This month's Inside Lines informs PJM's stakeholders of various committee actions, upcoming training and other activities. PJM would like to highlight the following:

Advisory Committee Meets on Transmission Recommendations
The Transmission Expansion Advisory Committee (TEAC) met on May 23 to hear PJM's System Planning staff discuss its recommendations for projects to be included in the latest Regional Transmission Expansion Plan (RTEP). More than 100 stakeholders, including transmission owners, developers, regulators, consultants and media attended live or teleconference. (more)

New Board Members Elected at Annual Meeting
Approximately 375 participants attended PJM’s Annual Meeting of Members held at the Hyatt Regency Chesapeake Bay Resort, Spa and Marina in Cambridge, MD. The meeting was held May 2-4. (more)

Scarcity Pricing Could Be Used for First Time This Summer
If the weather is extremely hot and if electricity load is extremely high this summer, there’s a good chance a new pricing methodology could be triggered in areas of the PJM RTO. Scarcity pricing would set the price of generation within a defined area to reflect the market-based offer of the highest priced generator. This methodology would only be implemented under certain conditions. (more)

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What's Inside:

Committees Report
Highlights
Regulatory Reports

06.13.2006 Generation 101
06.14.2006 Generation 201
06.15.2006 Generation 301
06.16.2006 Operations 101
06.20.2006 – 06.21.2006 Market Settlements 301
06.27.2006 PJM 101: The Basics
06.28.2006 Scenario-Based Training
07.11.2006 – 07.12.2006 PJM 101: The Basics
07.18.2006 – 07.19.2006 LMP 101
07.25.2006 – 07.26.2006 Capacity 201

Committee Meetings:

