PJM West Reability Assurance Agreement







Exhibit  10(d)(2) 

 




 

PJM WEST
RELIABILITY ASSURANCE AGREEMENT


 

Among 

 

LOAD SERVING ENTITIES 

 

in the 

 

PJM WEST REGION 

 

This version includes compliance Filings and FERC-approved revisions
as of October 28, 2004. 

 










			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 1
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 1



 

 

PJM WEST 

 

RELIABILITY ASSURANCE AGREEMENT 

 

This PJM West RELIABILITY ASSURANCE AGREEMENT,
(hereafter “Agreement”) dated as of this 14th day of March, 2001, by and among
each entity that becomes a Party to this Agreement by executing a counterpart
hereof, hereinafter referred to collectively as the “Parties” and individually
as a “Party.” 

 

WITNESSETH: 

 

WHEREAS, PJM Interconnection, L.L.C., a
Delaware limited liability company has amended its operating agreement (the
“Amended Operating Agreement”) to extend its market administration and
transmission system operator functional control service to utility systems
located outside the current PJM Control Area; and 

 

WHEREAS, certain entities desire to achieve
the benefits of reliable electric service by becoming a party to the Amended
Operating Agreement and by sharing certain operating reserve requirements and
meeting other operating criteria; and 

 

WHEREAS, the Amended Operating Agreement
requires that every Load Serving Entity serving load within the PJM West Region
become a Party to this Agreement; and 

 

WHEREAS, each Party to this Agreement is a
Load Serving Entity within the PJM West Region; and 

 

WHEREAS, each Load Serving Entity is
committing to share Capacity Resources with the other Parties to reduce the
overall operating reserve requirements for the Parties while maintaining
reliable service; and 

 

WHEREAS, PJM Interconnection, L.L.C., is
obligated under the Amended Operating Agreement to establish and administer a
capacity credit market and perform other responsibilities in order to facilitate
the ability of Load Serving Entities to meet their obligations under this
Agreement; and 

 

WHEREAS, each Load Serving Entity is
committing to provide mutual assistance to the other Parties during Emergencies
and to meet other obligations designed to achieve reliable electric service;


 

NOW THEREFORE, for and in consideration of
the covenants and mutual agreements set forth herein and intending to be legally
bound hereby, the Parties agree as follows: 

 

ARTICLE 1 — DEFINITIONS 

 

Unless the context otherwise specifies or
requires, capitalized terms used herein shall have the respective meanings
assigned herein or in the Schedules hereto for all purposes of 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









					
	
      PJM Interconnection, L.L.C.
	  	 	  	Third
      Revised Sheet No. 2
	
      First Revised Rate Schedule FERC No.
      32
	  	 	  	Superseding Second Revised Sheet No. 2



 

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 Articles, Sections or Schedules, are to Articles,
Sections or Schedules of this Agreement. As used in this Agreement: 

 

1.1 Accounted-For Obligation shall have the
meaning set forth in Schedule 7. 

 

1.1A [Reserved.] 

 

1.2 Agreement shall mean this PJM West
Reliability Assurance Agreement, together with all Schedules hereto, as amended
from time to time. 

 

1.3 Amended Operating Agreement shall mean
the “Operating Agreement of PJM Interconnection, L.L.C.” as amended by action of
the PJM Members Committee on February 8, 2001, as such agreement may be further
amended from time to time. 

 

1.4 Applicable Regional Reliability Council
shall mean the reliability council for the region in which a Member operates.


 

1.4A ALM shall mean active load management
in accordance with Schedule 5.2, and includes Qualified Interruptible Load.


 

1.4B ALM Factor shall mean that factor
approved from time to time by the Reliability Committee for use in the
determination of credit for ALM in accordance with Schedule 5.2. 

 

1.4C Behind The Meter Generation refers to
one or more generating units that are located with load at a single electrical
location such that no transmission or distribution facilities owned or operated
by any Transmission Owner or Electrical Distributor are used to deliver energy
from the generating units to the load; provided, however, that Behind The Meter
Generation does not include (i) at any time, any portion of such generating
units[s]’ capacity that is designated as a Capacity Resource or (ii) in any
hour, any portion of the output of the generating unit[s] that is sold to
another entity for consumption at another electrical location or into the PJM
Interchange Energy Market. 

 

1.4D Black Start Capability shall mean the
ability of a generating unit or station to go from a shutdown condition to an
operating condition and start delivering power without assistance from the power
system. 

 

1.4E Capacity Credits shall mean the
entitlement to a specified number of megawatts of Unforced Capacity for the
purpose of satisfying capacity obligations imposed under this Agreement and that
are acquired by a Party through bilateral purchase or pursuant to Schedule 11 of
the Amended Operating Agreement, or any successor schedule. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      March 1, 2004
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 2A
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 2A



 

1.5 Capacity Resources shall mean megawatts
of net capacity from (i) owned or contracted for generating facilities, all of
which are accredited to a Party pursuant to the procedures set forth in
Schedules 9 and 10 for purposes of this Agreement and are committed to satisfy
that Party’s obligations under this Agreement or (ii) net capacity from
resources within the PJM Region not owned or contracted for by a party which are
accredited to the PJM Region pursuant to the procedures set forth in Schedules 9
and 10 for purposes of this Agreement. 

 

1.6 [Reserved.] 

 

1.7 [Reserved.] 

 

1.8 Control Area shall mean an electric
power system or combination of electric power systems bounded by interconnection
metering and telemetry to which a common generation control scheme is applied in
order to: 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Substitute First Revised Sheet No. 3
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 3



 


	 	(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. 



 

1.9 [Reserved.] 

 

1.10 ECAR shall mean the reliability
council under section 202 of the Federal Power Act, established pursuant to the
East Central Area Reliability Coordination Agreement dated June 1, 1968, or any
successor thereto. 

 

1.11 Effective Date shall mean January 1,
2002 or such other date as is allowed by the FERC. 

 

1.12 Electric Distributor shall mean an
entity that owns, or leases with rights equivalent to ownership, electric
distribution facilities that are providing electric distribution service to
electric load within the PJM West Region or MAAC Control Zone. 

 

1.13 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. 

 

1.14 End-Use Customer shall mean a Member
that is a retail end-user of electricity within the MAAC Control Zone or PJM
West Region. 

 

1.14A FERC shall mean the Federal Energy
Regulatory Commission or any successor federal agency, commission or department.


 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 29, 2003
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER03-703-000, issued May 30, 2003, 103 FERC ¶
61,250.









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 4
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 4



 

1.15 Firm Point-To-Point Transmission Service
shall mean Firm Transmission Service provided pursuant to the rates, terms
and conditions set forth in Part II of the PJM Tariff. 

 

1.16 Force Majeure shall mean any act of
God, labor disturbance, act of public enemy, war, insurrection, riot, fire,
storm or flood, explosion, breakage or accident to machinery or equipment, any
curtailment, order, regulation or restriction imposed by governmental military
or lawfully established civilian authorities, or any other cause beyond a
Party’s control. No Party will be considered in default as to any obligation
under this Agreement if prevented from fulfilling the obligation due to an event
of Force Majeure. However, a Party whose performance under this Agreement is
hindered by an event of Force Majeure shall make all reasonable efforts to
perform its obligations under this Agreement. 

 

1.17 [Reserved.] 

 

1.17A [Reserved.] 

 

1.18 [Reserved.] 

 

1.18A Firm Transmission Service shall mean
transmission service that is intended to be available at all times to the
maximum extent practicable, subject to an Emergency, an unanticipated failure of
a facility, or other event beyond the control of the owner or operator of the
facility or the Office of the Interconnection. 

 

1.18B Forecast LSE Obligation (MW) shall
mean a Party’s obligation established pursuant to Section 6.1.2. 

 

1.18C Forecast Pool Requirement shall mean
the amount, stated in percent, equal to one hundred plus the percent reserve
margin for the PJM Region required pursuant to this Agreement, as approved by
the PJM Board, upon the recommendation of the Reliability Committee, pursuant to
Schedule 4. 

 

1.18D Full Requirements Service shall mean
wholesale service to supply all of the power needs of a Load Serving Entity to
serve end-users within the PJM Region that are not satisfied by its own
generating facilities. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 4A
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 4A



 

1.19 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 MAAC Control Zone or
PJM West Region. Purchasing all or a portion of the output of a generation
facility shall not be sufficient to qualify a Member as a Generation Owner.


 

1.19A 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 a 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. 

 

1.19B Generator Maintenance Outage shall
mean the scheduled removal from service, in whole or in part, of a generating
unit in order to perform repairs on specific components of the facility, if
removal of the facility qualifies as a maintenance outage pursuant to the PJM
Manuals. 

 

1.19C 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. 

 

1.20 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. 

 

1.21 [Reserved.] 

 

1.21A Interval shall be the four-month
period commencing June 1, the three-month period commencing October 1 , and the
five-month period commencing January 1, provided, however, that solely for
purposes of Schedule 17 in calendar year 2004, Interval shall include the one
month period beginning May 1 rather than the five-month period beginning January
1. 

 

1.21B Interval Deficiency Charge shall be
equal to the Deficiency Rate established by the Reliability Committee multiplied
by the number of days in each Interval. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      December 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 5
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 5



 

1.22 Load Serving Entity or LSE
shall mean any entity (or the duly designated agent of such an entity),
including a load aggregator or power marketer, (i) serving end-users within the
PJM West Region, and (ii) 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 West Region. Load Serving
Entity shall include any end-use customer that qualifies under state rules or a
utility retail tariff to manage directly its own supply of electric power and
energy and use of transmission and ancillary services. 

 

1.23 MAAC shall mean the Mid-Atlantic Area
Council, a reliability council under § 202 of the Federal Power Act, established
pursuant to the MAAC Agreement dated August 1, 1994, or any successor thereto.


 

1.23A MAAC Control Zone shall mean the
aggregate of the Zones of Atlantic City Electric Company, Baltimore Gas and
Electric Company, Delmarva Power and Light Company, Jersey Central Power and
Light Company, Metropolitan Edison Company, PECO Energy Company, Pennsylvania
Electric Company, PPL Electric Utilities Corporation, Potomac Electric Power
Company, Public Service Electric and Gas Company and Rockland Electric Company,
as shown on Schedule 14. 

 

1.23B MAIN shall mean the Mid-America
Interconnected Network, a reliability council under section 202 of the Federal
Power Act established pursuant to the Amended and Restated Bylaws of MAIN dated
January 8, 1998, or any successor thereof. 

 

1.23C Member shall mean an entity that
satisfies the requirements of Sections 1.24 and 11.6 of the PJM Operating
Agreement. In accordance with Article 5 of this Agreement, each Party to this
Agreement also is a Member. 

 

1.23D Members Committee shall mean the
committee specified in Section 8 of the PJM Operating Agreement composed of the
representatives of all the Members. 

 

1.24 NERC shall mean the North American
Electric Reliability Council or any successor thereto. 

 

1.25 Network Resources shall have the
meaning set forth in the PJM Tariff. 

 

1.26 Network Transmission Service shall
mean transmission service provided pursuant to the rates, terms and conditions
set forth in Part III of the PJM Tariff. 

 

1.27 Office of the Interconnection shall
mean the employees and agents of PJM Interconnection L.L.C., subject to the
supervision and oversight of the PJM Board, acting pursuant to the Amended
Operating Agreement. 

 

1.28 Operating Agreement of PJM
Interconnection, L.L.C. or Operating Agreement shall mean that
certain agreement, dated April 1, 1997 and as amended and restated June 2, 1997
and as amended from time to time thereafter, among the members of the PJM
Interconnection, L.L.C. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      December 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 5A
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 

1.28A 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 Region, as
specified in the PJM Manuals. 

 

1.28B Other Supplier shall mean a Member
that is (i) a seller, buyer or transmitter of electric capacity or energy in,
from or through the MAAC Control Zone or PJM West Region, and (ii) is not a
Generation Owner, Electric Distributor, Transmission Owner or End-Use Customer.


 

1.28C Partial Requirements Service shall
mean wholesale service to supply a specified portion, but not all, of the power
needs of a Load Serving Entity to serve end-users within the PJM Region that are
not satisfied by its own generating facilities. 

 

1.29 Party shall mean an entity bound by
the terms of this Agreement by executing a counterpart hereof. 

 

1.29A Peak Party Load shall be the daily
summation of the weather adjusted actual coincident summer peak for the previous
summer of the end-users for which the Party was responsible on that billing
date, as set forth in Schedule 7 of this Agreement. 

