PJM Manual 11: Energy & Ancillary Services Market Operations Revision: 92 Effective Date: November 1, 2017

Transcription

1 PJM Manual 11: Energy & Ancillary Services Market Operatins Revisin: 92 Effective Date: Nvember 1, 2017 Prepared by Day-Ahead and Real-Time Market Operatins PJM 2017

2 PJM Manual 11: Energy & Ancillary Services Market Operatins Table f Cntents Table f Cntents Table f Exhibits...7 Apprval...8 Current Revisin...9 Intrductin Abut PJM Manuals Abut This Manual Using This Manual...11 Sectin 1: Overview f Energy & Ancillary Services Market Operatins PJM Respnsibilities PJM Market Participants Respnsibilities Market Buyers Market Sellers Lad Serving Entities Curtailment Service Prviders...16 Sectin 2: Overview f the PJM Energy Markets Overview f PJM Energy Markets Definitin f Lcatinal Marginal Price Energy Market Business Rules Bidding & Operatins Time Line Market Buyers Market Sellers Minimum Generatr Operating Parameters Parameter Limited Schedules A External Bilateral and Up-t Cngestin Transactins Curtailment Service Prviders PJM Activities Market Pwer Mitigatin Mechanical/Technical Rules Mdeling Day-ahead Lcatinal Marginal Price (LMP) Calculatins Real-Time Lcatinal Marginal Price (LMP) Calculatins Real-Time Market Applicatins PJM State Estimatr Revisin: 92, Effective Date: 11/01/2017 PJM

3 PJM Manual 11: Energy & Ancillary Services Market Operatins Table f Cntents 2.7 Lcatinal Pricing Calculatr (LPC) Determinatin f LMPS fr De-Energized Busses Determinatin f LMPs fr Generatin Resurces with ffers greater than $2,000/MWh The Calculatin f Lcatinal Marginal Prices (LMPs) During Emergency Prcedures The Calculatin f Lcatinal Marginal Prices (LMPs) During Reserve Shrtages Determinatin f a Reserve Shrtage PJM Real-time Lcatinal Marginal Price Verificatin Prcedure Price-Bunding Vilatins Calculatin f Ramp Limited Desired MWh Using and Calculating Lcatinal Marginal Prices Day-Ahead Settlement Balancing Settlement Balancing Operating Reserve Cst Analysis Maximum Emergency Generatin in Day-ahead Market Minimum Capacity Emergency in Day-ahead Market...54 Sectin 3: Overview f the PJM Regulatin Market Overview f the PJM Regulatin Market PJM Regulatin Market Business Rules Regulatin Market Eligibility Regulatin Market Data Timeline Regulatin Bilateral Transactins Regulatin Requirement Determinatin Regulatin Obligatin Fulfillment Regulatin Offer Perid Regulatin Market Clearing Hydr Units Regulatin Market Operatins Settlements Sectin 4: Overview f the PJM Synchrnized Reserve Market Overview f the PJM Synchrnized Reserve Market PJM Synchrnized Reserve Market Business Rules Synchrnized Reserve Market Eligibility Synchrnized Reserve Requirement Determinatin Reserve Demand Curves and Penalty Factrs Synchrnized Reserve Obligatin Fulfillment Synchrnized Reserve Offer Perid Bilateral Synchrnized Reserve Transactins Synchrnized Reserve Cmmitment Hydr Units Demand Resurces Synchrnized Reserve Market Clearing Price (SRMCP) Calculatin...84 Revisin: 92, Effective Date: 11/01/2017 PJM

4 PJM Manual 11: Energy & Ancillary Services Market Operatins Table f Cntents Settlements Verificatin Nn-Perfrmance...87 Sectin 4b: Overview f the Nn-Synchrnized Reserve Market b.1 Overview f the Nn-Synchrnized Reserve Market b.2 Nn-Synchrnized Reserve Market Business Rules b.2.1 Nn-Synchrnized Reserve Resurce Eligibility b.2.2 Nn-Synchrnized Reserve Znes and Levels b.2.3 Nn-Synchrnized Reserve Offer Infrmatin b.2.4 Nn-Synchrnized Reserve Cmmitments b.2.5 Nn-Synchrnized Reserve Market Clearing Price (NSRMCP) Calculatin b.2.6 Nn-Synchrnized Reserve Obligatin Fulfillment b.2.7 Nn-Synchrnized Reserve Bilateral Transactins b.2.8 Nn-Synchrnized Reserve Settlement b.2.9 Verificatin b.2.10 Nn-Perfrmance...93 Sectin 5: Market Clearing Prcesses and Tls PJM Philsphy Scheduling Tls ExSchedule PJM InSchedule Lad Frecasting Markets Database System Hydr Calculatr PJM Energy Market Technical Sftware Sectin 6: Reserve Requirements in PJM Energy Markets Frecasting PJM Generatin Requirement PJM Regulatin Requirement Regulatin Service PJM Synchrnized Reserve Requirements Synchrnized Reserve Service Prcessing Market Infrmatin PJM Member Lad Frecasts Reserve Service Self-Scheduled Resurces Deviatins frm Day-ahead Market fr Pl Scheduled Resurces Fees fr Cancellatin f Pl Scheduled Resurces Resurce Specific Data Requirements External Market Sellers Day-ahead Market between 1030 and Rebidding Perid between 1330 and Revisin: 92, Effective Date: 11/01/2017 PJM

5 PJM Manual 11: Energy & Ancillary Services Market Operatins Table f Cntents Real Time Market Sectin 7: External Transactin Scheduling Net Interchange Cap Overview f the PJM-MISO Crdinated Transactin Scheduling PJM-MISO Crdinated Transactin Scheduling Business Rules CTS Bid Clearing CTS Cmmn Clearing CTS Clearing Suspensin CTS Settlement Sectin 8: Psting OASIS Infrmatin Sectin 9: Hurly Scheduling Hurly Scheduling Adjustments Hurly Schedule Adjustments Intraday Offers Optinality Sectin 10: Overview f the Demand Resurce Participatin Overview f Demand Resurce Participatin Ecnmic Lad Respnse Participant Review Prcess Demand Resurce Registratin Requirements Registratin cmbinatins Curtailment Service Prviders PJM Activities Electric Distributin Cmpany ( EDC ) and Lad Serving Entity ( LSE ) activities CBL Certificatin Prcess Ecnmic Energy Market Participatin Net Benefits Test t determine Net Benefits Threshld Demand Resurce Metering and Settlement Data Requirements Metered Data Custmer Base Line (CBL) Ecnmic Energy Settlements Ecnmic Energy Settlements Cst Allcatin Emergency and Pre-Emergency Energy Settlements Emergency and Pre-Emergency Energy Settlements Cst Allcatin Aggregatin fr Ecnmic and Emergency Demand Resurces Calculatins fr the weighted average line lss factr Settlement fr Aggregatin Interval Meter Equipment and Lad Data Requirements Use f Sub-meter lad data t supprt demand respnse regulatin cmpliance Revisin: 92, Effective Date: 11/01/2017 PJM

6 PJM Manual 11: Energy & Ancillary Services Market Operatins Table f Cntents Sectin 11: Overview f the Day-Ahead Scheduling Reserve Market Overview f Day-Ahead Scheduling Reserve Market PJM Day-Ahead Reserve Market Business Rules Day-Ahead Scheduling Reserve Market Reserve Requirement Day-Ahead Scheduling Reserve Market Eligibility Day-Ahead Scheduling Reserve Market Rules Day-Ahead Scheduling Reserve Market Offer Perid Day-Ahead Scheduling Reserve Market Clearing Day-Ahead Scheduling Reserve Market Operatins Day-Ahead Scheduling Reserve Perfrmance Day-Ahead Scheduling Reserve Market Obligatin Fulfillment Day-Ahead Scheduling Reserve Bilateral Transactins Day-Ahead Scheduling Reserve Market Settlement Sectin 12: Overview f the Price Respnsive Demand Overview f Price Respnsive Demand Price Respnsive Demand Business Rules Price-Demand Curves in the Energy Market Characteristics f Price-Demand Curves in PJM Energy Market Business Rule Changes t Price Sensitive Demand Bids Price-Demand Curves in Real-time Energy Market Operatins Balancing Operating Reserves Deviatins PRD Curves Submitted by Curtailment Service Prviders (CSPs) Attachment A: Interchange Energy Schedule Curtailment Order Attachment B: Pumped Strage Mdeling Attachment C: PJM Prcedure fr Cst Adjustment Attachment D: Verificatin f Cst Offers greater than $2,000/MWh. 170 Revisin Histry Revisin: 92, Effective Date: 11/01/2017 PJM

7 PJM Manual 11: Energy & Ancillary Services Market Operatins Table f Exhibits Table f Exhibits Exhibit 1: Scheduling Timeline Exhibit 2: Lad Frecasting Prcess Exhibit 3: Energy Market Daily...97 Exhibit 4: Settlement Subsystems...99 Exhibit 5: Dwnlad Data frm Markets Database Exhibit 6: Energy Market Data Flw Exhibit 7: Requirement Versus Resurce Supply Exhibit 8: Synchrnized Reserve and Regulatin Data Flw Exhibit 9: Generatr Regulatin Service Exhibit 10: Capacity and Energy Resurce Data Requirements Revisin: 92, Effective Date: 11/01/2017 PJM

8 PJM Manual 11: Energy & Ancillary Services Market Operatins Apprval Apprval Apprval Date: 10/27/2017 Effective Date: 11/01/2017 Mike Ward, Manager Day-Ahead Market Operatins Lisa Mrelli, Manager Real-Time Market Operatins Revisin: 92, Effective Date: 11/01/2017 PJM

9 PJM Manual 11: Energy & Ancillary Services Market Operatins Current Revisin Current Revisin Revisin 92 (11/01/2017): Revisins thrughut t implement hurly differentiated ffers and the ability t update ffers intraday Revisin: 92, Effective Date: 11/01/2017 PJM

10 PJM Manual 11: Energy & Ancillary Services Market Operatins Intrductin Intrductin Welcme t the PJM Manual fr Energy & Ancillary Services Market Operatins. In this Intrductin, yu will find the fllwing infrmatin: What yu can expect frm the PJM Manuals in general (see Abut PJM Manuals ). What yu can expect frm this PJM Manual (see Abut This Manual ). Hw t use this manual (see Using This Manual ). Abut PJM Manuals The PJM Manuals are the instructins, rules, prcedures and guidelines established by PJM fr the peratin, planning and accunting requirements f the PJM RTO and the PJM Energy Market. The manuals are gruped under the fllwing categries: Transmissin PJM Energy Market Generatin and transmissin intercnnectin Reserve Accunting and Billing PJM administrative services Fr a cmplete list f all PJM Manuals, g t the Library sectin n PJM.cm. Abut This Manual The PJM Manual fr Energy & Ancillary Services Market Operatins is ne f a series f manuals within the PJM Energy Market manuals. This manual fcuses n the day-ahead and hurly scheduling activities that are perfrmed by the PJM staff and the PJM Members. The manual describes the rules and prcedures that are fllwed t schedule resurces. The PJM Manual fr Energy & Ancillary Services Market Operatins cnsists f ten sectins. The sectins are listed in the table f cntents beginning n page ii. Intended Audience The intended audience f the PJM Manual fr Energy & Ancillary Services Market Operatins is: PJM Members - Any participants requesting t purchase r sell energy t r frm the PJM Interchange Energy Market r Ancillary Service Markets and any participant that schedules bilateral sales r purchases. PJM peratins staff - The PJM peratins staff prcesses the market infrmatin and develps the resurce schedule. PJM dispatchers - The PJM dispatchers prcess PJM Member requests, make hurly schedule adjustments, and pst infrmatin in the OASIS. Lcal Cntrl Center dispatchers - The Lcal Cntrl Center dispatchers submit hurly schedule changes. Revisin: 92, Effective Date: 11/01/2017 PJM

11 PJM Manual 11: Energy & Ancillary Services Market Operatins Intrductin Lcal Cntrl Center peratins supprt staff - The Lcal Cntrl Center peratins supprt staff supprt the day-ahead and real-time infrmatin requirements. References The References t ther dcuments that prvide backgrund r additinal detail directly related t the PJM Manual fr Energy & Ancillary Services Market Operatins are: PJM ExSchedule User Guide PJM Manual fr Transmissin Operatins(M-03) PJM Manual fr Pre-Scheduling Operatins (M-10) PJM Manual fr Balancing Operatins (M-12) PJM Manual fr Emergency Operatins (M-13) PJM Manual fr Operating Agreement Accunting (M-28) Using This Manual We believe that explaining cncepts is just as imprtant as presenting prcedures. This philsphy is reflected in the way we rganize the material in this manual. We start each sectin with an verview. Then, we present details, prcedures r references t prcedures fund in ther PJM manuals. The fllwing prvides an rientatin t the manual s structure. What Yu Will Find In This Manual A table f cntents that lists tw levels f subheadings within each f the sectins. An apprval page that lists the required apprvals and a brief utline f the current revisin. Sectins cntaining the specific guidelines, requirements, r prcedures including PJM actins and market participant actins. Attachments that include additinal supprting dcuments, frms, r tables in this PJM Manual. A sectin at the end detailing all previus revisins f the PJM Manual. Revisin: 92, Effective Date: 11/01/2017 PJM

12 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 1: Overview f Energy & Ancillary Services Market Operatins Sectin 1: Overview f Energy & Ancillary Services Market Operatins Welcme t the Overview f Energy & Ancillary Services Market Operatins f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: A descriptin f the scpe and purpse f scheduling (see Scpe & Purpse f Energy & Ancillary Services Market Operatins ). A list f the PJM respnsibilities (see PJM Respnsibilities ). A list f the market participants scheduling respnsibilities (see PJM Market Participant Respnsibilities ). Scpe & Purpse f Energy & Ancillary Services Market Operatins Operatin f the PJM RTO markets invlves many activities that are perfrmed by different perating and technical persnnel. These activities ccur in parallel n a cntinuus basis, 24 hurs a day and can be gruped int three verlapping time frames: pre-scheduling peratins scheduling peratins and the Day-ahead Energy Market dispatching and the Real-time Energy Market In the PJM Manual fr Energy & Ancillary Services Market we fcus mainly n the activities that take place ne day prir t the Operating Day including the activities assciated with the Day-ahead Energy Market and in real-time assciated with the Real-time Energy Market and Ancillary Service Markets. Exhibit 1 presents the scheduling activities in the frm f a time line. The reference pint fr the timeline is the Operating Day, recgnizing that every new day becmes an Operating Day. This timeline-type f descriptin is used thrughut this PJM Manual. Generatin resurces, regardless f fuel type, fall int ne f tw categries, Capacity Resurces r Energy Resurces. If available, All Generatin Capacity Resurces that have an RPM Resurce Cmmitment must submit ffer data int the Day-ahead Market and may elect either t Self-Schedule r ffer the resurce t PJM fr scheduling as a PJM RTO-Scheduled Resurce. In this sectin we fcus primarily n the PJM Day-ahead Energy Market and the Cntrl Area reliability-based scheduling prcess that takes place after the Day-ahead Energy Market is clsed. Scheduling by PJM includes the Day-ahead Energy Market, the Cntrl Area reliability-based scheduling prcess and the hurly scheduling prcess. The Day-ahead Energy Market bid/ffer perid clses at 1030 n the day befre the Operating Day and the Day-ahead Market results are psted by 1330 r as sn as practicable thereafter n the day befre the Operating Day. The Cntrl Area reliability-based scheduling prcess ccurs thrughut the day befre the perating day. Hurly scheduling ccurs up t sixty minutes prir t an hur during the Operating Day. During the scheduling prcess, PJM will: Clear the Day-ahead Market and Day-ahead Scheduling Reserve Market based using least-cst security cnstrained resurce cmmitment and dispatch that simultaneusly ptimizes energy and reserves. Revisin: 92, Effective Date: 11/01/2017 PJM

13 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 1: Overview f Energy & Ancillary Services Market Operatins Determine a plan t reliably serve the hurly energy and reserve requirements f the PJM RTO by minimizing the cst t prvide additinal perating reserves abve what was scheduled in the Day-ahead Market if required. Perfrm hurly scheduling thrughut the Operating Day as required. Exhibit 1: Scheduling Timeline PJM Members submit their bids accrding t either actual cst r ffer price as designated by the Operating Agreement f PJM Intercnnectin, L.L.C. fr each generatin resurce. In this manual, Lcatinal Marginal Price (LMP) is defined as the marginal price fr energy at the lcatin where the energy is delivered r received. Fr accunting purpses, LMP is expressed in dllars per megawatt-hur ($/MWh). In perfrming this LMP calculatin, the cst f serving an increment f lad at each bus frm each resurce assciated with an eligible energy ffer is calculated as the sum f the fllwing three cmpnents f Lcatinal Marginal Price: System Energy Price, Cngestin Price, and Lss Price. In this manual, unless therwise specified, the terms LMP r Lcatinal Marginal Price refer t the ttal LMP value including all three cmpnents. Fr infrmatin n the cncept f Lcatinal Marginal Prices, please refer t Sectin 2 f this manual. Revisin: 92, Effective Date: 11/01/2017 PJM

