to the letter from the PJM Interconnection to FERC dated June 26,
1995, the calculation of an annual average for the cost of emission allowances,
described below, is required due to the profile of the PJM physical system and
PJM Energy Management software system. Approximately five hundred and forty
generating units comprise the PJM system, of which 9 units are Phase I units.
Current real-time operational software and hardware tools used in the
transaction of energy do not identify individual units, and therefore do not
identify Phase I units. (The pool has contracted with a vendor to supply a new
Energy Management System to be installed over the next several years.) It is
currently not possible for system operators to provide actual individual unit
emission allowance costs in real time transaction quotations.
An average emission allowance cost based on a standard production cost
study case will be used to calculate the average cost of emission allowances for
each pool megawatt produced. This cost for the current year is less than 0.2
dollars per megawatt-hour.
In summary, for the above-mentioned reasons, it is not practical nor cost
effective to provide actual individual emission allowance costs in real-time
transaction quotations. Therefore,
1
the annual average method is proposed.
The Emission Allowances (Tons of SO\\2\\) associated with a transaction
will be calculated by multiplying the magnitude of a transaction (MWhr) by an
Emissions per MWHr Factor (Tons of SO\\2\\ per MWhr):
Emission Transaction Emissions
Allowances = Magnitude x per MWhr
Used Factor
(Tons of S0\\2\\) (MWhr) (Tons of S0\\2\\ per MWhr)
The Emissions per MWHr Factor will be calculated by dividing the forecast
annual emissions from all Phase I units (Tons of S0\\2\\) by the Forecast Annual
Total PJM Energy Production (MWhr):
Emissions
per MWhr = Forecast Annual Phase I Unit Emissions (Tons of S0\\2\\)
-------------------------------------------------------
Factor Forecast Annual Total PJM Energy Production (MWhr)
(Tons of S0\\2\\
per MWhr)
Likewise, the cost (Dollars) of the Emission Allowances for a transaction
will be calculated by multiplying the transaction magnitude (MWhr) by a Charge
per MWhr Factor (Dollars per MWHr).
Cost of Emission Transaction Charge
Allowances Used = Magnitude x per MWhr Factor
(Dollars) (MWhr) (Dollars per MWhr)
The Charge per MWhr Factor will be calculated by multiplying, for each
Member subject to Schedule 2, its Forecast Annual Emissions (Tons of S0\\2\\) by
its respective Emissions Allowance Replacement Cost (Dollars per Ton of S0\\2\\)
to yield each the forecasted annual cost of emissions (Dollars). Then, the
total of forecasted annual cost of emissions for each Member subject to Schedule
2 is divided by the Forecast Annual Total PJM Energy Production (MWhr) to
determine the Charge per MWHr Factor (Dollars per MWHr).
Charge per
MWhr Factor = the sum of(A x B) , where:
-------
C
A = Member's Forecasted Annual Emissions, (Tons of S0\\2\\)
B = Emission Allowance Replacement Cost, (Dollars per Ton of SO\\2\\,
per company)
C = Forecast Annual PJM Energy Production, (MWhr)
2
SCHEDULE 3
----------
Revision No. 6
ALLOCATION OF THE COST AND EXPENSES
-----------------------------------
OF THE OFFICE OF THE INTERCONNECTION
------------------------------------
Issued: June 2, 1997
Effective: January 1, 1998
(a) Each group of Affiliates, each group of Related Parties, and each
Member that is not in such a group shall pay an annual membership fee, the
proceeds of which shall be used to defray the costs and expenses of the LLC,
including the Office of the Interconnection. The amount of the annual fee as of
the Effective Date shall be $5,000. The amount of the annual membership fee
shall be adjusted from time to time by the PJM Board to keep pace with
inflation.
(b) All remaining costs of the operation of the LLC and the Office of the
Interconnection and the expenses, including, without limitation, the costs of
any insurance and any claims not covered by insurance, associated therewith as
provided in this Agreement shall be costs of Scheduling, System Control and
Dispatching Service under the PJM Tariff and shall be recovered pursuant to the
PJM Tariff.
(c) An entity accepted for membership in the LLC shall pay all costs and
expenses associated with additions and modifications to its own metering,
communication, computer, and other appropriate facilities and procedures needed
to effect the inclusion of the entity in the operation of the Interconnection.
1
SCHEDULE 4
----------
Revision No. 1
STANDARD FORM OF AGREEMENT TO BECOME A MEMBER OF THE LLC
--------------------------------------------------------
Issued: June 2, 1997
Effective: January 1, 1998
Any entity which wishes to become a Member of the LLC shall, pursuant to
Section 11.6 of this Agreement, tender to the President an application, upon the
acceptance of which it shall execute a supplement to this Agreement in the
following form:
Additional Member Agreement
---------------------------
1. This Additional Member Agreement (the "Supplemental Agreement"), dated as
of __________________, is entered into among _____________ and the President of
the LLC acting on behalf of its Members.
2. _____________ has demonstrated that it meets all of the qualifications
required of a Member to the Operating Agreement. If expansion of the PJM
Control Area is required to integrate ____________________'s facilities, a copy
of Attachment J from the PJM Tariff marked to show changes in Control Area
boundaries is attached hereto. ____________________ agrees to pay for all
required metering, telemetering and hardware and software appropriate for it to
become a member.
3. ______________________ agrees to be bound by and accepts all the terms of
the Operating Agreement as of the above date.
4. _________________________ hereby gives notice that the name and address of
its initial representative to the Members Committee under the Operating
Agreement shall be:
__________________________________________________________________
5. The President of the LLC is authorized under the Operating Agreement to
execute this Supplemental Agreement on behalf of the Members and to file it with
regulatory authorities having jurisdiction.
6. The Operating Agreement is hereby amended to include ___________ as a
Member of the LLC thereto, effective as of ___________________, _____.
IN WITNESS WHEREOF, _______________________ and the Members of the LLC have
caused this Supplemental Agreement to be executed by their duly authorized
representatives.
1
Members of the LLC
By:
Name:
Title: President
By:
Name:
Title:
2
SCHEDULE 5
-----------
Revision No. 1
PJM DISPUTE RESOLUTION PROCEDURES
---------------------------------
Issued: June 2, 1997
Effective: January 1, 1998
1. DEFINITIONS
1.1 Alternate Dispute Resolution Committee.
"Alternate Dispute Resolution Committee" shall mean the Committee
established pursuant to Section 5 of this Schedule.
1.2 MAAC Dispute Resolution Committee.
"MAAC Dispute Resolution Committee" shall mean the committee established by
the Mid-Atlantic Area Council to administer its industry-specific mechanism for
resolving certain types of wholesale electricity disputes.
1.3 Related PJM Agreements.
"Related PJM Agreements" shall mean this Agreement, the Transmission Owners
Agreement, and the Reliability Assurance Agreement.
2. PURPOSES AND OBJECTIVES
2.1 Common and Uniform Procedures.
The PJM Dispute Resolution Procedures are intended to establish common and
uniform procedures for resolving disputes arising under the Related PJM
Agreements. To the extent any of the foregoing agreements or the PJM Tariff
contain dispute resolution provisions expressly applicable to disputes arising
thereunder, however, this Agreement shall not supplant such provisions, which
shall apply according to their terms.
2.2 Interpretation.
To the extent permitted by applicable law, the PJM Dispute Resolution
Procedures are to be interpreted to effectuate the objectives set forth in
Section 2.1. To the extent permitted by these PJM Dispute Resolution
Procedures, the Alternate Dispute Resolution Committee shall coordinate with the
MAAC Dispute Resolution Committee, where appropriate, in order to conserve
administrative resources and to avoid duplication of dispute resolution
staffing.
NEGOTIATION AND MEDIATION
3.1 When Required.
The parties to a dispute shall undertake good-faith negotiations to resolve
any dispute as to a matter governed by one of the Related PJM Agreements. Each
party to a dispute shall designate an executive with authority to resolve the
matter in dispute to participate in such negotiations. Any dispute as to a
matter governed by one of the Related PJM Agreements that has not been resolved
through good-faith negotiation shall be subject to non-binding mediation prior
to the initiation of arbitral, regulatory, judicial, or other dispute resolution
proceedings as may be appropriate as provided by these PJM Dispute Resolution
Procedures.
3.2 Procedures.
3.2.1 Initiation.
If a dispute that is subject to the mediation procedures specified
herein has not been resolved through good-faith negotiation, a party to the
dispute shall notify the Alternate Dispute Resolution Committee in writing of
the existence and nature of the dispute prior to commencing any other form of
proceeding for resolution of the dispute. The Alternate Dispute Resolution
Committee shall have ten calendar days from the date it first receives
notification of the existence of a dispute from any of the parties to the
dispute in which to distribute to the parties a list of mediators.
3.2.2 Selection of Mediator.
The Chair of the Alternate Dispute Resolution Committee shall
distribute to the parties by facsimile or other electronic means a list
containing the names of seven mediators with mediation experience, or with
technical or business experience in the electric power industry, or both, as it
shall deem appropriate to the dispute. The Chair of the Alternate Dispute
Resolution Committee may draw from the lists of mediators maintained by the MAAC
Dispute Resolution Committee, as the Chair shall deem appropriate. The persons
on the proposed list of mediators shall have no official, financial, or personal
conflict of interest with respect to the issues in controversy, unless the
interest is fully disclosed in writing to all participants in the mediation
process and all such participants waive in writing any objection to the
interest. The parties shall alternate in striking names from the list with the
last name on the list becoming the mediator. The determination of which party
shall have the first strike off the list shall be determined by lot. The
parties shall have ten calendar days to complete the mediator selection process,
unless the time is extended by mutual agreement.