 

1.29B Peak Season shall have the meaning
set forth in Schedule 8. 

 

1.29C Peak Season Maintenance shall have
the meaning set forth in Schedule 8. 

 

1.29D Peak Season Maintenance Obligation
shall have the meaning set forth in Schedule 8. 

 

1.30 PJM shall mean the PJM Board and the
Office of the Interconnection. 

 

1.31 PJM Board shall mean the Board of
Managers of the PJM Interconnection, L.L.C., acting pursuant to the Amended
Operating Agreement. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Third
      Revised Sheet No. 6
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Second Revised Sheet No. 6



 

1.32 [Reserved.] 

 

1.33 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
MAAC Control Zone, the PJM West Region, and the PJM Interchange Energy Market in
a manner consistent with Applicable Regional Reliability Council standards.


 

1.34 PJM Open Access Transmission Tariff or
PJM Tariff shall mean the tariff for transmission service in the PJM
Region, as in effect from time to time, including any schedules, appendices, or
exhibits attached thereto. 

 

1.34A PJM Region shall mean the aggregate
of the PJM West Region and the MAAC Control Zone. 

 

1.35 PJM West Region shall mean the
aggregate of the Zones of the West Transmission Owners. 

 

1.35A Planning Period shall initially mean
the 12 months beginning June 1 and extending through May 31 of the following
year, or such other period approved by the Members Committee. 

 

1.36 Qualified Interruptible Load shall
mean load (including pumped storage hydroelectric generation in the pumping
mode) subject by contract to interruption by the Transmission Provider and which
qualifies as Active Load Management in accordance with Schedule 5.2. 

 

1.37 RAA shall mean the reliability
assurance agreement among the load-serving entities in the MAAC Control Zone, on
file with FERC as PJM Rate Schedule FERC No. 27. 

 

1.37A [Reserved.] 

 

1.38 [Reserved.] 

 

1.39 [Reserved.] 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      December 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 6A
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 6A



 

1.40 Reliability Committee shall mean the
committee established pursuant to the Operating Agreement as a Standing
Committee of the Members Committee. 

 

1.40A Reliability Principles and Standards
shall mean the principles and standards established by NERC or an Applicable
Regional Reliability Council to define, among other things, an acceptable
probability of loss of load due to inadequate generation or transmission
capability, as amended from time to time. 

 

1.41 Required Approvals shall mean all of
the approvals required for this Agreement to be modified or to be terminated, in
whole or in part, including the acceptance for filing by FERC and every other
regulatory authority with jurisdiction over all or any part of this Agreement.


 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      November 7, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      November 6, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 7
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 7



 

1.41C State Consumer Advocate shall mean a
legislatively created office from any State, all or any part of the territory of
which is within the PJM West Region or MAAC Control Zone, and the District of
Columbia established, inter alia, for the purpose of representing the interests
of energy consumers before the utility regulatory commissions of such states and
the District of Columbia and the FERC. 

 

1.41D Transmission Facilities shall mean
facilities that: (i) are within the PJM Region; (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 transmission system and
integrated into the planning and operation of the PJM Region to serve all of the
power and transmission customers within such area. 

 

1.41E 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. 

 

1.42 Transmission Provider shall mean PJM.


 

1.42A Unforced Capacity shall mean
installed capacity rated at summer conditions that is not on average
experiencing a forced outage or forced derating, calculated for each Capacity
Resource on a rolling 12-month average (which shall be updated each month for
the 12 months ending two months prior to the billing month) without regard to
the ownership of or the contractual rights to the capacity of the unit.


 

1.43 [Reserved.] 

 

1.44 [Reserved.] 

 

1.45 West Transmission Owner shall mean a
Member that has executed that certain “West Transmission Owners Agreement among
PJM Interconnection, L.L.C. and Certain Owners of Electric Transmission
Facilities.” (PJM Interconnection L.L.C. Rate Schedule FERC No. 33.) 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 7A
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 

1.46 Zone shall mean an area within the PJM
West Region, as described on Schedule 14, or as such areas may be (i) combined
as a result of mergers or acquisitions or (ii) added as a result of the
expansion of the boundaries of the PJM West Region. 

 

1.47 Zonal Entity shall mean the entity
listed on Schedule 14 which, as a result of its present or historical load
serving responsibility, is responsible under this Agreement for providing the
daily load estimate of each Load Serving Entity within each Zone in the PJM West
Region. 

 

ARTICLE 2 — PURPOSE 

 

This Agreement is intended to ensure that adequate
Capacity Resources will be available to provide reliable service to loads within
the PJM West Region, to assist other Parties during Emergencies and to
coordinate planning of Capacity Resources consistent with the Reliability
Principles and Standards. Further, it is the intention and objective of the
Parties to 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 8
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 8



 

implement this Agreement in a manner consistent with the development of a
robust competitive marketplace. To accomplish these objectives, this Agreement
is among all of the Load Serving Entities within the PJM West Region. Unless
this Agreement is terminated as provided in Section 4.2, every entity which is
or will become a Load Serving Entity within the PJM West Region is to become and
remain a Party to this Agreement or to an agreement (such as a requirements
supply agreement) with a Party pursuant to which that Party has agreed to act as
the agent for the Load Serving Entity for purposes of satisfying the obligations
under this Agreement related to the load within the PJM West Region of that Load
Serving Entity. Nothing herein is intended to abridge, alter or otherwise affect
the emergency powers the Office of the Interconnection may exercise under the
Amended Operating Agreement and PJM Tariff. 

 

ARTICLE 3 — NECESSARY PREREQUISITES


 

Prior to this Agreement becoming effective, each
of the following events shall have occurred: 

 

1. The Amended Operating Agreement is in full
force and effect. 

 

2. The Amended Operating Agreement shall have been
executed by Monongahela Power Company, The Potomac Edison Company, and West Penn
Power Company, all doing business as Allegheny Power. 

 

3. The FERC shall have accepted the Amended
Operating Agreement, this Reliability Assurance Agreement, and the PJM Tariff
changes filed contemporaneously with this Agreement, including all rate changes,
all without change or condition. In the event that the FERC fails to adopt, as
required by this Article, all of the above agreements and Tariff changes without
change or condition, the Parties hereto agree to negotiate in good faith to seek
to accommodate such changes as the FERC indicates are required before
acceptance. In the event of failure to so agree, no Party shall be bound by the
terms of this Agreement and this Agreement shall have no further force and
effect. 

 

ARTICLE 4 — TERM AND TERMINATION


 

4.1 Term. This Agreement shall become
effective on the Effective Date and shall continue in effect until terminated in
accordance with the terms hereof. 

 

4.2 Termination. 

 

4.2.1 Rights to Terminate. This Agreement
may be terminated by a vote in the Members Committee to terminate the Agreement
by an affirmative Sector Vote as specified in the Operating Agreement and upon
the receipt of all Required Approvals related to the termination of this
Agreement. Any such termination must be approved by the PJM Board and filed with
the FERC and shall become effective only upon the FERC’s approval. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Third
      Revised Sheet No. 9
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Second Revised Sheet No. 9



 

4.2.2 Obligations upon Termination. Any
provision of this Agreement that expressly or by implication comes into or
remains in force following the termination of this Agreement shall survive such
termination. The surviving provisions shall include, but shall not be limited
to: (a) final settlement of the obligations of each Party under Articles 9, 11,
12, and 17 of this Agreement, including the accounting for the period ending
with the last day of the month for which the Agreement is effective, (b) the
provisions of this Agreement necessary to conduct final billings, collections
and accounting with respect to all matters arising hereunder and (c) the
indemnification provisions as applicable to periods prior to such termination.


 

ARTICLE 5 — ADDITION OF NEW PARTIES


 

Each Party agrees that any entity that (i) is or
will become a Load Serving Entity, in the PJM West Region and (ii) complies with
the process and data requirements set forth in Schedule 1, and (iii) meets the
applicable standards for interconnection set forth in Schedule 2 shall become a
Party to this Agreement and shall be listed in Shedule 16 of this Agreement upon
becoming a Party to the Amended Operating Agreement and execution of a
counterpart of this Agreement. 

 

ARTICLE 6 — WITHDRAWAL OF A PARTY


 

6.1 Withdrawal of a Party. 

 

6.1.1 Notice. Upon written notice to the
Office of the Interconnection, any Party may withdraw from this Agreement,
effective upon the completion of its obligations hereunder and the documentation
by such Party, to the satisfaction of the Office of the Interconnection, that
such Party is no longer a Load Serving Entity within the PJM West Region.


 

6.1.2 Determination of Obligations. A
Party’s obligations hereunder shall be completed as of the end of the last month
for which a Forecast LSE obligation (MW) has been set at the time said notice is
received, except as provided in Article 14, or unless the Members Committee
determines that the remaining Parties will be able to adjust their obligations
and commitments related to the performance of this Agreement consistent with
such earlier withdrawal date as may be requested by the withdrawing Party,
without undue hardship or cost, while maintaining the reliability of the PJM
West Region. 

 

6.1.3 Survival of Obligations upon
Withdrawal. (a) The obligations of a Party upon its withdrawal from the
Agreement and any obligations of that Party under the Agreement at the time of
its withdrawal shall survive the withdrawal of the Party from the Agreement.
Upon the withdrawal of a Party from this Agreement, final settlement of the
obligations of such Party under Articles 9, 11, 12, and 17 of this Agreement
shall include the accounting through the date established pursuant to Sections
6.1.1 and 6.1.2. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      December 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 9A
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 

(b) Any Party that withdraws from this Agreement
shall pay all costs and expenses associated with additions, deletions and
modifications to communication, computer, and other affected facilities and
procedures, including any filing fees, to effect the withdrawal of the Party
from the Agreement. 

 

6.1.4 Regulatory Review. Any withdrawal
from this Agreement shall be filed with the FERC and shall become effective only
upon the FERC’s approval . 

 

6.2 Withdrawal or Breach by a Party. If a
Party (a) fails to pay any amount due under this Agreement within 30 days after
the due date or (b) is in breach of any material 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 10
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 10



 

obligation under this Agreement, the Office of the Interconnection shall
cause a notice of such non-payment or breach to be sent to that Party. If the
Party fails, within 30 days of the receipt of such notice (except as otherwise
described below), to cure such non-payment or breach, or if the breach cannot be
cured within such time and if the Party does not diligently commence to cure the
breach within such time and to diligently pursue such cure to completion, the
Office of the Interconnection and the remaining Parties may, without an election
of remedies, exercise all remedies available at law or in equity or other
appropriate proceedings. Such proceedings may include (c) the commencement of a
proceeding before the appropriate state regulatory commission(s) to request
suspension or revocation of the breaching Party’s license or authorization to
serve retail load within the state(s) and/or (d) bringing any civil action or
actions or recovery of damages that may include, but not be limited to, all
amounts due and unpaid by the breaching Party, and all costs and expenses
reasonably incurred in the exercise of its remedies hereunder (including, but
not limited to, reasonable attorneys’ fees). 

 

ARTICLE 7 — MANAGEMENT AND ADMINISTRATION


 

Except as otherwise provided herein, this
Agreement shall be managed and administered by the Parties, Members, and State
Consumer Advocates through the Members Committee and the Reliability Committee
as a Standing Committee thereof, except as delegated to the Office of the
Interconnection and except that only the PJM Board shall have the authority to
approve and authorize the filing of amendments to this Agreement with the FERC.


 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 11
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 11



 

[Sheet Nos. 11 through 14A are reserved for future
use.] 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003

       
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 15
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 15



 

ARTICLE 8 — RESERVE REQUIREMENTS AND
OBLIGATIONS 

 

8.1 Forecast Pool Requirement and Accounted-For
Obligations. (a) The Forecast Pool Requirement shall be established to
ensure a sufficient amount of capacity to meet the forecast load plus reserves
adequate to provide for the unavailability of Capacity Resources, load
forecasting uncertainty, and planned and maintenance outages. Schedule 4 sets
forth guidelines with respect to the Forecast Pool Requirement. 

