AMENDED AND RESTATED
OPERATING AGREEMENT
OF
PJM INTERCONNECTION, L.L.C.
Dated June 2, 1997
(Revised December 31, 1997)
DRAFT: 12/18/97
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
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
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....................... 23
10.3 Confidential Information......................... 23
10.4 Duties and Responsibilities...................... 25
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
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........................................ 37
17. MEMBER REPRESENTATIONS, WARRANTIES AND COVENANT...... 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 Transmission Owners Rights....................... 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
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
1.3.15 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...................................... 3
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
1.3.33 Spot Market Energy............................. 5
1.3.34 Transmission Congestion Charge................. 5
1.3.35 Transmission Congestion Credit................. 6
1.3.36 Transmission Customer.......................... 6
1.3.37 Transmission Forced Outage..................... 6
1.3.38 Transmission Planned Outage.................... 6
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 Interconnection..................... 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.............. 14
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.................................... 15
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
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
1.10.7 Bilateral Transactions........................ 26
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
1.11.4 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
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 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
SCHEDULE 2 - COMPONENTS OF COST.......................... 1
SCHEDULE 3 - ALLOCATION OF OI COSTS...................... 1
SCHEDULE 4 - STANDARD MEMBERSHIP AGREEMENT............... 1
SCHEDULE 5 - DISPUTE RESOLUTION PROCEDURE................ 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
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..................... 3
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 OBLICATIONS
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
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:
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, Section 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.
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.
1.13 Finance Committee.
"Finance Committee" shall mean the body formed pursuant to
Section 0 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 0 of Schedule 1 of this Agreement.
1.20 MAAC.
"MAAC" shall mean the Mid-Atlantic Area Council, a
reliability council under Section 202 of the Federal Power Act
established pursuant to the MAAC Agreement dated August 1, 1994,
or any successor thereto.
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.
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.
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.
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.
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.
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 0
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 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
955 Jefferson Avenue, Valley 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 1209 Orange Street, Wilmington, Delaware 19801, 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.
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
0 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.
5. WORKING CAPITAL AND CAPITAL CONTRIBUTIONS
1 Funding of Working Capital and Capital Contributions.
(a) The Office of the Interconnection shall attempt to
obtain financing of up to five million two hundred thousand
dollars ($5,200,000) 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. Section 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.
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.
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.
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.
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 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 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.
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.
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. 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 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.
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.
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.
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.
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;
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.
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;
(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 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;
(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.
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.
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.
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 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 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.
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
transactions in the PJM Interchange Energy Market or other
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.
Any Member that fails to make such payment, 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 30 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. Section 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 30th 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.
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.
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.
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 160 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 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.
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.
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.
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.
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.
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.
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.
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.
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.
SCHEDULE 1
PJM INTERCHANGE ENERGY MARKET
(Revises and replaces former Schedules 7.01 and 7.03)
Issued: June 2, 1997
Effective: August 1, 1997
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 an Internal Market
Buyer's net system requirements to serve its customer load in the
PJM Control Area, 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.
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 number determined as
specified in Section 0 of this Schedule.
1.3.6 Generating Market Buyer.
"Generating Market Buyer" shall mean an Internal Market
Buyer 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
consumption by end-users inside the PJM Control Area.
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.
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.
1.3.15 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.
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.
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.
.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) the amount
by which an Internal Market Buyer's hourly Equivalent Load
exceeds, or is exceeded by, the sum of the hourly outputs of the
Internal Market Buyer's operating generating resources; or (b)
the hourly scheduled deliveries of Spot Market Energy by an
External Market Seller; or (c) the hourly net metered output of
any other Market Seller; or (d) the hourly scheduled deliveries
of Spot Market Energy to an External Market Buyer.
1.3.26 PJM Interchange Export.
"PJM Interchange Export" shall mean the following, as
determined in accordance with Schedules to this Agreement: (a)
the amount by which an Internal Market Buyer's hourly Equivalent
Load is exceeded by the sum of the hourly outputs of the Internal
Market Buyer's operating generating resources; or (b) the hourly
scheduled deliveries of Spot Market Energy by a Market Seller
from an External Resource; or (c) the hourly net metered output
of any other Market Seller.