3.2.3 Advisory Mediator.
If the Alternate Dispute Resolution Committee deems it appropriate, it
shall distribute two lists, one containing the names of seven mediators with
mediation experience, and one containing the names of seven mediators with
technical or business experience in the electric power industry. In connection
with circulating the foregoing lists, the Alternate Dispute Resolution Committee
shall specify one of the lists as containing the proposed mediators, and the
other as a list of proposed advisors to assist the mediator in resolving the
dispute. The parties shall then utilize the alternative strike procedure set
forth above until one name remains on each list, with the last named persons
serving as the mediator and advisor.
2
3.2.4 Mediation Process.
The disputing parties shall attempt in good faith to resolve their
dispute in accordance with procedures and a timetable established by the
mediator. In furtherance of the mediation efforts, the mediator may:
(a) Require the parties to meet for face-to-face discussions, with or
without the mediator;
(b) Act as an intermediary between the disputing parties;
(c) Require the disputing parties to submit written statements of
issues and positions;
(d) If requested by the disputing parties at any time in the mediation
process, provide a written recommendation on resolution of the dispute
including, if requested, the assessment by the mediator of the merits of the
principal positions being advanced by each of the disputing parties; and
(e) Adopt, when appropriate, the Center for Public Resources Model ADR
Procedures for the Meditation of Business Disputes (as revised from time to
time) to the extent such Procedures are not inconsistent with any rule,
standard, or procedure adopted by the Alternate Dispute Resolution Committee or
with any provision of this Agreement.
3.2.5 Mediator's Assessment.
(a) If a resolution of the dispute is not reached by the thirtieth day
after the appointment of the mediator or such later date as may be agreed to by
the parties, if not previously requested to do so the mediator shall promptly
provide the disputing parties with a written, confidential, non-binding
recommendation on resolution of the dispute, including the assessment by the
mediator of the merits of the principal positions being advanced by each of the
disputing parties. The recommendation may incorporate or append, if and as the
mediator may deem appropriate, any recommendations or any assessment of the
positions of the parties by the advisor, if any. Upon request, the mediator
shall provide any additional recommendations or assessments the mediator shall
deem appropriate.
(b) At a time and place specified by the mediator after delivery of
the foregoing recommendation, the disputing parties shall meet in a good faith
attempt to resolve the dispute in light of the recommendation of the mediator.
Each disputing party shall be represented at the meeting by a person with
authority to settle the dispute, along with such other persons as each disputing
party shall deem appropriate. If the disputing parties are unable to resolve
the dispute at or in connection with this meeting, then: (i) any disputing party
may commence such arbitral, judicial, regulatory or other proceedings as may be
appropriate as provided in the PJM Dispute Resolution Procedures; and (ii) the
recommendation of the mediator, and any statements made by any party in the
mediation process, shall have no further force or effect, and shall not be
admissible for any purpose, in any subsequent arbitral, administrative,
judicial, or other proceeding.
3
3.3 Costs.
Except as specified in Section 4.13, the costs of the time, expenses, and
other charges of the mediator and any advisor, and of the mediation process,
shall be borne by the parties to the dispute, with each side in a mediated
matter bearing one-half of such costs, and each party bearing its own costs and
attorney's fees incurred in connection with the mediation.
4. ARBITRATION
4.1 When Required.
Any dispute as to a matter: (i) governed by one of the Related PJM
Agreements that has not been resolved through the mediation procedures specified
herein, (ii) involving a claim that one or more of the parties owes or is owed a
sum of money, and (iii) the amount in controversy is less than $1,000,000.00,
shall be subject to binding arbitration in accordance with the procedures
specified herein. If the parties so agree, any other disputes as to a matter
governed by a Related PJM Agreement may be submitted to binding arbitration in
accordance with the procedures specified herein.
4.2 Binding Decision.
Except as specified in Section 4.1, the resolution by arbitration of any
dispute under this Agreement shall not be binding.
4.3 Initiation.
A party or parties to a dispute which is subject to the arbitration
procedures specified herein shall send a written demand for arbitration to the
Chair of the Alternate Dispute Resolution Committee with a copy to the other
party or parties to the dispute. The demand for arbitration shall state each
claim for which arbitration is being demanded, the relief being sought, a brief
summary of the grounds for such relief and the basis for the claim, and shall
identify all other parties to the dispute.
4.4 Selection of Arbitrator(s).
The parties to a dispute for which arbitration has been demanded may agree
on any person to serve as a single arbitrator, or shall endeavor in good faith
to agree on a single arbitrator from a list of arbitrators prepared for the
dispute by the Alternate Dispute Resolution Committee and delivered to the
parties by facsimile or other electronic means promptly after receipt by the
Alternate Dispute Resolution Committee of a demand for arbitration. The
Alternate Dispute Resolution Committee may draw from the lists of arbitrators
maintained by the MAAC Dispute Resolution Committee, as the Alternate Dispute
Resolution Committee deems appropriate. If the parties are unable to agree on a
single arbitrator by the fourteenth day following delivery of the foregoing list
of arbitrators or such other date as agreed to by the parties, then not later
than the end of the seventh business day thereafter the party or parties
demanding arbitration on the one hand, and the party or parties responding to
the demand for arbitration on the other, shall each designate an arbitrator from
a list for the dispute prepared by the Alternate Dispute Resolution Committee.
The arbitrators so chosen shall then choose a third arbitrator.
4
4.5 Procedures.
The Alternate Dispute Resolution Committee shall compile and make available
to the arbitrator(s) and the parties standard procedures for the arbitration of
disputes, which procedures (i) shall include provision, upon good cause shown,
for intervention or other participation in the proceeding by any party whose
interests may be affected by its outcome, (ii) shall conform to the requirements
specified in these PJM Dispute Resolution Procedures, and (iii) may be modified
or adopted for use in a particular proceeding as the arbitrator(s) deem
appropriate. To the extent deemed appropriate by the Alternate Dispute
Resolution Committee, the procedures adopted by the Alternate Dispute Resolution
Committee shall be based on the American Arbitration Association Rules, to the
extent such Rules are not inconsistent with any rule, standard or procedure
adopted by the Alternate Dispute Resolution Committee, or with any provision of
these PJM Dispute Resolution Procedures. Upon selection of the arbitrator(s),
arbitration shall go forward in accordance with applicable procedures.
4.6 Summary Disposition and Interim Measures.
4.6.1 Lack of Good Faith Basis.
The procedures for arbitration of a dispute shall provide a means for
summary disposition of a demand for arbitration, or a response to a demand for
arbitration, that in the reasoned opinion of the arbitrator(s) does not have a
good faith basis in either law or fact. If the arbitrator(s) determine(s) that
a demand for arbitration or response to a demand for arbitration does not have a
good faith basis in either law or fact, the arbitrator(s) shall have discretion
to award the costs of the time, expenses, and other charges of the arbitrator(s)
to the prevailing party.
4.6.2 Discovery Limits.
The procedures for the arbitration of a dispute shall provide a means
for summary disposition without discovery of facts if there is no dispute as to
any material fact, or with such limited discovery as the arbitrator(s) shall
determine is reasonably likely to lead to the prompt resolution of any disputed
issue of material fact.
4.6.3 Interim Decision.
The procedures for the arbitration of a dispute shall permit any party
to a dispute to request the arbitrator(s) to render a written interim decision
requiring that any action or decision that is the subject of a dispute not be
put into effect, or imposing such other interim measures as the arbitrator(s)
deem necessary or appropriate, to preserve the rights and obligations secured by
any of the Related PJM Agreements during the pendency of the arbitration
proceeding. The parties shall be bound by such written decision pending the
outcome of the arbitration proceeding.
5
4.7 Discovery of Facts.
4.7.1 Discovery Procedures.
The procedures for the arbitration of a dispute shall include adequate
provision for the discovery of relevant facts, including the taking of testimony
under oath, production of documents and other things, and inspection of land and
tangible items. The nature and extent of such discovery shall be determined as
provided herein and shall take into account (i) the complexity of the dispute,
(ii) the extent to which facts are disputed, and (iii) the amount in
controversy. The forms and methods for taking such discovery shall be as
described in the Federal Rules of Civil Procedure, except as modified by the
procedures established by the Alternate Dispute Resolution Committee, the
arbitrator(s) or agreement of the parties.
4.7.2 Procedures Arbitrator.
The sole arbitrator, or the arbitrator selected by the arbitrators
chosen by the parties, as the case may be (such arbitrator being hereafter
referred to as the "Procedures Arbitrator"), shall be responsible for
establishing the timing, amount, and means of discovery, and for resolving
discovery and other pre-hearing disagreement. If a dispute involves contested
issues of fact, promptly after the selection of the arbitrator(s) the Procedures
Arbitrator shall convene a meeting of the parties for the purpose of
establishing a schedule and plan of discovery and other pre-hearing actions.