14 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 1: Overview f Energy & Ancillary Services Market Operatins 1.1 PJM Respnsibilities In the Day-ahead Market, PJM determines the minimum prductin cst f satisfying the Demand bids, Decrement bids, perating reserves and ther ancillary services requirements f the market buyers, including the reliability requirements f the PJM RTO. In additin t the Dayahead Market scheduling prcess, PJM will als schedules resurces t: Satisfy the reserve requirements f the PJM RTO by minimizing the cst t prvide additinal perating reserves abve what was scheduled in the Day-ahead Market if required, Prvide ther ancillary services requirements f the market buyers, Satisfy all ther reliability requirements f the PJM RTO. Specifically, PJM s respnsibilities t supprt scheduling activities fr all PJM Members include: PJM develps the Day-ahead Market financial schedules based upn participantsupplied bids, ffers and bilateral transactin schedules using least-cst security cnstrained resurce cmmitment and dispatch analysis. The fllwing infrmatin is psted after the Day-ahead Market clears by 1330: Schedules fr Next Day by participant (generatin & demand), Transactin Schedules, Day-ahead LMPs, Day-ahead Cngestin Prices, & Day-ahead Lss Prices Day-ahead Binding Transmissin Cnstraints, Day-ahead Net Tie Schedules, Day-ahead Reactive 500 kv Interface Indicatr Limits PJM Lad Frecast, Aggregate Demand Bids PJM Day-ahead Scheduling Reserve (Operating Reserve) Objective. Perfrm scheduling fr the PJM Frecasted lad and reserves nt cvered by the Dayahead demand bids, Self-Scheduled Resurces r Bilateral Transactins, including scheduling generatin t relieve expected transmissin cnstraints Maintain data and infrmatin which is related t generatin facilities in the PJM RTO, as may be necessary t cnduct the scheduling and dispatch f the PJM Interchange Energy Market and PJM RTO Pst the updated frecast f PJM Lad and f the lcatin and duratin f any expected transmissin cngestin between areas in the PJM RTO Revise schedule f resurces t reflect updated prjectins f lad, changing Bulk Electric System cnditins, availability f and cnstraints f limited energy and ther resurces Ntificatin t PJM stakehlders f any new clsed lp interface implementatin shuld be made as far in advance as pssible and shuld be annunced 5 days prir t the next FTR Revisin: 92, Effective Date: 11/01/2017 PJM

15 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 1: Overview f Energy & Ancillary Services Market Operatins auctin clse thrugh psting n OASIS System Infrmatin and ntificatin thrugh t the MIC and OC explder lists. Exceptins t this are limited t estimated shrt duratin planned, emergency r maintenance utages, (e.g., <10 days) t set price, r t allw Demand Respnse (DR) t set price if a transmissin limitatin exists as defined in the PJM Tariff and manuals. The psting will include the interface name, effective date, estimated terminatin date (if applicable), whether included in DA mdel, whether included in the FTR mdel, cnditins when use is applicable, general descriptin, interface definitin/branch names and directins, whether it will set price fr DR, generatin, r bth and any revisin histry. PJM will pst interface definitin with netwrk mdel map-able branch names in CSV r XLS frmat. In additin PJM will prvide ntice when PJM is studying if a new clsed lp interface may be defined and any infrmatin regarding the mdeling f such prspective clsed lp interface. 1.2 PJM Market Participants Respnsibilities Only PJM Members are eligible t submit ffers and purchase energy r related services in the Day-ahead Energy Market and in the Real-time Energy Market. PJM Members include Market Buyers and Market Sellers Market Buyers There are tw general types f Market Buyers: Metered Market Buyer A Metered Market Buyer is a buyer that is purchasing energy frm the PJM Interchange Energy Market fr cnsumptin by end-users inside the PJM RTO. A Metered Market Buyer may be further classified as a Generating Market Buyer. A Generating Market Buyer is a Metered Market Buyer that wns r has cntractual rights t the utput f generatin resurces that are capable f serving the Market Buyer s lad in the PJM RTO r selling energy-related services in the PJM Interchange Energy Market r elsewhere. The scheduling respnsibilities f a Metered Market Buyer are t: Submit frecasts f custmer lads fr the next Operating Day. Submit ecnmic lad management agreements t PJM. Submit Bilateral Transactins fr delivery within the PJM RTO, regardless f whether the generatin is lcated inside r utside the PJM RTO. Unmetered Market Buyer An Unmetered Market Buyer is a Market Buyer that is making purchases f energy frm the PJM Interchange Energy Market fr cnsumptin by metered end-users r end-users that are lcated utside the PJM RTO. The scheduling respnsibilities f an Unmetered Market Buyer are t: Submit ptinal requests t purchase specified amunts f energy fr each hur f the Operating Day during which it intends t purchase frm the PJM Dayahead Energy Market, alng with Dispatch Rates (i.e. price-sensitive Demand Bids) abve which it des nt desire t purchase, if desired. Purchase transmissin capacity reservatin in rder t receive generatin frm PJM Interchange Energy Market if the energy is being delivered t end-users that are lcated utside the PJM RTO. Revisin: 92, Effective Date: 11/01/2017 PJM

16 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 1: Overview f Energy & Ancillary Services Market Operatins By definitin, all Market Buyers becme Market Sellers upn apprval f their applicatins and therefre carry the respnsibilities f Market Sellers utlined belw Market Sellers A Market Seller is a PJM Member that demnstrates t PJM that it meets the standards fr the issuance f an rder mandating the prvisin f transmissin service under Sectin 211 f the Federal Pwer Act, submits an applicatin t the PJM, and is apprved by the Market Administrative Cmmittee (see the Manual 33: Administrative Services fr the PJM Intercnnectin Operating Agreement). The scheduling respnsibilities f a market seller include: Submit hurly schedules fr Self-Scheduled Resurce increments. Submit a frecast f the availability f each Generatin Capacity Resurce fr the next seven days. Submit Offer Data fr Generatin Capacity Resurces fr supply f energy t the PJM Day-ahead Energy Market fr the next day whether Self-Scheduled r PJM scheduled. Submit schedules fr bilateral sales t entities utside the PJM RTO frm within the PJM RTO. Submit ptinal ffers fr the supply f energy, capacity, and ther services frm Energy Resurces int the Day-ahead Energy Market r the Real-time Energy Market fr the next perating day nly Lad Serving Entities A Lad Serving Entity (LSE) is any entity that has been granted authrity r has an bligatin pursuant t state r lcal law, regulatin, r franchise t sell electric energy t end-users that are lcated within the PJM RTO. An LSE may be a Market Buyer r a Market Seller, as described abve Curtailment Service Prviders A Curtailment Service Prvider is a Member r Special Member, which acting n behalf f itself r ne r mre ther Members r nn-members, participates in the PJM Interchange Energy Market by causing a reductin in demand. Revisin: 92, Effective Date: 11/01/2017 PJM

17 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Sectin 2: Overview f the PJM Energy Markets Welcme t the Overview f the PJM Energy Markets sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: An verview descriptin f the PJM Energy Markets (see Overview f PJM Energy Markets ). A list f the PJM Tw-Settlement Market Business Rules (see PJM Energy Markets Business Rules ). 2.1 Overview f PJM Energy Markets The PJM Energy Markets cnsists f tw markets, a Day-ahead market and a Real-time balancing market. The Day-ahead Market is a frward market in which hurly clearing prices are calculated fr each hur f the next perating day based n generatin ffers, demand bids, Increment ffers, Decrement bids and bilateral transactin schedules submitted int the Dayahead Market. The balancing market is the real-time energy market in which the clearing prices are calculated every five minutes based n the actual system peratins security-cnstrained ecnmic dispatch. Separate accunting settlements are perfrmed fr each market, the Dayahead Market settlement is based n scheduled hurly quantities and n day-ahead hurly prices, the balancing settlement is based n actual hurly (integrated) quantity deviatins frm day-ahead scheduled quantities and n real-time prices integrated ver the hur. The dayahead price calculatins and the balancing (real-time) price calculatins are based n the cncept f Lcatinal Marginal Pricing. The Day-ahead Market enables participants t purchase and sell energy at binding Day-ahead Lcatinal Marginal Prices (LMPs). The cmpnents f Day-ahead hurly LMPs are the Dayahead System Energy Price, Day-ahead Cngestin Price, and the Day-ahead Lss Price. It als allws transmissin custmers t schedule bilateral transactins at binding Day-ahead cngestin charges based n the differences in the Cngestin Prices between the transactin surce and sink. Lad Serving Entities (LSEs) may submit hurly demand schedules, including any price sensitive demand, fr the amunt f demand that they wish t lck-in at Day-ahead prices. Any generatr that is a PJM generatin capacity resurce that has an RPM Resurce Cmmitment must submit a bid schedule int the Day-ahead Market even if it is self-scheduled r unavailable due t utage. Other generatrs have the ptin t bid int the Day-ahead Market. Transmissin custmers may submit fixed, dispatchable r up t cngestin bid bilateral transactin schedules int the Day-ahead Market and may specify whether they are willing t pay cngestin charges r wish t be curtailed if cngestin ccurs in the Real-time Market. Curtailment Service Prviders (CSPs) may submit demand reductin bids. All spt purchases and sales in the Day-ahead Market are settled at the Day-ahead prices. Cngestin that results frm the Day-ahead sales and purchases f energy is settled at the Day-ahead Cngestin Price cmpnent f LMP. Transmissin lsses that result frm the Day-ahead sales and purchases f energy are settled at the Day-ahead Lss Price cmpnent f LMP. After the daily qute perid clses, PJM will calculate the Day-ahead schedule based n the bids, ffers and schedules submitted, using the scheduling prgrams described in Sectin 2 f this manual, based n least-cst, security cnstrained resurce cmmitment and dispatch fr each hur f the next perating day. The Day-ahead scheduling prcess will incrprate PJM reliability requirements and reserve bligatins int the analysis. The resulting DayRevisin: 92, Effective Date: 11/01/2017 PJM

18 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets ahead hurly schedules and Day-ahead LMPs represent binding financial cmmitments t the market participants. Financial Transmissin Rights (FTRs) are accunted fr at the Dayahead Cngestin Price cmpnent f LMP values (see the manual 06: Financial Transmissin Rights). The Real-time Energy Market is based n actual real-time peratins. Generatrs and Demand Resurces may alter their bids fr use in the Real-time Energy Market as defined in Sectin 9.1 f this manual during the fllwing perids: during the Generatin Rebidding Perid which is defined frm the time the ffice f intercnnectin psts the results f the Day-ahead Energy Market until Starting at 1830 (typically after the secnd resurce cmmitment is cmpleted) and up t 65 minutes prir t the start f the perating hur. Real-time LMPs are calculated based n actual system perating cnditins as described by the PJM state estimatr. LSEs will pay the Real-time LMPs fr any demand that exceeds their Day-ahead scheduled quantities (and will receive revenue fr demand deviatins belw their scheduled quantities). In the energy market, generatrs are paid the Real-time LMPs fr any generatin that exceeds their day-ahead scheduled quantities (and will pay fr generatin deviatins belw their scheduled quantities). Transmissin custmers pay cngestin charges based n the real-time Cngestin Price cmpnent f LMPs fr bilateral transactin quantity deviatins frm Day-ahead schedules. CSPs may self-schedule demand reductins fr Demand Resurces nt dispatched in real-time by PJM. All spt purchases and sales in the balancing market are settled at the real-time LMPs. Cngestin that results frm the Real-time sales and purchases f energy is settled at the Real-time Cngestin Price cmpnent f LMP. Transmissin lsses that result frm the Real-time sales and purchased f energy are settled at the Real-time Lss Price cmpnent f LMP. 2.2 Definitin f Lcatinal Marginal Price Lcatinal Marginal Price (LMP) is defined as the marginal price fr energy at the lcatin where the energy is delivered r received. Fr accunting purpses, LMP is expressed in dllars per megawatt-hur ($/MWh). LMP is a pricing apprach that addresses Transmissin System cngestin and lss csts, as well as energy csts. Therefre, each spt market energy custmer pays an energy price that includes the full marginal cst f delivering an increment f energy t the purchaser s lcatin. When there is transmissin cngestin in PJM, the PJM dispatcher dispatches ne r mre f the generating units ut f ecnmic merit rder t keep transmissin flws within limits. There may be many resurces that are dispatched t relieve the cngestin. The LMP reflects the cst f re-dispatch fr ut-f-merit resurces and cst f delivering energy t that lcatin. LMPs are calculated at all injectins, withdrawals, EHVs (nminal vltage f 500 KV and abve), Interfaces, and varius aggregatins f these pints. LMPS are calculated in bth the Real-time Energy Market and Day-ahead Energy Market. Revisin: 92, Effective Date: 11/01/2017 PJM

19 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets The LMP calculatin calculates the full marginal cst f serving an increment f lad at each bus frm each resurce assciated with an eligible energy ffer as the sum f three separate cmpnents f LMP. In perfrming this LMP calculatin, the cst f serving an increment f lad at each bus frm each resurce assciated with an eligible energy ffer is calculated as the sum f the fllwing three cmpnents f Lcatinal Marginal Price: System Energy Price - is the price at which the Market Seller has ffered t supply an additinal increment f energy frm a generatin resurce r decrease an increment f energy being cnsumed by a Demand Resurce. The System Energy Price may include a prtin f the defined reserve penalty factrs shuld a reserve shrtage exist. Cngestin Price - is the effect n transmissin cngestin csts (whether psitive r negative) assciated with increasing the utput f a generatin resurce r decreasing the cnsumptin by a Demand Resurce, based n the effect f increased generatin frm r cnsumptin by the resurce n transmissin line ladings. The Cngestin Prices may include a prtin f the defined reserve penalty factrs shuld a reserve shrtage exist. Lss Price - is the effect n transmissin lss csts (whether psitive r negative) assciated with increasing the utput f a generatin resurce r decreasing the cnsumptin by a Demand Resurce, based n the effect f increased generatin frm r cnsumptin by the resurce n transmissin lsses. The energy ffer r ffers that can serve an additinal increment f lad at a bus at the lwest cst, calculated in this manner, shall determine the Lcatinal Marginal Price at that bus. 2.3 Energy Market Business Rules Bidding & Operatins Time Line The day-ahead scheduling/bidding timeline fr PJM energy markets cnsists f the fllwing time frames: 1030 Day-ahead Market bid perid clses. All bids and ffers must be submitted t PJM. At 1030 PJM begins t run the day-ahead market clearing sftware t determine the hurly cmmitment schedules and the LMPs fr the Day-ahead Market. The Day Ahead clearing results in the resurce cmmitment prfile that satisfies the fixed demand, cleared price-sensitive demand bids, cleared demand reductin bids, and PJM Day-ahead Scheduling Reserve (Operating Reserve) bjectives, while minimizing the ttal prductin cst (subject t certain limitatins) fr energy and reserves. This cmmitment analysis als includes external bilateral transactin schedules and external resurce ffers int the PJM Day-ahead Market. By PJM psts the day-ahead hurly schedules and LMPs in the Markets Gateway System. PJM als makes these results available in dwnladable files, via the Markets Gateway System, r a dedicated cmmunicatin link. After Day-ahead Results psting-1415 PJM pens the balancing market ffer perid. During this time, market participants can submit revised resurce ffers. Hwever if the Revisin: 92, Effective Date: 11/01/2017 PJM

20 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets market participant self-scheduled their unit in the Day-ahead Market, they cannt change the unit status t ecnmic in the rebid perid The balancing market ffer perid clses. PJM perfrms a secnd resurce cmmitment, which includes the updated ffers, updated resurce availability infrmatin, and updated PJM lad frecast infrmatin and lad frecast deviatin. The fcus f this cmmitment is reliability and the bjective is t minimize start-up and n lad csts fr any additinal resurces that are cmmitted Operating Day PJM may perfrm additinal resurce cmmitment runs, as necessary, based n updated PJM lad frecasts and updated resurce availability infrmatin. PJM sends ut individual generatin schedules updates t specific generatin wners nly, as required Operating Day Starting at 1830 (typically after the Reliability Run cmpletes) and up t 65 minutes prir t perating hur, revised resurce ffers may be submitted t PJM Market Buyers The fllwing business rules apply t Market Buyers: Each Market Participant's prfile (which is defined by PJM) shall specify the transmissin znes r aggregates fr which that participant is eligible t submit demand bids. Market Buyers may submit hurly demand quantities fr which it cmmits t purchase energy at day-ahead prices fr cnsumptin in the next Operating Day. Quantity bids must specify MW quantity and lcatin (transmissin zne, aggregate, r single bus). Demand bids are assumed t exclude lsses (transmissin zne lsses and share f 500 kv lsses). Price sensitive demand bids shall specify MW quantity, lcatin (transmissin zne, aggregate, r single bus), and the price at which the demand shall be curtailed. Price sensitive demand bids are accepted in single bid blcks nly. Up t nine bid blcks may be submitted per market participant at a specific lcatin. If a Market Buyer submits n day-ahead bid infrmatin, then a zer MW quantity is assumed. The ttal MW quantity f demand bids (fixed demand bids and price sensitive demand bids) submitted by a LSE fr a given Operating Day must nt exceed the LSE s Daily Demand Bid Limit, as described in the Mechanical /Technical Rules sectin f this manual. Fr the Day-ahead Market, the Electric Distributin Cmpany (EDC) shall specify the transmissin zne, bus distributins, and aggregate bus distributins as a daily distributin. The default distributin fr a transmissin zne fr the Day-ahead Market is the state estimatr distributin fr that zne at 0800 ne week prir t the Operating Day (i.e. if next Operating Day is Mnday, the default distributin is frm 0800 n Mnday f the previus week). The default distributin fr a residual metered lad aggregate fr the Day-ahead Market is the final real-time distributin factrs fr the residual metered lad aggregate at 8 a.m. ne week prir t the Operating Day. See Manual 28, Sectin 3 fr additinal details n residual metered lad aggregates. Revisin: 92, Effective Date: 11/01/2017 PJM