1.3.27 PJM Interchange Import.
"PJM Interchange Import" shall mean the following, as
determined in accordance with the Schedules to this Agreement:
(a) the amount by which an Internal Market Buyer's hourly
Equivalent Load exceeds the sum of the hourly outputs of the
Internal Market Buyer's operating generating resources; or (b)
the hourly scheduled deliveries of Spot Market Energy to an
External Market Buyer.
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.
1.3.33 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.
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.
1.3.38 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 a Load Serving Entity shall establish to
the satisfaction of the Office of the Interconnection that the
end-users as to which it or its principal is the Load Serving
Entity, and which 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 by the Load Serving Entity or
its agent. Such applicant shall further demonstrate that:
i) The foregoing Load Serving Entity (the applicant or its
principal) is obligated to meet the requirements of the
Reliability Assurance Agreement; and
ii) The foregoing Load Serving Entity 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 a Load Serving Entity shall demonstrate
that:
i) The applicant has obtained or will obtain Network
Transmission Service or 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.
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 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 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 0, provided it is not in default of
any obligation incurred under this Agreement.
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 execution of the PJM
Dispute Resolution Agreement and 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;
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 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, in
accordance with the Schedules to this Agreement;
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.
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 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 be individually metered in
accordance with Section 0 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.
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 0 to this Agreement.
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.
1.7.10 Other Transactions.
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 Internal Market
Buyers 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. 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.
he Office of the Interconnection, with the assistance of the
Member's 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.
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.
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.
The Office of the Interconnection shall schedule to the
Operating Reserve and load-following objectives of the PJM
Control Area 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).
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.
(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) Internal Market Buyers 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) External Market Buyers 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.
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 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 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.
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.
(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 Internal Market Buyer 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 an Internal
Market Buyer expects to curtail load at a specific Dispatch Rate,
it should specify the Dispatch Rate and estimated load
curtailment.
(b) An External Market Buyer 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:
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; 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;
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;
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 Schedule 3 to this Agreement. Alternatively, the
Market Seller shall receive any cancellation fee reflected in the
Market Seller's offer in lieu of start-up and no-load fees, if
any, 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.
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.
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. A
Market Seller offering energy from External Resources on an
aggregated basis and that does not deliver energy as scheduled by
the Office of the Interconnection shall be assessed a non-
delivery charge as specified below.
(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. A Market
Seller offering an External Resource on a resource-specific basis
that does not deliver energy as scheduled by the Office of the
Interconnection shall be assessed a non-delivery charge as
specified below, unless the resource being offered has suffered a
Generator Forced Outage. The burden shall be on the Market
Seller to demonstrate to the reasonable satisfaction of the
Office of the Interconnection that the resource being offered has
experienced a Generator Forced Outage.
(d) Subject to the conditions specified in this paragraph,
the non-delivery charge for External Resources that do not
deliver energy as scheduled shall be calculated hourly as
follows: Pro-rated start-up plus hourly no-load fees specified
in the Offer Data + [offered minimum dispatch level x (Locational
Marginal Price - offered energy price) x 110%]. For purposes of
the foregoing calculation: (i) the Locational Marginal Price
shall be the Locational Marginal Price at the buses at which the
energy from the External Resource should have been delivered to
the PJM Control Area; (ii) if the Locational Marginal Price less
the offered energy price is less than zero, this difference shall
be set to zero; and (iii) start-up and no-load fees shall be
subject to the requirements of this Schedule. Payments or credits
for non-delivery charges shall be used by the Office of the
Interconnection to reduce or offset PJM Control Area costs for
Operating Reserves.
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.
(d) An External Market Buyer that does not take delivery of
the amounts of energy specified in its request to purchase shall
be assessed a non-delivery charge, or if using Point-to-Point
service within the PJM Control Area shall pay for imbalance
service as specified in the Tariff. The non-delivery charge
shall be calculated as the summation for all applicable busses of
the product of (i) the Locational Marginal Price at each load bus
at which delivery was not taken, times (ii) the amount of energy
not taken each hour at such bus. The non-delivery charge shall
not apply to deliveries curtailed by the Office of the
Interconnection in accordance with this Schedule, or for periods
when the Dispatch Rate exceeds the maximum value specified by the
External Market Buyer in accordance with this Schedule. Payments
or credits for non-delivery charges shall be used by the Office
of the Interconnection to reduce or offset PJM Control Area costs
for Operating Reserves.