4.8 Evidentiary Hearing.
The procedures for the arbitration of a dispute shall provide for an
evidentiary hearing, with provision for the cross-examination of witnesses,
unless all parties consent to the resolution of the matter on the basis of a
written record. The forms and methods for taking evidence shall be as described
in the Federal Rules of Evidence, except as modified by the procedures
established by the Alternate Dispute Resolution Committee, the arbitrator(s) or
agreement of the parties. The arbitrator(s) may require such written or other
submissions from the parties as shall be deemed appropriate, including
submission of the direct testimony of witnesses in written form. The
arbitrator(s) may exclude any evidence that is irrelevant, immaterial, unduly
repetitious or prejudicial, or privileged. Any party or parties may arrange for
the preparation of a record of the hearing, and shall pay the costs thereof.
Such party or parties shall have no obligation to provide or agree to the
provision of a copy of the record of the hearing to any party that does not pay
an equal share of the cost of the record. At the request of any party, the
arbitrator(s) shall determine a fair and equitable allocation of the costs of
the preparation of a record between or among the parties to the proceeding
willing to share such costs.
6
4.9 Confidentiality.
4.9.1 Designation.
Any document or other information obtained in the course of an
arbitral proceeding and not otherwise available to the receiving party,
including any such information contained in documents or other means of
recording information created during the course of the proceeding, may be
designated "Confidential" by the producing party. The party producing documents
or other information marked "Confidential" shall have twenty days from the
production of such material to submit a request to the Procedures Arbitrator to
establish such requirements for the protection of such documents or other
information designated as "Confidential" as may be reasonable and necessary to
protect the confidentiality and commercial value of such information and the
rights of the parties, which requirements shall be binding on all parties to the
dispute. Prior to the decision of the Procedures Arbitrator on a request for
confidential treatment, documents or other information designated as
"Confidential" shall not be used by the receiving party or parties, or the
arbitrator(s), or anyone working for or on behalf of any of the foregoing, for
any purpose other than the arbitration proceeding, and shall not be disclosed in
any form to any person not involved in the arbitration proceeding without the
prior written consent of the party producing the information or as permitted by
the Procedures Arbitrator.
4.9.2 Compulsory Disclosure.
Any party receiving a request or demand for disclosure, whether by
compulsory process, discovery request, or otherwise, of documents or information
obtained in the course of an arbitration proceeding that have been designated
"Confidential" and that are subject to a non-disclosure requirement under these
PJM Dispute Resolution Procedures or a decision of the Procedures Arbitrator,
shall immediately inform the party from which the information was obtained, and
shall take all reasonable steps, short of incurring sanctions or other
penalties, to afford the person or entity from which the information was
obtained an opportunity to protect the information from disclosure. Any party
disclosing information in violation of these PJM Dispute Resolution Procedures
or requirements established by the Procedures Arbitrator shall thereby waive any
right to introduce or otherwise use such information in any judicial,
regulatory, or other legal or dispute resolution proceeding, including the
proceeding in which the information was obtained.
4.9.3 Public Information.
Nothing in the Related PJM Agreements shall preclude the use of
documents or information properly obtained outside of an arbitral proceeding, or
otherwise public, for any legitimate purpose, notwithstanding that the
information was also obtained in the course of the arbitral proceeding.
7
4.10 Timetable.
Promptly after the selection of the arbitrator(s), the arbitrator(s) shall
set a date for the issuance of the arbitral decision, which shall be not later
than eight months (or such earlier date as may be agreed to by the parties to
the dispute) from the date of the selection of the arbitrator(s), with other
dates, including the dates for an evidentiary hearing or other final submissions
of evidence, set in light of this date. The date for the evidentiary hearing or
other final submission of evidence shall not be changed absent extraordinary
circumstances. The arbitrator(s) shall have the power to impose sanctions,
including dismissal of the proceeding for dilatory tactics or undue delay in
completing the arbitral proceedings.
4.11 Advisory Interpretations.
Except as to matters subject to decision in the arbitration proceeding, the
arbitrator(s) may request as may be appropriate from any committee or
subcommittee established under a Related PJM Agreement or by the Office of the
Interconnection, an interpretation of any Related PJM Agreements, or of any
standard, requirement, procedure, tariff, Schedule, principle, plan or other
criterion or policy established by any committee or subcommittee. Except to the
extent that the Office of the Interconnection is itself a party to a dispute,
the arbitrator(s) may request the advice of the Office of the Interconnection
with respect to any matter relating to a responsibility of the Office of the
Interconnection under the Agreement or with respect to any of the Related PJM
Agreements, or to the PJM Manuals. Any such interpretation or advice shall not
relieve the arbitrator(s) of responsibility for resolving the dispute or
deciding the arbitration proceeding in accordance with the standards specified
herein.
4.12 Decisions.
The arbitrator(s) shall issue a written decision, including findings of
fact and the legal basis for the decision. The arbitral decision shall be based
on (i) the evidence in the record, (ii) the terms of the Related PJM Agreements,
as applicable, (iii) applicable United States federal and state law, including
the Federal Power Act and any applicable FERC regulations and decisions, and
international treaties or agreements as applicable, and (iv) relevant decisions
in previous arbitration proceedings. The arbitrator(s) shall have no authority
to revise or alter any provision of the Related PJM Agreements. Any arbitral
decision issued pursuant to these PJM Dispute Resolution Procedures that affects
matters subject to the jurisdiction of FERC under Section 205 of the Federal
Power Act shall be filed with FERC.
4.13 Costs.
Unless the arbitrator(s) shall decide otherwise, the costs of the time,
expenses, and other charges of the arbitrator(s) shall be borne by the parties
to the dispute, with each side on an arbitrated issue bearing its pro-rata share
of such costs, and each party to an arbitral proceeding shall bear its own costs
and fees. The arbitrator(s) may award all or a portion of the costs of the
time, expenses, and other charges of the arbitrator(s), the costs of
arbitration, attorney"s fees, and the costs of mediation, if any, to any party
that substantially prevails on an issue determined by the arbitrator(s) to have
been raised without a substantial basis.
8
4.14 Enforcement.
If the decision of the arbitrator(s) is binding, the judgment may be
entered on such arbitral award by any court having jurisdiction thereof;
provided, however, that within one year of the issuance of the arbitral decision
any party affected thereby may request FERC or any other federal, state,
regulatory or judicial authority having jurisdiction to vacate, modify, or take
such other action as may be appropriate with respect to any arbitral decision
that is based upon an error of law, or is contrary to the statutes, rules, or
regulations administered or applied by such authority. Any party making or
responding to, or intervening in proceedings resulting from, any such request,
shall request the authority to adopt the resolution, if not clearly erroneous,
of any issue of fact expressly or necessarily decided in the arbitral
proceeding, whether or not the party participated in the arbitral proceeding.
5. ALTERNATE DISPUTE RESOLUTION COMMITTEE
5.1 Membership.
5.1.1 Representatives.
The Alternate Dispute Resolution Committee shall be composed of two
representatives selected by each of the following: (i) the Office of the
Interconnection; (ii) the Members Committee; (iii) the parties to the
Reliability Assurance Agreement; and (iv) the parties to the Transmission Owners
Agreement.
5.1.2 Term.
Representatives on the Alternate Dispute Resolution Committee shall
serve for terms of three years and may serve additional terms.
5.2 Voting Requirements.
Approval or adoption of measures by the Alternate Dispute Resolution
Committee shall require two-thirds of the votes of the representatives present
and voting. Two-thirds of the representatives on the Alternate Dispute
Resolution Committee shall constitute a quorum for the conduct of business.
5.3 Officers.
At the first meeting of the Alternate Dispute Resolution Committee, the
representatives to the Alternate Dispute Resolution Committee shall choose a
Chair and Vice Chair from among the representatives on the Committee. The Chair
of the Alternate Dispute Resolution Committee shall preside at meetings of the
Committee, and shall have the power to call meetings of the Committee and to
exercise such other powers as are specified in this Agreement or are authorized
by the Alternate Dispute Resolution Committee. The Vice Chair shall preside at
meetings of the Alternate Dispute Resolution Committee in the absence of the
Chair, and shall exercise such other powers as are delegated by the Chair.
9
5.4 Meetings.
The Alternate Dispute Resolution Committee shall meet at such times and
places as determined by the Committee, or at the call of the Chair. The Chair
shall call a meeting of the Alternate Dispute Resolution Committee upon the
request of two or more representatives on the Alternate Dispute Resolution
Committee.
5.5 Responsibilities.
The duties of the Alternate Dispute Resolution Committee include but are
not limited to the following:
i) Maintain a list of persons qualified by temperament and
experience, and with technical or legal expertise in matters
likely to be the subject of disputes, to serve as mediators or
arbitrators under these PJM Dispute Resolution Procedures;
ii) Determine the rates and other costs and charges that shall be
paid to mediators, advisors and arbitrators for or in connection
with their services;
iii) Determine whether mediation is not warranted in a particular
dispute;
iv) Provide to disputing parties lists of mediators, advisors or
arbitrators to resolve particular disputes;
v) Compile and make available to parties to disputes, arbitrators,
and other interested persons suggested procedures for the
arbitration of disputes in accordance with Section 4.5;
vi) Maintain and make available to parties to disputes, mediators,
advisors, arbitrators, and other interested persons the written
decisions required by Section 4.12;
vii) Establish such procedures and schedules, in addition to those
specified herein, as it shall deem appropriate to further the
prompt, efficient, fair and equitable resolution of disputes;
and
viii) Provide such oversight and supervision of the dispute resolution
processes and procedures instituted pursuant to the Related PJM
Agreements as may be appropriate to facilitate the prompt,
efficient, fair and equitable resolution of disputes.