21 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets The EDC may update the default distributin factrs fr a transmissin zne nly after the state estimatr ppulates the default. EDCs shall submit a frecast f demand within their transmissin zne. This is fr reliability purpses nly (and des nt, therefre, require a binding bid). A Market Buyer that is nt an LSE r purchasing n behalf f an LSE is nt required t purchase transmissin service fr purchases frm the PJM Market t cver deviatin frm its sales in a day-ahead market. The list f transmissin znes, aggregates, and single buses at which demand bids are accepted is defined by PJM. Market Buyers may submit increment ffers r decrement bids at any hub, transmissin zne, aggregate, single bus r eligible external interface pint (psted n the PJM Web site) fr which an LMP is calculated. It is nt required that physical generatin r lad exists at the lcatin that is specified in the increment ffer r decrement bid. PJM may require that a market participant shall nt submit in excess f 3000 virtual bid/ ffer segments in the Day-ahead Energy Market, when PJM determines that such limit is required t avid r mitigate significant system perfrmance prblems related t the vlume f virtual bids. Energy market transactins, except generatin resurce ffers, may be submitted with an energy bid/ffer price f n greater than $2,000/MWh plus the sum f the applicable Primary Reserve and Synchrnized Reserve Penalty Factrs frm the first step f the demand curve nt t exceed $3,700/MWh Market Sellers The fllwing business rules apply t Market Sellers: Self-scheduled generatin shall submit an hurly MW schedule. Generatrs that are Capacity Resurces shall submit ffers int the Day-ahead Market, even if they are unavailable due t frced, planned, r maintenance utages. Generatin Capacity Resurces are cnsidered Capacity Perfrmance Resurces fr purpses f determining the applicable PLS fr the resurce if they have a daily Capacity Perfrmance bligatin fr any MW f Capacity Perfrmance prduct fr that delivery day. In ther wrds, if a Generatin Capacity Resurce has a capacity cmmitment fr a certain number f MW in an RPM Auctin fr the 2016/2017 r 2017/2018 Delivery Years as an Annual Resurce (i.e. nn-capacity Perfrmance Resurce), but als has a capacity cmmitment fr a certain number f MW thrugh a Transitin Incremental Auctin fr the same Delivery Year as a Capacity Perfrmance Resurce, the PLS fr that resurce shall be the unit-specific PLS applicable t Capacity Perfrmance Resurces, nt the default PLS that typically applies t Annual Resurces. Generatrs that are Capacity Resurces and are self-scheduling shall submit ffer data in the event that they are called upn during emergency prcedures. Such ffers shall be based n the ICAP equivalent f the cleared UCAP capacity cmmitment. Generatin Capacity Resurces shall submit a schedule f availability fr the next seven days and may submit nn-binding ffer prices fr the days beynd the next Operating Day. Revisin: 92, Effective Date: 11/01/2017 PJM

22 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets The set f ffer data last submitted fr each Generatin Capacity Resurce shall remain in effect fr each day until specifically superseded by subsequent ffers. Any hurly updates made t the Offer Updates r Detail Updates pages f Markets Gateway supersede the daily values n the Offer and/r Detail pages. Hurly updates made n the Offer Updates r Detail Updates pages are nt carried ver int the next perating day. If a Generatin Capacity Resurce is nt scheduled in the Day-ahead Market, it may revise its ffer and submit int the Real-time Market r it may self-schedule the resurce. Generatin wners planning t run generatin resurces scheduled in the Day-ahead Markets are required t call the PJM Cntrl Center at least 20 minutes prir t bringing the unit nline. Generatin wners f self-scheduled generatin resurces must als prvide at least 20 minutes ntice. Generatin resurces that are scheduled in the Day-ahead Market have a financial bligatin t sell their utput in real-time. Prvisins exist in the Tariff that permit make whle payments t be made t thse cmbustin turbines that are scheduled in the Dayahead Market and then nt called n in real-time by PJM that are furthered defined in PJM Manual 28. Market Sellers can select the Switch t Cst Schedule flag in Markets Gateway (Detail Updates tab) between 1830 the day prir t the perating day and 65 minutes prir t the perating hur. Selecting this flag will make the price-based schedule(s) unavailable fr the remainder f the perating day selected and will ensure any future cmmitments fr the perating day are made n an available cst-based schedule. Once the Switch t Cst Schedule ptin is selected, the Market Seller will nt have the ptin t resume using the price-based schedule fr the remainder f the perating day. Generatin Capacity Resurces that have ntificatin, startup, and minimum run times that exceed 24 hurs must submit binding price-based ffer prices fr the next seven days. Generatin Capacity Resurces that have ntificatin plus startup times that exceed 24 hurs and have been called n by PJM dispatch in advance f the clse f the Dayahead Market bid perid fr the desired Operating Day must mdify their ntificatin and startup time prir t the clse f the market bid perid fr that day in rder t create the pssibility fr the unit t be cmmitted in the Day-ahead Market. Generatin resurces that are cmmitted by PJM in advance f the Day-Ahead Energy Market will be ffer capped and cmmitted n the applicable available schedule at the time f the cmmitment. The cst-based schedule made available must fllw the Generatin Owner s Fuel Cst Plicy as defined in PJM Manual 15: Cst Develpment Guidelines. Each Generatin Capacity Resurce must make available at least ne cst-based schedule and fr price based units, if it falls within the types f generatrs in the PJM Unit Parameter matrix it must als submit a Price Based Parameter Limited Schedule. Generatin ffers may cnsist f startup, n-lad and incremental energy ffer. Generatin resurce cst based incremental energy ffers must be develped in accrdance with Manual 15 and PJM s gverning dcuments. Revisin: 92, Effective Date: 11/01/2017 PJM

23 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Generatin resurce market based incremental energy ffers may nt exceed $1,000/ MWh unless cst based incremental energy ffer is greater than $1,000/MWh then the market based incremental energy ffer is capped at the lesser f the cst based incremental energy ffer r $2,000/MWh. Market Sellers with a cst based incremental energy ffer greater than $2,000/MWh may be eligible t receive credit fr Operating Reserves. Market Sellers must submit all relevant dcumentatin demnstrating the calculatin f csts greater than $2,000/MWh t PJM and the MMU in accrdance with Attachment D. Emergency and Pre-Emergency Demand Resurce emergency r pre-emergency ffer price may nt exceed the fllwing: 30 minute lead time: $1,000/MWh, plus the applicable Primary Reserve Penalty Factr frm the first step f the demand curve, minus $1.00 apprved 60 minute lead time: $1,000/MWh, plus [the applicable Primary Reserve Penalty Factr frm the first step f the demand curve divided by 2]; and apprved 120 minute lead time: $1,100/MWh. An ecnmic demand resurce ffer may nt exceed $1,000/MWh, plus the applicable Primary Reserve Penalty Factr frm the first step f the demand curve, minus $1.00 Energy resurces may ffer int the Day-ahead Market r Real-time Market. If an Energy resurce des nt submit ffer data, then the ffer is assumed t be a zer MW quantity. Intermittent Generatin Resurces, that are Capacity Resurces, and Capacity Strage Resurces shall meet the must ffer requirement by either self-scheduling (Availability = Must Run) r may allw the Day-ahead Market t schedule by ffering the unit as a dispatchable resurce (Availability = Ecnmic). The hurly Day-ahead self-scheduled values fr intermittent resurces and Capacity Strage Resurces may vary hur t hur frm the capacity bligatin value. Market Seller with Market-based Rate Authrity may elect t ffer their generatin resurces as price-based resurces. PJM must be ntified f this electin s that Markets Gateway can be cnfigured t accept price-based ffers fr the selected resurce. Once a Market Seller elects t ffer a resurce as a price-based resurce, they may nt change it back t a cst-based resurce. Fr price-based units, a price-based parameter limited schedule must be ffered int the Day-ahead and Balancing Market. All price-based units have the ptin f submitting a secnd price schedule that is nt parameter limited. In additin t the price-based schedules, ne cst-based schedule shall be made available fr PJM's use in the event that the resurce is used t cntrl a transmissin cnstraint. The cst-based schedule shall be parameter-limited. A generatr ffer that is accepted fr the Day-ahead Market autmatically carries ver int the balancing market, unless superseded by a subsequent update. A generatr ffer fr a generating unit with cmbined cycle capability shall make available either the schedules fr the CTs r the schedule fr the cmbined cycle unit, Revisin: 92, Effective Date: 11/01/2017 PJM

24 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets nt bth. Only CTs may submit weather curves, which specify MW limits fr CTs as a functin f temperature. Frecast pints shall cnsist f a daytime temperature and a nighttime temperature. There are separate weather curves fr ecnmic MW and fr emergency MW. Each CT is assigned t a weather pint, which is entered by the Operating Cmpany. As generating units change wnership it may be necessary t add weather pints. The default fr the weather pints is the PJM temperature frecast. The pririty f generatr ffer perating limits are as fllws: (1) Unit Hurly MW limits (Markets Gateway>Generatr>Unit>Hurly), (2) Daily Unit Schedule Limits (Markets Gateway>Generatr> Schedules>Detail), (3) Unit limits (Markets Gateway>Unit>Detail). Daily unit schedule MW limits can be verridden by unit hurly MW limits. Weather curves fr CTs apply t bth unit limits and schedule limits. Market Sellers may submit increment ffers r decrement bids at any hub, transmissin zne, aggregate, single bus r eligible external interface pint (psted n the PJM Web site) fr which an LMP is calculated. It is nt required that physical generatin r lad exists at the lcatin that is specified in the increment ffer r decrement bid. A price-based unit has the ptin t chse cst-based start-up and n-lad fees. A price-based unit that chses the cst based ptin may specify the start-up and nlad fees fr each hur and update thse values in real-time in accrdance with the rules defined in Sectin 9.1 f this Manual. A priced-based unit that chses the price based ptin will cntinue t be able t change the start-up and n-lad fees twice a year. The chice between using cst-based and price-based startup and n-lad fees can be made twice a year during the same pen enrllment windw (n r befre 1030 hurs March 31 fr the perid April 1 thrugh September 30 and n r befre 1030 hurs September 30 fr the perid Octber 1 thrugh March 31). Perid 1 is defined as the perid f time beginning April 1 and ending September 30. Perid 2 is defined as the perid f time beginning Octber 1 and ending March 31. If a priced based unit chses the cst-based start-up and n-lad fees ptin, the decisin cannt be changed until the next pen enrllment perid takes place. When a unit r part f a unit is designated as Maximum Emergency (ME), this means that the referenced utput levels may require extrardinary prcedures and that the designated MW is available t PJM nly when PJM requests Maximum Emergency Generatin. Designatin f a unit r a prtin f a unit as ME shuld be based n the real perating characteristics f the unit and nt be used t withhld all r a prtin f the capacity f a unit frm the Day-ahead Market. Designatin f all r part f a unit s capacity as Maximum Emergency (ME) cnstitutes withhlding in the Day-ahead Market, if: The capacity is nt designated as ME in the bid fr the Real-time Market, r; There is n physical reasn t designate the unit as ME. The cnsequence f withhlding a unit s capacity under ME is: The unit will be given an utage ticket which reflects a de-rating equal t the psitive difference in capacity designated Maximum Emergency in the bid fr the Day-ahead Revisin: 92, Effective Date: 11/01/2017 PJM

25 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Market and capacity designated Maximum Emergency in the bid fr the Real-time Market. A unit bid includes an Ecnmic Maximum pint, which is the highest utput n its bid curve that the unit is ffering fr ecnmic dispatch. The Ecnmic Max represents the highest unrestricted level f MW that the perating cmpany will perate the unit, under its ffer, fr ecnmic dispatch. The Ecnmic Max pint shuld be based n the actual capability f the unit t perate n its bid curve and shuld nt be used t withhld a prtin f the capacity f a unit frm the Day-ahead Market. Reductin f Ecnmic Max MW cnstitutes withhlding in the Day-ahead Energy Market, if: The Ecnmic Max MW is higher in the bid fr the Real-time Energy Market than in the bid fr the Day-ahead Market, r; There is n physical reasn t designate a lwer Ecnmic Max in the bid fr the Day-ahead Market bid than in the bid fr the Real-time Market. The cnsequence f withhlding a unit s capacity by reductin f Ecnmic Max MW is: The unit will be given an utage ticket which reflects a derating equal t the psitive difference in Ecnmic Max utput designated in the bid fr the Real-time Market and in the bid fr the Day-ahead Market. Generating units that are cnnected t the system at the same electrical lcatin may be aggregated and ffered int the PJM market as a single unit. The aggregated unit must be ffered int the PJM markets as a single unit with nly ne set f ffer data, including startup, n lad and incremental energy. This rule applies t all energy and ancillary service markets int which the unit is ffered. Hurly integrated, revenue quality meter data must be submitted t Pwer Meter n the basis f the aggregated unit. Real-time meter data is required fr each physical unit in rder t supprt the PJM state estimatr mdel and t allw energy settlement n an individual unit level. Balancing Operating Reserve deviatins fr aggregated units will be calculated based n the hurly aggregated unit utput as defined in PJM Manual 28: Operating Agreement Accunting, sectin n Operating Reserve Accunting. Balancing Operating Reserve Generatr deviatins fr units deemed t be nt fllwing dispatch that ccur at a single bus will be able t ffset ne anther. A single bus will be any unit lcated at the same site and that has the identical electrical impacts n the transmissin system. Units are deemed t have identical electrical impacts n the transmissin system if they meet the fllwing criteria: Units that have identical dfax t the system Units that are n the same lw side f the bus (i.e. cnnected at same vltage level) In the case f units n busses with bus-tie breaker, if bus-tie breaker was pen less than 5% f the hurs in the previus 3 years, supplier netting f units will be allwed acrss this bus-tie breaker. Revisin: 92, Effective Date: 11/01/2017 PJM

26 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets PJM will maintain a list f units that are deemed t have identical electrical impacts n the transmissin system t be used fr Balancing Operating Settlement. PJM will review the list n an annual basis. Generatrs will be reviewed as needed during any new generatin activatin r recnfiguratin prcess as defined in Sectin 7 f PJM Manual 14D: Generatr Operatinal Requirements. Unit parameters d nt have t be identical fr the units deviatin MW t ffset ne anther. If multiple units are deemed nt fllwing dispatch at a single bus, the deviatin MW and directin f each unit at that bus will be summed t determine the deviatin MW at that bus. Units at a single bus must be wned r marketed by single PJM Market Participant. Unit mdeling changes in the PJM Markets Gateway system (unit type, aggregatin level, fr example), nt including changes based n physical changes at the plant, can be made at the beginning f each quarter. CT s are permitted t prvide an Ecnmic Minimum less than the physical ecnmic minimum value f the unit. Per the PJM Manual fr Operating Agreement Accunting (M28), fr settlement purpses, PJM determines the resurce s hurly UDS LMP Desired MWh based n its dispatch rate, ffer data, and minimum and maximum energy limits fr that hur. Fr steam units, the lesser f the day-ahead scheduled and real-time ecnmic minimum limits, and the greater f the day-ahead scheduled and real-time ecnmic maximum limits, are used. Fr CT s, perating at PJM directin, the actual real-time utput is used as the UDS LMP Desired MWh value Minimum Generatr Operating Parameters Parameter Limited Schedules Belw is the list f business rules t require units t submit schedules that meet minimum accepted parameters. Market Sellers are required t submit, per Sectin f this Manual, as fllws: (1) at least ne cst-based schedule that is parameter limited, (2) ne price-based schedule, and (3) ne price-based parameter limited schedule. Generatin Capacity Resurces shall be cmmitted n these schedules under the fllwing circumstances: Fr the 2014/2015 thrugh 2017/2018 Delivery Years, in the event that PJM: (i) declares a Maximum Generatin Emergency; (ii) issues a Maximum Generatin Emergency Alert; r (iii) schedules units based n the anticipatin f a Maximum Generatin Emergency r a Maximum Generatin Emergency Alert fr all r any part f such Operating Day, generatin resurces will be cmmitted n the mre ecnmic schedule f their price based parameter-limited schedule and price based schedule. Fr Capacity Perfrmance Resurces, in the event that PJM: (i) declares a Maximum Generatin Emergency; (ii) issues a Maximum Generatin Emergency Alert, Ht Weather Alert, Cld Weather Alert; r (iii) schedules units based n the anticipatin f a Maximum Generatin Emergency, Maximum Generatin Emergency Alert, Ht Weather Alert r Cld Weather Alert fr all r any part f such Operating Day; generatin resurces will be cmmitted n the mre ecnmic schedule f their price based parameter limited schedule and price based schedule. Fr Base Capacity Resurces, in the event that PJM: (i) declares a Maximum Generatin Emergency; (ii) issues a Maximum Generatin Emergency Alert, Ht Revisin: 92, Effective Date: 11/01/2017 PJM

27 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Weather Alert during ht weather peratins; r (iii) schedules units based n the anticipatin f a Maximum Generatin Emergency, Maximum Generatin Emergency Alert, Ht Weather Alert during ht weather peratins fr all r any part f such Operating Day; generatin resurces will be cmmitted n the mre ecnmic schedule f their price based parameter limited schedule and price based schedule. If a Market Seller fails the three pivtal supplier test in the Energy Markets, the Seller s resurces will be cmmitted n the schedule with the least cst amng the cst-based schedule, price-based schedule and price-based parameter limited schedule. Fr the 2014/2015 thrugh 2017/2018 Delivery Years, PJM will define a list f minimum acceptable perating parameters fr Generatin Capacity Resurces ther than Capacity Perfrmance Resurces, and fr the 2018/2019 Delivery Year fr generatin resurces f FRR Entities nt cmmitted as Base Capacity Resurces r Capacity Perfrmance Resurces, based n an analysis f histrically submitted ffers, fr each unit class fr the fllwing parameters: Turn Dwn Rati Minimum Dwn Time Minimum Run Time Maximum Daily Starts Maximum Weekly Starts Fr the 2016/2017 and subsequent Delivery Years fr Capacity Perfrmance Resurces, and fr the 2018/2019 and 2019/2020 Delivery Years fr Base Capacity Resurces, the list f minimum acceptable parameters will cnsist f the fllwing parameters: Turn Dwn Rati Minimum Dwn Time Minimum Run Time Maximum Daily Starts Maximum Weekly Starts Maximum Run Time Start Up Time Ntificatin Time Fr the Delivery Years up t an including f the 2017/2018 Delivery Year, the limits set frth in the Parameter Limited Schedule Matrix shall apply t Generatin Capacity Resurces, ther than Capacity Perfrmance Resurces, and fr the 2018/2019 Delivery Year fr generatin resurces f FRR Entities nt cmmitted as Capacity Perfrmance Resurces r Base Capacity Resurces, unless the generatin resurce is perating pursuant t an exceptin frm the default values due t physical peratinal limitatins that prevent the resurce frm meeting the minimum parameters. The Parameter Limited Schedule Matrix is fund in Sectin 6.6(c) f Attachment K-Appendix f the Tariff and the parallel prvisin f Schedule 1 f the Operating Agreement fund at: Revisin: 92, Effective Date: 11/01/2017 PJM

