Metering Requirements for the PJM Demand Side Response Programs

1. Metering Requirements for the PJM Demand Side Response Programs Joe Polidoro, Sr. EngineerPJM Interconnection, LLC610-666-4693

2. PJM Demand Side Response Working Group The Demand Side Working Group’s mission is to identify and promote opportunities for demand-side resources to participate in the PJM markets, and to recommend adoption of protocols and protocol revisions that foster optimum load participation in all markets.

3. PJM Demand Side Response Working Group Why Is Your Participation Important? • What is done in 2004 will likely fix your options for the next few years • There are many Protocols issues that will be addressed by DSRWG this year that will affect whether your load is suitable for other opportunities • If you have a stake, you cannot afford not to play • You can participate in person, via phone or via web

4. Future Footprint • PJM • PJM Western Region • Duquesne - Jan ‘05 • AEP – Oct ’04 • Dayton Power & Light - Oct ‘04 • ComEd – May ‘04 • Dominion Power – Nov ‘04

5. ISOs in North America – 12-31-03 California45,900 IMO 25,414 IMO 25,414 PJM is currently the largest centrally dispatched Entity in North America New England 25,158 New York 30,983 PJM + PJM West 63,777 California45,900 ERCOT 57,000 ERCOT 57,000

6. PJM MISO Common Market Area

7. PJM Governance Independent Board Members Committee Other Suppliers End-Use Customers Generation Owners Transmission Owners Electric Distributors

8. How Demand Response Interacts with the Market? • A working demand response program puts a downward pressure on price. • It is an alternative to generating more electricity. • When wholesale prices are high, Demand response can stabilize prices by reducing demand. When electricity supplies are short, demand response reduces stress on the grid. • 4,600+ Large Industrial and Commercial participants. • 45,000+ small commercial and residential end users in the program.

9. What Program is Right for the End User?

10. Load Reduction Verification Timeline EDC Verification 10 Business Days CSP Submittal 60 Calendar Days LSE Verification 10 Business Days PJM Database PJM reviews and forwards to LSE and EDC PJM approves payment to CSP

11. Customer Baseline (CBL) In the Economic Program ONLY….. End-use customers that wish to measure load reductions by comparing metered load against an estimate of what metered load would have been absent the reduction may calculate a customer baseline (CBL) for the following methods as defined: Average Day CBL for Weekdays Average Day CBL for Weekend/Holidays

12. Average Day CBL for Weekdays • 10 most recent days, beginning two days prior to event • Exclude the following day-types: • NERC holidays • Weekend Days • Event Days • Any day which the day’s average daily event period usage is less than 75% of the average event period usage level • Replace excluded days with next valid day • Final Weekday CBL Basis Window must contain 10 days

13. Average Day CBL for Weekdays • For each of the 10 Days in Weekday CBL Basis Window calculate: • Average daily event period usage = simple average of the participants usage over the hours in the day • For all 10 Days in Weekday CBL Basis Window calculate: • Average event period usage level = simple average of 10 average daily event period usage values • Exclude low usage days, replace excluded day per Step 1, and continue • Rank all remain 10 days, and eliminate 5 days with lowest average daily event period usage • Weekday CBL Basis must contain 5 days

14. Customer Baseline (CBL) • For each hour of the event, • Average Day CBL for Weekdays is the average of the usage in that hour in the five days that comprise the Weekday CBL Basis

15. Reserves in PJM • Spinning Reserve • Primary Reserve • Quick Start • Supplemental Reserves

16. Reserves in PJM • Spinning Reserve • Synchronized reserve capability that can be converted to energy within 10 minutes • Procured via real-time Spinning Reserve Market • Requirement varies based on NERC Reliability Region, typically equal to output of largest contingency on system • ECAR and MAIN rules allow dispatchable load to count as spinning reserve (MAAC does not)

17. Reserves in PJM • Primary Reserve • Made up of Spinning Reserve and 10 minute non-synchronized reserve • Requirement varies based on NERC Reliability Region, PJM Mid-Atlantic requirement is 150% of largest unit on system • Procured in real time by PJM dispatchers • No premium paid for Primary Reserve Services • Shortfall in Primary Reserve corrected by committing additional Spinning Reserve

18. Reserves in PJM • Quick Start • Non-synchronized capability that can start up within 15 minutes • No quick start requirement operated to • MIC currently discussing possible quick start market • Counts towards primary reserve in some reliability regions

19. Reserves in PJM • Supplemental Reserve • Non-synchronized capability that can start up within 30 minutes • Procured day ahead via reliability run (2nd commitment process) • Requirement varies by reliability region, averages 8% across RTO • Proposed operational constraint in Reliability Pricing Model to procure Supplemental Reserves

20. Obtain a Free eData Account

21. FUTURE MEETINGS October 12, 2004 Wilmington, DE November 3, 2004 Wilmington, DE November 30, 2004 Wilmington, DE For more information, submit requests to: LoadResponse@pjm.com Next Steps