10
SCHEDULE 6
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Revision No. 1
REGIONAL TRANSMISSION EXPANSION PLANNING PROTOCOL
-------------------------------------------------
Issued: June 2, 1997
Effective: January 1, 1998
1. REGIONAL TRANSMISSION EXPANSION PLANNING PROTOCOL
Purpose and Objectives
This Regional Transmission Expansion Planning Protocol shall govern
the process by which the Members shall rely upon the Office of the
Interconnection to prepare a plan for the enhancement and expansion of the
Transmission Facilities in order to meet the demands for firm transmission
service in the PJM Control Area. The Regional Transmission Expansion Plan to be
developed shall enable the transmission needs in the PJM Control Area to be met
on a reliable, economic and environmentally acceptable basis.
1.2 Conformity with NERC and MAAC Criteria
(a) NERC establishes Planning Principles and Guides to promote the
reliability and adequacy of the North American bulk power supply as related to
the operation and planning of electric systems.
(b) MAAC is responsible for ensuring the adequacy, reliability and security
of the bulk electric supply systems in the MAAC region through coordinated
operations and planning of generation and transmission facilities. Toward that
end, it has adopted the NERC Planning Principles and Guides and has established
detailed Reliability Principles and Standards for Planning the Bulk Electric
Supply System of the MAAC Group.
(c) The Regional Transmission Expansion Plan shall conform with the
applicable reliability principles, guidelines and standards of NERC and MAAC in
accordance with the procedures detailed in the PJM Manuals.
1.3 Establishment of Committees
(a) The Regional Transmission Owners shall supply representatives to the
Planning Committee to provide the data, information, and analysis support
necessary to perform studies as required. As used herein, "Regional
Transmission Owner" shall be defined as it is in the PJM Open Access
Transmission Tariff ("PJM Tariff").
(b) The Transmission Expansion Advisory Committee established by the Office
of the Interconnection will provide input to the development of the Regional
Transmission Expansion Plan. The Transmission Expansion Advisory Committee will
invite participation by: (i) all Transmission Customers, as that term is
defined in the PJM Tariff, and applicants for transmission service; (ii) any
other entity proposing to provide Transmission Facilities to be integrated into
the
PJM Control Area; (iii) all Members; (iv) the agencies and offices of consumer
advocates of the States in the PJM Control Area exercising regulatory authority
over the rates, terms or conditions of electric service or the planning, siting,
construction or operation of electric facilities and (v) any other interested
entities or persons.
1.4 Contents of the Regional Transmission Expansion Plan
(a) The Office of the Interconnection shall prepare the Regional
Transmission Expansion Plan, which shall consolidate the transmission needs of
the region into a single plan which is assessed on the basis of maintaining the
PJM Control Area"s reliability in an economic and environmentally acceptable
manner.
(b) The Regional Transmission Expansion Plan shall reflect transmission
enhancements and expansions, load and capacity forecasts and generation
additions and retirements for the ensuing ten years.
(c) The Regional Transmission Expansion Plan shall, as a minimum, include a
designation of the Regional Transmission Owner or Owners or other entity that
will own a transmission facility and how all reasonably incurred costs are to be
recovered.
(d) The Regional Transmission Expansion Plan shall (i) avoid unnecessary
duplication of facilities; (ii) avoid the imposition of unreasonable costs on
any Regional Transmission Owner or any user of Transmission Facilities; (iii)
take into account the legal and contractual rights and obligations of the
Regional Transmission Owners; (iv) provide, if appropriate, alternative means
for meeting transmission needs in the PJM Control Area; and (v) provide for
coordination with existing transmission systems and with appropriate
interregional and local expansion plans.
1.5 Procedure for Development of the Regional Transmission Expansion Plan
1.5.1 Commencement of the Process
(a) The Office of the Interconnection shall initiate the enhancement
and expansion study process if (i) required as a result of a need for transfer
capability identified by the Office of the Interconnection in its evaluation of
requests for firm transmission service with a term of one year or more or as a
result of the Office of the Interconnection's on-going evaluation of
transmission system adequacy and performance; (ii) identified as a result of the
MAAC reliability assessment or more stringent local reliability criteria, if
any; (iii) constraints or available transfer capability shortage are identified
by the Office of the Interconnection as a result of generation additions or
retirements, evaluation of load forecasts or proposals for the addition of
Transmission Facilities in the PJM Control Area; or (iv) expansion of the
transmission system is proposed by the Regional Transmission Owners or others.
(b) The Office of the Interconnection shall notify the Transmission
Expansion Advisory Committee of the commencement of an enhancement and expansion
study. The Transmission Expansion Advisory Committee shall notify the Office of
the Interconnection in writing of any additional transmission considerations to
be included.
Revised: September 24, 1998
Effective: January 1, 1999
2
1.5.2 Development of Scope, Assumptions and Procedures
Once the need for an enhancement and expansion study has been
established, the Office of the Interconnection shall consult with the
Transmission Expansion Advisory Committee to prepare the study"s scope,
assumptions and procedures.
1.5.3 Scope of Studies
In general, enhancement and expansion studies shall include:
(a) An identification of existing and projected electric system
limitations, with accompanying simulations to identify the costs of controlling
those limitations. Potential enhancements and expansions will be proposed to
mitigate limitations controlled by non-economic means.
(b) Evaluation and analysis of potential enhancements and
expansions, including alternatives thereto, needed to mitigate such limitations.
(c) Engineering studies needed to determine the effectiveness and
compliance (with reliability criteria) of recommended enhancements and
expansions.
1.5.4 Supply of Data
(a) The Regional Transmission Owners shall provide to the Office of
the Interconnection on an annual basis a 10-year forecast of summer and winter
load and resources expected to be served by, or use, their Transmission
Facilities. The forecast shall include to the extent known or reasonably
capable of forecast: (i) a description of the total load to be served from each
substation; (ii) the amount of any interruptible loads included in the total
load (including conditions under which an interruption can be implemented and
any limitations on the duration and frequency of interruptions); and (iii) a
description of all generation resources to be located in the geographic region
encompassed by the Regional Transmission Owner"s transmission facilities,
including unit sizes, VAR capability, operating restrictions, and any must-run
unit designations required for system reliability or contract reasons. The data
required under this section shall be provided in the form and manner specified
by the Office of the Interconnection.
(b) In addition to the foregoing, the Regional Transmission Owners,
those entities requesting transmission service and any other entities proposing
to provide Transmission Facilities to be integrated into the PJM Control Area
shall supply any other information and data reasonably required by the Office of
the Interconnection to perform the enhancement and expansion study.
1.5.5 Coordination of the Regional Transmission Expansion Plan
(a) The Regional Transmission Expansion Plan shall be developed in
coordination with the transmission systems of the surrounding regional
reliability councils and with the local transmission providers.
(b) The Regional Transmission Expansion Plan shall be developed by
the Office of the Interconnection in consultation with the Transmission
Expansion Advisory Committee during the enhancement and expansion study process.
Revised: September 24, 1998
Effective: January 1, 1999
3
1.5.6 Development of the Recommended Regional Transmission Expansion
Plan
(a) Upon completion of its studies and analysis, the Office of the
Interconnection shall prepare a recommended enhancement and expansion plan for
review by the Transmission Expansion Advisory Committee. The recommended plan
shall include recommendations for cost responsibility, except for directly
assigned costs, for any enhancement or expansion, based on the planning analysis
and other input from participants, including any indications of a willingness to
bear cost responsibility for an enhancement or expansion.
(b) For the purposes of Section 1.5.6(a), any allocation of costs
to all of the Regional Transmission Owners shall be proportional to the load
within the Zones. Load shall be measured consistent with the loads utilized to
develop the rates included in Attachment H to the PJM Tariff.
(c) Any Regional Transmission Owner and other participants on the
Revised: September 24, 1998
Effective: January 1, 1999
3a
Transmission Expansion Advisory Committee may offer an alternative.
(d) If the Office of the Interconnection adopts the alternative,
based upon its review of the relative costs and benefits, the ability of the
alternative to supply the required level of transmission service, and its impact
on the reliability of the Transmission Facilities, the Office of the
Interconnection shall make any necessary changes to the recommended plan.
(e) If, based upon its review of the relative costs and benefits,
the ability of the alternative to supply the required level of transmission
service, and the alternative"s impact on the reliability of the Transmission
Facilities, the Office of the Interconnection does not adopt such alternative,
the Regional Transmission Owner or Owners whose alternative or alternatives have
not been accepted or to whom cost responsibility has been assigned and other
participants on the Transmission Expansion Advisory Committee may require that
its or their alternative(s) be submitted to Alternative Dispute Resolution.
1.6 Approval of the Final Regional Transmission Expansion Plan
(a) The PJM Board shall approve the final Regional Transmission Expansion
Plan, including any alternatives therein, in accordance with the requirements of
this Section 1.6.