 

(b) Unless the Party and its customer who is also
a Load Serving Entity agree that such customer is to bear direct responsibility
for the obligations set forth in this Agreement, (i) any Party that supplies
Full Requirements Service to a Load Serving Entity within the PJM West Region
shall be responsible for all of that Load Serving Entity’s capacity obligations
under this Agreement and (ii) any Party that supplies Partial Requirements
Service to a Load Serving Entity within the PJM West Region shall be responsible
for such portion of the capacity obligations of that Load Serving Entity as
agreed by the Party and the Load Serving Entity so long as the Load Serving
Entity’s full capacity obligation under this Agreement is allocated between or
among Parties to this Agreement. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 15A
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 

(c) Whenever a transmission owning Party joins, or
withdraws from the Amended Operating Agreement such that the boundaries of the
PJM West Region are expanded or contracted, the Parties’ capacity obligations
under this Agreement shall be re-examined by the Reliability Committee to
determine whether revisions are appropriate. 

 

8.2 Capacity Plans and Deliverability. As
set forth in Schedule 6, each Party shall submit to the Office of the
Interconnection its plans (or revisions to previously submitted plans) to
install or contract for Capacity Resources. As set forth in Schedule 10, each
Party must designate its Capacity Resources as Network Resources or Points of
Receipt under the PJM Tariff to allow firm delivery of the output of its
Capacity Resources to the Party’s load within the PJM West Region and each Party
must obtain any necessary Firm Transmission Service in an amount sufficient to
deliver Capacity Resources from outside of the PJM Region to the border of the
PJM Region to reliably serve the Party’s load within the PJM West Region.


 

8.3 Responsibility to Provide Unforced
Capacity. (a) Each Party shall install or contract for Capacity Resources or
obtain Capacity Credits providing Unforced Capacity sufficient to satisfy each
day its Accounted-For Obligation, as determined pursuant to Schedule 7.


 

(b) A Party that fails to satisfy its obligations
to provide sufficient Unforced Capacity shall be deficient and shall pay the
applicable deficiency charge determined pursuant to Schedule 11. 

 

8.4 Responsibility During Peak Season. (a)
Each Party shall install or contract for Capacity Resources or obtain Capacity
Credits providing Unforced Capacity during the Peak Season sufficient to satisfy
the sum of its Accounted-For Obligation and its Peak Season Maintenance
Obligation. 

 

(b) A Party that fails to have Unforced Capacity
on any day during the Peak Season adequate to satisfy the sum of its
Accounted-For Obligation and its Peak Season Maintenance Obligation shall be
considered to be deficient to the extent set forth in Schedule 8. 

 

8.4A Prohibition of Sales. (a) The Office
of the Interconnection shall determine each party’s daily Accounted For
Obligation pursuant to Schedule 7 at noon two business days before the day for
which the Accounted For Obligation is being determined, in the case of that
portion of a Party’s Accounted For Obligation that is in a Zone that has adopted
a retail access program for end-use electric customers. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 15B
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 15B



 

(b) No party may sell capacity or Capacity Credits
for any day for which its Accounted For Obligation has been determined unless it
has capacity or Capacity Credits available to sell in excess of its Accounted
For Obligation plus its other contractual obligations to sell capacity.


 

8.4B Nature of Resources. (a) Each Party
shall provide or arrange for specific, firm Capacity Resources that are capable
of supplying the energy requirements of its own load on a firm basis without
interruption for economic conditions and with such other characteristics that
are necessary to support the reliable operation of the PJM West Region, as set
forth in more detail in Schedules 9 and 10. 

 

(b) The Parties agree that Capacity Credits may be
relied upon by a Party to satisfy its obligations to provide and arrange for
Capacity Resources. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Third
      Revised Sheet No. 16
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Second Revised Sheet No. 16



 

8.5 Compliance Audit of Parties. (a) For
the 36 months following the end of each Planning Period, each Party shall make
available the records and supporting information related to the performance of
this Agreement from such Planning Period for audit. 

 

(b) The Office of the Interconnection shall
evaluate and determine the need for an audit of a Party, and shall, upon a
decision of the Office of the Interconnection to require such an audit, provide
the Party or Parties to be audited with notice at least 90 days in advance of
the audit. 

 

(c) Any audit of a Party conducted pursuant to
this Agreement shall be performed by an independent consultant to be selected by
the Office of the Interconnection. Such audit shall be limited to a review of
the Party’s compliance with the requirements of this Agreement. 

 

(d) Prior to the completion of its audit, the
independent consultant shall review its preliminary findings with the Party
being audited and, upon the completion of its audit, the independent consultant
shall issue a final audit report detailing the results of the audit, which final
report shall be issued to the Party being audited, the Office of the
Interconnection and the Members Committee; provided, however, no confidential
data of any Party shall be disclosed through such audit reports. 

 

(e) If, based on a final audit report, an
adjustment is required to any amounts due to or from the Parties pursuant to
Schedule 11, such adjustment shall be accounted for in determining the amounts
due to or from the Parties pursuant to Schedule 11 for the month in which the
adjustment is identified. 

 

8.6 Interim Capacity Obligations in the ComEd
Zone. Notwithstanding the above provisions of this Article 8, the
obligations of Parties serving load in the ComEd Zone during the Interim Period,
as those terms are defined in Schedule 17, shall be determined as set forth in
Schedule 17. 

 

ARTICLE 9 — DEFICIENCY AND EMERGENCY CHARGES


 

9.1 Nature of Charges. Upon the advice and
recommendations of the Members Committee, the PJM Board shall, subject to any
Required Approvals, approve certain charges to be imposed on a Party for its
failure to satisfy its obligations under this Agreement. Such charges are set
forth in Schedules 11 and 12. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      December 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 16A
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 16A



 

9.2 Determination of Charge Amounts. No
later than April 1 of each year, the Members Committee shall recommend to the
PJM Board such charges to be applicable under this Agreement for the next June 1
to May 31 twelve-month period, and Schedules 11 and 12, which, upon approval of
the PJM Board, shall be modified accordingly, subject to the receipt of all
Required Approvals. The Reliability Committee may establish projected charges
for estimating purposes only. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	July 31,
    2003	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 17
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 17



 

9.3 Distribution of Charge Receipts. All of
the monies received as a result of any charges imposed pursuant to this
Agreement and Section 5.6 of Schedule 11 of the Amended Operating Agreement
shall be disbursed as provided in Schedules 11 and 12 of this Agreement.


 

9.4 Charges Relating to Interim Capacity
Obligations in the ComEd Zone. Notwithstanding the above provisions of this
Article 9, any charges related to the obligations of Parties serving load in the
ComEd Zone during the Interim Period, as those terms are defined in Schedule 17,
shall be determined as set forth in Schedule 17. 

 

ARTICLE 10 — COORDINATED PLANNING AND OPERATION


 

10.1 Overall Coordination. Each Party shall
cooperate with the other Parties in the coordinated planning and operation of
their owned or contracted for Capacity Resources to obtain a degree of
reliability consistent with Applicable Regional Reliability Council and NERC
regional practices. In furtherance of such Cooperation each Party shall:


 

(a) coordinate its Capacity Resource plans with
the other Parties to maintain reliable service to its own electric customers and
those of the other Parties; 

 

(b) cooperate with the members and associate
members of MAAC, ECAR, MAIN, and NERC to ensure the reliability of the region;


 

(c) make available its Capacity Resources to the
other Parties through the Office of the Interconnection for coordinated
operation and to supply the needs of the PJM West Region in accordance with the
Amended Operating Agreement; 

 

(d) provide or arrange for Network Transmission
Service or Firm Point-to-Point Transmission Service for service to the projected
load of the Party and include all Capacity Resources as Network Resources
designated pursuant to the PJM Tariff or Points of Receipt for Firm
Point-to-Point Transmission Service; 

 

(e) provide or arrange for sufficient reactive
capability and voltage control facilities to meet Good Utility Practice and to
be consistent with the Reliability Principles and Standards; 

 

(f) implement emergency procedures and take such
other coordination actions as may be necessary in accordance with the directions
of the Office of the Interconnection in times of Emergencies; 

 

(g) maintain or arrange for Black Start Capability
for a portion of its Capacity Resources at least equal to that established from
time-to-time by the Office of the Interconnection; and 

 

(h) meet its obligations under the Amended
Operating Agreement. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      December 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 17A
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 17A



 

10.2 Generator Planned Outage Scheduling.
Each Party shall develop or, to the maximum extent its legal rights will
allow, cause to be developed, schedules of planned outages of its Capacity
Resources. Such schedules of planned outages shall be submitted to the Office of
the Interconnection for coordination with the schedules of planned outages of
other Parties and anticipated transmission planned outages. 

 

10.3 Data Submissions. Each Party shall
submit to the Office of the Interconnection for review, any data and other
information necessary for the performance of this Agreement, including its plans
for the addition, modification and removal of Capacity Resources, its load
forecasts, and such other data set forth in Schedule 15. 

 

10.4 Charges for Failures to Comply. An
emergency procedure charge, as set forth in Schedule 12, shall be imposed on any
Party that fails to comply with the directions of the Office of the
Interconnection pursuant to any capacity resource plan on file with the Office
of Interconnection under Schedule 6. 

 

10.5 Metering. Each Party shall comply with
the metering standards as set forth in the PJM Manuals. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      December 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 18
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 18



 

ARTICLE 11 — SHARED COSTS 

 

11.1 Recording and Audit of Costs.


 

(a) Any costs related to the performance of this
Agreement, including the costs of the Office of the Interconnection and such
other costs that the Members Committee determines are to be shared by the
Parties, shall be documented and recorded in a manner acceptable to the Parties.


 

(b) The Members Committee may require an audit of
such costs; provided, however, the cost records shall be available for audit by
any Member or State Consumer Advocate, at the sole expense of such Member or
State Consumer Advocate, for 36 months following the end of the Planning Period
in which the costs were incurred. 

 

11.2 Cost Responsibility. The costs
determined under Section 11.1(a) shall be allocated to and recovered from the
Parties to this Agreement and other entities pursuant to Schedule 9-5 of the PJM
Tariff. 

 

ARTICLE 12 — BILLING AND PAYMENT


 

12.1 Periodic Billing. Each Party shall
receive a statement periodically setting forth (i) any amounts due from or to
that Party as a result of any charges imposed pursuant to this Agreement and
(ii) that Party’s share of any costs allocated to that Party pursuant to Article
11. To the extent practical, such statements are to be coordinated with any
billings or statements required pursuant to the Amended Operating Agreement or
PJM Tariff. 

 

12.2 Payment. The payment terms and
conditions shall be as set forth in the billing statement and shall, to the
extent practicable, be the same as those then in effect under the PJM Tariff.


 

12.3 Failure to Pay. If any Party fails to
pay its share of the costs allocated pursuant to Article 11, those unpaid costs
shall be allocated to and paid by the other Parties hereto in proportion to the
sum of the Accounted For Obligations of each such Party (calculated without any
reduction for ALM load credit) for the billing month. The Office of the
Interconnection shall enforce collection of a Party’s share of the costs.


 

ARTICLE 13 — INDEMNIFICATION AND LIMITATION OF
LIABILITIES 

 

13.1 Indemnification. (a) Each Party agrees
to indemnify and hold harmless each of the other Parties, its officers,
directors, employees or agents for all actions, claims, demands, costs, damages
and liabilities asserted by third parties against the Party seeking
indemnification and arising out of or relating to acts or omissions in
connection with this Agreement of the Party from which indemnification is
sought, except (i) to the extent that such liabilities result from the willful
misconduct of the Party seeking indemnification and (ii) that each Party shall
be responsible for all claims of its own employees, agents and servants growing
out of any workmen’s compensation law. Nothing herein shall limit a Party’s
indemnity obligations under Article 16 of the Amended Operating Agreement.


 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 19
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 19



 

(b) The amount of any indemnity payment under this
Section 13.1 shall be reduced (including, without limitation, retroactively) by
any insurance proceeds or other amounts actually recovered by the Party seeking
indemnification in respect of the indemnified actions, claims, demands, costs,
damages or liabilities. If any Party shall have received an indemnity payment in
respect of an indemnified action, claim, demand, cost, damage, or liability and
shall subsequently actually receive insurance proceeds or other amounts in
respect of such action, claim, demand, cost, damage, or liability, then such
Party shall pay to the Party 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. 

 

13.2 Limitations on Liability. No Party
will be liable to another Party for any claim for indirect, incidental, special
or consequential damage or loss of the other Party including, but not limited
to, loss of profits or revenues, cost of capital or financing, loss of goodwill
and cost of replacement power arising from such Party’s carrying out, or failure
to carry out, any obligations contemplated by this Agreement; provided, however,
nothing herein shall be deemed to reduce or limit the obligation of any Party
with respect to the claims of persons or entities not a party to this Agreement.


 

13.3 Insurance. Each Party shall obtain and
maintain in force such insurance as is required of Load Serving Entities by the
states in which it is doing business within the PJM West Region. 