28 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Fr the 2018/2019 and 2019/2020 Delivery Years fr Base Capacity Resurces, and the 2016/2017 Delivery Year and subsequent Delivery Years fr Capacity Perfrmance Resurces, PJM will determine fr each such resurce its unit-specific parameter limits based n the perating design characteristics and ther cnstraints f that resurce. The resurce s unit-specific parameter limits will apply fr that resurce unless it is perating pursuant t an exceptin frm thse limits under sectin 6.6(h) f Attachment K-Appendix f the Tariff and the parallel prvisin f Schedule 1 f the Operating Agreement due t peratinal limitatins that prevent it frm meeting the minimum resurce parameters. Market Sellers that d nt believe their individual resurces can meet the unit-specific parameter limits determined by PJM due t actual perating cnstraints, can request that PJM establish adjusted unit-specific parameter limits fr thse resurces. The Market Seller may request adjusted unit-specific parameter limits by prviding all the necessary data, infrmatin and dcumentatin t PJM in rder t justify and supprt the adjusted unit-specific parameter limits at unitspecificpls@pjm.cm by n later than the February 28 immediately preceding the first Delivery Year fr which the adjusted unit-specific parameter limits are requested t cmmence, and prvide technical infrmatin abut the peratinal limits that supprt the requested adjustment. PJM shall ntify the Market Seller if its request was apprved r denied by n later than April 15. The effective date f the requested parameter shall be n earlier than June 1 f the first applicable Delivery Year. PJM will cnsult with the Market Mnitring Unit and cnsider any input received in its determinatin f a resurce s unit-specific parameter limits. Once PJM has made a determinatin f the unit-specific parameter limited schedule values fr a Generatin Capacity Resurce, thse values will remain applicable t the resurce until such time as the Office f the Intercnnectin determines that a change is needed based n changed peratinal capabilities f the resurce. The peratinal limitatins that supprt adjusted unit-specific parameter limits shall be (a) physical peratinal limitatin based n perating design characteristics f the resurce, r (b) ther actual physical cnstraints that are nt based n the characteristics f the resurce, including cntractual limitatins. Fr a cntractual limit t be cnsidered a physical cnstraint which the Market Seller shuld be permitted t reflect in its unit-specific parameter limits fr the resurce, and nt an ecnmic cnstraint which shuld nt be taken int cnsideratin in the determinatin f the unitspecific parameter limits fr that resurce, the cntractual limit must be based n a natural gas pipeline transprtatin cntract that is fr the best available service ffered by the pipeline and available t the Market Seller rather than a lwer cst ptin that prvides less flexible service. Fr example, if a pipeline ffers hurly nminatins and/ r n ntice service, the resurce s peratinal parameters will be based n thse mre flexible services that are available even if a less flexible service is prcured. Only actual physical peratinal limitatins, fuel cntractual cnstraints, envirnmental limitatins and ther actual cnstraints n a resurce will be cnsidered fr adjustment requests. The fllwing list is nt an exhaustive list, but prvides examples f the types f infrmatin and dcumentatin PJM wuld request t supprt adjusted unit-specific parameter limits requests: Start Up Time adjustments OEM (Original Equipment Manufacturer) backup dcumentatin, cntrl rm data, startup/lading curves and a detailed start-up Revisin: 92, Effective Date: 11/01/2017 PJM

29 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets sequence listing the required steps alng with the time required t perfrm each step. Maximum Daily/Weekly Starts adjustments OEM backup dcumentatin and/ r detailed start-up and shutdwn sequences that shw why the default start parameters cannt be physically met. Minimum Run Time adjustments OEM backup dcumentatin fr physical unit cnstraints that requires the unit t be perated fr the requested time perid. Minimum Dwn Time adjustments - OEM backup dcumentatin and a detailed shut dwn sequence listing the required steps t bring the unit int a ready fr startup cnditin alng with the time required t perfrm each step. Ntificatin Time Adjustment A detailed sequence f events f the tasks required prir t startup alng with the time required t perfrm each step. In additin gas pipeline cntracts may be submitted fr review. Turn Dwn Rati Adjustments Requests fr adjustments t this parameter based n physical equipment limitatins shuld include OEM backup dcumentatin describing the equipment limitatin. Requests fr adjustments t this parameter based n emissins permit limitatins and related cncerns will require inclusin f the applicable Air Permit as well as emissins data fr justificatin. There are three different types f exceptins t the Parameter Limited Schedule Matrix default values: Temprary Exceptin is a ne-time exceptin lasting fr 30 days r less during the twelve mnth perid frm June 1 t May 31. Perid Exceptin is an exceptin lasting fr at least 31 days but n mre than ne year during the twelve mnth perid frm June 1 t May 31. Persistent Exceptin is an exceptin lasting fr at least ne year. Fr the Delivery Years up t and including the 2018/2019 Delivery Year, the MMU shall review the Parameter Limited Schedule Matrix, included in Sectin 6.6(c) f Attachment K-Appendix f the Tariff and the parallel prvisin f Schedule 1 f the Operating Agreement, annually, and, in the event it determines that revisin is apprpriate, shall prvide a revised matrix t PJM by n later than December 31 that ccurs immediately prir t the cmmencement f the applicable Delivery Year. Pursuant t sectin II.B f Attachment M Appendix f the Tariff, perid and persistent exceptin requests must send t Parameters.Exceptins@pjm.cm by n later than February 28 immediately preceding the twelve mnth perid frm June 1 t May 31 during which the exceptin is requested t cmmence. All market sellers that wish t submit a Parameter-Limited Schedule fr units with physical peratinal limitatins that prevent the units frm meeting the minimum parameters may submit a request fr an exceptin via Markets Gateway fr evaluatin. Each market seller seeking an exceptin must supply the required histrical unit perating data in supprt f the perid r persistent exceptin and if the exceptin requested is based n new physical peratinal limits fr the resurce fr which histrical perating data is unavailable, the generatin resurce may als submit technical infrmatin abut the physical peratinal limits fr perid exceptins f the resurce t supprt the requested parameters. Revisin: 92, Effective Date: 11/01/2017 PJM

30 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Physical peratinal limitatins fr perid r persistent exceptins may include but are nt limited t, metallurgical restrictins due t age and lng term degradatin; physical design mdificatins; perating permit limitatins; perating limits impsed by federal, state r lcal regulatry requirements r insurance carrier requirements; cnsent decrees; manufacturer technical bulletins; r envirnmental permit limitatins under nnemergency cnditins. Each market seller requesting a perid r persistent exceptin based n new physical peratinal limitatins fr a unit may submit the technical infrmatin, required due t the unavailability f histrical perating data, supprting the requested parameters, which must be based n the definitin f physical peratinal limitatins fr perid r persistent exceptins f the unit. Each temprary, perid r persistent exceptin request will indicate the expected duratin f the requested exceptin including the date n which the requested exceptin perid will end. If physical cnditins at the unit change such that the exceptin is n lnger required, the market seller is bligated t infrm PJM and the MMU and the exceptin will be reviewed t determine if the exceptin cntinues t be apprpriate. If a request fr a perid r persistent exceptin is received by February 28, the MMU will review the exceptin and prvide the Market Seller and PJM with a determinatin in writing whether the request raises market pwer cncerns by April 1, and PJM shall prvide its determinatin whether the request is apprved r denied by n later than April 15. Shuld PJM require additinal technical expertise in rder t evaluate the exceptin request, PJM will engage the services f a cnsultant with the required expertise. A generatin resurce shall ntify the MMU and PJM when the temprary exceptin cmmences and terminates and prvide t the MMU and PJM within three days fllwing such cmmencement dcumentatin explaining in detail the reasns fr the temprary exceptin, that includes: Unit Name Parameter Limit Requested Reasn fr Temprary Exceptin Request edart ticket Justificatin fr Temprary Exceptin Request, including required unit perating data in supprt f the exceptin Date n which the exceptin perid will end. Market Seller can cmmunicate the resurce s current peratinal capabilities t PJM befre and after Day-ahead Energy Market clses thrugh Real Time Values functins n Markets Gateway. Real Time Values shuld be utilized when a resurce cannt perate accrding t the unit specific parameters (Capacity Perfrmance and Base Capacity resurces), default Parameter Limited Schedules (nn-capacity Perfrmance resurces), r apprved Parameter Limit exceptins. The Real Time Values cnsist f the fllwing values: Turn Dwn Rati Minimum Dwn Time Minimum Run Time Revisin: 92, Effective Date: 11/01/2017 PJM

31 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Maximum Run Time Start Up Time Ntificatin Time A Generatin Capacity Resurce that perates utside f its unit-specific parameters will nt receive Operating Reserve Credits nr be made whle fr such peratin when nt dispatched by the Office f the Intercnnectin, unless the Market Seller f the Generatin Capacity Resurce can justify t the Office f the Intercnnectin that peratin utside f such unit -specific parameters was the result f an actual cnstraint. Such Market Seller shall prvide t the Market Mnitring Unit and the Office f the Intercnnectin (unitspecificmakewhle@pjm.cm) its request t receive Operating Reserve Credits and/r t be made whle fr such peratin, alng with dcumentatin explaining in detail the reasns fr perating its resurce utside f its unit-specific parameters, within thirty calendar days fllwing the issuance f billing statement fr the Operating Day. The Market Seller shall als respnd t additinal requests fr infrmatin frm the Market Mnitring Unit and the Office f the Intercnnectin. The Market Mnitring Unit shall evaluate such request fr cmpensatin and prvide its determinatin f whether there was an exercise f market pwer t the Office f the Intercnnectin by n later than twentyfive calendar days after receiving the Market Seller s request fr cmpensatin. The Office f the Intercnnectin shall make its determinatin whether the Market Seller justified that it is entitled t receive Operating Reserve Credits and/r be made whle fr such peratin f its resurce fr the day(s) in questin, by n later than thirty calendar days after receiving the Market Seller s request fr cmpensatin. If PJM des nt receive a cmplete exceptin request, and the unit did nt clear in the Day-ahead Energy Market, the unit schedule will returned t its previus parameter limits. Physical peratinal limitatins fr temprary exceptins may include, but are nt limited t, shrt term equipment failures, shrt term fuel quality prblems such as excessive misture in cal fired units, r envirnmental permit limitatins under nn-emergency cnditins. Market Sellers may use exceptins t reflect physical peratinal limitatins (e.g., peratinal flw rders) n natural gas pipelines and lcal natural gas distributin cmpanies (LDC). These exceptins will be reviewed by PJM and the MMU and apprved by PJM, in accrdance with the applicable prvisins f the Tariff and Operating Agreement. In additin, physical peratinal limitatins fr temprary exceptins may include any physical peratinal limitatin fr perid exceptins that arises during the annual perid frm June 1 t May 31 t which perid exceptins apply. Fr steam units, regardless f fuel type, the average histrical values fr any f the parameters as ffered by the wners fr the calendar year 2006 may be used in place f the values in the parameter-limited schedule matrix. Fr steam units, regardless f fuel type, the histrical averages are calculated frm the market based ffers fr market based units and frm cst-based ffers fr units that made nly cst-based ffers. Fr cmbined cycle units: Revisin: 92, Effective Date: 11/01/2017 PJM

32 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets If the 2006 average histrical market-based ffer parameters are within the limits in the parameter matrix, the unit will be limited t that 2006 histrical average. If nt then ii) applies; If the unit was ffered with market-based ffer parameters fr 10% r mre f the days (36 days minimum) at a level at r mre flexible than parameters in matrix, the unit will be limited at that level. If nt the iii) applies If the 2006 average histrical market based ffer parameters exceed the limits in the matrix (less flexible than the parameters in the matrix) then the unit will be limited t the level at which the market-based parameter was bid t the mst flexible level fr 10% r mre f the days (36 days minimum) at that level. If physical cnditins at the unit change such that the exceptin is n lnger required, the market seller is bligated t infrm PJM and the MMU and the exceptin will be terminated. Market sellers may indicate t PJM and the MMU thse units with the ability t perate n multiple fuels. Multiple-fuel units may submit a parameter-limited schedule assciated with each fuel type. All Parameter-Limited Schedules must be submitted via Markets Gateway seven days prir t the beginning f each perid beginning June 1. Any exceptins required fr any f the parameter-limited schedules submitted fr multiplefuel units will be required t be submitted and apprved via the exceptin prcess, by the applicable deadlines. Nuclear Units are excluded frm eligibility fr Operating Reserve payments except in cases where PJM requests that nuclear units reduces utput at PJM s directin r where a physical prblem at a nuclear unit requires a risk premium and that risk premium is submitted t and accepted by the MMU. Other specific circumstances will be evaluated n a case-by-case basis by PJM and the MMU. Market Sellers shall ntify in writing the MMU and the PJM f a material change t the facts relied upn by the MMU and/r the PJM t supprt a temprary, perid r persistent exceptin. MMU will prvide written ntice f any change t its determinatin regarding the exceptin request within 15 days f receipt f such ntice t PJM and the Market Seller. PJM will ntify the Market Seller and MMU in writing, by n later than 20 days after receipt f the Market Seller s ntice, whether it is revking r cnfirming its apprval f the exceptin request. If PJM determines that its apprval f the exceptin shuld be revked r terminated, (1) fr Generatin Capacity Resurces that are nt Base Capacity Resurces r Capacity Perfrmance Resurces the default values specified in the Parameter Limited Schedule Matrix shall apply, (2) fr Base Capacity Resurces and Capacity Perfrmance Resurces withut apprved adjusted unit-specific values, the unit-specific values determined by PJM shall apply, and (3) fr Base Capacity Resurces and Capacity Perfrmance Resurces with apprved adjusted unit-specific values, the adjusted unitspecific values shall apply. PJM shall ntify the market seller 3 business days befre such revcatin A External Bilateral and Up-t Cngestin Transactins The fllwing business rules apply t Transmissin Custmers: Revisin: 92, Effective Date: 11/01/2017 PJM

33 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Transmissin custmers may submit external bilateral transactin schedules and may indicate willingness t pay cngestin charges int either the Day-ahead Market r balancing market. In the Day-ahead Market, a transactin shall indicate willingness t pay cngestin charges by submitting the transactin as an up t cngestin bid. Up t cngestin bids shall be n greater than $50/MWh, and n less than -$50/MWh. Any up t cngestin transactin that bids higher than $50/MWh r less than -$50/MWh will be rejected. PJM will maintain an up-t date list f surce/sink cmbinatins that will be available fr Up t cngestin bidding n the PJM OASIS. Internal bilateral transactins may be designated as day-ahead r balancing market in PJM InSchedule. Up-t cngestin bids, increment ffers, and decrement bids shall be supprted in the Day-ahead Market nly. Up t cngestin bids are cleared based n the ttal LMP price difference between the surce and the sink. PJM may require that a market participant shall nt submit in excess f 3000 up t cngestin transactins in the Day-ahead Energy Market, when PJM determines that such limit is required t avid r mitigate significant system perfrmance prblems related t the vlume f transactins Curtailment Service Prviders The business rules that apply t Curtailment Service Prviders are set frth in Sectin PJM Activities The fllwing business rules apply t PJM activities: PJM shall pst n the Markets Gateway System, the PJM lad frecast, ttal bid demand, and Day-ahead Scheduling Reserve (Operating Reserve) bjective fr each hur f the next Operating Day by 1330 at the cmpletin f the day-ahead scheduling prcess. PJM shall pst frecasts f ttal hurly demand fr the next fur days and peak demand fr the subsequent three days. PJM shall pst hurly LMP, Cngestin Price, and Lss Price values fr the next perating day at the cmpletin f the day-ahead scheduling prcess by PJM shall pst the schedule f demand, supply, and bilateral transactins fr private viewing by market participants. PJM may perfrm supplemental resurce cmmitments after the day-ahead schedule is psted in rder t maintain reliable peratin. Such supplemental cmmitments are based n minimizing startup and n-lad csts. During the varius resurce cmmitment analyses, PJM may limit its dependence n Cmbustin Turbines t prvide reserves in rder t maintain reliable peratinal standards. Such limits shall be based n past perfrmance f these units. Revisin: 92, Effective Date: 11/01/2017 PJM