• Market Implementation Committee (MIC) – 05.31.2006 - Topics: FTR Proposal, Black Start Services Manual Changes, Uncompensated Parallel Flow (Loop Flow), Cost Development Task Force Update, Revenue Adequacy, Settlement Agreement – 120 Day Report, Load Response Business Rules, Expansion of Bid/Offer Data Postings Update, Transaction Ramp Issues, ARR Allocation Proposal, Tariff Changes for Compliance with NAESB Standards, eMKT User Interface, Demand Side Response Working Group Update, Long-Term FTR Working Group Update, Reserve Market Working Group Update, Market Settlements Working Group, Marginal Losses Working Group Update.
• Reserve Markets Working Group (RMWG)– 05.26.2006 - Topics: Operating Reserves.
• Regional Planning Process Working Group (RPPWG) – 05.25.2006 - Topics: GANTT PJM RTEPP, Manual 14B Table of Contents, Market Efficiency, OATT Part IV, OP Agreement Schedule 6, TEAC Charter, Proposal from PSEG, Mirant, Williams, Conectiv Energy and NRG.
• Planning Committee (PC) – 05.24.2006 - Topics: Summer Reliability Assessment, Operation Analysis Task Force Update, Post Contingency Remediation Follow-Up, ReliabilityFirst Corporation Update, Markets and Reliability Committee Update, NERC Update, Manual 19 Revisions.
• Small Generation Interconnection Working Group (SGIWG) – 05.24.2006 - Topics: Draft EEI Supplemental Comments on FERC’s PURPA Mandatory Purchase Obligation NOPR, Demonstration Project of the Internet Based SCADA Option.
• Tariff Advisory Committee (TAC) – 05.24.2006 - Topics: Proposed Revisions to PJM Long-Term FTRS, Proposed Revisions to Option to Build.
• Transmission Expansion Advisory Committee (TEAC) – 05.23.2006 - Topics: 2011 RTEP Baseline, Interconnection Impact Studies, Aging Infrastructure, FERC Order on Jurisdiction of Distribution Facilities Interconnection, FERC Order on Wind and Impact on Queues, Overview of Future Planning Initiatives – DOE Corridor, RPPWG, AP and AEP Proposed Projects.
• Dispatcher Training Task Force (DTTF) – 05.23.2006 – Topics: Report from SOS Liaison, eDART, PJM Operations Training 2006, PJM Emergency Preparedness Drill Performance, Recent Revisions to PJM Operational Manuals, PJM System Operator Certification, NERC.
• Marginal Losses Working Group (MLWG) – 05.22.2006 - Topics: Working Group Charter, May 1, 2006 FERC Order, Loss Surplus Allocation Options.
• eDART User Group (EDARTUG) – 05.22.2006 - Topics: Enhancements for the Next Release, Question and Answer Resolution Session.
• Joint Operating Committee/Nuclear Generation Owners – 05.18.2006 - Topics: Review of Operations, Nuclear Generation Issues, 2006 Summer Reliability Assessment, NERC/Reliability First Update.
• eDart XML User’s Group – 05.18.2006 - Topics: Generation, Agenda Review, Enhancements for the Next Release, Question and Answer Resolution Session, Transmission.
• Systems Information Subcommittee (SIS)– 05.17.2006 - Topics: Member Company Roundtable, PJM Operations Update, Inter-RTO Activities, eSuite Update, PJMnet Project Update, Electric Utility Security Issues, PJM Advanced Control Center Project Update, Communication and System Issues, Metrics, eTUG.
• Markets and Reliability Committee (MRC)– 05.16.2006 - Topics: Legal Report, Eastern Standard Time, Automatic Sectionalizing, Summer Assessment, Black Start Services Working Group Update, Install Reserve Margin (IRM) and Associated Factors for the 2007/2008 Planning Period, Option to Build, Regional Planning Process Working Group Update, Marginal Losses, DSR In Ancillary Services Market, Scarcity Pricing Implementation, Long-Term Transmission Rights Allocation Proposal, Operating Agreement Limitation Provision.
• Transmission Owners Agreement-Administrative Committee (TOA-AC)– 05.16.2006 - Topics: 500-230kV Transformers Common Specification Update, RTEP Update, TOA-AC 2006 Work Plan Update, Legal Issues Team Update, Finance Committee Update, NERC Control Center Proposal.
• Reserve Markets Working Group (RMWG)– 05.15.2006 - Topics: Operating Reserves, Next Steps.
• Cost Development Task Force (CDTF) – 05.12.2006 – Topics: Hand-Whitman index update for 2006, spinning synchronized heading, long-term service contract (LTSA) inclusion as allowable for incremental cost, discuss Manual 15 proposed language and process for approval to include incremental cost components of LTSA contracts in cost based offers, non-synchronized reserve incremental cost of service, pumped storage hydro plant pumping cost.
• Governance Working Group (GWG)– 05.11.2006 – Topics: Sub-group updates (Working Group Protocols and Conduct of Meetings, Protocols for Sector Operations Sector Definition and Qualification for Membership in Sectors, Governance Among Members and Voting Protocols, Evaluation of Alternative Governance Protocols), Review Research on Member Access to Boards of Managers, Endorse Charter and recommend approval to MC.
• Demand Side Response Working Group (DSRWG)– 05.11.2006 – Topics: Load Response Business Rules, text of load response business rules to be effective 6/1, revisions required by implementation of Ancillary Services market initiative on 5/1, eLoad Response - Elements of Revision Targeted for 6/1, demand side response reports, ancillary services implementation update, use of eCapacity by CSPs for full emergency load response, price responsive load survey.
• System Operations Subcommittee (SOS) – 05.10.2006 – Topics: Review of operations, market updates, eDart update, Avian flue preparedness planning, system operator certification, Dispatcher Training Task Force (DTTF), peak load forecasts for summer 2006.
• PJM-MISO Cost Allocation for Economic Transmission Upgrades – 05.09.2006
• Regional Planning Process Working Group (RPPWG)– 05.08.2006 – Topics: Draft market efficiency business rules, draft market efficiency business rules v. 3 AEP, Revision 2 whitepaper market efficiency – TEAC, RPPWG TEAC timeline charter.
• Members Committee (MC) – 05.04.2006 - Topics: Comments by the Chair, Comments by the President and CEO, Comments by the President of NERC, Announce Sector Selections of New Members and Sector Changes of Existing Members, Elect Members of the Board of Managers, Market Operations Report, System Operations Report, First Quarter Financial Reports, OPSI Report, Regulatory Activities, National Interest Electric Corridor Report, Markets and Reliability Committee Report.
• Markets and Reliability Committee (MRC)– 05.02.2006 - Topics: Installed Reserve Margin, FPR and ALM Factor for the 2007/2008 Planning Period, Option to Build, Operating Reserve Package, Operating Committee Report, Planning Committee Report, Markets Implementation Committee Report, Annual Plan.
• Finance Committee (FC) – 05.02.2006 - Topics: First Quarter 2006 Unaudited Financial Statements, First Quarter 2006 Quarter Financial Review.