 

ARTICLE 14 — SUCCESSORS AND ASSIGNS


 

14.1 Binding Rights and Obligations. The
rights and obligations created by this Agreement and all Schedules and
supplements thereto shall inure to and bind the successors and assigns of the
Parties; provided, however, no Party may assign its rights or obligations under
this Agreement without the written consent of the Members Committee unless the
assignee concurrently becomes the Load Serving Entity with regard to the
end-users previously served by the assignor. 

 

14.2 Consequences of Assignment. Upon the
assignment of all of its rights and obligations hereunder to a successor
consistent with the provisions of Section 14.1, the assignor shall be deemed to
have withdrawn from this Agreement. 

 

ARTICLE 15 — NOTICE 

 

Except as otherwise expressly provided herein, any
notice required hereunder shall be in writing and shall be sent: overnight
courier, hand delivery, telecopy or other reliable electronic means to the
representative on the Members Committee of such Party at the address for such
Party previously provided by such Party to the other Parties. Any notice shall
be deemed to have been given (i) upon delivery if given by overnight courier,
hand delivery or certified mail or (ii) upon confirmation if given by facsimile
or other reliable electronic means. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 20
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 20



 

 

ARTICLE 16 — REPRESENTATIONS AND WARRANTIES


 

16.1 Representations and Warranties at Date an
Entity Becomes a Party. Each Party represents and warrants to the other
Parties that, as of the date it becomes a Party: 

 

(a) the Party is duly organized, validly existing
and in good standing under the laws of the jurisdiction where organized;


 

(b) the execution and delivery by the Party of
this Agreement and the performance of its obligations hereunder have been duly
and validly authorized by all requisite action on the part of the Party and do
not conflict with any applicable law or with any other agreement binding upon
the Party. The Agreement has been duly executed and delivered by the Party, and
this Agreement constitutes the legal, valid and binding obligation of the Party
enforceable against it in accordance with its terms except insofar as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting the enforcement of creditor’s rights generally and by general
principles of equity regardless of whether such principles are considered in a
proceeding at law or in equity; and 

 

(c) there are no actions at law, suits in equity,
proceedings or claims pending or, to the knowledge of the Party, threatened
against the Party before or by any federal, state, foreign or local court,
tribunal or governmental agency or authority that might materially delay,
prevent or hinder the performance by the Party of its obligations hereunder.


 

16.2 Continuing Representations and
Warranties. Each Party represents and warrants to the other Parties that
throughout the term of this Agreement: 

 

(a) the Party is a Load Serving Entity;


 

(b) the Party satisfies the requirements of
Schedule 2; 

 

(c) the Party is in compliance with the
Reliability Principles and Standards; 

 

(d) the Party is a signatory, or its principals
are signatories, to the agreements set forth in Schedule 3; 

 

(e) the Party is in good standing in the
jurisdiction where incorporated; and 

 

(f) the Party will endeavor in good faith to
obtain any corporate or regulatory authority necessary to allow the Party to
fulfill its obligations hereunder. 

 

ARTICLE 17 — OTHER MATTERS 

 

17.1 Relationship of the Parties. This
Agreement shall not be interpreted or construed to create any association, joint
venture, or partnership between or among the Parties or to impose any
partnership obligation or partnership liability upon any Party. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 20A
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 

17.2 Governing Law. This Agreement shall be
interpreted, construed and governed by the laws of the State of Delaware.


 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 21
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 

17.3 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.


 

17.4 Amendment. This Agreement may be
amended only by action of the PJM Board. Notwithstanding the foregoing, an
applicant eligible to become a Party in accordance with the procedures set forth
in Schedule 1 shall become a Party by executing a counterpart of this Agreement
without the need for execution of such counterpart by any other Party. The
Office of the Interconnection shall file with FERC any amendment to this
Agreement approved by the PJM Board. 

 

17.5 Headings. The article and 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.


 

17.6 Confidentiality. (a) No Party shall
have a right hereunder to receive or review any documents, data or other
information of another Party, 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 another Party; provided, however, a
Party 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 document does not disclose any individual Party’s confidential
data or information. 

 

(b) Notwithstanding anything in this Section to
the contrary, if a Party is required by applicable laws, or in the course of
administrative or judicial proceedings, to disclose information that is
otherwise required to be maintained in confidence pursuant to this Section, that
Party may make disclosure of such information; provided, however, that as soon
as the Party learns of the disclosure requirement and prior to making
disclosure, that Party shall notify the affected Party or Parties of the
requirement and the terms thereof and the affected Party or Parties may direct,
at their sole discretion and cost, any challenge to or defense against the
disclosure requirement and the Party shall cooperate with such affected Parties
to the maximum extent practicable to minimize the disclosure of the information
consistent with applicable law. Each Party shall cooperate with the affected
Parties to obtain proprietary or confidential treatment of such information by
the person to whom such information is disclosed prior to any such disclosure.


 

(c) Any contract with a contractor retained to
provide technical support or to otherwise assist with the administration of this
Agreement shall impose on that contractor a contractual duty of confidentiality
that is consistent with this Section. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	March 20, 2003
	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      March 20, 2003
	  	 	  	 

























			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 22
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 22



 

17.7 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. 

 

17.8 No Implied Waivers. The failure of a
Party 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 Party’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. 

 

17.9 No Third Party Beneficiaries. This
Agreement is intended to be solely for the benefit of the Parties and their
respective successors and permitted assigns and is not intended to and shall not
confer any rights or benefits on any third party not a signatory hereto.


 

17.10 Dispute Resolution. Except as
otherwise specifically provided in the Amended Operating Agreement, disputes
arising under this Agreement shall be subject to the dispute resolution
provisions of the Amended Operating Agreement. 

 

IN WITNESS WHEREOF, the Parties have caused this
Agreement to be executed by their duly authorized representatives. 

 




	 	 	 
	 	PJM
      INTERCONNECTION, L. L. C.                
	 
 	 
 	 
 
	Date: 	By:  	/s/   Phillip G.
      Harris
	 	
      

    
	 	Title   President and
      Chief Executive Officer



 

 


	 	 	 
	 	AMERICAN
      ELECTRIC POWER SERVICE CORPORATION
	 
 	 
 	 
 
	Date: 	By:  	/s/   J. Craig
      Baker
	 	
      

              
	 	Title    Senior
      Vice President - Regulatoroy Services



 

 

 

 

 

 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Substitute First Revised Sheet No. 23
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 23



 

SCHEDULE 1 

 

PROCEDURES TO BECOME A PARTY 

 


	A.	Notice
      



 

Any entity that is or will become a Load Serving
Entity within the PJM West Region and thus a Party to this Agreement shall
submit a notice to the Office of the Interconnection together with (i) its
representation that it has satisfied or will (prior to the date this Agreement
is to become effective as to that entity) satisfy the requirements to become a
Party, and (ii) a deposit in an amount to be specified that will be applied
toward the costs of any required analysis. 

 

The required notice, representations, data and
deposit must be submitted in sufficient time to conduct an analysis of the data
submitted and to adjust the obligations of the Parties for the month in which
the entity desires to become a Party: 

 


	 	•	 	If the then
      existing boundaries of the PJM Region would be expanded by an entity
      becoming a Party, that entity shall submit the required notice,
      representation, data and deposit no later than when the entity applies for
      its transmission facilities to be included in the PJM Tariff.




 


	 	•	 	If an entity
      will serve load within the then existing boundaries of the PJM Region,
      that entity shall submit the required notice, representations, data and
      deposit as soon as possible prior to the month (i) in which it is to begin
      serving loads within the PJM West Region or (ii) in which any agency
      relationship through which the entity’s obligations under this Agreement
      had been satisfied is terminated; provided, however, that such submission
      shall not be required sooner than any request for transmission service or
      any change in the designation of Network Resources or points of receipt
      and loads under the PJM Open Access Tariff associated with providing
      service to those loads. 



 


	B.	Analysis
      of Data 



 

The notice, representations and data submitted to
the Office of the Interconnection are to be analyzed in accordance with
procedures consistent with this Agreement and the encouragement of reliable
operation of the PJM West Region. 

 


	C.	Response
      



 

Upon completion of the analysis, the Office of the
Interconnection will inform the entity of (a) the estimated costs and expenses
associated with modifications to communication, computer and other facilities
and procedures, including any filing fees, needed to include the entity as a
Party, (b) the entity’s share of any costs pursuant to Article 11, and (c) the
earliest date upon which the entity could become a Party. In addition, a
counterpart of the Agreement shall be forwarded for execution. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 29, 2003
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER03-703-000, issued May 30, 2003, 103 FERC ¶
61,250.









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 24
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 24



 


	D.	Agreement
      by New Party 



 

After receipt of the response from the Office of
the Interconnection, the entity shall identify its representative to the Members
Committee and Reliability Committee execute the counterpart of the Agreement,
indicating the desired effective date; provided, however, such effective date
shall be the first day of a month, may be no earlier than the date indicated in
the response from the Office of the Interconnection and shall be no later than
(i) the date on which the entity begins serving loads within the PJM West Region
or (ii) the termination date of any agency relationship through which its
obligations under this Agreement had been satisfied. The executed counterpart of
the Agreement, together with payment of its share of any costs then due, shall
be returned as directed by the Office of the Interconnection. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 25
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 25



 

SCHEDULE 2 

 

STANDARDS FOR INTEGRATING AN ENTITY INTO THE
PJM REGION 

 


	A.	The
      following standards will be applied by the Office of the Interconnection
      to determine the eligibility of an entity to become a part of the PJM
      Region. For an entity to be integrated into the PJM Region it must possess
      generation and transmission attributes that would enable the entity to
      share its reserves with other entities in the PJM Region. Appropriate
      transmission and reliability studies are to be performed to determine the
      adequate transmission capability necessary to integrate the entity into
      the PJM Region consistent with Good Utility Practice.




 


	B.	In addition,
      the entity shall meet the following requirements to be included in the PJM
      Region: 



 


	 	1.	All load,
      generation and transmission operating as part of the PJM Region’s
      interconnected system must be included within the metered boundaries of
      the PJM Region. 



 


	 	2.	The entity
      will accept and comply with the PJM Region’s standards with respect to
      system design, equipment ratings, operating practices and maintenance
      practices as set forth in the PJM Manuals 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
      Region. 



 


	 	3.	The load,
      generation and transmission facilities of each entity shall be included in
      the telemetry to the Office of the Interconnection from a 24-hour control
      center. Each system operator in these control centers must be 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. 



 


	 	4.	Each entity
      must have compatible operational communication mechanisms, maintained at
      its expense, to interact with the Office of the Interconnection and for
      internal requirements. 



 


	 	5.	Each entity
      must assure the continued compatibility of its local system energy
      management system monitoring and telecommunications systems to satisfy the
      technical requirements of interacting with the Office of the
      Interconnection as it directs the operation of the PJM Region.
  



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 26
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 26



 

SCHEDULE 3 

 

OTHER AGREEMENTS TO BE EXECUTED BY THE PARTIES


 


	 	•	 	Any
      agreement for Network Transmission Service or Firm Point-To-Point Service
      that is required under the PJM Tariff for service consistent with the
      requirements of Section 10.1(c); 



 


	 	•	 	The Amended
      Operating Agreement. 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 27
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 27



 

[Sheet Nos. 27-29 are reserved.]


 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Fifth
      Revised Sheet No. 30
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Fourth Revised Sheet No. 30



 

SCHEDULE 4 

 

GUIDELINES FOR DETERMINING THE FORECAST POOL
REQUIREMENT 

 


	A.	Objective
      Of The Forecast Pool Requirement 



 

The Forecast Pool Requirement shall be determined
for the specified Planning Periods to establish the level of Capacity Resources
and ALM that will provide an acceptable level of reliability consistent with the
Reliability Principles and Standards. 

 


	B.	Forecast
      Pool Requirement To Be Determined Annually 



 

Eleven months in advance of each Planning Period
based on the projections described in section C of this Schedule, the PJM Board,
acting upon the recommendation of the Members Committee, shall establish the
Forecast Pool Requirements for the Parties for such Planning Period annually
before June 30. Unless otherwise agreed by the PJM Board, the Forecast Pool
Requirement for such Planning Period shall be considered firm and not subject to
re-determination thereafter; provided, however, that the Forecast Pool
Requirement (including the ALM Factor and the installed reserve margin) shall be
revised, to the extent determined necessary by the PJM Board, to reflect the
addition of a new transmission owner zone to the PJM Region, with such revision
to be effective on the first day of the first Interval that is at least three
months after the date of such addition; and provided further that in such cases
the PJM Board may in its discretion direct that the revised Forecast Pool
Requirement (including the ALM Factor and the installed reserve margin) may be
implemented in the added transmission owner zone effective upon the date of its
integration into the PJM Region, notwithstanding that such revised Forecast Pool
Requirement otherwise shall take effect in the remainder of the PJM Region at a
later time in accordance with the foregoing proviso. 