34 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets PJM Market Operatrs will cmmit in the Day-ahead Market any generatin resurces that were scheduled by PJM dispatch in advance f the Day-ahead Market and are still required fr the perating day and therefre nt cancelled. The scheduled hurs fr the pre-cmmitted generatin resurce in the Day-ahead Market will at least include the hurs where PJM dispatch has scheduled the resurce as well as any additinal hurs where the resurce was deemed t be ecnmic as a result f the Day-ahead Energy market slutin. Price-sensitive demand can set LMP in the Day-ahead Market. Participants can submit PRD Curves per business rules in Sectin 12 f this Manual Market Pwer Mitigatin PJM tests fr the cncentratin f lcal market pwer under transmissin cnstrained cnditins and applies measures t mitigate such pwer when detected. If transmissin limits are identified during the day-ahead scheduling prcess r during real-time peratins, the apprpriate generatrs (thse fr which the wner fails the Three-Pivtal Supplier Test ( TPS Test ) as detailed in Sectin paragraphs (e) and (f) f the PJM Operating Agreement) are ffercapped. Units remain eligible t set LMP when ffer-capped. Bth pl-scheduled and selfscheduled units are eligible fr ffer capping. Offer-capping will be applied as fllws: Units are ffer-capped at lesser f their cst-based r price-based schedules, including start-up and n-lad cmpnents. Specific details regarding determinatin f cst-based ffers may be fund in PJM Manual M-15 (Cst Develpment Guidelines) and Sectin f the PJM Operating Agreement. Fr units scheduled in the Day-Ahead Market, the ffer caps will be applied at the time f cmmitment and will apply fr the length f time the unit is scheduled in the DayAhead Market at the schedule that results in the lwest verall system prductin cst, in accrdance with Sectin (a) f the Operating Agreement. If the incremental energy ffer, n lad cst r start-up cst fr any prtin f the ffer capped hurs are updated subsequent t the day-ahead cmmitment, the ffer caps will be recalculated fr each hur that is updated and will apply at the schedule that results in the lwest dispatch cst fr each updated hur, in accrdance with sectin (g) f the Operating Agreement; hwever, nce the resurce is dispatched n a cst-based ffer, it will remain n a cst-based ffer regardless f the determinatin f the cheapest schedule. Fr units scheduled in the Real-time Market, the ffer caps will be applied at the time f cmmitment and will apply at the schedule that results in the lwest dispatch cst, in accrdance with Sectin (g) f the Operating Agreement. If the incremental energy ffer, n lad cst r start-up cst fr any prtin f the ffer capped hurs are updated subsequent t the real-time cmmitment, the ffer caps will be recalculated fr each hur that is updated and will apply at the schedule that results in the lwest dispatch cst fr each updated hur in accrdance with Sectin (g) f the Operating Agreement; hwever, nce the resurce is dispatched n a cst-based ffer, it will remain n a cst-based ffer regardless f the determinatin f the cheapest schedule. Revisin: 92, Effective Date: 11/01/2017 PJM

35 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Nn-CT units, as well as CTs which are cmmitted in the Day-Ahead Market and expected t run in the Real-time Market withut additinal ntificatin frm PJM Dispatch, that are ffer-capped in the Day-Ahead Market will be ffer-capped fr thse same hurs in the Real-time market and at the same schedule. Pl-scheduled CTs that are cmmitted in the Day-Ahead Market and nt expected t run in Real-time unless ntified by PJM Dispatch and are ffer-capped in the Day-Ahead market will be re-evaluated fr market pwer at the time f cmmitment in the Real-time Market. Such units will be ffer-capped in accrdance with the results f the TPS test that is cnducted at the time f the real-time cmmitment. Pl-scheduled units brught n-line fr ecnmics prir t cnstrained cnditins will nt be ffer-capped at the time f cmmitment. Units whse wners passed the TPS test at the time f cmmitment will remain uncapped and nt be subjected t additinal market pwer testing until the end f the initial capping determinatin perid, which is defined as fllws: Fr pl-scheduled r self-scheduled units cmmitted in the Day-Ahead Market, the end f their day-ahead cmmitment Fr pl-scheduled units cmmitted in the Real-time Market (and nt in the DayAhead Market), the end f their minimum run time Fr self-scheduled units cmmitted in the Real-time Market (and nt in the DayAhead Market), the end f the first hur f their cmmitment Units running in real-time beynd the initial capping determinatin perid will be subject t evaluatin fr market pwer n an hurly basis and will be ffer-capped as fllws: Units perating n a price-based schedule whse wner pass the TPS test will nt be ffer-capped and will remain n the price-based ffer. Units perating n a price-based schedule whse wner des nt pass the TPS test will be ffer-capped. Units perating n a cst-based schedule will remain n a cst schedule regardless f the results f the TPS test. Once a unit is ffer-capped in the Real-time Market it shall remain ffer-capped until the earlier f: The unit s release frm its cmmitment by PJM Dispatch The end f the Operating Day The start f the unit s next pre-existing cmmitment Mechanical/Technical Rules A valid generatr ffer cnsists f the fllwing elements: Use start-up & n-lad switch, with a default value f yes (1). Hurly start-up and n-lad csts, with default values f zer. External resurces can nly submit start-up and n-lad csts if the entire utput f the unit is available fr PJM dispatch. Revisin: 92, Effective Date: 11/01/2017 PJM

36 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Cndense available switch, with a default value f n (0). Hurly ecnmic max/min and emergency max/min are the unit-level ecnmic and emergency MW limits, respectively. Daily minimum dwn time and start times, with default values f zer. Daily minimum run time and ntificatin time fr the Day-Ahead Market, with the ability t update the hurly values in real-time. The default values will be zer. Daily maximum run time and maximum number f starts per week, with default values f infinity. Use ffer slpe switch, with a default value f n (0). Hurly incremental ffer curves, with default value f $0. If the last MW pint n the segment curve is less than the maximum emergency limit, then the curve is extended up t the emergency maximum limit using zer slpe frm the last incremental pint n the curve. Fr thse parameters that are allwed t vary hurly, in the absence f verrides specifying separate values fr each hur (hurly differentiated ffer data), the daily ffer value is used. In rder t qualify fr exempt r bnus MW during a Perfrmance Assessment Hur, in accrdance with Manual 18, Nn-Perfrmance sectin, each generatin resurce must have at least ne available schedule. Each ffer must have the fllwing: Ecnmic Minimum value (zer r nn-zer value) Ecnmic Maximum value (zer r nn-zer value) Emergency Maximum value (zer r nn-zer value) At least ne segment n the incremental ffer curve Valid ffers fr a Generatin Capacity Resurce cnsists f a parameter limited price-based schedule (if the unit is price-based) and at least ne cst-based schedule. Valid ffers fr a nn-capacity Generatin Resurce cnsists f a price-based schedule (if the unit is price-based) and at least ne cst based schedule. The default values fr the schedules are: Valid ffers fr demand bids, price sensitive and fixed, cnsist f the fllwing items: MW, with a default value f 0 MW. Demand bids shuld nt include lsses. Lcatin (transmissin zne, aggregate, r single bus) Price at which demand shall be curtailed (fr price-sensitive bids) PJM shall apply Demand Bid Screening t all Demand Bids submitted in the DayAhead Energy Market fr each LSE, separately by Zne. PJM will autmatically reject a LSE s Demand Bids if the ttal MW vlume f such bids exceeds the LSE s Demand Bid limit fr any hur in such Operating Day. On a daily basis, PJM will update and pst each LSE s Demand Bid Limit in each applicable Zne. Such Demand Bid Limit will apply t all Demand Bids submitted by that LSE fr each future Operating Day fr which it submits bids. Revisin: 92, Effective Date: 11/01/2017 PJM

37 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets The Demand Bid Limit is calculated using the fllwing equatin: Where: Znal Peak Demand Reference Pint fr each Zne: the prduct f (a) LSE s Recent Lad Share, multiplied by (b) Peak Daily Lad Frecast. LSE s Recent Lad Share is the LSE s highest share f Netwrk Lad in each Zne fr any hur ver the previus seven Operating Days. Peak Daily Lad Frecast is PJM s highest available peak lad frecast fr each applicable Zne that is calculated n a daily basis. PJM may allw a LSE t submit bids in excess f its Demand Bid Limit when circumstances exist that will cause, r are reasnably expected t cause, a LSE s actual lad t exceed its Demand Bid Limit n a given Operating Day. Examples f such circumstances include, but are nt limited t, changes in lad cmmitments due t state spnsred auctins, mergers and acquisitins between PJM Members, and sales and divestitures between PJM Members. A LSE whse Demand Bids are rejected as a result f Demand Bid Screening may change the Demand Bids t reduce the ttal megawatt vlume t a level that des nt exceed the Demand Bid Limit. Re-submissins must ccur prir t Market clsing fr the perating day Mdeling Fixed transactins, including increment ffers and decrement bids, are mdeled in the Resurce Cmmitment. Up-t cngestin transactins are nt mdeled in the cmmitment, but are handled in the day ahead dispatch. The day-ahead security analysis treats increment ffers as injectins (generatin) and decrement bids as withdrawals (lads) External bilateral transactins with surce = interface bus are mdeled as generatin at the surce bus lcatin. This is the case fr bth dispatchable and nn-dispatchable transactins. External bilateral transactins with sink = interface bus are mdeled as a lad at the sink bus lcatin. This is the case fr bth dispatchable and nn-dispatchable transactins. Only fixed transactins and transactins invlving external aggregate resurces are mdeled in the Resurce Cmmitment (RSC) fr the Day-ahead Market Day-ahead Lcatinal Marginal Price (LMP) Calculatins The fllwing resurces are eligible t set LMP values in the Day-ahead Market: All pl-dispatchable steam units Pl-scheduled CTs and diesels Dispatchable external resurce ffers Revisin: 92, Effective Date: 11/01/2017 PJM

38 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Increment ffers Cmmitted Ecnmic Lad Respnse bids Price-sensitive demand bids and decrement bids. Transactins that bid up t cngestin charges Settlements Data Requirements can be fund in M28: Operating Agreement Accunting. Generatin resurces with cst based incremental energy ffers in excess f $2,000/ MWh will be dispatched in ecnmic merit rder but will be capped at $2,000/MWh fr the purpses f calculating LMP Operating Parameter Definitins Cld/Warm/Ht Ntificatin Time - The time interval between PJM ntificatin and the beginning f the start sequence fr a generating unit that is currently in its cld/warm/ht temperature state. Start sequence may include steps such as any valve peratin, starting feed water pumps, startup f auxiliary equipment, etc. Cld/Warm/Ht Start-up Time - The time interval, measured in hurs, frm the beginning f the start sequence t the pint after generatr breaker clsure which is typically indicated by telemetered r aggregated state estimatr MWs greater than zer fr a generating unit in its cld/warm/ht temperature state. Fr a Cmbined Cycle unit it is the time interval frm the beginning f the start sequence t the pint after first cmbustin turbine generatr breaker clsure which is typically indicated by telemetered r aggregated state estimatr MWs greater than zer. Start sequence may include steps such as any valve peratin, starting feed water pumps, startup f auxiliary equipment, etc. Other mre detailed actins that culd signal the beginning f the start sequence culd include but are nt limited t the peratin f pumps, cndensers, fans, water chemistry evaluatins, checklists, valves, fuel systems, cmbustin turbines, starting engines r systems, maintaining stable fuel/air ratis, and ther auxiliary equipment necessary fr startup. Minimum Run Time (hur) - The minimum number f hurs a unit must run, in real-time peratins, frm the time after generatr breaker clsure which is typically indicated by telemetered r aggregated state estimatr MWs greater than zer t the time f generatr breaker pening, as measured by PJM's state estimatr. Fr Cmbined Cycle units this is the time perid after the first cmbustin turbine generatr breaker clsure which is typically indicated by telemetered r aggregated state estimatr MWs greater than zer and the last generatr breaker pening as measured by PJM s state estimatr. Turn Dwn Rati The rati f a unit s ecnmic maximum MW t its ecnmic minimum MW. Minimum Dwn Time (hur) - The minimum number f hurs under nrmal perating cnditins between unit shutdwn and unit startup, calculated as the shrtest time difference between the unit s generatr breaker pening and after the unit s generatr breaker clsure, which is typically indicated by telemetered r aggregated state estimatr MWs greater than zer. Fr Cmbined Cycles units this is the minimum number f hurs between the last generatr breaker pening and after first cmbustin turbine generatr breaker clsure which is typically indicated by telemetered r aggregated state estimatr MWs greater than zer. Revisin: 92, Effective Date: 11/01/2017 PJM

39 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Maximum Daily Starts - The maximum number f times that a unit can be started in an perating day under nrmal perating cnditins. Maximum Weekly Starts - The maximum number f times that a unit can be started in ne week under nrmal perating cnditins (168 hur perid starting Mnday 0001 hur). Maximum Run Time (hur) - The maximum number f hurs a unit can run ver the curse f an perating day as measured by PJM s state estimatr. Cld/Warm/Ht Sak Time - The minimum number f hurs a unit must run, in real-time peratins, frm the time after generatr breaker clsure which is typically indicated by telemetered r aggregated state estimatr MWs greater than zer t the time the unit is dispatchable. Fr Cmbined Cycle units this is the minimum number f hurs frm the time just after the first cmbustin turbine generatr breaker clsure which is typically indicated by telemetered r aggregated state estimatr MWs greater than zer and the time the unit is dispatchable. Sak Time may include items such as the time necessary t alleviate temperature gradients acrss biler r turbine cmpnents, the startup and stable peratin f envirnmental equipment, water chemistry evaluatins and hlds, the maintaining f stable fuel/air ratis, the additin f incremental fuel related r ther auxiliary equipment, the starting additinal cmbustin turbines in a cmbined cycle, and the pressure matching f heat recvery steam generatrs. 2.4 Real-Time Lcatinal Marginal Price (LMP) Calculatins The PJM Real-time Lcatinal Marginal Price (LMP) calculatin prcess cnsists f several prgramming mdules that are executed as part f the real-time sequence. The real-time sequence executes every five minutes. In the Market Clearing Engine (MCE), the fllwing systems are used in the calculatin f the real-time LMP and ancillary service market clearing prices: The Real Time Market Applicatins (ASO, IT SCED and RT SCED) PJM State Estimatr Lcatinal Pricing Calculatr (LPC) Each f the PJM LMP mdules is described in detail belw. 2.5 Real-Time Market Applicatins T cnduct the real-time markets, a multi-mdule sftware platfrm is used by PJM t dispatch energy, and ensure adequate reserves in real-time and regulatin in near time (see the image belw). The real time market applicatins and varius ther applicatins cmmunicate jintly and the mst recent infrmatin frm each applicatin is stred and upn request prvides the relevant data t each applicatin. T run the Real-time Market, data is prcessed frm the markets database and ther PJM systems. Revisin: 92, Effective Date: 11/01/2017 PJM

40 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets The applicatins jintly ptimize the prducts n a 5-minute basis t ensure that all system requirements are met using the least cst resurce set. The real-time market applicatins cnsist f the fllwing: Ancillary Service Optimizer (ASO): The Ancillary Services Optimizer (ASO) perfrms the jint ptimizatin functin f energy, reserves and regulatin. The ASO creates an interval-based slutin ver a ne hur lk-ahead perid, as well as perfrms the regulatin three pivtal supplier test. ASO des nt calculate market clearing prices. The main functins f ASO are the cmmitment f all regulatin resurces and inflexible reserve resurces fr the next perating hur. Intermediate Term Security Cnstrained Ecnmic Dispatch (IT SCED): The Intermediate Term Security Cnstrained Ecnmic Dispatch (IT SCED) applicatin is used by PJM t perfrm varius functins ver a 1-2 hur lk-ahead perid. Histrical and current system infrmatin is used t anticipate generatr perfrmance t varius requests, and t prvide accurate infrmatin regarding generatr perating parameters under multiple scenaris. The IT SCED slves a multi-interval, time-cupled slutin t perfrm the fllwing functins: Calculate energy dispatch trajectry fr use in real-time dispatch Resurce cmmitment recmmendatins fr energy and reserves Resurce cmmitment decisins fr ecnmic demand resurces Executin f the Three Pivtal Supplier Test fr energy Revisin: 92, Effective Date: 11/01/2017 PJM

41 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Real-Time Security Cnstrained Ecnmic Dispatch (RT SCED): The Real-Time Security Cnstrained Ecnmic Dispatch (RT SCED) applicatin is respnsible fr dispatching resurces t maintain the system balance f energy and reserves ver a near-term lk-ahead perid. Histrical and current system infrmatin is used t anticipate generatr perfrmance t varius requests, and t prvide accurate infrmatin regarding generatr perating parameters under multiple scenaris. RT SCED will jintly ptimize energy, regulatin and reserves n nline, dispatchable resurces t ensure system needs are maintained. The results frm the RT SCED are energy basepints and Tier 2 and Nn-Synchrnized reserve cmmitments that are sent t resurce wners in real-time. All quantities may change with each slutin based n system ecnmics and reserve needs. RT SCED determines reserves shrtages. An RT SCED dispatch slutin is executed autmatically every five minutes r when executed by the peratr. T calculate the slutin, data frm multiple surces is used, including but nt limited t, data regarding nline and available resurces, resurce ffers, frecasted lad, scheduled and current interchange, as well as varius ther input parameters. The RT SCED cases use lad frecast and ther system infrmatin that are effective fr the lk-ahead interval, rather than the time at which the case is executing, t achieve a dispatch slutin that will adequately cntrl fr thse frecasted cnditins. Real-time data surces include: Lad frecast data frm EMS Cnstraint data - resurce sensitivities frm EMS State Estimatr utput frm EMS Outage data frm edart Transactin data frm ExSchedule Generatr perating parameters and ffer data Multiple RT SCED cases are then prduced, with each slutin slving the security cnstrained ecnmic dispatch prblem. Each f these slutin cases cntains: A recmmended set f znal dispatch rates A list f exceptins t the dispatch rates fr cnstraint cntrl Individual resurce dispatch rates Individual Resurce Desired MW level Individual Resurce Reserve Cmmitments 2.6 PJM State Estimatr The Real-time LMP calculatin depends upn having a cmplete and cnsistent pwer flw slutin as input. This input requirement can be achieved by using a state estimatr. The state estimatr is a standard pwer system peratins tl whse purpse is t prvide a base case pwer flw slutin fr input int ther cmputer prgrams. Revisin: 92, Effective Date: 11/01/2017 PJM