(b) If the facilities to be provided in the Regional Transmission
Expansion Plan are acceptable, but the Regional Transmission Owners and other
entities who have indicated a willingness to bear some or all of the cost
responsibility cannot unanimously agree on the allocation of the costs of
enhancements or expansions, the cost responsibility shall be allocated (a) to
those entities who have indicated a willingness to bear some or all of the cost
of responsibility, and (b) among the Regional Transmission Owners in accordance
with the following guidelines :
i) All of the costs of Transmission Facilities (other than
transformers) with a nominal operating voltage of 500 kV or
higher shall be allocated to all of the Regional Transmission
Owners;
ii) One-half of the costs of Transmission Facilities (other than
transformers) with a nominal operating voltage of 230 kV or 345
kV shall be allocated to all Regional Transmission Owners and
one-half of the costs of such facilities shall be allocated to
the Regional Transmission Owners in whose Zone, as that term is
defined in the PJM Tariff, the enhancement or expansion is to be
located;
iii) All of the costs of Transmission Facilities (other than
transformers) with a nominal operating voltage below 230 kV shall
be allocated to the Regional Transmission Owner or Owners in
whose Zone the enhancement or expansion is located;
iv) One-half of the costs of transformers shall be allocated in
accordance with the methodology specified in (a), (b), or (c)
above, based upon the voltage at the high side of the transformer
and one-half of the costs shall be allocated in accordance with
the methodology specified in (a), (b), and (c) above based upon
the voltage at the low side of the transformer, unless the low
side of the transformer is less than 100 kV, in which case all of
the costs of the transformer shall be allocated to the Regional
Transmission Owner or
4
Owners in whose Zone the transformer is located.
If a Regional Transmission Expansion Plan is not approved, or if the
transmission service requested by any entity is not included in an approved
Regional Transmission Expansion Plan, nothing herein shall limit in any way the
right of any entity to seek relief pursuant to the provisions of Section 211 of
the Federal Power Act.
(d) Following PJM Board approval, the final Regional Transmission
Expansion Plan shall be submitted to MAAC for verification that all enhancements
or expansions conform to all MAAC Reliability Principles and Standards.
1.7 Obligation to Build
(a) Subject to the requirements of applicable law, government regulations
and approvals, including, without limitation, requirements to obtain any
necessary state or local siting, construction and operating permits, to the
availability of required financing, to the ability to acquire necessary right-
of-way, and to the right to recover, pursuant to appropriate financial
arrangements and tariffs or contracts, all reasonably incurred costs, plus a
reasonable return on investment, Regional Transmission Owners designated as the
appropriate entities to construct and own or finance enhancements or expansions
specified in the Regional Transmission Expansion Plan shall construct and own or
finance such facilities or enter into appropriate contracts to fulfill such
obligations.
(b) Nothing herein shall prohibit any Regional Transmission Owner from
seeking to recover the cost of enhancements or expansions on an incremental cost
basis or from seeking approval of such rate treatment from any regulatory agency
with jurisdiction over such rates.
1.8 Relationship to the PJM Control Area Open Access Transmission PJM
Tariff
Nothing herein shall modify the rights and obligations of an Eligible
Customer or a Transmission Customer, as those terms are defined in the PJM
Tariff, with respect to required studies and completion of necessary
enhancements or expansions. An Eligible Customer or Transmission Customer
electing to follow the procedures in the PJM Tariff instead of the procedures
provided herein, shall also be responsible for the related costs. The
enhancement and expansion study process under this Protocol shall be funded as a
part of the operating budget of the Office of the Interconnection.
Revised: March 31, 1999
Effective: April 1, 1999
5
SCHEDULE 7
----------
Revision No. 1
UNDERFREQUENCY RELAY OBLIGATIONS AND CHARGES
--------------------------------------------
Issued: June 2, 1997
Effective: January 1, 1998
1. UNDERFREQUENCY RELAY OBLIGATION
1.1 Application.
The obligations of this Schedule apply to each Member that is an Electric
Distributor, whether or not that Member participates in the Electric Distributor
sector on the Members Committee or meets the eligibility requirements for any
other sector of the Members Committee.
1.2 Obligations.
Each Electric Distributor shall install or contractually arrange for
underfrequency relays to interrupt at least 30 percent of its peak load with 10
percent of the load interrupted at each of three frequency levels: 59.3 Hz, 58.9
Hz and 58.5 Hz. Upon the request of the Reliability Committee, each Electric
Distributor shall document that it has complied with the requirement for
underfrequency load shedding relays.
2. UNDERFREQUENCY RELAY CHARGES
If an Electric Distributor is determined to not have the required
underfrequency relays, it shall pay an underfrequency relay charge of:
Charge = D x R x 365
where
D = the amount, in megawatts, the Electric Distributor is deficient;
and
R = the daily rate per megawatt, which shall be based on the annual
carrying charges for a new combustion turbine generator, installed
and connected to the transmission system, which daily deficiency
rate as of the Effective Date shall be $58.400/per kilowatt-year
or $160 per megawatt-day.
1
3. DISTRIBUTION OF UNDERFREQUENCY RELAY CHARGES
3.1 Share of Charges.
Each Electric Distributor that has complied with the requirements for
underfrequency relays imposed by this Agreement during a Planning Period,
without incurring an underfrequency relay charge, shall share in any
underfrequency relay charges paid by any other Electric Distributor that has
failed to satisfy said obligation during such Planning Period. Such shares
shall be in proportion to the number of megawatts of a Electric Distributor"s
load in the most recently completed month at the time of the peak for the PJM
Control Area during that month rounded to the next higher whole megawatt, as
established initially on the Effective Date and as updated at the beginning of
each month thereafter.
3.2 Allocation by the Office of the Interconnection.
In the event all of the Electric Distributors have incurred underfrequency
relay charges during a Planning Period, the underfrequency relay charges shall
be distributed among the Electric Distributors on an equitable basis as
determined by the Office of the Interconnection.
2
SCHEDULE 8
----------
Revision No. 1
DELEGATION OF RELIABILITY RESPONSIBILITIES
------------------------------------------
Issued: June 2, 1997
Effective: January 1, 1998
1. DELEGATION
The following responsibilities shall be delegated to the Office of the
Interconnection by the parties to the Reliability Assurance Agreement.
2. NEW PARTIES
With regard to the addition, withdrawal or removal of a party to the
Reliability Assurance Agreement, the Office of the Interconnection shall:
(a) Receive and evaluate the information submitted by entities that plan to
serve loads within the PJM Control Area, including entities whose participation
in the Agreement will expand the boundaries of the PJM Control Area, such
evaluation to be conducted in accordance with the requirements of the
Reliability Assurance Agreement; and
(b) Evaluate the effects of the withdrawal or removal of a party from the
Reliability Assurance Agreement.
3. IMPLEMENTATION OF RELIABILITY ASSURANCE AGREEMENT.
With regard to the implementation of the provisions of the Reliability
Assurance Agreement, the Office of the Interconnection shall:
(a) Receive all required data and forecasts from the parties to the
Reliability Assurance Agreement and other owners of Capacity Resources;
(b) Perform all calculations and analyses necessary to determine the
Forecast Pool Requirement and the capacity obligations imposed under the
Reliability Assurance Agreement, including periodic reviews of the capacity
benefit margin for consistency with the Reliability Principles and Standards, as
the foregoing terms are defined in the Reliability Assurance Agreement;
(c) Monitor the compliance of each party to the Reliability Assurance
Agreement with its obligations under the Reliability Assurance Agreement;
(d) Keep cost records, and xxxx and collect any costs or charges due from
the parties to the Reliability Assurance Agreement and distribute those charges
in accordance with the terms of the Reliability Assurance Agreement;
(e) Assist with the development of rules and procedures for determining and
Revised: November 19, 1998
Effective: September 1, 1998
1
demonstrating the capability of Capacity Resources;
(f) Establish the capability and deliverability of Capacity Resources
consistent with the requirements of the Reliability Assurance Agreement;
(g) Collect and maintain generator availability data;
(h) Perform any other forecasts, studies or analyses required to administer
the Reliability Assurance Agreement;
(i) Coordinate maintenance schedules for generation resources operated as
part of the PJM Control Area;
(j) Determine and declare that an Emergency exists or has ceased to exist
in all or any part of the PJM Control Area or announce that an Emergency exists
or ceases to exist in a Control Area interconnected with the PJM Control Area;
(k) Enter into agreements for (i) the transfer of energy in Emergencies in
the PJM Control Area or in a Control Area interconnected with the PJM Control
Area and (ii) mutual support in such Emergencies with other Control Areas
interconnected with the PJM Control Area; and
(l) Coordinate the curtailment or shedding of load, or other measures
appropriate to alleviate an Emergency, to preserve reliability in accordance
with FERC, NERC or MAAC principles, guidelines, standards and requirements and
the PJM Manuals, and to ensure the operation of the PJM Control Area in
accordance with Good Utility Practice.