 


	C.	Methodology 



 

Each year, the Forecast Pool Requirement for at
least each of the next five Planning Periods shall be projected by applying
suitable probability methods to the data and forecasts provided by the Parties
and obtained from Electric Distributors, as described in Schedule 15, the
Amended Operating Agreement and in the PJM Manuals. The projection of the
Forecast Pool Requirements shall consider the following data and forecasts as
necessary. 

 


	 	1.	Seasonal
      peak load forecasts for each Planning Period as provided by each Party
      reflecting (a) load forecasts with a 50 percent probability of being too
      high or too low, (b) summer peak diversities determined by the Office of
      the Interconnection from recent experience and (c) ALM as determined
      pursuant to Schedule 5.2 and in accordance with the PJM Manuals.
  



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2004

	 	  	
      Vice President, Government
    Policy
	  	 	  	 
	
      Issued On:
	  	
      July 30, 2004
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 30.01
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 


	 	2.	Forecasts of
      aggregate seasonal load shape of the Parties which are consistent with
      forecast averages of 52 weekly peak loads prepared by the Parties and
      obtained from Electric Distributors for their respective systems.
    



 


	 	3.	Variability
      of loads within each week, due to weather and other recurring and random
      factors, as determined by the Office of the Interconnection.




 


	 	4.	Generating
      unit capability and types for every existing and proposed unit.
  



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2004

	 	  	
      Vice President, Government
    Policy
	  	 	  	 
	
      Issued On:
	  	
      July 30, 2004
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 30A
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 30A



 


	 	5.	Generator
      Forced Outage rates for existing mature generating units, as determined by
      the Office of the Interconnection, based on data submitted by the Parties
      for their respective systems, from recent experience, and for immature and
      proposed units based upon forecast rates related to unit types,
      capabilities and other pertinent characteristics.




 


	 	6.	Generator
      Maintenance Outage factors and planned outage schedules as determined by
      the Office of the Interconnection based on forecasts and historical data
      submitted by the Parties for their respective systems.




 


	 	7.	Miscellaneous adjustments to capacity due to all causes, as
      determined by the Office of the Interconnection, based on forecasts
      submitted by the Parties for their respective systems.




 


	 	8.	The
      emergency capacity assistance available as a function of interconnections
      of the PJM Region with other Control Areas, as limited by the capacity
      benefit margin considered in the determination of available transfer
      capability and the probable availability of generation in excess of load
      requirements in such areas. 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2004

	 	  	
      Vice President, Government
    Policy
	  	 	  	 
	
      Issued On:
	  	
      July 30, 2004
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 30B
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 30B



 

SCHEDULE 4.1 

 

DETERMINATION OF THE FORECAST POOL
REQUIREMENT 

 

Based on the guidelines set forth in Schedule 4, the Forecast Pool
Requirement shall be determined as set forth in this Schedule 4.1 on an unforced
capacity basis. 

 


	A.	The
      installed capacity requirement (“ICR”) shall be determined as:
  



 

ICR = (FAP - FALC) * (1 + IRM) 

 

Where: 

 


											
	 	 	
      FAP
	 	 	 	=	 	 	  	the forecast
      accounting peak for the PJM Region, which shall be the weather-normalized,
      50/50 probability load prior to ALM being invoked
						
	 	 	
      FALC
	 	 	 	=	 	 	  	the forecast of the
      ALM credit adjustment for the PJM Region
						
	 	 	
      IRM
	 	 	 	=	 	 	  	the installed
      reserve margin approved by the PJM Board, upon the recommendation of the
      Reliability Committee, for that Planning Period



 


	B.	The PJM
      Region equivalent demand forced outage rate (“EFORD”) shall be determined
      as the capacity weighted EFORD for all units expected to serve loads
      within the PJM Region as determined pursuant to Schedule 5.1.




 


	C.	The PJM
      Region unforced capacity requirement (UCR”) shall be determined as:
    



 

UCR = ICR * (1 -EFORD). 

 


	D.	The PJM
      Region Forecast Pool Requirement (“FPR”) in percent shall be determined
      as: 



 

FPR = [UCR/(FAP-FALC)] * 100. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      November 7, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      November 6, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 31
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 31



 

SCHEDULE 5 

 

DETERMINATION OF FORECAST REQUIREMENTS AND
OBLIGATIONS 

 


	A.	Each Party
      shall be responsible for satisfying the Forecast Pool Requirement related
      to the end-users it serves. 



 


	B.	It is
      recognized that changing conditions and improvements in techniques may
      require from time to time modifications to the determination of
      obligations hereunder. A Party or the Office of the Interconnection having
      the opinion that such a modification is required shall request the Members
      Committee to have the matter studied and a recommendation made to the PJM
      Board. Upon approval of a change by the PJM Board, this schedule and other
      related schedules shall be appropriately revised and supplemented and
      shall thereupon be made effective. 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Substitute Original Sheet No. 31A
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 31A



 

SCHEDULE 5.1 

 

FORCED OUTAGE RATE CALCULATION 

 


	A.	The
      equivalent demand forced outage rate (“EFORD”) shall be calculated as
      follows: 



 

EFORD (%) = {(ff *
FOH + fp *
EFPOH) / (SH + ff *
FOH)} * 100 

 

Where 

 

ff =
full outage factor 

fp =
partial outage factor 

FOH = full forced outage hours 

EFPOH = equivalent forced partial outage hours


SH = service hours 

 


	B.	Calculation
      of average EFORD for Forecast Unforced Capacity Requirements and Obligations
    



 

The forecast average EFORD in a Planning Period shall be the
average of the forced outage rates, weighted for unit capability and expected
time in service, attributable to all of the Capacity Resources of the Parties
serving load within the PJM Region that are planned to be in service including
Capacity Resources purchased from specified units and excluding Capacity
Resources sold outside the PJM Region from specified units. Such rate shall also
include (i) an adjustment, if any, for capacity unavailable due to energy
limitations determined in accordance with definitions and criteria set forth in
the PJM Manuals and (ii) any other adjustments approved by the Reliability
Committee to adjust the parameters of a designated unit when such parameters are
or will be used to determine a future PJM Region reserve requirement and such
adjustment is required to more accurately predict the future performance of such
unit in light of extraordinary circumstances. For the purposes of this Schedule,
the average EFORD
shall be the average of the capacity-weighted EFORDs of all units committed to serve
load in the PJM Region. All rates shall be in percent. 

 


	 	1.	The
      EFORD of a unit not yet in service or which has been in service less
      than one full calendar year at the time of forecast shall be the class
      average rate for units with that capability and of that type, as estimated
      and used in the calculation of the Forecast Pool Requirement.




 


	 	2.	The
      EFORD of a unit in service five or more full calendar years at the time
      of forecast shall be the average rate experienced by such unit during the
      five most recent calendar years. Historical data shall be based on
      official reports of the Parties under rules and practices approved by the
      Reliability Committee. 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 29, 2003
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER03-703-000, issued May 30, 2003, 103 FERC ¶
61,250.









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 31B
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Substitute Original Sheet No.
31B



 


	 	3.	The EFORD of
      a unit in service at least one full calendar year but less than five full
      calendar years at the time of the forecast shall be determined as follows:
      



 

Full Calendar 

Years 

 


	 	1.	One fifths
      the rate experienced during the calendar year, plus four-fifths the class
      average rate. 



 


	 	2.	Two-fifths
      the average rate experienced during the two calendar years, plus
      three-fifths the class average rate. 



 


	 	3.	Three-fifths
      the average rate experienced during the three calendar years, plus
      two-fifths the class average rate. 



 


	 	4.	Four-fifths
      the average rate experienced during the four calendar years, plus
      one-fifth the class average rate. 



 


	C.	Calculations of average EFORD for Accounted-For Obligations for Unforced Capacity
      



 

The average EFORD used to determine a Load Serving
Entity’s ability to meet its Accounted-For Obligation for Unforced Capacity in a
month shall be the average of the forced outage rates, weighted for unit
capability, calculated on a twelve-month rolling average basis for the
twelve-month period ending two months prior to the first month of the Interval
for which the obligation was incurred, attributable to all of the generating
units of the Load Serving Entity committed to serve load within the Zone. These
resources include Capacity Resources purchased from specified units and exclude
Capacity Resources sold from specified units. Such rate shall also include (i)
an adjustment, if any, for capacity unavailable due to energy limitations
determined in accordance with definitions and criteria set forth in the PJM
Manuals and (ii) any other adjustment approved by the Members Committee to
adjust the parameters of a designated unit. 

 


	 	1.	The
      EFORD of a unit in service twelve or more full calendar months prior to
      the calculation month shall be the average rate experienced by such unit
      during the twelve most recent calendar months, allowing for up to a two
      month period to collect data and calculate rates. Historical data shall be
      based on official reports of the Parties under rules and practices set
      forth in the PJM Manuals. 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 31C
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 


	 	2.	The
      EFORD of a unit in service at least
      one full calendar month but less than twelve full calendar months prior to
      the calculation month shall be the average of the actual EFORD experienced by the unit
      weighted by full months of service, and the class average rate for units
      with that capability and of that type weighted by twelve minus months of
      service, allowing for up to a two-month period to collect data and
      calculate rates. Historical data shall be based on official reports of the
      Parties under rules and practices set forth in the PJM Manuals.
  



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 29, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 31D
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 31D



 

SCHEDULE 5.2 

 

PROCEDURES FOR THE 

ACTIVE LOAD MANAGEMENT CREDIT 

 


	A.	Parties can
      receive an adjustment to their load used in determining their
      Accounted-For Obligation for ALM that is operated under the direction of
      the Office of the Interconnection. For a Party to receive this adjustment
      to load, ALM must satisfy the following criteria:




 


	 	1.	A Party must
      formally notify, in accordance with the requirements of the PJM Manuals
      and paragraph E of this schedule as applicable, the Office of the
      Interconnection of the ALM that it is placing under the direction of the
      Office of the Interconnection. 



 


	 	2.	The
      initiation of load interruption, upon the request of the Office of the
      Interconnection, must be within the authority of the dispatchers of the
      Party. No additional approvals should be required.




 


	 	3.	A period of
      no more than 2 hours prior notification must apply to interruptible
      customers. 



 


	 	4.	The
      initiation of ALM upon the request of the Office of the Interconnection is
      considered an emergency action and must be implementable prior to a
      voltage reduction. 



 


	 	5.	A Party must
      agree to reserve, for interruption at the direction of the Office of the
      Interconnection, at least 10 interruptions per Planning Period in order to
      receive ALM credit. 



 


	 	6.	A Party must
      agree to reserve interruptions of at least 6-hour duration. As a minimum,
      such 6-hour duration for interruptions should be available on weekdays
      during the 8-hour daily peak window for the appropriate season. There will
      be no credit given to Parties who choose to provide interruption less than
      6 hours and/or exclusive of the above time period.




 


	 	7.	The ALM must
      be available during the summer period of June through September for credit
      in the corresponding Planning Period. 



 


	B.	The ALM load
      credit of a Party will be determined as: 



 

The ALM load credit of a Party will be the product
of the nominal megawatt value of that Party’s ALM multiplied by the ALM Factor.
The ALM Factor is a factor established by the Members Committee to reflect the
increase in the peak load carrying capability in the PJM Region due to ALM for
the PJM Region divided by the total nominal amount of ALM in the PJM Region. The
PJM ALM Factor will be determined 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      March 1, 2004
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 31E
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 31E



 

using an analytical program that uses a
probabilistic approach to determine reliability. The determination of the PJM
ALM Factor will consider the reliability of the active load management, the
number of interruptions, and the total amount of active load management. The
detailed procedures used for calculating the PJM ALM Factor shall be set forth
in the PJM Manuals. 

 

The ALM credit value for the individual Parties
shall be calculated as follows: 

 

ALM credit = Megawatt Value of a Party’s ALM x PJM
ALM Factor 

 


	C.	The Electric
      Distributor or LSE that establishes a contractual relationship (by
      contract or tariff rate) with a customer for ALM reductions is entitled to
      the PJM ALM credit for the customer, regardless of the customer’s energy
      supplier. 