42 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets The state estimatr uses actual perating cnditins that exist n the pwer grid (as described by metered inputs) alng with the fundamental pwer system equatins t calculate the remaining flws and cnditins that are nt metered. Since the state estimatr slutin prvides a cmplete and cnsistent mdel f actual perating cnditins based upn bservable (metered) input and an underlying mathematical mdel, it can be used t prvide the basis fr the Lcatinal Marginal Price calculatins. The inputs t the state estimatr are the available (metered) real-time measurements, the current status f equipment (lines, generatrs, transfrmers, etc.), and the bus lad distributin factrs. This standard industry tl depends upn data redundancy and the underlying physical and mathematical relatinships f the pwer system t prvide a slutin with less errr than the riginal measurements. Therefre the state estimatr can crrect bad data and calculate missing data in the mdel t prvide a cnsistent representatin f existing netwrk cnditins. The PJM state estimatr is run n a thirty-secnd cycle and can prvide the fllwing inputs t the PJM LMP Mdel, n a five-minute basis: AC pwer flw slutin Actual generatr MW utput Bus lads Tie line flws MW lsses by transmissin zne Actual MW flw n any cnstrained transmissin facility 2.7 Lcatinal Pricing Calculatr (LPC) The functin f the Lcatinal Pricing Calculatr (LPC) is t determine the Real-Time LMP values and Ancillary Service clearing prices n a five minute basis. The LPC calculates LMPs fr each f the PJM ndes in the state estimatr mdel and fr interface busses used as a prxy fr transfers t and frm PJM and external cntrl areas. The Real-Time LMPs are defined as the cst t serve the next increment f lad at each nde bus lcatin fr the current system, taking int accunt eligible resurce real-time ffer prices and the buses lcatin with respect t transmissin limitatins and incremental system lsses. The LPC is an incremental linear ptimizatin prgram that is frmulated t jintly ptimize and price energy and reserves. The bjective is t minimize the cst functin including the cst f energy and reserves subject t the pwer balance cnstraint, the Synchrnized and Primary Reserve requirements, specific generatr and demand resurce perating limitatins, transactin MW limits, and any transmissin cnstraints that currently exist n the system and a nrmalized distributin f system lsses t a netwrk lcatin. Every 5 minutes the LPC will calculate: Lcatinal Marginal Prices (LMPs) Synchrnized Reserve Market Clearing Prices (SRMCPs) Nn-Synchrnized Reserve Market Clearing Prices (NSRMCPs) Revisin: 92, Effective Date: 11/01/2017 PJM

43 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Regulatin Market Clearing Prices (RMCPs) and Regulatin Market Perfrmance Clearing Price (RMPCP), which are then used t derive the Regulatin Market Capability Clearing Price (RMCCP) Each energy and reserve clearing price is calculated as the cst t serve the next MW f demand fr each individual prduct cnsidering its impact n the thers. Fr example, LMPs are calculated such that they reflect the cst t serve the next MW f energy demand in each lcatin while cnsidering the impact f that additinal MW f energy n the ability t meet the Primary Reserve and Synchrnized Reserve Requirements. This methd f calculatin f LMPs is cnsistent with the jint ptimizatin f energy and reserves perfrmed and will ensure cnsistency between LMPs and dispatch directives. Regulatin clearing prices are calculated as the cst f the last resurce cmmitted t meet the Regulatin requirement, as further described in sectin Determinatin f LMPS fr De-Energized Busses Due t equipment utages, the main transmissin system may cntain sme de-energized busses fr which LMPs cannt be directly calculated. It is necessary fr settlement purpses that LMPs fr these de-energized busses be established. The methdlgy fr determining LMPs at de-energized busses is t assign t them the LMPs at their neighbring energized busses. The fllwing criteria fr a search is designed and implemented in the market clearing sftware. Search rules: 1. Search at the same vltage level. a. Check whether any f the ther busses belnging in the same vltage level as the de-energized bus is energized. If an energized bus is fund, set the LMP f the deenergized bus equal t the LMP f the energized bus. If a suitable replacement cannt be fund, prceed t step Search at the same statin. a. Check whether there are any energized busses lcated at a vltage level different frm the de-energized-bus vltage level but at the same statin. If an energized bus is fund, set the LMP f the de-energized bus equal t the LMP f the energized bus. If a suitable replacement cannt be fund, prceed t step Search in the nearest neighbring statins. a. Rank all the transmissin lines ut f the de-energized bus statin in the descending rder f their admittances. b. Check whether there is any energized bus in the next statin available in the rank. If ne is fund, set the LMP f the de-energized bus equal t the LMP at the energized bus. If by searching all the neighbring statins n energized bus is fund, the PJM Market Operatr will be ntified that a de-energized bus exists fr which n suitable replacement culd be fund using the abve steps and will be required t manually search fr a suitable replacement. PJM peratrs will als review the suitability f the replacements selected by the market clearing sftware, and in cases where mdeling discrepancies cause the selectin f a sub-ptimal replacement, may elect t use a mre suitable replacement. Revisin: 92, Effective Date: 11/01/2017 PJM

44 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Determinatin f LMPs fr Generatin Resurces with ffers greater than $2,000/ MWh Generatin resurces with cst based incremental energy ffers in excess f $2,000/MWh will be dispatched in ecnmic merit rder but will be capped at $2,000/MWh fr the purpses f calculating LMP. 2.8 The Calculatin f Lcatinal Marginal Prices (LMPs) During Emergency Prcedures In rder t prperly calculate LMPs during Emergency Prcedures, PJM will perfrm the fllwing functins t ensure that deplyed r purchased emergency capacity is eligible t set LMPs within PJM. Pre-Emergency and Emergency Demand Respnse Pre-Emergency r Emergency Demand Respnse may be deplyed by lead time, by prduct, and by transmissin zne r transmissin subzne. PJM will dispatch the resurces f all Pre-Emergency r Emergency Lad Respnse Prgram participants (nt already dispatched under the Ecnmic Lad Respnse Prgram) based n the availability, lcatin, dispatch price and/r quantity f lad reductin needed, subject t transmissin cnstraints in the PJM Regin. T give PJM dispatchers the flexibility t address reliability cncerns in the mst effective and timely manner and invke the resurces that ffer the mst assurance f effective relief f emergency cnditins, the dispatch f Demand Resurces may nt be slely based n the least-cst resurces since such dispatch shall be based nt nly n price, but als n availability, lcatin and/r quantity f megawatts f lad r lad reductin needed. Resurces in the Full Prgram Optin and Energy Only Optin in the Pre-Emergency r Emergency Lad Respnse Prgram are eligible t set the real time LMP when PJM has dispatched the resurces and such resurces are required t reduce demand in the PJM Regin. PJM will treat pre-emergency and emergency demand respnse similar t a dispatchable generatr fr the purpse f determining whether it is marginal. PJM will use peratinal data submitted by CSPs t determine the availability and actual respnse f pre-emergency and emergency lad respnse. Maximum Emergency Generatin Generatrs wh have designated all r prtins f the utput f their unit as max emergency will be eligible t set price. Max emergency utput will nly be eligible t set LMP if PJM Operatrs have laded maximum emergency generatin. Emergency Purchases Revisin: 92, Effective Date: 11/01/2017 PJM

45 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets PJM will allw emergency purchase transactins t set LMP t the extent they are required t clear the energy and reserve markets. Emergency purchases will be treated similar t the dispatchable generatr fr the purpse f determining whether they are marginal r nt. If determined t be marginal, an emergency purchase will set price at the lesser f its ffer price r the applicable ffer cap stated in Sectin In the event that PJM initiates a vltage reductin r manual lad dump t maintain system reliability: All reserve clearing prices in the regin where the vltage reductin and/r manual lad dump were initiated will be set cnsistent with a shrtage f the first step n the demand curve. Nn-Synchrnized Reserve Clearing Price = Primary Reserve Penalty Factr Synchrnized Reserve Clearing Price = Primary Reserve Penalty Factr + Synchrnized Reserve Penalty Factr The LMPs and reserve clearing prices in the lcatin that the vltage reductin and/r manual lad dump was initiated will be calculated cnsistent with all reserve prducts in that regin being shrt until such emergency cnditins are terminated as defined in PJM Manual 13: Emergency Operatins. Shrtage pricing will be terminated in a Reserve Zne r Reserve Sub-zne when demand and reserve requirements can be fully satisfied with generatin and demand resurces and any Vltage Reductin Actin and/r Manual Lad Dump Actin taken fr that Reserve Zne r Reserve Sub-zne has been terminated. 2.9 The Calculatin f Lcatinal Marginal Prices (LMPs) During Reserve Shrtages When all reserve prducts can be met at a price less than r equal t the defined penalty factrs, LMPs will be set slely using the supply and demand ffers frm Market Participants. When PJM cannt maintain enugh reserves t meet the reserve requirements at a price less than r equal t the assciated penalty factrs, i.e. a reserve shrtage, the penalty factr(s) fr the deficient reserve prduct(s) will be used in the determinatin f LMPs in the regin where the shrtage ccurred. The methdlgy fr calculating LMPs is cnsistent during perids f adequate reserves and during reserve shrtages. When reserve requirements can be met at a price less than r equal t the defined penalty factrs, the penalty factrs will nt impact the calculatin f LMPs. When any reserve requirement cannt be met at a price less than r equal t the defined penalty factr, the applicable penalty factr(s) will be used in the determinatin f LMPs. The maximum LMP achievable during a reserve shrtage is the $2,000/MWh energy ffer cap, plus the Primary Reserve and Synchrnized Reserve Penalty Factrs frm the first step n the demand curves, plus r minus cngestin and marginal lss impacts. Revisin: 92, Effective Date: 11/01/2017 PJM

46 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Determinatin f a Reserve Shrtage If the Real-Time Security Cnstrained Ecnmic Dispatch (RT SCED) applicatin frecasts a Primary Reserve shrtage and/r a Synchrnized Reserve shrtage as further described in the Sectin(s) 2.8 and 4.2 f this Manual, PJM shall deem this t be a Primary Reserve shrtage and/r a Synchrnized Reserve shrtage and shall implement shrtage pricing thrugh the inclusin f Primary Reserve and/r Synchrnized Reserve Penalty Factrs in the Real-Time market applicatins. Shrtage pricing shall exist until the Real-Time Security Cnstrained Ecnmic Dispatch (RT SCED) slutin is able t meet the specified reserve requirements and n Vltage Reductin Actin r Manual Lad Dump Actin is still in effect. If a Primary Reserve shrtage and/r Synchrnized Reserve shrtage exists and cannt be accurately frecasted by the Office f the Intercnnectin due t a technical prblem with r malfunctin f the Real-Time Security Cnstrained Ecnmic Dispatch (RT SCED) sftware prgram, including but nt limited t prgram failures r data input failures, PJM will utilize the best available alternate data surces t determine if a Reserve Zne r Reserve Sub-zne is experiencing a Primary Reserve shrtage and/r a Synchrnized Reserve shrtage PJM Real-time Lcatinal Marginal Price Verificatin Prcedure During and after each Operating Day, PJM reviews all f the five minute LMP and ancillary service clearing prices prir t finalizing hurly LMPs fr psting and use in settlement. If there are any instances where five minute LMPs and ancillary service clearing prices were calculated inaccurately, PJM crrects thse five minute intervals in the LMP Verificatin Prcedure. In the event f a data input failure, prgram failure, data input discrepancy r lgging errr, crrective actins may be taken t ensure that the resulting Real-time LMPs are as accurate as is reasnably btainable. Data Input Failures (Stale cst data, stale dispatch rates, stale EMS data) r Prgram Failures (State Estimatr failure, LPC Failure, Cnstraint lgger failure) - Data input failures can ccur when telecmmunicatin prblems exist either n the PJM cmputer netwrk r n the data lines between PJM and PJM member cmpanies. If failures ccur within PJM s netwrk, all pssible steps will be taken t recver the riginal data fr use in LMP calculatin reruns. In the event f a prgram failure, an attempt will first be made t crrect the reasn fr the failure and t recalculate LMP values fr the affected intervals. If the failure cannt be crrected (due t a data input failure), and the riginal data cannt be recvered, PJM may utilize data frm the best available alternate data surces including, but nt limited t, backup systems, dispatcher lgs, raw telemetry data, and member cmpany data surces. In the event f a data input r prgram failure, LMP replacements will be perfrmed as utlined belw: If the stale data r prgram failure exists fr less than 6 intervals within the same hur then the affected intervals may be replaced with data frm the last successful interval. If the stale data r prgram failure exists fr mre than six intervals within the same hur then the LMP values will be recalculated using data frm the best available surces. Revisin: 92, Effective Date: 11/01/2017 PJM

47 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Lgging Errrs (Transmissin cnstraint lgging, CT lgging) The reference fr lgging times is the transmissin dispatcher manual lg. In the event f a lgging errr, LMP replacements will be perfrmed as utlined belw: Transmissin cnstraint r CT lgs entered (r remved) with a delay f less than fur intervals) N recalculatin f LMP is required. Transmissin cnstraint r CT lgs entered (r remved) with a delay f fur intervals r mre) The cnstraint and/r CT data will be crrected and LMP values will be recalculated. Transmissin cnstraint r CT lgs entered incrrectly - The cnstraint and/r CT data will be crrected and LMP values will be recalculated. Other Data Input Errrs Data input errrs can ccur when the applicatins r prcesses upstream f the LMP calculatin cmplete successfully but prduce errneus results. These errrs may include, but are nt limited t, errrs with EMS inputs, such as distributin factrs and lss sensitivity factrs, cnstraint mdeling errrs that result in pricing that is incnsistent with the way PJM peratrs are managing a cnstraint, and unintentinal apprval f the RT SCED case upn which the LPC case runs and prduces LMPs. In the event f a data input errr, LMP replacements may be perfrmed as utlined belw: If the EMS data, such as distributin factrs r lss sensitivity factrs, are fund t have errrs, the errneus input data may be replaced with that frm a surrunding interval and LMPs will be recalculated, r the LMPs f the impacted pndes may be replaced with thse frm electrically equivalent pndes when the number f pndes impacted is limited. If a cnstraint is mdeled in the upstream applicatins in a way that is incnsistent with hw PJM peratrs are managing the cnstraint, the mdeling f the cnstraint will be crrected in the LPC case inputs and the LMPs will be recalculated. If the RT SCED case upn which the LPC case runs and prduces LMPs was apprved in errr, LMPs will be recalculated using the last intentinally apprved RT SCED case as the basis fr the LMP calculatin Price-Bunding Vilatins After each five-minute iteratin f the LPC, a set f validatin checks are applied t the resulting LMPs and ancillary service clearing prices. These validatin checks include but are nt limited t criteria such as maximum and minimum LMP level, maximum and minimum ancillary service clearing price level, and the cnsistency f the pricing results with the dispatch slutin. If any f these validatin checks fail, the five-minute LMPs and/r ancillary service clearing prices will nt be published. This knwn as a Price-Bunding Vilatin. The ccurrence f a Price-Bunding Vilatin des nt mean that the riginally psted prices are nt crrect r that they are nt used in the settlement f the market. It is an autmated prcess implemented by PJM t limit the publicatin f market clearing results that are suspected t have an issue. If a Price-Bunding Vilatin ccurs, PJM Market Operatins persnnel are ntified by the LPC system immediately. Fllwing the ntificatin, the Market Operatr will diagnse the cause f the vilatin. If the slutin is fund t be accurate, the 5Revisin: 92, Effective Date: 11/01/2017 PJM

48 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets minute prices will be left as-is and the validatin checks will be adjusted t release subsequent pricing infrmatin. If the prices are fund t be inaccurate, they will be revised in accrdance with the PJM Real-time Lcatinal Marginal Price Verificatin Prcedure utlined abve Calculatin f Ramp Limited Desired MWh Operating Reserve deviatins t generatrs that are perating at PJM s directin are based n a cmparisn f their Real-time desired MW with their Real-time MWh. Fr the purpses f settlement f Operating Reserve charges and credits, a Ramp-Limited Desired MW value will be used t determine whether a unit is fllwing PJM dispatch instructins as well as the actual quantity f deviatins that will be calculated when a unit be determined t nt be fllwing dispatch instructins. PJM will calculate a Ramp Limited Desired MW value fr units where the ecnmic minimum and ecnmic maximum are at least as far apart in real-time as they are in Day-Ahead. Real Time Ecnmic Minimum <= 105% f Day-ahead Ecnmic Minimum r Dayahead Ecnmic Minimum plus 5MW, whichever is greater. Real Time Ecnmic Maximum >= 95% Day-ahead Ecnmic Maximum r Day-ahead Ecnmic Maximum minus 5MW, whichever is lwer. PJM will determine a unit s Ramp-Limited Desired MW accrding t the fllwing calculatin: Where: UDStarget UDS basepint fr the previus UDS case AOutput Unit s utput at case slutin time UDSLAtime UDS lk ahead time Case_Eff_time Time between base pint changes RL_Desired Ramp limited desired MW UDS LMP Desired MWh is calculated by cmparing the hurly integrated UDS LMP t the unit s bid curve t determine a crrespnding MW value. This value is nt ramp-limited. In the event f technical difficulties where either a) UDS data des nt exist r b) there is nt a sufficient amunt f data t calculate a reasnable Ramp Limited Desired MW value, the UDS LMP Desired MW value will be used. PJM utilizes the Ramp-Limited Desired MW value t determine whether a unit is fllwing PJM dispatch instructins. PJM will calculate tw values, fr a generatin resurce that is perating at PJM s directin: Revisin: 92, Effective Date: 11/01/2017 PJM