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.
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 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 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. Any such refusal of delivery shall be subject
to non-delivery charges in accordance with this Schedule.
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.
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.
1.11.4 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.
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.
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.
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.
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 bill for each
Market Buyer, determined as the difference between its total load
payment and its total generation revenue. The portions of the
net bill 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, 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)
500 kV transmission losses; (v) deliveries pursuant to bilateral
energy sales; (vi) receipts pursuant to bilateral energy
purchases; (vii) Inadvertent Interchange allocated to the Market
Buyer; and (viii) the Market Buyer's allocated share of energy
purchased from another Control Area in connection with a Minimum
Generation Emergency in such other Control Area as specified in
Section 0(0). For External Market Buyers, this calculation shall
determine the energy delivered pursuant to the External Market
Buyer's purchase request.
(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 0 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. If the Office
of the Interconnection dispatches energy to serve load in the PJM
Control Area, the pool-dispatched 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.
(h) If energy in excess of a Generating Market Buyer's
Equivalent Load flows to the PJM Control Area from a self-
scheduled resource, the Generating Market Buyer shall receive a
payment or credit for such excess energy at a rate equal to the
lesser of (i) 95% of the Locational Marginal Price at the
delivery bus for such energy, or (ii) the Locational Marginal
Price at the delivery bus for such energy if the Locational
Marginal Price is negative. For purposes of the foregoing
calculation, such excess energy shall be deemed to have been
delivered from the Generating Market Buyer's self-scheduled
resource or resources with the lowest Locational Marginal Price
or Prices at the time of delivery. Revenues attributable to the
difference between the market clearing price in the PJM
Interchange Energy Market and payments or credits for excess
energy from self-scheduled resources shall be used by the Office
of the Interconnection to reduce or offset PJM Control Area costs
for Operating Reserves.
3.2.2 Regulation.
(a) Each Internal Market Buyer 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.
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 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) The sum of the foregoing credits, plus any cancellation
fees paid in accordance with Section 1.10.2(d), less any amounts
received in accordance with Sections 1.10.5(d), 1.10.6(d) and
3.2.1(h) of this Schedule and payments received from another
Control Area for Operating Reserves or from users of Point-to-
Point Transmission Service within the PJM Control Area for
imbalance service, shall be the cost of Operating Reserves for
the PJM Control Area for each Operating Day.
(d) The cost of Operating Reserves for each Operating Day
shall be allocated and charged to each Market Buyer in proportion
to its total load during that Operating Day in the PJM Control
Area.
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 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
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 Internal Market Buyer 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.
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 0 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.
(d) Market Sellers, including Generating Market Buyers,
shall be charged for non-delivery of Spot Market Energy from
resources that are not Capacity Resources, as specified in
Section 1.10.5(d) of this Schedule.
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.
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 other than entities that are also
Internal Market Buyers 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 0
through 0 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.
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
the affected Market Buyer.
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.
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 the adjacent
Control Area, in accordance with an agreement between the Office
of the Interconnection and such adjacent Control Area that
complies with this Agreement.
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 bill 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 bill 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.
5.1.6 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 Transmission Customer using firm Point-to-Point
Transmission Service and each Network Service User 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 of each Network Service User
and Transmission Customer, determined as specified below.
(b) Each Network Service User shall designate a subset of
its Network Resources for which Fixed Transmission Rights will be
assigned. The Fixed Transmission Right for each Network Resource
shall be 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 to the
aggregate load busses of the Network Service User. The sum of
each Network Service User's Fixed Transmission Rights must be
equal to or less than the Network Service User's projected annual
peak load.
(c) Each Transmission Customer receiving firm Point-to-Point
Transmission Service shall be assigned Fixed Transmission Rights.