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Advisory Committee Meets on Transmission Recommendations

The Transmission Expansion Advisory Committee (TEAC) met on May 23 to hear PJM's System Planning staff discuss its recommendations for projects to be included in the latest Regional Transmission Expansion Plan (RTEP). More than 100 stakeholders, including transmission owners, developers, regulators, consultants and media attended live or teleconference.

The System Planning Division’s recommendations are just one step in the process of developing transmission upgrades and additions. The TEAC members will review recommendations on proposed new transmission lines and provide written comments to PJM by June 9. The PJM Board will review the proposed plan and comments from the TEAC meeting. The next Board meeting is June 23.

The current recommendations include a new 500-kilovolt transmission line from southwestern Pennsylvania to Virginia. This line would resolve reliability criteria violations in the current five-year period. The proposed line uses parts of Allegheny Energy’s proposed Trans-Allegheny Interstate Line.

In addition, the PJM Planning staff recommends that more than 10 other transmission-line projects identified by transmission owners and PJM staff be further developed and evaluated. The projects are intended to relieve identified overloads in the period six-to-15 years in the future. They also are expected to improve the economic performance of the grid. Affected transmission owners would proceed with preliminary siting evaluations, initial environmental impact assessment work and potentially with right-of-way acquisition. The PJM Board will consider the siting evaluations in making its ultimate decisions to proceed with individual projects.

During the third quarter, PJM will evaluate the effectiveness of proposed transmission projects to resolve reliability violations identified as part of the RTEP process. The evaluation will determine the most effective combination of transmission projects and identify the most effective locations for interconnection with the existing grid. Projects will be recommended to the PJM Board for consideration as reliability evaluations are completed. An economic/market efficiency analysis of proposed projects will be completed after the reliability analysis.

PJM's RTEP process determines the best combination of proposed projects and elements of proposed projects to meet the long-term needs of the region. The evaluation can include refinements, additional elements and potential new configurations.

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Approximately 375 participants attended PJM’s Annual Meeting of Members held at the Hyatt Regency Chesapeake Bay Resort, Spa and Marina in Cambridge, MD. The meeting was held May 2-4.

The meeting was mixed business and pleasure with the Markets and Reliability Committee, General Session and Members Committee meetings taking place as well as many leisure activities and dining experiences. During the Members Committee meeting, Lynn W. Eury, John M. Foster and Howard Schneider were re-elected to the PJM Board of Managers.

Meeting Materials from the General Session and Members Committee meetings that were held at the Annual Meeting are posted at the following link:
http://www.pjm.com/committees/members/members.html

We look forward to seeing you at the 2007 Annual Meeting to be held at Nemacolin Woodlands Resort and Spa May 1 – 3, 2007.

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Scarcity Pricing Could Be Used for First Time This Summer

If the weather is extremely hot and if electricity load is extremely high this summer, there’s a good chance a new pricing methodology could be triggered in areas of the PJM RTO. Scarcity pricing would set the price of generation within a defined area to reflect the market-based offer of the highest priced generator. This methodology would only be implemented under certain conditions.

Scarcity pricing may be implemented when PJM reasonably believes that the control area is experiencing a material shortage in reserves to meet reliability standards and the shortage is likely to be sustained absent operator action.

Scarcity pricing is one of the major provisions of a settlement agreement reached between PJM and members this past Fall and was approved by the Federal Energy Regulatory Commission (FERC) in January this year.

The agreement defines five zones that could be considered for scarcity pricing. The five zones are: the entire Regional Transmission Organization (RTO) footprint, the Bedington-Black Oak Region, the Eastern Mid-Atlantic Area Council (MAAC) Region, the Eastern Market Region and the entire MAAC region.

Scarcity pricing would only be implemented if any of the following occurs:

• PJM begins to dispatch on-line generators which are partially designated as Maximum Emergency (MaxE) into emergency output levels.
• PJM begins to dispatch on-line generators which are designated entirely as MaxE, above their designated minimum load points, if they are currently on-line and operating at their minimum load points because of restrictive operating parameters associated with the generators.
• PJM begins to dispatch any offline generators that are designated entirely as MaxE and that have start times less than or equal to 30 minutes.
• Voltage reductions are implemented.
• Emergency energy purchases are implemented.
• Load is manually dumped.
  