49 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets the MW ff dispatch - is a defined term that is the lesser f the difference between the actual utput f a unit in MW and the UDS Basepint, r the difference between the actual utput f a unit in MW and its Ramp-Limited Desired MW. % ff dispatch. PJM will use the lesser f the difference between the actual utput and the desired dispatch pint, r the actual utput and Ramp-Limited Desired MW value. The % ff dispatch and MW ff dispatch will then be calculated as time-weighted averages f the values calculated with each dispatch slutin ver the curse f an hur. Pl-scheduled and dispatchable self-scheduled resurces perating abve ecnmic minimum will then be cnsidered t be fllwing dispatch if: 1. actual utput is between their Ramp-Limited Desired MW value and desired dispatch pint, 2. % ff dispatch is less than r equal t 10, r 3. hurly integrated Real-time MWh are within five percent (5%) r 5 MW (whichever is greater) f the hurly integrated Ramp-Limited Desired MW. Dispatchable pl-scheduled and self-scheduled generatin resurces that fllw dispatch wn t be assessed Balancing Operating Reserve deviatins, and thse that d nt fllw dispatch will be assessed Balancing Operating Reserve deviatins based n hurly integrated Real-time MWh hurly integrated Ramp Limited Desired MW, pursuant t the rules as defined in PJM Manual M28. The rules prvide that Ramp-Limited Desired MW value must be used t determine real-time deviatins frm day-ahead schedules fr generatin resurces. (See Operating Reserve sectin f PJM Manual M28 fr a detailed descriptin f the calculatin f generatr deviatin charges) Using and Calculating Lcatinal Marginal Prices LMPs are used in the PJM Energy Market accunting t calculate charges r credits fr many f the market services, including: Spt Market Energy LMPs are used t calculate the charges fr Spt Market Energy purchases and the credits fr Spt Market Energy deliveries. (See Spt Market Energy Accunting sectin f PJM Manual M28 fr a detailed descriptin f these calculatins). Operating Reserve LMPs, alng with ther cmpnents, are used t determine whether prviders f Operating Reserve are prperly cmpensated fr their csts. (See Operating Reserve Accunting sectin f PJM Manual M28 fr a detailed descriptin f this calculatin). Transmissin Cngestin Cngestin price cmpnents f LMPs are used in the calculatin f Transmissin Cngestin Charges and t determine the value f FTRs used in the calculatin f Transmissin Cngestin Credits. (See Transmissin Cngestin Accunting sectin f PJM Manual M28 fr a detailed descriptin f this calculatin). Revisin: 92, Effective Date: 11/01/2017 PJM

50 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Transmissin Lsses Lss price cmpnents f LMPs are used t determine the charges fr transmissin lsses. (See Transmissin Lsses Accunting sectin f PJM Manual M28 fr a detailed descriptin f this calculatin). Emergency Energy LMPs are used t calculate the charges and credits fr Emergency purchases and sales between PJM and ther Cntrl Areas. (See Emergency Energy Accunting sectin f PJM Manual M28 fr a detailed descriptin f this calculatin). PJM Lad Respnse Prgrams LMPs are used t calculate charges and credits fr the PJM Lad Respnse Prgrams (see Sectin 11: PJM Lad Respnse Prgrams Accunting f PJM Manual M28 fr a detailed descriptin f this calculatin). Metering Recnciliatin Weighted average LMPs are used t calculate mnthly meter errr crrectin charges between PJM Members and between Cntrl Areas. (See Metering Recnciliatin Accunting sectin f PJM Manual M28 fr a detailed descriptin f this calculatin). In general, generatrs are paid based n the generatr bus LMP and lads are charged based n the lad bus LMP. Transmissin Custmers r Energy Market Buyers are charged fr cngestin n transactins based n the differential in surce and sink LMPs. LMPs are calculated n a peridic basis thrughut the Operating Day, nminally every five minutes. At the end f each hur, an average f the five-minute LMP values is cmputed. The resulting hurly LMPs are then used in the PJM Energy Market accunting, as described in the ther sectins f this manual Day-Ahead Settlement Day-Ahead settlement is based n Day-ahead hurly LMPs. The cmpnents f Day-ahead hurly LMPs are the Day-ahead System Energy Price, Day-ahead Cngestin Price, and the Day-ahead Lss Price. Please refer t Manual 28: Operating Agreement Accunting fr additinal settlements details. FTR hlders receive cngestin credits based n hurly day-ahead Cngestin Price cmpnent f LMP values. Therefre, under tw-settlement, cngestin charges fr the hur frm bth day-ahead and real-time markets are distributed t FTR hlders based n target allcatins, which are calculated as a functin f day-ahead prices. Excess cngestin charges are distributed accrding t the methd described in Manual 28: Operating Agreement Accunting. Operating Reserves there are separate perating reserve credit calculatins fr the Dayahead Market and the Balancing market. This ptin preserves the incentive fr demand and supply t bid int the Day-ahead Market based n their actual expectatins and preserves the incentive fr generatin t fllw real-time dispatch signals. Please refer t Manual 28: Operating Agreement Accunting fr additinal settlements details Balancing Settlement Balancing settlement is based n Real-time LMP values averaged ver the hur. The cmpnents f Real-time hurly LMPs are the Real-time System Energy Price, Real-time Cngestin Price, and the Real-time Lss Price. Please refer t Manual 28: Operating Agreement Accunting fr additinal settlements details. Revisin: 92, Effective Date: 11/01/2017 PJM

51 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets FTRs d nt apply t balancing settlement. FTRs apply t the day-ahead settlement nly, because f the market revenue adequacy issue. PJM cannt prvide financial hedging in bth the day-ahead and the balance markets, which in effect is selling the service twice Balancing Operating Reserve Cst Analysis Accunting fr Operating Reserve is perfrmed n a daily basis. A pl-scheduled resurce f a PJM Member is eligible t receive credits fr prviding Operating Reserve in the day-ahead market and, prvided that the resurce was available fr the entire time specified in its ffer data, in the balancing market. The ttal resurce ffer amunt fr generatin, including startup and n-lad csts as applicable, is cmpared t its ttal energy market value fr specified perating perid segments during the day (including any amunts credited fr day-ahead scheduling reserve in excess f the day-ahead scheduling reserve ffer, any amunts credited fr synchrnized reserve in excess f the synchrnized reserve ffer plus pprtunity cst, any amunts credited fr nn-synchrnized reserve in excess f the nn-synchrnized reserve pprtunity cst and any amunts credited fr resurces prviding reactive services). If the ttal value is less than the ffer amunt, the difference is credited t the PJM Member. Fees are als prvided fr pl-scheduled energy transactins, fr generating units perating as synchrnus cndensers (nt fr synchrnized reserve nr fr reactive services) at the directin f PJM, fr cancellatin f pl-scheduled resurces, fr units whse utput is suspended r reduced due t a transmissin cnstraint r ther reliability reasn, fr units perfrming an annual black start test, and fr units prviding reactive services at the directin f PJM. The ffered price fr pl-scheduled resurces will be capped fr the entire perating day in the event either f the fllwing cnditins exists: The generatin resurce is identified in the day-ahead schedule t be dispatched ut f ecnmic merit rder t cntrl an identified transmissin cnstraint. The generatin resurce is dispatched t prvide quick start reserve fr reliability. In the event ne f the abve cnditins exists, the ffer prices will be capped at ne f the fllwing three levels, as specified in advance by the resurce wner: The weighted average real-time Lcatinal Marginal Price at the generatin bus during all hurs ver the past six mnths in which the resurce was dispatched in ecnmic merit rder abve minimum. The incremental perating cst f the generatin resurce as determined in the PJM Cst Develpment Guideline Manual plus a 10% adder. An amunt negtiated between PJM and the Market Seller in the event the generatin resurce cannt recver csts with either f the first tw methds abve. The ttal cst f Day-ahead Operating Reserve fr the Operating Day, excluding the ttal cst fr resurces scheduled t prvide Black Start Service, Reactive Service, r transfer interface cntrl is allcated and charged t PJM Members in prprtin t their ttal cleared day-ahead demand and decrement bids plus their cleared day-ahead exprts fr that Operating Day. The ttal cst f Balancing Operating Reserve, excluding the ttal cst assciated with scheduling Revisin: 92, Effective Date: 11/01/2017 PJM

52 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets units fr Black Start service r testing f Black Start units, fr the Operating Day is allcated and charged t PJM Members in prprtin t their lcatinal real-time deviatins frm day-ahead schedules and generating resurce deviatins during that Operating Day, r t PJM Members in prprtin t their real-time lad plus exprts during that Operating day fr generatr credits prvided fr reliability. In rder t determine the reasn why the Operating Reserve credit has been earned s that the charges related can be prperly allcated, PJM cnducts a Balancing Operating Reserve Cst Analysis (BORCA). PJM als calculates a Reginal Balancing Operating Reserve rate fr the csts f Operating Reserves that result frm actins t cntrl transmissin cnstraints that are slely within pre-defined regins in the RTO. Additinal csts f Operating Reserves that result frm actins t cntrl transmissin cnstraints that benefit the entire RTO will cntinue t be allcated equally t deviatins acrss the entire RTO. The ttal cst f synchrnus cndenser payments (ther than that fr synchrnized reserve r reactive services) fr the Operating Day is allcated and charged t PJM Members in prprtin t their ttal lad plus their exprts during that Operating Day. The ttal cst f Reactive Services fr the Operating Day is allcated and charged t PJM Members in prprtin t their ttal lad in the applicable transmissin zne. The ttal cst f Day-ahead Operating Reserve fr the Operating Day fr resurces scheduled t prvide Reactive Services r transfer interface cntrl because the resurce is knwn r expected t be needed t maintain system reliability in a zne(s) are allcated and charged t PJM Members in prprtin t their ttal real-time lad in the applicable transmissin zne(s). The ttal cst f Operating Reserves fr resurces prviding Black Start service r testing f Black Start units is allcated t Netwrk and Pint-tPint Transmissin Custmers based n their mnthly transmissin use n a megawatt basis. Additinal details n this allcatin can be fund in the Black Start Service Accunting sectin f Manual 27. The purpse f the Balancing Operating Reserve Cst Analysis is t separate thse Balancing Operating Reserve charges t be allcated t deviatins between Day-ahead schedules and Real-time quantities frm thse that shuld be allcated t real-time lad and exprts. The key factr in separating the allcatin is the determinatin f the particular units by which perating reserve credits were earned, and the units fr which thse credits shuld be allcated t deviatins as ppsed t thse units fr which thse credits shuld be allcated t lad and exprts. This cst determinatin will ccur in tw stages: thse units called n during the Reliability Analysis, and thse units called n t perate during the Operating Day. In bth cases, the prpsed changes establish clear, definitive, and bjective criteria that will be applied t such units t determine the reasn Balancing Operating Reserve credits were earned. Fr resurces scheduled by PJM during its reliability analysis fr an Operating Day, the assciated Balancing Operating Reserve charges are allcated based n the reasn the resurce was scheduled. If the resurce is cmmitted t perate in real-time t augment the physical resurces cmmitted in the Day-ahead Energy Market t meet the frecasted real-time lad plus the Operating Reserve Requirement, then in such cases, Balancing Operating Reserve charges will be allcated t real-time deviatins frm day-ahead schedules. If hwever, a resurce is scheduled by PJM during its reliability analysis nt t accunt fr anticipated deviatins between day-ahead schedules and real time cnditins but instead t prvide additinal reliability margin, Balancing Operating Reserve charges must be allcated t real-time lad plus exprts. Revisin: 92, Effective Date: 11/01/2017 PJM

53 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Fr resurces called n by PJM t perate during the Operating Day, the assciated Balancing Operating Reserve charges are allcated based n the reasn the resurce was scheduled. Balancing Operating Reserve credits earned by units called n by PJM t perate during the Operating Day fr which the LMP at the unit s bus des nt meet r exceed the unit s applicable ffer (cst r price) fr at least fur, five-minute intervals f at least ne clck hur during which the unit was running at PJM s directin will be allcated accrding t rati share f lad plus exprts. Balancing Operating Reserve credits earned by all ther units perating at PJM s directin in real-time will be allcated accrding t deviatins between Day-ahead schedules and Real-time quantities. The lgic behind this distinctin is that units called n in real-time fr which LMP exceeds their ffer fr a significant number f intervals while they are running are necessary t meet lad requirements respecting active transmissin cnstraints. Units called n at PJM s directin in real time fr which the LMP des nt exceed the unit s ffer were nt needed and were therefre perating in rder t ensure reliability is maintained as ppsed t accunt fr differences between day-ahead schedules and real-time system cnditins. PJM further cllects Balancing Operating Reserve credits that are accrued t resurces perating t manage lcal transmissin cnstraints. In rder t apprpriately cllect the csts f Balancing Operating Reserve fr lcal cnstraints within the pre-determined regins where the cnstraints existed, PJM calculates Reginal Balancing Operating Reserve adders. PJM calculates Reginal Balancing Operating Reserve adders fr the fllwing Regins within the PJM RTO. Western Regin f PJM RTO, cmprised f the AEP, APS, ATSI, CmEd, Duquesne, Daytn, DEOK and EKPC Znes. Eastern Regin f PJM RTO made f the AEC, BGE, Dminin, PENELEC, PEPCO, ME, PPL, JCPL, PECO, DPL, PSEG and RE Znes. Generatin resurces with market based ffers greater than $1,000/MWh in the Day Ahead and Real Time Energy Market that are als greater than the resurce s lwest available and applicable cst-based ffer are nt eligible t receive Operating Reserve Credits. Balancing Operating Reserve credits that are accrued t resurces perating t cntrl transmissin cnstraints that benefit the entire RTO are charged as an RTO Balancing Operating Reserve rate. (See Operating Reserve Accunting sectin f PJM Manual 28 fr a detailed descriptin f the calculatin f allcatin charges) Maximum Emergency Generatin in Day-ahead Market If the day-ahead demand bid MW cannt be satisfied with all available generatin at its ecnmic maximum MW limit, the prgram shall issue a Maximum Generatin Warning message due t a shrtage f ecnmic generatin in the Day-ahead Market. The prgram shall then perfrm the fllwing steps t achieve pwer balance: Revisin: 92, Effective Date: 11/01/2017 PJM

54 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 2: Overview f the PJM Energy Markets Increase all n-line generatin up t its maximum emergency MW limit. (Increase generatr MW prprtinately by rati f ecnmic maximum, if pwer balance is achieved prir t reaching maximum limits). Set LMP values equal t the highest ffer f all n-line generatin. Lad ff-line generatin that is designated as available nly fr maximum generatin emergency cnditins, as required. The rder f lading is based n ecnmic ffer data. Set LMP values equal t the highest ffer f all n-line generatin. If generatin is still nt enugh t achieve pwer balance after Step 2, drp any remaining pricesensitive demand t zer MW. Set LMP values equal t the highest price-sensitive demand bid that was cut in this step. If n price-sensitive demand was reduced in this step, the LMP values are set equal t highest ffer price f all n-line generatin (resulting frm Step 2). If pwer balance is nt achieved after step 3, reduce all lad prprtinately (by rati f lad MW) until balance is achieved. Set LMP values equal t the highest ffer price f all n-line generatin, the price frm Step 3, r the bid cap (presently $2,000/ MWh), whichever is higher Minimum Capacity Emergency in Day-ahead Market If the day-ahead demand bid MW is less than the ttal generatin MW with all pssible generatin ff and with all remaining generatin at their ecnmic minimum MW limit, the prgram shall issue a Minimum Generatin Warning message due t an excess f ecnmic generatin in the Day-ahead Market. The prgram shall then perfrm the fllwing steps t achieve pwer balance. Reduce all n-line generatin dwn t its minimum emergency MW limit. (Reduce generatr MW prprtinately, by rati f ecnmic minimum, if pwer balance is achieved prir t reaching minimum limits). Set LMP values equal t the lwer f zer r t the lwest ffer price f all n-line generatin. Set LMP values t zer. Reduce all n-line generatin belw emergency minimum prprtinately (by rati f emergency minimum) t achieve pwer balance. Revisin: 92, Effective Date: 11/01/2017 PJM

55 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market Sectin 3: Overview f the PJM Regulatin Market Welcme t the Overview f the PJM Regulatin Market sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: An verview descriptin f the PJM Regulatin Market (see Overview f PJM Regulatin Market ). A list f the PJM Regulatin Market Business Rules (see PJM Regulatin Market Business Rules ). 3.1 Overview f the PJM Regulatin Market The PJM Regulatin Market prvides PJM participants with a market-based system fr the purchase and sale f the Regulatin ancillary service. Resurce wners submit specific ffers fr Regulatin Capability and Regulatin Perfrmance, and PJM utilizes these ffers tgether with energy ffers and resurce schedules frm the Markets Gateway System, as input data t the Ancillary Service Optimizer (ASO) which is an hur-ahead Market Clearing Engine. ASO then ptimizes the RTO dispatch prfile and frecasts LMPs t determine hurly cmmitments f Regulatin t meet the requirement. In real-time PJM jintly ptimizes the Regulatin cmmitted simultaneusly with energy and reserve and calculates the Regulatin Market Clearing Price (RMCP) and, Regulatin Market Perfrmance Clearing Price (RMPCP), which are used t derive the Regulatin Market Capability Clearing Price (RMCCP) ) every 5 minutes based n the current system cnditins. All 5 minute, real-time, Regulatin prices will be averaged t calculate the hurly Regulatin Market Perfrmance Clearing Price (RMPCP) and the Regulatin Market Capability Clearing Price (RMCCP). These clearing prices are then used in market settlements t determine the credits awarded t prviders and charges allcated t purchasers f the Regulatin service. PJM uses resurce schedules, regulatin, and energy ffers frm the Markets Gateway System as input data t the ASO t prvide the lwest cst alternative fr the prcurement f Regulatin fr each hur f the perating day. The lwest cst alternative fr this service is achieved thrugh a simultaneus c-ptimizatin with Synchrnized Reserve, Nn-Synchrnized Reserve and energy. Within the c-ptimizatin, an RTO dispatch prfile is frecasted alng with LMPs fr the market hur and adjacent hurs. Using the dispatch prfile and frecasted LMPs, an pprtunity cst, adjusted by applicable perfrmance scre and benefits factr, is estimated fr each resurce that is eligible t prvide regulatin. The estimated pprtunity cst fr demand resurces will be zer. The adjusted lst pprtunity cst is added t the adjusted regulatin capability cst and the adjusted regulatin perfrmance cst t make the adjusted ttal regulatin ffer cst. The adjusted ttal regulatin ffer cst is then used t create the merit rder price. Resurce wners may self-schedule Regulatin n any qualified resurce. The merit rder price fr any self-scheduled Regulatin resurce is zer. All available regulating resurces are then ranked in ascending rder f their merit rder prices, and the lwest cst set f resurces necessary t simultaneusly meet the PJM Regulatin Requirement, PJM Synchrnized Reserve Requirement, PJM Primary Reserve Requirement and prvide energy in that hur is determined. If there is an excess f self-scheduled and zer-cst ffers ver and beynd the Regulatin requirement, PJM uses resurce-specific histric perfrmance scres, selecting thse resurces with the highest perfrmance scres, as a tie-breaker t determine which set f resurces t cmmit t meet the Regulatin requirement. The least cst set f Revisin: 92, Effective Date: 11/01/2017 PJM