 


	D.	The Parties
      need to demonstrate that their ALM performed during periods when load
      management procedures were invoked by the Office of the Interconnection.
      The Office of the Interconnection shall adopt and maintain rules and
      procedures for verifying the performance of ALM. 



 


	E.	Prior to the
      commencement of the Planning Period, Parties may elect to place ALM
      associated with Behind The Meter Generation under the direction of the
      Office of the Interconnection. This election shall remain in effect for
      the entire Planning Period. In the event such an election is made, such
      Behind The Meter Generation will not be netted from load for the purposes
      of calculating Accounted-For Obligations under this Agreement.
  



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      March 1, 2004
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 32
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 32



 

SCHEDULE 6 

 

PLANS TO MEET CAPACITY OBLIGATIONS


 


	A.	Each Party
      shall submit to the Office of the Interconnection its plans for satisfying
      its estimated Accounted-For Obligation through Capacity Resources,
      including (1) installation of generating resources or (2) purchases.
      



 

Each Party must submit to the Office of the
Interconnection a notice of any change in its plans for Capacity Resources three
months (or such shorter time period consistent with the ability of the Office of
the Interconnection to evaluate requests for Network Transmission Service, the
designation of Network Resources or the identification of a Point of Receipt for
Firm Point-to-Point Service) prior to each month in a Planning Period.


 


	B.	The Capacity
      Resource plans of each Party shall indicate the nature and current status
      of commitments with respect to each addition, retirement and sale or
      purchase of capacity included in its plans. The Office of the
      Interconnection will review the adequacy of the submittals hereunder both
      as to timing and content. 



 


	C.	The specific
      Capacity Resources identified in a Party’s plans may be adjusted at any
      time; provided, however, no such adjustment may be retroactive and any new
      Capacity Resource must also be a Network Resource or Point of Receipt
      deliverable to loads on a firm basis under the PJM Tariff.




 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 33
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 33



 

[Sheet No. 33 is reserved.] 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Second
      Revised Sheet No. 34
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding First Revised Sheet No. 34



 

SCHEDULE 7 

 

DETERMINATION OF ACCOUNTED-FOR OBLIGATION


AND DEFICIENCIES 

 


	A.	Each Party’s
      Accounted-For Obligation shall be determined pursuant to the provisions of
      this Schedule. 



 


	 	1.	For each
      billing month during a Planning Period the Accounted-For Obligation of a
      Party shall be determined on a daily basis as follows:




 

Accounted-For Obligation = (FSP – ALM credit) x
FPR/100 

 

Where: 

 


			
	
      FSP =
	  	the daily summation of
      the forecasted weather-adjusted coincident summer peak of the end-users in
      the PJM Region (net of operating Behind The Meter Generation, but not to
      be less than zero) for which the Party was responsible on that billing
      day, as determined in accordance with the procedures set forth in the PJM
      Manuals
		
	
      ALM credit =
	  	the ALM load
      adjustments to the Party for the Zone determined pursuant to Schedule
      5.2
		
	
      FPR =
	  	the Forecast Pool
      Requirement



 


	 	2.	A Party
      shall be deficient and shall pay the deficiency charge set forth in
      Schedule 11 if the Party’s Unforced Capacity is less than its
      Accounted-For Obligation. Such deficiencies shall be measured on a
      day-by-day basis as required by changes in a Party’s Unforced Capacity and
      in its responsibilities for service to end-users.




 


	B.	For purposes
      of determining deficiencies pursuant to paragraph A.2 of this Schedule,
      the sum of the Unforced Capacity for each Capacity Resource and the
      Capacity Credits relied on by a Party shall be established by the Office
      of the Interconnection on a daily basis, subject only to adjustment for
      the transfer of rights to Capacity Resources (including the purchase or
      sale of Capacity Credits) during a period in the initial billing month (as
      defined in the PJM Manuals) in which the final Accounted-For Obligation of
      a Party is known; provided, however, that such transfers of rights to
      Capacity Resources shall (1) include only resources that qualify as
      Capacity Resources on the day a Party intends to rely on the Unforced
      Capacity of those Capacity Resources to satisfy its Accounted-For
      Obligation and (2) exclude any Firm Transmission Rights, as that term is
      defined under the Operating Agreement. Notwithstanding anything to the
      contrary herein, the Capacity Credits held by a Party shall be counted
      fully toward the satisfaction of that Party’s Accounted-For Obligation.
      



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      March 1, 2004
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 35
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 35



 

SCHEDULE 8 

 

PEAK SEASON MAINTENANCE 

 


	A.	To preserve
      and maintain the reliability of the PJM Region and to recognize the impact
      of planned outages and maintenance outages during the Peak Season, each
      Party is obligated to have sufficient Unforced Capacity to satisfy its
      Accounted-For Obligation plus its Peak Season Maintenance Obligation
      during the Peak Season. 



 


	B.	The Peak
      Season shall be defined to be those weeks containing the 24th through 36th
      Wednesdays of the calendar year. Each such week shall begin on a Monday
      and end on the following Sunday, except for the week containing the 36th
      Wednesday, which shall end on the following Friday.




 


	C.	Peak Season
      Maintenance is defined as planned outages and maintenance outages during
      the Peak Season. 



 


	D.	For each day
      during the Peak Season, the Peak Season Maintenance Obligation of a Party
      shall be the amount, in megawatts, which shall be based on the Unforced
      Capacity of the Unit, of that Party’s Peak Season Maintenance at the time
      of the PJM Region daily peak, excluding outages for maintenance when
      released by the Office of the Interconnection for a specified period and
      other outages as approved by the Reliability Committee from time to time.
      



 


	E.	A Party
      shall be deficient and shall pay the charge set forth in Schedule 11 it
      its Unforced Capacity is less than the sum of its Peak Season Maintenance
      Obligation and its Accounted-For Obligation (as determined pursuant to
      Schedule 7); provided, however, that Party shall be considered to be
      deficient only to the extent of any megawatts of deficiency in excess of
      the number of megawatts for which such Party already has paid a deficiency
      charge related to Schedule 7. 



 


	F.	The Office
      of the Interconnection may, in accordance with the Amended Operating
      Agreement and the PJM Manuals, withdraw its approval of a Generator
      Planned Outage in connection with anticipated implementation or avoidance
      of Emergency procedures. If this delay in the start of a Generator Planned
      Outage causes the end of such outage (based on its planned duration at the
      time of the delay) to be in the Peak Season, there will be no requirement
      for additional Capacity Resources for the number of Peak Season days equal
      to the number of days of delay in the start of the Generator Planned
      Outage. 



 


	G.	Subject to
      the provisions of Section 10.2 of the Agreement, the Office of the
      Interconnection shall adopt and maintain rules and procedures for
      determining the allowable Peak Season Maintenance.




 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 36
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 36



 

SCHEDULE 9 

 

PROCEDURES FOR 

ESTABLISHING THE CAPABILITY OF CAPACITY
RESOURCES 

 


	A.	Such rules
      and procedures as may be required to determine and demonstrate the
      capability of Capacity Resources for the purposes of meeting a Load
      Serving Entity’s obligation under the Agreement shall be approved by the
      Reliability Committee and maintained in the PJM Manuals.




 


	B.	The rules
      and procedures for determining and demonstrating the capability of
      generating units to serve load in the PJM Region shall be consistent with
      achieving uniformity for planning, operating, accounting and reporting
      purposes. 



 


	C.	The rules
      and procedure shall recognize the difference in types of generating units
      and the relative ability of units to maintain output at stated capability
      over a specified period of time. Factors affecting such ability include,
      but are not limited to, fuel availability, stream flow for hydro units,
      reservoir storage for hydro and pumped storage units, mechanical
      limitations, and system operating policies. 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 37
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 

SCHEDULE 10 

 

PROCEDURES FOR ESTABLISHING 

DELIVERABILITY OF CAPACITY RESOURCES


 

Capacity Resources must be deliverable, consistent with a loss of load
expectation as specified by the Reliability Principles and Standards, to the
total system load, including portion(s) of the system in the PJM Region that may
have a capacity deficiency at any time. Deliverability shall be demonstrated by
either obtaining or providing for Network Transmission Service or Firm
Point-To-Point Transmission Service within the PJM Region such that each
Capacity Resource is either a Network Resource or a Point of Receipt,
respectively. In addition, for Capacity Resources located outside the metered
boundaries of the PJM Region that are used to meet an Accounted-For Obligation,
the capacity and energy of such Capacity Resources must be delivered to the
metered boundaries of the PJM Region through firm transmission service.


 

Certification of deliverability means that the physical capability of the
transmission network has been tested by the Office of the Interconnection and
found to provide that service consistent with the assessment of available
transfer capability as set forth in the PJM Tariff and, for Capacity Resources
owned or contracted for by a Load Serving Entity, that the Load Serving Entity
has obtained or provided for Network Transmission Service or Firm Point-To-Point
Transmission Service to have capacity delivered on a firm basis under specified
terms and conditions. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 1, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 38
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 38



 

SCHEDULE 11 

 

DEFICIENCY CHARGES 

 


	A.	Deficiency Rate 



 

The rate for deficiencies determined pursuant to
Schedules 7 and 8 shall be approved annually by the Reliability Committee based
on the annual carrying charges for a new combustion turbine, installed and
connected to the transmission system. The annual carrying charges shall be
divided by a factor of one less the forecast average EFORD for the most recent calendar year
(as determined pursuant to Schedule 5.1) to state the rate in terms of Unforced
Capacity. Until otherwise changed by the Reliability Committee, the rate for
deficiencies shall be $160 per megawatt-day ($58.40 per kilowatt-year) divided
by a factor of one less the average EFORD. 

 


	B.	Calculation of Deficiency Charges for Schedule 7
  



 


	 	1.	The
      deficiency charge for a deficiency determined pursuant to Schedule 7 shall
      be calculated in a manner set forth herein: 



 

DC = (R x L) 

Where: 

 

DC        is the daily deficiency
charge in dollars. 

 

R           is the
daily deficiency rate in dollars per megawatt-day in terms of Unforced Capacity
as defined in section A. 

 

L           is the
deficiency calculated pursuant to section C of Schedule 7. 

 


	 	2.	A change in
      Accounted-For Obligation due to an increase in customers during the
      applicable Interval shall be determined by subtracting the Party Peak Load
      of the Party (net of its operating Behind The Meter Generation, but not to
      be less than zero) on the twentieth day of the immediately preceding month
      from the Party Peak Load (net of its operating Behind The Meter
      Generation, but not to be less than zero) on the day the Party is
      deficient and multiplying this quantity by the Forecast Pool Requirement.
      If that number is positive, then the Party shall be assessed the DC for
      that portion of its deficiency due to such increase in customers.
    



 


	 	3.	If, on any
      day during an Interval, all or part of a deficiency occurs for reasons
      other than an increase in a Party’s Accounted-For Obligation due to an
      increase in customers as defined in subsection 2, above, then an entity
      shall pay the Interval Deficiency Charge per MW of deficiency. The
      Interval Deficiency Charge shall be paid only once during an Interval and
      shall be based on the largest amount of megawatts a Party is deficient on
      any one day during the Interval. 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      March 1, 2004
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Substitute Original Sheet No. 39
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 39



 


	C.	Calculation of Deficiency Charges for Schedule 8
      



 

The deficiency charge for deficiencies determined
pursuant to Schedule 8 shall be DC 

 

= (R x P), where the meanings of DC and R are as
set forth above and P means the deficiency determined pursuant to section E of
Schedule 8. 

 


	D.	Distribution Of Deficiency Charges




 


	 	i.	Recipients
      of capacity deficiency revenues are defined for each Interval as: (a) each
      owner of Capacity Resources with Unforced Capacity which it has committed
      to PJM prior to the start of the Interval for every day of the Interval;
      (b) each owner of newly certified Capacity Resources that become available
      during an Interval and which are committed to PJM for every remaining day
      of the Interval after such certification; and (c) each Party and each
      party to the RAA that has fully satisfied its obligation on every day
      during the Interval for which a deficiency charge has been established
      pursuant to this Agreement. Recipients shall share in any deficiency
      charges paid by any Party or by any party to the RAA during the Interval
      that has failed to satisfy its obligation and that have been received by
      the Office of the Interconnection, in accordance with subsection (ii)
      below. 