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) The foregoing assignment of Fixed Transmission Rights
shall be enhanced by an amendment to this Schedule, to be filed
with FERC not later than December 31, 1997, that will provide for
an auction of Fixed Transmission Rights over and above those FTRs
obtained and retained by Network Service Users and Transmission
Customers then receiving firm Point-to-Point Transmission Service
(including firm Point-to-Point transmission service for existing
bilateral contracts), such auction to be implemented as soon
after December 31, 1997 as shall be determined by the Office of
the Interconnection to be reasonably practical. For so long as
Fixed Transmission Rights are assigned on the basis of Network
Transmission Service and firm Point-to-Point Transmission
Service, any Fixed Transmission Rights awarded pursuant to an
auction shall be simultaneously feasible with all Network
Transmission Service and firm Point-to-Point Transmission Service
obligations. 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 an auction,
including but not limited to the nature of the bidding process,
the frequency of auctions, and the duration of the Fixed
Transmission Rights purchased at auction.
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.
SCHEDULE 2
Revision No. 2
COMPONENTS OF COST
Issued: June 2, 1997
Effective: August 1, 1997
(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.
SCHEDULE 2 -- EXHIBIT A
EXPLANATION OF THE TREATMENT OF THE COSTS OF
EMISSION ALLOWANCES
Issued: June 2, 1997
Effective: August 1, 1997
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 Cantor-
Fitzgerald 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, the annual average method is proposed.
The Emission Allowances (Tons of SO2)associated with a
transaction will be calculated by multiplying the magnitude of a
transaction (MWhr) by an Emissions per MWHr Factor (Tons of
SO2 per MWhr):
Emission Transaction Emissions
Allowances = Magnitude x per MWhr
Used Factor
(Tons of S0 2 ) (MWhr) (Tons of SO2 per MWhr)
The Emissions per MWHr Factor will be calculated by dividing
the forecast annual emissions from all Phase I units (Tons of
S02) 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 S02
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 S02)by its respective Emissions
Allowance Replacement Cost (Dollars per Ton of S02) 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 = S (A x B) , where:
C
A = Member's Forecasted Annual Emissions, (Tons of SO2)
B = Emission Allowance Replacement Cost, (Dollars per Ton of
SO2 , per company)
C = Forecast Annual PJM Energy Production, (MWhr)
SCHEDULE 3
Revision No. 6
ALLOCATION OF THE COST AND EXPENSES
OF THE OFFICE OF THE INTERCONNECTION
Issued: June 2, 1997
Effective: August 1, 1997
(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.
SCHEDULE 4
Revision No. 1
STANDARD FORM OF AGREEMENT TO BECOME A MEMBER OF THE LLC
Issued: June 2, 1997
Effective: August 1, 1997
Any entity which wishes to become a Member of the LLC shall,
pursuant to Section 0 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.
Members of the LLC
By:
Name:
Title: President
By:
Name:
Title:
SCHEDULE 5
Revision No. 1
PJM DISPUTE RESOLUTION PROCEDURES
Issued: June 2, 1997
Effective: August 1, 1997
1. DEFINITIONS
1.1 Alternate Dispute Resolution Committee.
"Alternate Dispute Resolution Committee" shall mean the
Committee established pursuant to Section 0 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.
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 Costs.
Except as specified in Section 0, 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 0, 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.
4.5 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.
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.
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.
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.
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.
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.
SCHEDULE 6
Revision No. 1
REGIONAL TRANSMISSION EXPANSION PLANNING PROTOCOL
Issued: June 2, 1997
Effective: August 1, 1997
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 PJM 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.
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
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 such 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.
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 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 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.
SCHEDULE 7
Revision No. 1
UNDERFREQUENCY RELAY OBLICATIONS AND CHARGES
Issued: June 2, 1997
Effective: August 1, 1997
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.
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.
SCHEDULE 8
Revision No. 1
DELEGATION OF RELIABILITY RESPONSIBILTIES
Issued: June 2, 1997
Effective: August 1, 1997
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;
(b) Perform all calculations and analyses necessary to
determine the Forecast Pool Requirement, the Forecast Zone
Requirement and the Forecast LSE Obligation, 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 bill 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 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 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 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.
SCHEDULE 9
Revision No. 1
EMERGENCY PROCEDURE CHARGES
Issued: June 2, 1997
Effective: August 1, 1997
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.