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FERC Orders

May

• 05.19.2006 Docket Nos. EL06-62-000, ER06-765-000 (PDF) On May 19, 2006, in Docket Nos. EL06-62-000 and ER06-765-000, the Commission issued an order accepting for filing PJM's proposed unexecuted interconnection service agreement (ISA) among PJM, H-P Energy Resources (H-P) and Monongahela Power Company and suspended the ISA for a nominal period, to become effective March 21, 2006, subject to refund. In addition, the Commission consolidated these dockets (the ISA docket and the H-P complaint docket) and established hearing and settlement judge procedures.
• 05.17.2006 Document No. ER05-1410-000, EL05-148-000 (PDF) On May 17, the FERC granted a motion for appointment of a settlement judge in the RPM dockets.
• 05.16.2006 Docket Nos. EL06-20-001, EL06-49-001, ER04-375-023 (PDF) On May 16, 2006, the Commission issued an Order Granting Clarifications and Dismissing Rehearing Request (115 FERC 61,185). In this Order, the Commission dismissed the Wisconsin Public Service's request for rehearing of the Commission's March 16, 2006, Order that dismissed the WPS' complaints filed in response the joint PJM and MISO joint and common market reports. The Commission also clarified that the WPS and others have the right to raise issues and comments to all aspects of the joint and common market initiatives and the forthcoming production cost study in other future proceedings.
• 05.10.2006 Docket No. ER06-650-001 (PDF) On May 10, 2006, the Commission accepted for filing an interconnection service agreement among PJM Interconnection, L.L.C., Calvert Cliffs Nuclear Power Plant, Inc., and Baltimore Gas and Electric Company, and a notice of cancellation of an interim interconnection service agreement being superseded, with an effective date of January 17, 2006 as requested.
• 05.08.2006 Docket Nos. ER04-156-007, ER05-513-0001, EL05-121-001 (PDF) On May 8, 2006, the Commission issued an order in the PJM license plate rate design proceeding, Docket Nos. ER04-156-007, ER05-513-0001, and EL05-121-001. In this Order, the Commission denies rehearing and grants clarification of its May 31, 2005 order in this proceeding that accepted a tariff filing providing options for PJM Transmission Owners to recover the costs of constructing new upgrades designated by PJM under the RTEPP and set for hearing the continued validity of PJM's current zonal rate structure. In denying the rehearing request, the Commission found that there is a reasonable question as to the appropriateness of license plate rates for an integrated RTO. The Commission also denied a request to expand the proceeding to include MISO's rate design.
• 05.01.2006 Docket No. EL06-55-000 (PDF) Order issued 5/1/2006 by the Commission requiring compliance with existing tariff provisions and related filings - (a) PJM shall implement locational marginal loss method for allocating transmission line losses per section 3.2.5 of the OA and Attachment K of the Tariff no later than 10/2/2006; (b) PJM to make compliance filing and revised tariff sheets no later than 60 days prior to 10/2/2006 to resolve any remaining issues (by 8/4/2006).
  