 


	 	ii.	A Recipient
      shall receive the higher of (a) a proportionate share of the deficiency
      charges for the Interval equal to ((x + y)/z); or (b) the alternate
      value of capacity times y. Except that, if, for an owner of Capacity
      Resources, the Alternate Value of capacity multiplied by (y) is greater
      than [(y) divided by (z)] times the total deficiency charges, then: (1)
      each owner of Capacity Resources with net capacity shall receive the
      Alternate Value of capacity multiplied by (y), provided, however, that if
      the sum of the payments thus calculated exceeds the total deficiency
      charges collected, each Capacity Resource owner will receive a
      proportional share of the total deficiency charges equal to (y) divided by
      the sum (y), times the total deficiency charges; and then (2) any
      remaining deficiency charges shall be allocated to each LSE that has fully
      satisfied its Accounted-For Obligation, where the share of each such LSE
      shall be (x) divided by the total of (x) for all LSEs.




 

Where: 

 

x is the average MW of covered obligation for a
Party for every day of the Interval. 

 

y is (a) the minimum MW of capacity, uncommitted
to any LSE and committed and available to PJM prior to the start of the
interval, if committed by a capacity owner for every day of the entire Interval,
or (b) the minimum MW of capacity, uncommitted to any LSE and committed and
available to PJM from a new 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 29, 2003
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER03-703-000, issued May 30, 2003, 103 FERC ¶
61,250.









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 40
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 40



 

resource, if committed by a capacity owner for
every remaining day of the Interval after the capacity becomes available
multiplied by the ratio of the remaining days to the total days in the Interval.


 

z is the total of x and y for all Recipients


 

A Recipient that commits the Unforced Capacity of
a Capacity Resource to PJM for an Interval must commit the Capacity Resource for
the entire duration of the Interval. A Party that commits the Unforced Capacity
of a new Capacity Resource to PJM for the balance of an Interval must commit the
Capacity Resources for the entire duration of the balance of the Interval.


 


	 	iii.	for purposes
      of this Section D only, the alternate value of capacity (AV) shall be
      defined as: 



 

AV = F*16*OD 

 

Where: 

 

F equals (Average of the Forward Market Monthly
On-Peak Energy Prices over the Interval for Cinergy Hub) minus (Average of the
Forward Market Monthly On-Peak Energy Prices over the Interval for PJM West Hub)


 

16 is the number of on-peak hours per day


 

OD is the number of On-Peak Days in the Interval


 

This value will be determined for the five on-peak
days (as defined in Schedules 7 and 8 of the PJM Open Access Transmission
Tariff) preceding the 15th
day of the month immediately prior to the beginning of an Interval. The forward
prices used in the AV calculation shall be the weighted average of the prices
published, on the identified day, in such trade publication(s) as are approved
by the Reliability Committee and which shall be posted on the PJM web site. If
no new index is determined prior to the beginning of an Interval the current
index will be continued. 

 


	 	iv.	In the event
      all of the Parties and all of the parties to the RAA have incurred
      deficiency charges with respect to an obligation and there is no owner of
      Capacity Resources entitled to payments as described above, the deficiency
      charges shall be distributed as approved by the Reliability Committee.
      



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 29, 2003
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER03-703-000, issued May 30, 2003, 103 FERC ¶
61,250.









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 41
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 


	E.	ALM
      Deficiency Charge 



 


	 	1.	Each Party
      that specifies ALM pursuant to Schedule 5.2 but, in an Emergency, does not
      deliver, upon the request of the Office of the Interconnection, its entire
      specified amount of ALM will be assessed a deficiency charge in accordance
      with the following formula: 



 

Compliance Deficiency Value x Daily Capacity
Deficiency Rate x 365/10 

 

Where: 

 

Compliance Deficiency Value is equal to the amount
of ALM (in megawatts) a Party is deficient, if, during an Emergency, the Party,
upon the request of the Office of the Interconnection, provides less ALM than it
specified pursuant to Schedule 5.2; 

 

Daily Capacity Deficiency Rate is the rate
specified in Paragraph A of this Schedule 11. 

 


	 	2.	Revenues
      from deficiency charges will be distributed to the Parties and to the
      parties to the RAA that, during an Emergency, provide ALM in excess of the
      amount they specified pursuant to Schedule 5.2 of the agreement to which
      it is a party (prorated if necessary). Any deficiency charge payment not
      so distributed will be distributed at the discretion of the Reliability
      Committee. 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 29, 2003
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER03-703-000, issued May 30, 2003, 103 FERC ¶
61,250.









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 42
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 

SCHEDULE 12 

 

EMERGENCY PROCEDURE CHARGES 

 


	A.	Emergency
      Procedure Charges 



 

Following an Emergency, the compliance of each
Party with the instructions of the Office of the Interconnection shall be
evaluated as recommended by the Reliability Committee and directed by the PJM
Board. If, based on such evaluation, it is determined that a Party refused to
comply with, or otherwise failed to employ its best efforts to comply with, the
instructions of the Office of the Interconnection to implement PJM emergency
procedures, that Party shall pay an emergency procedure charge as follows: for
each megawatt ALM that was not interrupted as directed and for each megawatt of
a Capacity Resource that was not made available as directed despite being
capable of producing energy at the time, and that is deliverable to the PJM
Region in the case of a Capacity Resource located outside of the PJM Region, the
Party shall pay 365 times the daily deficiency rate per megawatt set forth in
Section A of Schedule 11. 

 


	B.	Distribution Of Emergency Procedure Charges




 


	 	1.	Each Party
      and each party to the RAA that has complied with the emergency procedures
      imposed by this Agreement or the RAA during an Emergency, without
      incurring an emergency procedure charge, shall share in any emergency
      procedure charges paid by any other Party or by any party to the RAA that
      has failed to satisfy said obligation during an Emergency. Such shares
      shall be in proportion to the sum of the Accounted For Obligations
      (calculated without any reduction for ALM load credit) of of the Parties
      and each of the parties to the RAA entitled to share in the charges, for
      the most recent month. 



 


	 	2.	In the event
      all of the Parties and all of the parties to the RAA have incurred charges
      with respect to an Emergency, the charges related to that Emergency shall
      be distributed as approved by the PJM Board. 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 29, 2003
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER03-703-000, issued May 30, 2003, 103 FERC ¶
61,250.









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 43
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 

SCHEDULE 13 

 

DELEGATION TO THE OFFICE OF THE INTERCONNECTION


 

The following responsibilities shall be delegated
by the Parties to the Office of the Interconnection. The Office of
Interconnection is obligated under the Amended Operating Agreement and this
Agreement to meet these responsibilities: 

 


	1.	New
      Parties. With regard to the addition, withdrawal or removal of a
      Party: 



 


	 	(a)	Receive and
      evaluate the information submitted by entities that plan to serve loads
      within the PJM West Region, including entities whose participation in the
      Agreement will expand the boundaries of the PJM West Region. Such
      evaluation shall be conducted in accordance with the requirements of the
      Agreement. 



 


	 	(b)	Evaluate the
      effects of the withdrawal or removal of a Party from this Agreement.
      



 


	2.	Implementation of West Reliability Assurance Agreement. With
      regard to the implementation of the provisions of this Agreement:
    



 


	 	(a)	Establish
      and operate the PJM Capacity Credit Market as described in Schedule 11 of
      the Amended Operating Agreement; 



 


	 	(b)	Receive all
      required data and forecasts from the Parties; 



 


	 	(c)	Perform all
      calculations and analyses necessary to determine the Forecast Pool
      Requirement and the obligations imposed under this Agreement, including
      periodic reviews of the capacity benefit margin for consistency with the
      Reliability Principles and Standards; 



 


	 	(d)	Monitor the
      compliance of each Party with its obligations under this Agreement;
    



 


	 	(e)	Keep cost
      records, and bill and collect any costs or charges due from the Parties
      and distribute those charges in accordance with the terms of this
      Agreement; 



 


	 	(f)	Assist with
      the development of rules and procedures for determining and demonstrating
      the capability of Capacity Resources; 



 


	 	(g)	Establish
      the capability and deliverability of Capacity Resources consistent with
      the requirements of this Agreement; 



 


	 	(h)	Collect and
      maintain generator availability data; 



 


	 	(i)	Perform any
      other forecasts, studies or analyses required to administer this
      Agreement; 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 29, 2003
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER03-703-000, issued May 30, 2003, 103 FERC ¶
61,250.









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 44
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 


	 	(j)	Coordinate
      maintenance schedules for generation resources operated as part of the PJM
      West Region; 



 


	 	(k)	Determine
      and declare that an Emergency exists or ceases to exist in all or any part
      of the PJM Region or announce that an Emergency exists or ceases to exist
      in a Control Area interconnected with the PJM Region;




 


	 	(l)	Enter into
      agreements for (i) the transfer of energy in Emergencies in the PJM Region
      or in a Control Area interconnected with the PJM Region and (ii) mutual
      support in such Emergencies with other Control Areas interconnected with
      the PJM Region; and 



 


	 	(m)	Administer
      and implement for the PJM West Region the automatic reserve sharing
      processes required by ECAR and MAIN; 



 


	 	(n)	Coordinate
      the curtailment or shedding of load, or other measures appropriate to
      alleviate an Emergency, to preserve reliability in accordance with FERC,
      NERC MAIN or ECAR principles, guidelines, standards and requirements, and
      to ensure the operation of the PJM Region in accordance with Good Utility
      Practice. 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      June 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 29, 2003
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER03-703-000, issued May 30, 2003, 103 FERC ¶
61,250.









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 45
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 45



 

SCHEDULE 14 

 

ZONES WITHIN THE PJM WEST REGION AND MAAC
CONTROL ZONE 

 



 


			
	ZONES
      IN PJM WEST REGION: ZONE 12-15	 	ZONES
      IN MAAC CONTROL ZONE: ZONES 1-11



 

[re 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2004

	 	  	
      Vice President, Government
    Policy
	  	 	  	 
	
      Issued On:
	  	
      July 30, 2004
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 46
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Original Sheet No. 46



 

 

SCHEDULE 15 

 

DATA SUBMITTALS 

 


	A.	To perform
      the studies required to determine the Forecast Pool Requirement and
      Accounted-For Obligations under this Agreement and to determine compliance
      with the obligations imposed by this Agreement, each Party and other owner
      of a Capacity Resource shall submit data to the Office of Interconnection
      in conformance with the following minimum requirements:




 


	 	1.	All data
      submitted shall satisfy the requirements, as they may change from time to
      time, of any procedures adopted by the Members Committee.




 


	 	2.	Data shall
      be submitted in an electronic format, or as otherwise specified by the PJM
      Board. 



 


	 	3.	Actual
      outage data for each month for Generator Forced Outages, Generator
      Maintenance Outages and Generator Planned Outages shall be submitted so
      that it is received by such date specified in the PJM Manuals.
  



 


	 	4.	On or before
      the date specified in the PJM Manuals, planned and maintenance outage data
      for all Capacity Resources and load forecasts (including seasonal and
      average weekly peaks) shall be submitted. 



 


	 	5.	On or before
      the date specified in the PJM Manuals, adjustments to forecasts shall be
      submitted. 



 


	 	6.	On or before
      the date or schedule for updates specified in the PJM Manuals, revisions
      to capacity and load forecasts (including the plans for satisfying the
      Accounted-For Obligation of the Party) shall be submitted.




 


	 	7.	Capacity
      plans or revisions to previously submitted capacity plans, required under
      Schedule 6. 



 


	 	8.	As desired
      by a Party, revisions to monthly peak load forecasts may be submitted.
      



 

The Parties acknowledge that additional
information required to determine the Forecast Pool Requirement is to be
obtained by the Office of the Interconnection from Electric Distributors in
accordance with the provisions of the Operating Agreement. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2003

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      July 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Substitute Second Revised Sheet No. 47
	
      First Revised Rate Schedule FERC No.
      32
	  	Superseding Second Revised Sheet No. 47



 

SCHEDULE 16 

 

PARTIES TO THE PJM WEST RELIABILITY ASSURANCE
AGREEMENT 

 

This Schedule sets forth the Parties to the Agreement: 

 

Harrison REA Inc. 

City of New Martinsville 

City of Philippi 

Letterkenny Industrial Development Authority-PA 

Old Dominion Electric Cooperative 

Town of Front Royal 

Hagerstown 

Borough of Chambersburg 

Town of Williamsport 

Thurmont 

Allegheny Electric Coopertive, Inc. 