Revised: November 19, 1998
Effective: September 1, 1998
2
SCHEDULE 9
----------
Revision No. 1
EMERGENCY PROCEDURE CHARGES
---------------------------
Issued: June 2, 1997
Effective: January 1, 1998
EMERGENCY PROCEDURE CHARGE
Following an Emergency, the compliance of each Member with the instructions
of the Office of the Interconnection shall be evaluated by the Office of the
Interconnection. If, based on such evaluation, it is determined that a Member
failed to comply with the instructions of the Office of the Interconnection to
implement voltage reductions or to drop load, that Member shall demonstrate that
it employed its best efforts to comply with such instructions. In the event a
Member failed to employ its best efforts to comply with the instructions of the
Office of the Interconnection, that Member shall pay an emergency procedure
charge as follows:
(a) For each megawatt of voltage reduction that was not implemented as
directed, the Member shall pay 365 times the daily deficiency rate per megawatt
based on the annual carrying charges for a new combustion turbine generator,
installed and connected to the transmission system, which daily deficiency rate
as of the Effective Date shall be $58.400/per kilowatt-year or $160 per
megawatt-day; and
(b) For each megawatt of load that was not dropped as directed, the Member
shall pay 730 times the daily deficiency rate per megawatt based on the annual
carrying charges for a new combustion turbine generator, installed and connected
to the transmission system, which daily deficiency rate as of the Effective Date
shall be $58.400/per kilowatt-year or $160 per megawatt-day.
2. DISTRIBUTION OF EMERGENCY PROCEDURE CHARGES
2.1 Complying Parties.
Each Member that has complied with the emergency procedures imposed by this
Agreement during an Emergency, without incurring an emergency procedure charge,
shall share in any emergency procedure charges paid by any other Member that has
failed to satisfy said obligation during such Emergency in an equitable manner
to be determined by the PJM Board.
2.2 All Parties.
In the event all of the Members have incurred emergency procedure charges
with respect to an Emergency, the emergency procedure charges related to that
Emergency shall be distributed in an equitable manner as directed by the PJM
Board.
Effective through March 31, 1998 only.
Issued: January 30, 1998
Effective: January 1, 1998
SCHEDULE 10
ACCOUNTING FOR UNSCHEDULED TRANSMISSION SERVICE COMPENSATION
------------------------------------------------------------
(a) Allocation among the Members of compensation paid or received for
Unscheduled Transmission Service, as defined in agreements between the
Members and others, and the billing within the Interconnection in
connection therewith, shall be made in accordance with this schedule.
(b) When the Members provide Unscheduled Transmission Service to others, the
compensation received, either in dollars or in transmission service
availability, shall be allocated initially among the Members in proportion
to their Forecast Obligations determined under Schedule 5 to the
Reliability Assurance Agreement, dated June 2, 1997, as amended and in
effect at the same time the Unscheduled Transmission Service was provided.
Each Member shall receive from the billing agent its share of the payment
in dollars as so allocated.
(c) When the Members receive Unscheduled Transmission Service from others, each
Member shall pay to the billing agent its share of the charges by said
others or alternatively each Member shall make available its share of
transmission service availability due said others as determined in
accordance with the agreement between the Members and said others, such
shares being initially in proportion to each Member"s respective Forecast
Obligations determined under Schedule 5 to the Reliability Assurance
Agreement, dated June 2, 1997, as amended and in effect at the time the
Unscheduled Transmission Service was received.
(d) When the Members enter into a facility agreement with NYPP for the
installation and operation of phase angle regulating facilities at Ramapo
to control or limit Unscheduled Transmission Service, each Member shall pay
to the billing agent its share of the charges in proportion to their
Forecast Obligations determined under Schedule 5 to the Reliability
Assurance Agreement, dated June 2, 1997, as amended and in effect at the
time when such charges were incurred.
(e) The foregoing allocation of an accounting for compensation shall be
reviewed from time to time and shall be revised upon approval by the PJM
Board upon consideration of the advice and recommendations of the Members
Committee.
Effective through March 31, 1998 only.
SCHEDULE 11
-----------
PJM CAPACITY CREDIT MARKETS
---------------------------
Issued: October 14, 1998
Effective: October 15, 1998
1. PURPOSES AND OBJECTIVES
1.1 PJM Capacity Credit Markets.
This Schedule sets forth the procedures applicable to the operation of the
PJM Capacity Credit Markets. The PJM Capacity Credit Markets will allow Market
Participants to buy and sell Capacity Credits at market clearing prices that are
established by the PJM Capacity Credit Markets and made public by the Office of
the Interconnection. The PJM Capacity Credit Markets shall be administered by
the Office of Interconnection in accordance with the principles and procedures
specified in this Schedule.
1.2 Voluntary Use of PJM Capacity Credit Market.
Except as provided in Section 7.4, participation in any PJM Capacity Credit
Market is voluntary.
1.3 Use of Capacity Credits.
An entity may use Capacity Credits to meet all or part of its capacity
obligations imposed under the Reliability Assurance Agreement. Such Capacity
Credits may be used by themselves, or along with any other options for meeting
capacity obligations imposed under the Reliability Assurance Agreement.
2. DEFINITIONS
Unless the context otherwise specifies or requires, capitalized terms used in
this Schedule shall have the respective meanings assigned herein or in the
Agreement for all purposes of this Schedule (such definitions to be equally
applicable to both the singular and the plural forms of the terms defined).
2.1 [Reserved.]
2.2 Buy Bid.
"Buy Bid" shall mean a bid to buy Capacity Credits in a PJM Capacity Credit
Market.
Revised: November 19, 1998
Effective: October 15, 1998
2.3 Capacity Credit.
"Capacity Credit" shall, subject to the transition provision specified
below, mean an entitlement to a specified number of megawatts of Unforced
Capacity from a Capacity Resource for the purpose of satisfying capacity
obligations imposed under the Reliability Assurance Agreement, such entitlement
not to include any entitlement to the output of the Capacity Resource.
2.4 Capacity Credit Market Implementation Date.
"Capacity Credit Market Implementation Date" shall mean the date specified
in Section 7.1 of this Schedule.
2.5 Capacity Resources.
"Capacity Resources" shall have the meaning specified in the Reliability
Assurance Agreement.
2.6 Fixed Block.
"Fixed Block" shall mean a Sell Offer or Buy Bid for not more or less than
a specified quantity of Capacity Credits.
2.7 Holiday.
"Holiday" shall mean a federal or state holiday designated by the Office of
the Interconnection for recognition in the conduct of PJM Daily Capacity Credit
Markets.
2.8 PJM Capacity Credit Market.
"PJM Capacity Credit Market" shall mean the PJM Daily Capacity Credit
Market and the PJM Monthly Capacity Credit Market.
2.9 PJM Daily Capacity Credit Market.
"PJM Daily Capacity Credit Market" shall mean a competitive market,
administered by the Office of the Interconnection in accordance with the
provisions of this Schedule, for the purchase and sale of Capacity Credits for
the business day following the day on which the market is conducted and for each
of any intervening weekend days or Holidays if the market is conducted on a
Friday or the day before a Holiday.
2.10 PJM Monthly Capacity Credit Market.
"PJM Monthly Capacity Credit Market" shall mean a competitive market,
administered by the Office of the Interconnection in accordance with the
provisions of this Schedule, for the purchase and sale of Capacity Credits for
each or any of the twelve months following the month during which the market is
conducted.
2.11 Sell Offer.
"Sell Offer" shall mean an offer to sell Capacity Credits in a PJM Capacity
Credit Market.
Revised: November 19, 1998
Effective: October 15, 1998
2
2.12 Unforced Capacity.
"Unforced Capacity" shall have the meaning specified in the Reliability
Assurance Agreement.
2.13 Up-To Block.
"Up-To Block" shall mean a Sell Offer or Buy Bid for a quantity of Capacity
Credits equal to or less than a specified quantity.
3. PARTICIPATION IN THE PJM CAPACITY CREDIT MARKET
3.1 Eligibility.
A Member shall become eligible to participate in any of the PJM Capacity
Credit Markets by becoming a Market Buyer or a Market Seller, or both as may be
appropriate, in accordance with the provisions of Schedule 1 of the Agreement.
In order to participate in any of the PJM Capacity Credit Markets, a Market
Buyer also either must be (a) an entity that is or will become a Load Serving
Entity in the PJM Control Area and a party to the Reliability Assurance
Agreement, or (b) have a contractual obligation to sell capacity (including
sales for resale) which will be used in the PJM Control Area. A Market Seller
may participate in any PJM Capacity Credit Market only to the extent that it has
Capacity Credits available to sell in excess of its capacity obligation imposed
under the Reliability Assurance Agreement and other contractual obligations to
sell capacity (including sales for resale), as determined in accordance with
Section 6.1.3.
3.2 Effect of Withdrawal.
Withdrawal from the Agreement shall not relieve a Market Participant of any
obligation to furnish or pay for Capacity Credits incurred in connection with
participation in a PJM Capacity Credit Market prior to such withdrawal, to pay
its share of any fees and charges incurred or assessed by the Office of the
Interconnection prior to the date of such withdrawal, or to fulfill any
obligation to provide indemnification for the consequences of acts, omissions or
events occurring prior to such withdrawal; and provided, further, that
withdrawal from this Agreement shall not relieve any Market Participant of any
obligations it may have under, or constitute withdrawal from, any Related PJM
Agreement.