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May

• 05.30.2006 Docket No. ER06-406-000 (PDF) On May 30, 2006, PJM filed on behalf of itself, Gerdau Ameristeel Corporation and PJM Customer Coalition a Settlement Agreement and accompanying documents in Docket No. ER06-406-000 that resolve all issues set for hearing in that docket.
• 05.30.2006 Docket Nos. ER05-1410-000, EL05-148-000 (PDF) On May 30, 2006, PJM filed in Docket Nos. ER05-1410 and EL05-148 the affidavits of Mr. Ott, Professor Hobbs and Mr. Pasteris, each of whom will appear as a panelist on behalf of PJM at the June 7-8 technical conference in the proceeding, which concerns PJM's Reliability Pricing Model. PJM's panelists address details of the VRR curve and the long-term fixed resource requirement alternative.
• 05.30.2006 Docket No. RM01-5-000 (PDF) On May 30, 2006, PJM filed comments on the Commission’s Electronic Tariff Filings Notice of Proposed Rulemaking, in Docket No. RM01-5-000.
• 05.25.2006 Docket Nos. ER06-232-000, 001 (PDF) On May 25, 2006, in compliance with the Commission's April 25, 2006 order in Docket No. ER06-232-000, PJM Interconnection, L.L.C. submitted amendments to the PJM Open Access Transmission Tariff and the Amended and Restated Operating Agreement of PJM Interconnection, L.L.C. to include in those documents the margin by which the amount market participants collectively are willing to pay to accelerate or reschedule a transmission outage that would cause congestion must exceed the estimated cost of such acceleration or rescheduling.
• 05.19.2006 Docket Nos. EL05-148-000, ER05-1410-000 (PDF) On May 19, 2006, PJM, as directed by the Commission's April 20, 2006 "Initial Order on Reliability Price Model", submitted its brief on the issues set for paper hearing.
• 05.17.2006 Docket No. EL05-121-000 (PDF) On May 17, 2006, PJM filed its inital post hearing brief in Docket No. EL05-121-000.
• 05.17.2006 Docket Nos. ER05-6-023, EL04-135-025, EL02-111-043, EL03-212-039 (PDF) On May 17, 2006, PJM and MISO jointly filed in the cross-border economic planning cost allocation proceeding a Motion for an Extension of Time to Submit Compliance Filing in Docket No. ER05-6-023, et. al. In this Motion the RTOs ask the Commission for a six month extension to December 1, 2006, to submit the compliance filing required by the Commission's November 21, 2006 Order currently due on June 1, 2006.
• 05.12.2006 Docket No. EL06-67-000 (PDF) On May 12, 2006, PJM filed an Answer to the matter of the Complaint of Chesapeake Transmission, L.L.C. v. PJM, Interconnection, L.L.C., Docket No. EL06-67-000.
• 05.12.2006 Docket Nos. EL05-148-000, ER05-1410-000 (PDF) On May 12, 2006, in Docket Nos. EL05-148 and ER05-1410, PJM filed an answer supporting the request for a settlement judge in the RPM proceeding, and opposing the request to suspend the procedural schedule.
• 05.11.2006 Docket No. ER06-880-000 (PDF) On May 11, 2006, PJM filed a Motion to Intervene in a PJM Transmission Owners proceeding, Docket No. ER06-880-000. On April 21, 2006, the PJM Transmission owners filed modifications to Schedule 12 of the PJM Tariff to clarify the allocations of transmission expansion costs to merchant transmission owners and the calculations of transmission enhancement charges for point-to-point transmission customers. PJM requests that the Commission afforded PJM all the rights of a party to this proceeding.
• 05.05.2006 Docket No. EL04-57-002 (PDF) On May 5, 2006, PJM filed an Initial Brief in Docket No. EL04-57-002, in compliance with the Commission's remand order, FPL Energy Marcus Hook v. PJM Interconnection, L.L.C., 114 FERC P 61,296 (2006).
• 05.05.2006 Docket No. EL-57-002 (PDF) On May 5, 2006, PJM filed a letter with the Commission attaching a Certificate of Service to accompany its Initial Brief in Docket No. EL04-57-002. The Certificate of Service was inadvertently omitted from the brief filed earlier in the day.
• 05.04.2006 Docket No. ER06-954-000 (PDF) On May 4, 2006 PJM filed with FERC a report and associated revisions to the PJM Tariff regarding allocations of cost responsibility for transmission upgrades approved by the PJM Board of Managers in conjunction with PJM's Regional Transmission Expansion Plan. PJM requests an effective date of August 4, 2006 for the Tariff revisions.
• 05.04.2006 Docket No. RR06-1-000 (PDF) On May 4, 2006, the ISO / RTO Council (IRC) submitted comments to the Commission on the Request of the North American Reliability Council and North American Electric Reliability Corporation for Certification as the Electric Reliability Organization (ERO) under Docket No. RR06-1-000.
• 05.01.2006 Docket No. ER05-826-000 (PDF) On May 1, 2006, PJM filed an Answer in opposition to the Motion of North Carolina Electric Membership Corporation (NCEMC) seeking consolidation of the proceeding in Docket No. ER06-826-000 (PJM Market Monitoring Plan) with Docket No. AD06-7-000 (Notice of Presentations on the Role of ISO/RTO Market Monitors).
• 05.01.2006 Docket No. EL05-49-000 (PDF) PJM Interconnection, L.L.C. submits the following reply comments on the Offer of Settlement and Settlement Agreement filed in Docket No. EL05-49 on March 30, 2006.

April

• 04.28.2006 Docket Nos. EC06-4, ER06-20-002 (PDF)
  On April 28, 2006, PJM filed the attached Motion to Intervene and Comments in the LGE Withdrawal from MISO proceeding, Docket No. ER06-20. PJM's comments address (i) a question of interpretation and clarification related to the TVA JRCA, any future amendments that may be implemented by the parties thereto and the obligations of the ITO, RC and LGE to accept and comply with the JRCA as may be amended from time to time; and (ii) recovery from LGE and TVA of any costs that were and may be incurred by PJM in developing and implementing the JRCA.

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