Allegheny Power 

AES New Energy, Inc. 

BP Energy Co. 

Commonwealth Edison Company 

Commonwealth Edison Company of Indiana 

Dayton Power & Light Company (The) 

American Municipal Power-Ohio, Inc. 

American Electric Power Service Corporation on behalf of its affiliates:


Appalachian Power Company 

Columbus Southern Power Company 

Indiana Michigan Power Company 

Kentucky Power Company 

Kingsport Power Company 

Ohio Power Company 

Wheeling Power Company 

Allegheny Energy Supply Company, L.L.C. 

Blue Ridge Power Agency, Inc. 

Central Virginia Electric Cooperative 

City of Dowogiac 

Hoosier Energy REC, Inc. 

Indiana Municipal Power Agency 

Ormet Primary Aluminum Corporation 

City of Sturgis 

Wabash Valley Power Association, Inc. 

 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      October 1, 2004

	 	  	
      Vice President, Government
    Policy
	  	 	  	 
	
      Issued On:
	  	
      October 28, 2004
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Commission, Docket Nos.
      ER04-1068-000 & 001, ER04-1074, and ER04-1079-000 & 001, issued
      September 28, 2004, 108 FERC ¶ 61,318 (2004).









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 48A
	
      First Revised Rate Schedule FERC No.
      32
	  	Original
      Sheet No. 48A



 

SCHEDULE 17 

 

CAPACITY ADEQUACY STANDARDS AND PROCEDURES FOR
THE 

COMMONWEALTH EDISON ZONE DURING THE INTERIM
PERIOD 

 


	A.	This
      schedule sets forth the standards and procedures to assure capacity
      adequacy in the zone (“ComEd Zone”) of Commonwealth Edison Company
      (including Commonwealth Edison Company of Indiana) (“ComEd”) during the
      Interim Period. For purposes of this schedule, the Interim Period is the
      time period beginning upon the date that the ComEd Zone is added to the
      PJM West Region and concluding upon May 31, 2005; provided, however, that
      if the American Electric Power Zone is not expected to be added to the PJM
      West Region by such date, the parties shall meet before such date to
      address the capacity adequacy requirements for the ComEd Zone to be in
      effect after such date. Except as may be waived during the Phase-in Period
      as set forth in section L of this Schedule 17, all Load-serving Entities
      serving load in the ComEd Zone during the Interim Period shall comply with
      the provisions of this schedule, and with all other provisions of this
      Agreement and its attached schedules to the extent not inconsistent with
      the provisions of this Schedule 17. 



 


	B.	Interim
      Installed Capacity Requirement. The Interim Installed Capacity Requirement
      shall be determined as set forth in this section to establish the level of
      Capacity Resources that will provide an acceptable level of reliability
      consistent with the Reliability Principles and Standards. The Interim
      Installed Capacity Requirement (“IICR”) shall be determined for each
      Interval as: 



 


			
	 	  	IICR
      = FZAP * (1 + IRM)
		
	
      Where:
	  	 
		
	
      FZAP    =
	  	the forecast
      accounting peak for the ComEd Zone for such Interval, which shall be the
      weather-normalized, 50/50 probability load prior to interruptible load
      being curtailed
		
	
      IRM      =
	  	the installed
      reserve margin applicable to such Interval, for which purpose, the PJM
      Board shall determine an installed capacity reserve margin for the
      summer-season Interval, and a separate installed capacity reserve margin
      for the non-summer-season Intervals



 


	C.	The Interim
      Installed Capacity Requirement shall be projected for each Interval, no
      later than 60 days prior to the first day of such Interval, by PJM based
      on the IRM and the FZAP projected by the Electric Distributor for the
      ComEd Zone under the direction and supervision of, and subject to the
      final approval of, the Office of the Interconnection.




 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Government
    Policy
	  	 	  	 
	
      Issued On:
	  	
      April 19, 2004
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER04-521-000, issued March 18, 2004, 106 FERC ¶
61,253.









			
	
      PJM Interconnection, L.L.C.
	  	First
      Revised Sheet No. 48B
	
      First Revised Rate Schedule FERC No.
      32
	  	Original
      Sheet No. 48B



 


	D.	Parties can
      receive an adjustment to their load used in determining their Interim
      Capacity Obligation for Mandatory Interruptible Load that is operated
      under the mandatory direction of the Office of the Interconnection. The
      Office of the Interconnection shall establish and set forth in the PJM
      Manuals standards and procedures for the determination of Mandatory
      Interruptible Load, such standards and procedures to be consistent with
      MAIN Guide 3B, MAIN Guide 6, and MAIN audit standards.




 


	E.	Each Party’s
      Interim Capacity Obligation for each billing month during an Interval
      shall be determined as: 



 

Party Interim Capacity Obligation = {IICR *
(FPAP/FZAP)} - {FPMIL * (1 + IRM)} 

 


					
	
      Where:
	  	 	  	 
	
      FPAP
	  	=	  	the forecasted
      weather-adjusted coincident annual peak of the end-users in the ComEd Zone
      for which the Party is responsible for that month (in accordance with
      Section I of this Schedule), as determined by the Electric Distributor for
      the ComEd Zone under the direction and supervision of, and subject to the
      approval of, the Office of the Interconnection, in accordance with the
      procedures set forth in the PJM Manuals.
			
	
      FPMIL
	  	=	  	the forecast Mandatory
      Interruptible Load adjustments to the Party for the Zone for the billing
      month determined pursuant to this schedule.



 

For purposes of this paragraph, FZAP shall be
determined for the annual peak of the ComEd Zone. 

 

Any disputes concerning the determination of the
Party Interim Capacity Obligation shall be resolved pursuant to the dispute
resolution provisions of the Amended Operating Agreement. 

 


	F.	Each Party
      shall satisfy its Interim Capacity Obligation by committing the installed
      capacity, rated at summer conditions, of Capacity Resources (“Installed
      Capacity”). A Party may use capacity credits to meet all or part of its
      capacity obligations under this Schedule. For this purpose, the Office of
      the Interconnection shall administer monthly and Interval capacity credit
      markets for the ComEd Zone in accordance with Schedule 11 to the Amended
      Operating Agreement, provided that the credits sold and purchased shall be
      on an Installed Capacity basis, shall only be used to meet capacity
      obligations in the ComEd Zone, and shall not include daily markets.
    



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Government
    Policy
	  	 	  	 
	
      Issued On:
	  	
      April 19, 2004
	  	 	  	 
	Filed to
      comply with order of the Federal Energy Regulatory Commission, Docket No.
      ER04-521-000, issued March 18, 2004, 106 FERC ¶
61,253.









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 48B.01
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 


	G.	For purposes
      of this Schedule, the capability of qualifying Capacity Resources shall be
      determined in accordance with Schedule 9 and the deliverability of such
      resources shall be determined in accordance with Schedule 10 (provided
      that the test for deliverability shall be as to the ComEd Zone, rather
      than as to the PJM Region). 



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      April 19, 2004
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 48C
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 


	H.	Planned
      maintenance outage schedules for Installed Capacity committed to satisfy a
      Party’s Interim Capacity Obligation may be modified only with the prior
      approval of the Office of the Interconnection. 



 


	I.	Following
      the Phase-in Period, a Party’s Interim Capacity Obligation shall be
      adjusted as of the first day of a calendar month to reflect a transfer of
      load from or to such Party where such transfer is to or from any other
      Party occurring on or at any time before the twentieth day of the
      immediately preceding month. 



 


	J.	If a Party’s
      Installed Capacity during any Interval is less than its Interim Capacity
      Obligation for such Interval, the Party shall be deficient and shall pay
      the deficiency charge set forth in section K of this Schedule. In
      addition, (i) a charge calculated in the same manner as that specified in
      Schedule 11, Section E (excluding, however, the forced outage adjustment
      factor), shall apply to a Party that specifies Mandatory Interruptible
      Load but that fails to deliver the full amount of such Mandatory
      Interruptible Load upon the request of the Office of the Interconnection;
      and (ii) a charge calculated in the same manner as that specified in
      Schedule 12 (excluding, however, the forced outage adjustment factor),
      shall apply to a Party that refuses to comply with, or otherwise fails to
      employ its best efforts to comply with, the instructions of the Office of
      the Interconnection to implement emergency procedures. Revenues from the
      charges specified in subsections (i) and (ii) of this Section J shall be
      distributed in a manner comparable to that set forth in Schedules 11 and
      12, respectively. 



 


	K.	The charge
      for deficiencies during any Interval required by Section J of this
      Schedule shall be equal to the product of: (i) the daily deficiency rate
      of $160 per megawatt-day, multiplied by (ii) the deficiency calculated
      under Section J of this Schedule (taking into account any change in such
      Party’s Interim Capacity Obligation during such Interval in accordance
      with Section I of this Schedule), multiplied by (iii) the number of days
      in such Interval. The deficiency charge shall be paid only once by any
      Party during any Interval and shall be based on the greatest number of
      megawatts such Party is deficient on any day during such Interval.
      Deficiency charge revenues collected for an Interval under this Section K
      shall be distributed to Parties that meet their Interim Capacity
      Obligations for the ComEd Zone for such Interval (or as determined by the
      PJM Board in the event all such Parties have incurred deficiency charges
      for such Interval) in the same manner as set forth in Section B of
      Schedule 11 of this Agreement, provided, however, the Alternative Value
      calculation set forth in that Section shall not be applicable, and
      distribution shall be made only to Parties that meet their obligations
      under this Schedule. 



 


	L.	Procedures
      during the Phase-in Period. For purposes of facilitating the
      implementation of the capacity adequacy procedures of this Schedule in the
      ComEd Zone, there shall be a Phase-in Period that shall commence on the
      first day of the Interim Period and conclude upon May 31, 2004. During the
      Phase-in Period, the following requirements and procedures shall apply.
      



 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      December 31, 2003
	  	 	  	 









			
	
      PJM Interconnection, L.L.C.
	  	Original
      Sheet No. 48D
	
      First Revised Rate Schedule FERC No.
      32
	  	 



 


	 	1.	The capacity
      obligations of this Schedule shall be waived as to any Load-Serving Entity
      (“Non-Party LSE”) serving load in the ComEd Zone for which ComEd has
      assumed all obligations of this Schedule for such Phase-in Period under
      this Section L. 



 


	 	2.	ComEd shall
      be a Party to this Agreement during the Phase-In Period, and shall commit
      for the duration of the Phase-in Period Capacity Resources sufficient to
      satisfy: (i) the Interim Installed Capacity Requirement, less (ii) the sum
      of the Party Interim Capacity Obligations of any Load-Serving Entity that
      becomes a Party to this Agreement and fulfills the obligations of this
      Schedule for the duration of the Phase-in Period.




 


	 	3.	The IRM
      shall be 15 percent, applied to the forecast accounting peak of the ComEd
      Zone during the Phase-In Period. Installed Capacity shall not include any
      capacity forecast to be out of service during the Phase-in Period. For
      this purpose, the Office of the Interconnection shall audit and establish
      each Party’s Installed Capacity no later than 45 days before the first day
      of the Phase-in Period. Each Party with capacity obligations during the
      Phase-in Period must disclose all known capacity outages for any part of
      the Phase-in Period during such audit. Installed Capacity committed
      pursuant to the audit must remain committed during the Phase-in Period as
      set forth in such audit. 



 


	 	4.	The
      penalties and charges set forth in sections J and K shall apply during the
      Phase-in Period, but no capacity credit market shall be conducted for the
      Phase-in Period or any month thereof. Transfers of load among Parties
      shall not modify the transferor Party’s or transferee Party’s capacity
      obligations during the Phase-in Period. 



 


	 	5.	Any
      Load-Serving Entity, as to all or part of the load it serves in the ComEd
      Zone, may elect to be a Party to this Agreement and subject to its rights
      and obligations, including the obligations of this Schedule, during the
      Phase-in Period. An LSE desiring to make this election must do so for the
      entire Phase-in Period and shall notify the Office of the Interconnection
      of such election by no later than 45 days prior to the first day of the
      Phase-in Period. 



 


	 	6.	The
      allocation of financial transmission rights shall be modified for the
      ComEd Zone during the Phase-in Period in the manner set forth in Section 9
      of Schedule 1 to the Amended Operating Agreement.




 


							
	
      Issued By:
	  	
      Craig Glazer
	  	Effective:	  	
      May 1, 2004

	 	  	
      Vice President, Governmental
      Policy
	  	 	  	 
	
      Issued On:
	  	
      December 31, 2003