4. RESPONSIBILITIES OF THE OFFICE OF THE INTERCONNECTION
4.1 Operation of the PJM Capacity Credit Market.
The Office of the Interconnection shall operate the PJM Capacity Credit
Markets in accordance with the provisions of this Schedule and applicable
provisions of the Agreement and the Reliability Assurance Agreement. Operation
of the PJM Capacity Credit Markets shall include, but not be limited to,
provision of the following services:
Second Revised: February 12, 1999
Effective: January 19, 1999
3
i) Determining the qualification of entities to become Market
Participants;
ii) Administering the PJM Capacity Credit Markets;
iii) Accounting for PJM Capacity Credit Market transactions, including but
not limited to rendering bills to, receiving payments from, and
disbursing payments to, participants in the PJM Capacity Credit
Markets;
iv) Maintaining such records of Sell Offers and Buy Bids, clearing price
determinations, and other aspects of PJM Capacity Credit Market
transactions, as may be appropriate to the administration of the PJM
Capacity Credit Markets; and
v) Monitoring compliance of participants in the PJM Capacity Credit
Markets with the provisions of this Schedule and the Agreement.
4.2 Records and Reports.
The Office of the Interconnection shall prepare and maintain such records
as are required for the administration of the PJM Capacity Credit Markets. For
each day of operation of the PJM Capacity Credit Markets, the Office of the
Interconnection shall publish, as specified below: (i) the price, if
determined, at which the PJM Capacity Credit Market cleared; (ii) the total
volume of Capacity Credits purchased; and (iii) such other PJM Capacity Credit
Market data as may be appropriate to the efficient and competitive operation of
the PJM Capacity Credit Markets, consistent with preservation of the
confidentiality of commercially sensitive or proprietary information.
Publication of the foregoing information shall be by posting on the PJM web
site. Such information shall remain available on the PJM web site for twelve
months from the date of posting. The Office of the Interconnection shall not
disclose commercially sensitive or proprietary information in any report or web
site posting.
5. GENERAL PROVISIONS
5.1 Market Sellers.
Only Market Sellers shall be eligible to submit Sell Offers. Market
Sellers shall comply with the terms and conditions of all Sell Offers, as
established by the Office of the Interconnection in accordance with this
Schedule and the Agreement.
5.2 Market Buyers.
Only Market Buyers shall be eligible to submit Buy Bids. Market Buyers
shall comply with the terms and conditions of all Buy Bids, as established by
the Office of the Interconnection in accordance with this Schedule and the
Agreement.
Revised: November 19, 1998
Effective: October 15, 1998
4
5.3 Agents.
A Market Participant may participate in the PJM Capacity Credit Markets
through an agent, provided that the Market Participant informs the Office of the
Interconnection in advance in writing of the appointment of such agent. A
Market Participant participating in the PJM Capacity Credit Markets through an
agent shall be bound by all of the acts or representations of such agent with
respect to transactions in the PJM Capacity Credit Markets, and shall ensure
that any such agent complies with the requirements of this Schedule and the
Agreement.
5.4 General Obligations of Market Participants.
Each Market Participant shall comply with all laws and regulations
applicable to the operation of the PJM Capacity Credit Markets and the use of
Capacity Credits, and shall comply with all applicable provisions of this
Schedule, the Agreement, and the Reliability Assurance Agreement, and all
procedures and requirements for the operation of the PJM Capacity Credit Markets
and the PJM Control Area established by the Office of the Interconnection in
accordance with the foregoing.
5.5 Relationship of Capacity Credits to Capacity Obligations Imposed Under
the Reliability Assurance Agreement.
A megawatt of Capacity Credit shall satisfy a megawatt of capacity
obligation imposed under the Reliability Assurance Agreement. Capacity Credits
purchased from a PJM Capacity Credit Market shall not be adjusted for forced
outages or other reasons. Because Capacity Credits are based on Capacity
Resources, no further capability or deliverability demonstrations beyond those
for the related Capacity Resource shall be required.
5.6 Deficiency Charges.
If the Office of the Interconnection determines that the first Market
Seller in a PJM Capacity Credit Market of a Capacity Credit did not have
sufficient Unforced Capacity to support the Capacity Credit transaction at the
time for which the Capacity Credit was applicable, any such deficiency shall be
satisfied through payment of deficiency charges by such first Market Seller
calculated as specified in the Reliability Assurance Agreement. Any amounts
collected from such deficiency charges shall be distributed in accordance with
the Reliability Assurance Agreement.
5.7 Fixed Transmission Rights.
Acquisition of a Capacity Credit shall not entitle the holder to a Fixed
Transmission Right.
Revised: November 19, 1998
Effective: October 15, 1998
5
5.8 Confidentiality.
The following information submitted to the Office of the Interconnection in
connection with any PJM Capacity Credit Market shall be deemed confidential
information for purposes of Section 18.17 of the Agreement: (i) the terms and
conditions of all Sell Offers and Buy Bids; and (ii) the terms and conditions of
any bilateral transactions for capacity or Capacity Credits.
6. OPERATION OF THE PJM CAPACITY CREDIT MARKETS
6.1 Content of Sell Offers.
6.1.1 Specifications.
Sell Offers shall specify:
i) The quantity of Capacity Credits offered, in increments of 0.1
megawatt;
ii) The minimum price, in dollars and cents per megawatt per day,
that will be accepted by the seller;
iii) Whether the offer is for a Fixed Block or an Up-To Block;
iv) For a PJM Daily Capacity Credit Market conducted on a Friday or
the day before a Holiday, the dates on which the offered Capacity
Credits may be used; and
v) For a PJM Monthly Capacity Credit Market, the month or months for
which the offered Capacity Credits may be used.
6.1.2 Market-based Offers.
A Market Seller that is authorized by FERC to sell electric generating
capacity at market-based prices, or that is not required to have such
authorization, may submit Sell Offers to PJM Capacity Credit Markets that
specify market-based prices.
6.1.3 Availability of Capacity Credits for Sale.
i) The Office of the Interconnection shall determine the maximum
megawatts of Capacity Credits each Market Seller may offer in a
PJM Capacity Credit Market, through verification of the
availability of megawatts of capacity from: (a) Capacity
Resources owned by or under contract to the Market Seller; (b)
rights obtained in bilateral transactions; (c) the results of
prior PJM Capacity Credit Markets; and (d) such other information
as may be available to the Office of the Interconnection. The
Office of the Interconnection may reject Sell Offers or portions
of Sell Offers for Capacity Credits determined by it not to be
available for sale.
Revised: November 19, 1998
Effective: October 15, 1998
6
ii) The Office of the Interconnection shall determine the maximum
amount of Capacity Credits available for sale in a PJM Capacity
Credit Market as of the beginning of the period during which Buy
Bids and Sell Offers are accepted for each market. To enable the
Office of the Interconnection to make this determination, no
bilateral transactions for capacity or Capacity Credits
applicable to the period covered by a PJM Capacity Credit Market
will be processed from the beginning of the period for submission
of Sell Offers and Buy Bids for that market until completion of
the clearing determination for that market. Processing of such
bilateral transactions will recommence once all sales for that
market are deemed final as specified below.
iii) In order for a bilateral transaction for the purchase and sale of
a Capacity Credit to be processed by the Office of the
Interconnection, both parties to the transaction must notify the
Office of the Interconnection of the transfer of the Capacity
Credit from the seller to the buyer in accordance with procedures
established by the Office of the Interconnection.
6.2 Content of Buy Bids.
Buy Bids shall specify:
i) The quantity of Capacity Credits desired, in increments of 0.1
megawatt;
ii) The maximum price, in dollars and cents per megawatt per day, that
will be paid by the buyer;
iii) Whether the bid is for a Fixed Block or an Up-To Block;
iv) For a PJM Daily Capacity Credit Market conducted on a Friday or the
day before a Holiday, the dates for which Capacity Credits are
desired; and
v) For a PJM Monthly Capacity Credit Market, the month or months for
which Capacity Credits are desired.
6.3 Submission of Sell Offers and Buy Bids.
The submission of Sell Offers and Buy Bids shall be subject to the
following requirements:
i) A Sell Offer or Buy Bid that fails to specify price or quantity, or
the date or months for which Capacity Credits are to be used if
applicable, shall be rejected by the Office of the Interconnection.
ii) A Sell Offer or Buy Bid that does not specify whether it is for a Full
Block or an Up-To Block shall be deemed a Sell Offer or Buy Bid for an
Up-To Block.
Revised: November 19, 1998
Effective: October 15, 1998
7
iii) All Sell Offers and Buy Bids for a PJM Daily Capacity Market must be
received by the Office of the Interconnection during a specified
period, as determined by the Office of the Interconnection, on the day
on which the market will be conducted. A Sell Offer or Buy Bid may be
withdrawn by a notification of withdrawal received by the Office of
the Interconnection at any time during the foregoing period, but may
not be withdrawn after that period.
iv) Sell Offers or Buy Bids for a PJM Daily Capacity Credit Market
conducted on a Monday, Tuesday, Wednesday or Thursday that is not the
day before a Holiday shall be for Capacity Credits applicable to the
following day.
v) Sell Offers or Buy Bids for a PJM Daily Capacity Credit Market
conducted on a Friday or the day before a Holiday shall designate the
date, to and including the next business day, to which the Capacity
Credits are applicable. A separate PJM Daily Capacity Credit Market
shall be conducted on such Friday or day before a Holiday for Capacity
Credits applicable to each following day, to and including the next
business day.
vi) Sell Offers and Buy Bids for a PJM Monthly Capacity Credit Market must
be received by the Office of the Interconnection during a specified
period, as determined by the Office of the Interconnection, on the day
of each month designated by the Office of the Interconnection for the
conduct of a PJM Monthly Capacity Credit Market. A Sell Offer or Buy
Bid may be withdrawn by a notification of withdrawal received by the
Office of the Interconnection at any time during the foregoing period,
but may not be withdrawn after that period.
vii) Sell Offers and Buy Bids shall be submitted or withdrawn via the
Internet site designated by the Office of the Interconnection;
provided, however, that if that Internet site cannot be accessed at
any time during the period specified in the foregoing paragraph, a
Sell Offer or Buy Bid may be submitted or withdrawn by a facsimile
transmitted to the number specified by the Office of the
Interconnection.
6.4 Conduct of PJM Capacity Credit Markets.
6.4.1 PJM Daily Capacity Credit Markets.
Following the submission of Sell Offers and Buy Bids in accordance
with the specified deadline for PJM Daily Capacity Credit Markets, a PJM Daily
Capacity Credit Market will be conducted each business day. Each such PJM Daily
Capacity Credit Market will clear Sell Offers and Buy Bids for Capacity Credits
for use the next business day, and for each of any intervening weekend days or
Holidays.
Revised: November 19, 1998
Effective: October 15, 1998
8
6.4.2 PJM Monthly Capacity Credit Markets.
Following the submission of Sell Offers and Buy Bids in accordance
with the specified deadline for PJM Monthly Capacity Credit Markets, a PJM
Monthly Capacity Credit Market will be conducted. Each such PJM Monthly
Capacity Credit Market will clear Sell Offers and Buy Bids for Capacity Credits
for use in each of the following twelve months.
6.5 Market Clearing Procedures.
i) For purposes of the rank ordering and market clearing procedures
described below, the Office of the Interconnection will: (a) evaluate
all Sell Offers for a Fixed Block at the same price as one Sell Offer
for a Fixed Block, with the quantity equal to the total quantity of
the equally-priced Sell Offers; (b) evaluate all Sell Offers for an
Up-To Block at the same price as one Sell Offer for an Up-to Block,
with the quantity equal to the total quantity of the equally-priced
Sell Offers; (c) evaluate all Buy Bids for a Fixed Block at the same
price as one Buy Bid for a Fixed Block, with the quantity equal to the
total quantity of the equally-priced Buy Bids; and (d) evaluate all
Buy Bids for an Up-To Block at the same price as one Buy Bid for an
Up-to Block, with the quantity equal to the total quantity of the
equally-priced Buy Bids.
ii) The Office of the Interconnection will rank order all Sell Offers and
Buy Bids by price. Sell Offers will be ranked by lowest price first
and then ranked in ascending price order. Buy Bids will be ranked by
highest price first and then ranked in descending price order. Sell
Offers or Buy Bids for Fixed Blocks will be given priority in the rank
order relative to Sell Offers or Buy Bids for Up-To Blocks of equal
price.
iii) For purposes of the market clearing procedures described below, the
Office of the Interconnection will not split or pro-rate: (a) a Sell
Offer for a Fixed Block; (b) a combined set of Sell Offers deemed a
single Sell Offer for a Fixed Block as specified above; (c) a Buy Bid
for a Fixed Block; or (d) a combined set of Buy Bids deemed a single
Buy Bid for a Fixed Block as specified above.
iv) The Office of the Interconnection will determine the largest quantity
of Sell Offers and Buy Bids for which the price of the marginal Sell
Offer is equal to or less than the price of the marginal Buy Bid. If
the marginal Sell Offer and the marginal Buy Bid are both for Up-to
Blocks, or if either or both are for Fixed Blocks that can be
satisfied without splitting or pro rating any such Fixed Block, the
market will clear at price specified in the marginal Sell Offer.
Revised: November 19, 1998
Effective: October 15, 1998
9
v) If either the marginal Sell Offer or the marginal Buy Bid (including
Sell Offers or Buy Bids that are combined as specified above) is for a
Fixed Block that could not be purchased or sold in full, then that
Sell Offer or Buy Bid will be removed from the rank order and the
market clearing price redetermined as specified above. If both the
marginal Sell Offer and the marginal Buy Bid (including Sell Offers or
Buy Bids that are combined as specified above) are for Fixed Blocks
that could not be purchased or sold in full, then both blocks will be
removed from the rank order and the market clearing price redetermined
as specified above.
vi) If a marginal Sell Offer or Buy Bid is a combination of Sell Offers or
Buy Bids deemed to be a single Sell Offer or Buy Bid for an Up-To
Block as specified above, the quantity purchased or sold will be
allocated among the combined Sell Offers or Buy Bids in proportion to
the quantities offered in each of the combined Sell Offers or Buy
Bids.
vii) If all Sell Offers remaining in the rank order are at prices higher
than the highest price of any Buy Bid remaining in the rank order, the
market will be cleared with no transactions, and a market clearing
price will not be determined.
6.6 Settlement Procedures.
Upon determination of the market clearing price as specified above: (a)
all Sell Offers at a price equal to or less than the market clearing price and
not removed from the rank ordering and for which there is sufficient Buy Bid
demand at or above the market clearing price will be deemed sold at the market
clearing price, and all Buy Bids at a price equal to or greater than the market
clearing price and not removed from the rank ordering and for which there is
sufficient Sell Offer supply at or below the market clearing price will be
deemed satisfied at the market clearing price, with any Up-To Blocks split and
pro-rated as may be appropriate; and (b) the accounts of Market Sellers and
Market Buyers will be credited or debited accordingly. The foregoing
determinations shall be made, and all sales and purchases shall be deemed final,
as of specified times, as designated by the Office of the Interconnection, on
the day on which each PJM Capacity Market is conducted.
6.7 Billing.
The Office of the Interconnection shall prepare a billing statement for
each Market Participant in accordance with the charges and credits specified in
this Schedule, and showing the net amount to be paid or received by each Market
Participant. Billing statements for PJM Daily Capacity Markets shall be
rendered following the end of each month for Capacity Credits bought and sold in
the month just ended. Billing statements for PJM Monthly Capacity Credit
Markets shall be rendered following the end of the month for which the Capacity
Credit applies. Billing statements shall provide sufficient detail, as
specified in the PJM Manuals, to allow verification of the billing amounts and
completion of the Market Participant"s internal accounting. Payment of
statements shall be made in accordance with the Agreement.
Revised: November 19, 1998
Effective: October 15, 1998
10
6.8 Time Standard.
All deadlines for the submission or withdrawal of Sell Offers or Buy Bids,
or for other purposes specified in this Schedule, shall be determined by the
time observed in the Eastern time zone.
7. EFFECTIVE DATE AND TRANSITION
7.1 Effective Date.
The Capacity Credit Market Implementation Date shall be October 15, 1998,
or as soon thereafter as the Office of the Interconnection can initiate trading
in the PJM Capacity Credit Market.
7.2 Transition Provisions.
To the extent that the Office of the Interconnection is not able to
administer a PJM Capacity Credit Market in accordance with the standards and
procedures specified above at the Capacity Credit Market Implementation Date,
the Office of the Interconnection shall implement the foregoing standards and
procedures if and to the extent practicable. The Office of the Interconnection
shall thereafter conform to each of the standards and procedures specified above
as soon as practicable.
7.3 Capacity Credit.
Prior to the effective date of the provisions for Unforced Capacity under
the Reliability Assurance Agreement, "Capacity Credit" shall mean an entitlement
to a specified number of megawatts of Capacity from a Capacity Resource for the
purpose of satisfying a capacity obligation imposed under the Reliability
Assurance Agreement, and deficiency charges shall be determined in accordance
with the then-current Reliability Assurance Agreement.
7.4 Mandatory Sell Offers and Buy Bids.
For the Daily Capacity Credit Markets conducted with respect to the
Operating Days between January 1, 1999 and May 31, 2000, there shall be the
following mandatory Sell Offers and Buy Bids:
i) Any Member that owns or has contracted for Capacity Credits or
Capacity Resources shall be required to make Sell Offers in each Daily
Capacity Credit Market to the full extent of the megawatts of capacity
that it has available to sell in excess of its capacity obligations
imposed under the Reliability Assurance Agreement and other
contractual obligations to sell capacity, as determined in accordance
with Section 6.1.3, as of the beginning of the period during which Buy
Bids and Sell Offers are accepted. To the extent that any such
megawatts of capacity available to a Member are not contained in such
Sell Offers, PJM automatically will place for that Member a Sell Offer
of an Up-To Block for such remaining amounts of capacity at a price of
zero.
Revised: May 11, 1999
Effective: June 1, 1999
11
ii) A party to the Reliability Assurance Agreement shall be required to
make Buy Bids in each Daily Capacity Credit Market for the amount of
capacity that, as of the beginning of the period during which Buy Bids
and Sell Offers are accepted, it lacks for purposes of meeting its
capacity obligations imposed under the Reliability Assurance Agreement
for the Operating Day covered by the Daily Capacity Credit Market. To
the extent that a party to the Reliability Assurance Agreement does
not place such Buy Bids, PJM automatically will place for that party a
Buy Bid of an Up-To Block that, when added to its other Buy Bids,
would meet its capacity obligations imposed under the Reliability
Assurance Agreement, at a price equal to the then-current deficiency
charge under the Reliability Assurance Agreement.
iii) A party shall have only one position, either excess of or deficient of
capacity obligations imposed under the Reliability Assurance
Agreement, as determined by the Office of the Interconnection.
Revised: November 19, 1998
Effective: October 15, 1998
12