56 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market regulatin resurces identified thrugh this prcess are then cmmitted. Prices fr Regulatin will be calculated simultaneusly with energy and reserve every 5 minutes fr the 12 intervals f the hur by the Lcatinal Pricing Calculatr (LPC). The highest merit rder price assciated with this lwest cst set f resurces awarded regulatin becmes the RMCP. The RMPCP is calculated as the highest adjusted perfrmance ffer frm the set f cleared resurces. The RMCCP is the difference between RMCP and RMPCP. In the after-the-fact settlement, any resurces self-scheduled t prvide Regulatin are cmpensated based n the prcesses described in Manual PJM Regulatin Market Business Rules Regulatin Market Eligibility Regulatin ffers may be submitted nly fr thse resurces electrically within the PJM RTO. T regulate, a resurce must meet the fllwing criteria: Generatin resurces must be able t prvide 0.1 MW f Regulatin Capability in rder t participate in the Regulatin Market. Demand Resurces must be able t prvide 0.1 MW f Regulatin Capability in rder t participate in the Regulatin Market. Generatin resurces must have a gvernr capable f AGC cntrl. Resurces must be able t receive an AGC signal. Resurces MW utput must be telemetered t the PJM cntrl center in a manner determined t be acceptable by PJM. New resurces must pass an initial perfrmance test (minimum 75% cmpliance required). Resurces must demnstrate minimum perfrmance standards, as set frth in the PJM Manual 12: Balancing Operatins, Sectin 4: Prviding Ancillary Services. Resurces shuld give pririty t the regulatin signal by nt allwing the sum f the regulating ramp rate and energy ramp rate t exceed the ecnmic ramp rate. Only after a regulating resurce has accunted fr the regulatin capability, may a generatr use net f the ecnmic base pint and the regulatin ramp rate t fllw the energy signal. Demand Resurces must cmplete initial and cntinuing training n Regulatin and Synchrnized Reserve Market as dcumented in Manual 40: Certificatin and Training Requirements, Sectin 2.6: Training Requirements fr Demand Respnse Resurces Supplying Regulatin and Synchrnized Reserve. When a Demand Resurce that is eligible fr the Regulatin Market is called fr a mandatry Emergency r Pre-Emergency Lad Management Event, it will be deassigned frm Regulatin fr any intervals that verlap with the Lad Management Event, starting frm the ntice time f the Lad Management Event, unless therwise apprved by PJM. PJM will nt assign the resurce t Regulatin fr the remainder f the mandatry prtin f the Lad Management Event. The fllwing infrmatin must be supplied thrugh the Markets Gateway System: Resurce Regulating Status (available, unavailable, self-scheduled) Regulatin Capability (abve and belw regulatin midpint, MW) Revisin: 92, Effective Date: 11/01/2017 PJM

57 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market Regulatin Maximum and Minimum values, cnsidering any necessary ffsets (MW) Demand Resurce must submit valid Ecnmic and Regulatin Maximum and Minimum MW limits respectively Regulatin Signal Type RegA r RegD Cst-Based Regulatin Offer ($/MWh): This value will be validated using the unit-specific perating parameters submitted with the regulatin ffer and the applicable $12/MWh regulatin margin adder. The prtins f the cst based ffer are split int: Regulatin Capability prtin capturing the Fuel Cst Increase and Unit Specific Heat Rate Degradatin due t Operating at Lwer Lads. The margin adder may nly be added t the Regulatin Capability prtin; and, Regulatin Perfrmance prtin representing Cst Increase due t Heat Rate Increase during nn-steady state peratin and Cst Increase in VOM. The $/MW value determined in this step will be cnverted t $/ΔMW by dividing the value by mileage ΔMW/MW fr the applicable signal fr that ffer. Price-Based Regulatin Offer ($/MWh, ptinal): This value is capped at $100/MWh, and its submissin is ptinal n the part f the market participant. The prtins f the pricebased ffer are split int: Regulatin Capability prtin the capturing the resurce wner s price t reserve MWs fr regulatin in $/MW; and, Regulatin Perfrmance prtin capturing the resurce wner s price t prvide regulatin mvement in $/ΔMW. The $/MW value determined in this step will be cnverted t $/ΔMW by dividing the value by mileage ΔMW/MW fr the applicable signal fr that ffer. In additin t the cst-based regulatin ffer price, each market participant may als submit additinal infrmatin t supprt the cst-based ffer price. Using the calculatins in Manual M-15: Cst Develpment Guidelines, PJM will validate the cst-based regulatin ffer price t ensure that it des nt exceed actual regulating cst as determined by this manual, plus the applicable regulatin margin adder. Any cst-based ffer prices that exceed this value will be rejected by the Markets Gateway System. An example f this calculatin is available n the PJM website in the Regulatin Tw Part Cst-Based Offer dcument, lcated at Regulatin ffers cannt be negative. If a market participant des nt submit a cst-based regulatin ffer price they will nt be permitted t participate in the PJM Regulatin Market until such ffer has been validated. Any participants that d nt submit any f the supprting parameters belw will have their cstbased regulatin ffer price capped at the margin adder f $12/MWh. The fllwing ptinal parameters may be submitted in the Markets Gateway System t supprt the cst-based regulatin ffer price. If any f these parameters are nt submitted they will default t zer. Heat EcMax [BTU/kWh]: The heat rate at the default ecnmic maximum fr a resurce. The ecnmic maximum that will crrespnd t this rate value will be the Revisin: 92, Effective Date: 11/01/2017 PJM

58 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market default ecnmic maximum that is shwn n bth the Daily Regulatin Offers and Unit Details pages. Heat RegMin [BTU/kWh]: The heat rate at the default regulatin minimum fr a resurce. The regulatin minimum that will crrespnd t this rate value will be the default regulatin minimum that is shwn n bth the Daily Regulatin Offers and Unit Details pages. VOM Rate [$/MWh f Regulatin]: The increase in VOM resulting frm perating the regulating resurce at a higher heat rate than is therwise ecnmic fr the purpse f prviding regulatin. Fuel Cst [$/MBTU]: The fixed fuel csts f the resurce. This value will be used t determine the heat rate adjustments during steady-state and nn steady-state peratin fr the purpse f prviding regulatin. Regulatin resurces that are dual certified as RegA and RegD may submit a set f ffers fr each signal type. In such case, the market clearing engine evaluates bth ffers but will clear the resurce fr either ne r neither f the tw signal types based n ecnmics and system needs. A dual certified resurce ffering bth signal types in a given hur, if cleared fr regulatin, will be assigned ne signal type fr that the entire hur. The signal type assigned may vary frm ne hur t anther during the curse f the day if bth signal types are made available cnsistently. If a dual certified resurce submits self-scheduled regulatin ffers as bth RegA and RegD signal types in the same hur, the market clearing engine will nly evaluate the RegA self-schedule ffer and then either cmmit the resurce r nt based n system needs. If a resurce submits ffers int bth the Regulatin and Synchrnized Reserve Markets in the same hur, the regulatin ffer receives higher pririty in the market clearing prcess, meaning if ecnmic fr bth markets, the unit will be cmmitted fr Regulatin rather than Synchrnized Reserve Regulatin Market Data Timeline Daily Cst-based and Price-based Regulatin Offer(s) and any applicable cst infrmatin must be supplied prir t 1415 day-ahead. T accurately reflect each resurce s capability and availability during the Operating Day, the fllwing infrmatin may be submitted n an hurly basis and/r changed up until 65 minutes prir t the start f the perating hur, at which time the Regulatin Market Clses. Resurce Regulating Status Regulatin Capability Regulatin Maximum and Regulatin Minimum Market participants wh did nt elect t pt-ut f Intraday Updates as detailed in Sectin may als submit and/r change: Regulatin Capability Offer ($/MWh) Regulatin Perfrmance Offer ($/MWh) Revisin: 92, Effective Date: 11/01/2017 PJM

59 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market Daily regulatin ffers submitted fr a capacity resurce n the Regulatin Offers page in Markets Gateway are autmatically carried ver frm ne day t the next unless updated. Changes made n the Regulatin Updates pages f Markets Gateway are nt carried ver int the next day. Any changes made t the Regulatin Updates pages supersede the values n the Offers page. In the event that the Regulatin Maximum and Regulatin Minimum limits are nt the mst restrictive fr a given resurce (i.e. the Regulatin Maximum the lwest f all the high limits and the Regulatin Minimum the highest f all the lw limits), the regulatin sftware will utilize the mst restrictive minimum and maximum f all applicable limits fr real time. Shuld a resurce wish nt t participate in the regulatin market in any given hur n the perating day, the fllwing update shuld be made at least 65 minutes prir t the perating hur in the Regulatin Updates screens f the Markets Gateway System: Set Offer MW t zer and Set Available status t Nt Available. Shuld a resurce s regulatin perating parameters change after the regulatin market clses fr an hur, the fllwing changes may be made thrugh direct cmmunicatin with the PJM Scheduling Crdinatr: Resurce Regulating Status: Available t unavailable Self-scheduled t unavailable High Regulatin Limit may be decreased but nt increased and Lw Regulatin Limit may be increased but nt decreased. Regulating capability may be decreased but nt increased. Regulatin Maximum capability may be decreased but nt increased and Regulatin Minimum capability may be increased but nt decreased Regulatin Bilateral Transactins Bilateral regulatin transactins may be reprted t PJM. Such reprted bilateral regulatin transactins must be fr the physical transfer f regulatin and must be reprted by the buyer and subsequently cnfirmed by the seller thrugh the Markets Gateway System n later than 1330 the day after the transactin starts. Bilateral transactins that have been reprted and cnfirmed may nt be changed; they must be deleted and re-reprted. Deletin f a reprted bilateral transactin is interpreted as a change in the end time f the transactin t the current hur, unless the transactin has nt yet started. The buyer n the transactin submits the MW amunt, the seller, and the start and end time f the transactin via the Markets Gateway System. The seller cnfirms the transactin via the Markets Gateway System by 1330 the day after the start date f the bilateral transactin. Payments and related charges assciated with the bilateral regulatin transactins reprted t PJM shall be arranged between the parties t the bilateral cntract. A buyer under a bilateral regulatin cntract reprted t PJM agrees that it guarantees and indemnifies PJM, PJM Settlement, and the market participants fr the csts f any purchases Revisin: 92, Effective Date: 11/01/2017 PJM

60 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market by the seller in the Regulatin Market, as determined by PJM, t supply the reprted bilateral transactin and fr which payment is nt made t PJM Settlement by the seller. Upn any default in bligatins t PJM r PJM Settlement by a Market Participant, PJM shall nt accept any new bilateral reprting by the Market Participant and shall terminate all f the market participant s reprting f Markets Gateway schedules assciated with its bilateral regulatin transactins previusly reprted t PJM fr all days where delivery had nt yet ccurred Regulatin Requirement Determinatin The ttal PJM Regulatin Requirement fr the PJM RTO is determined in whle MW fr the ramp and nn-ramp perids. Further detail can be fund in Manual 12, Sectin Determining Regulatin Assignment. Demand Resurces will be limited t prviding 25% f the regulatin requirement Regulatin Obligatin Fulfillment LSEs may fulfill their regulatin bligatins by: Self-scheduling the entity s wn resurces; Entering cntractual arrangements with ther market participants; r Purchasing regulatin frm the regulatin market Regulatin Offer Perid Resurce wners wishing t sell regulatin service must at least supply a daily cst-based regulatin ffer reflecting bth Regulatin capability ffer cst and the Regulatin perfrmance cst f the resurce by 1415 the day prir t peratin, and the remainder f the necessary data prir t Regulatin market clsing as stated abve in the Regulatin Market Date Timeline sectin. Daily Regulatin ffers are lcked as f 1415 the day prir t peratin. The Markets Database is generally unavailable fr updates t ffers fr the next Operating Day between 1030 and the time the ffice f intercnnectin psts the results f the Day-ahead Energy Market fr that Operating Day while the Day-ahead market is being cleared. Hurly updates t Regulatin ffers, as defined in Sectin f this Manual, can be submitted up t 65 minutes prir t the start f the perating hur. All resurces listed as available fr regulatin with n ffer price have their ffer prices set t zer Regulatin Market Clearing PJM clears the regulatin market simultaneusly with the synchrnized reserve market, and psts the results n later than 30 minutes prir t the start f the perating hur. Dispatch Ecnmic ramp rate must be adjusted when resurces prvide regulatin t minimize the cnflict between energy and regulatin prducts. The segment specific ramp rates shuld be calculated frm the ecnmic ramp rate as fllws: Revisin: 92, Effective Date: 11/01/2017 PJM

61 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market T increase cnsistency in the Individual Generatr Dispatch (IGD) set pint sent by PJM while a unit is regulating, the IGD set pint will nly mve up when the RT-SCED LMP justifies raising the resurce and the resurce has a nn-zer reduced energy ramp rate entered. The IGD set pint will nly mve dwn when the RT-SCED LMP justifies lwering the resurce and the resurce has a nn-zer reduced energy ramp rate entered. The reduced energy ramp rate is a member-entered, unit-specific percentage f the bid-in energy ramp rate fr each resurce. If n value is entered in the Market Gateway system fr the resurce, a default f zer will be used. Regulating Capability Fr each resurce, PJM will calculate an adjusted Capability Cst, as The Adjusted Regulating Capability Offer is adjusted by the benefits factr f the specific ffered resurce and the histric perfrmance scre f the resurce. The histric perfrmance scre is discussed in Manual 12 Balancing Operatins, Sectin Disqualificatin and Requalificatin f a Resurce. Mileage and the Perfrmance Offer Mileage is the summatin f mvement requested by the regulatin cntrl signal a resurce is fllwing. It is calculated fr the duratin f the market hur fr each regulatin cntrl signal (i.e. RegA and RegD). PJM calculates the perfrmance-adjusted Perfrmance Cst, as Similar t the Adjusted Regulating Capability Offer, the Adjusted Perfrmance Offer is adjusted by the benefits factr f the specific ffered resurce and the histric perfrmance scre f the resurce. Benefits factr is discussed later in this sectin. The histric perfrmance scre is discussed in Manual 12 Balancing Operatins, Sectin Disqualificatin and Requalificatin f a Resurce. The perfrmance ffer is priced n a $ per change in MW, t nrmalize the perfrmance between signal types, the histrical mileage is a rlling 30-day average by the signal type that the resurce has qualified t fllw. Revisin: 92, Effective Date: 11/01/2017 PJM

62 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market Lst Opprtunity Cst Estimated resurce pprtunity cst is calculated as fllws: The Market Clearing Engine (MCE) ptimizes resurce energy schedules and frecasts LMPs fr the perating hur while respecting apprpriate transmissin cnstraints and Ancillary Service requirements. MCE utilizes the lesser f the available price-based energy schedule r mst expensive available cst-based energy schedule (the lst pprtunity cst energy schedule ), and frecasted LMPs t determine the estimated pprtunity cst each resurce wuld incur if it adjusted its utput as necessary t prvide its full amunt f regulatin. Regulatin pprtunity cst is divided int three cmpnents: The lst pprtunity cst incurred in the shulder hur preceding the initial regulating hur while the unit mves unecnmically int its regulating band t cmply with the next hur s regulatin assignment. The lst pprtunity cst incurred in the actual regulating hur frm reducing r raising the unit s utput unecnmically fr the purpse f prviding regulatin. The lst pprtunity cst incurred in the shulder hur fllwing the final hur f the regulatin assignment while the unit mves frm its unecnmic regulatin set pint back t its ecnmic set pint. The apprximate frmula fr the lst pprtunity incurred during the shulder hurs can be defined as: Where: LMPSH is the frecasted shulder hur LMP at the generatr bus, ED is the price frm the lst pprtunity cst energy schedule assciated with the setpint the resurce must maintain t prvide its full amunt f regulatin, and GENOFF is the MW deviatin between ecnmic dispatch and the regulatin setpint. TIME is the percentage f the hur it wuld take the unit t reduce GENOFF MWs using the applicable ffer-in ramp rate. The apprximate frmula fr the lst pprtunity cst incurred during the regulating hur is: Where: LMP is the frecasted hurly LMP at the generatr bus, ED is the price frm the lst pprtunity cst energy schedule assciated with the setpint the resurce must maintain t prvide its full amunt f regulatin, and GENOFF is the MW deviatin between ecnmic dispatch and the regulatin setpint. Revisin: 92, Effective Date: 11/01/2017 PJM

63 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market All unit-specific lst pprtunity csts will be divided by the benefits factr f the specific ffered resurce and the resurce s histric perfrmance scre fr the purpses f cmmitment and setting the regulatin market clearing prices. Benefits factr is discussed later in this sectin. The histric perfrmance scre is discussed in Manual 12 Balancing Operatins, Sectin Disqualificatin and Requalificatin f a Resurce. Bth lst pprtunity cst calculatins are defined simplistically fr the purpse f the manual. The actual calculatins are integratins that may be visualized as the area n a graph enclsed by the lst pprtunity cst energy schedule, the pints n that curve crrespnding t the resurce s desired ecnmic dispatch and the setpint necessary t prvide the full amunt f regulatin, and the LMP. A sample calculatin can be fund n PJM website at media/markets-ps/ancillary/regulatin-uplift-and-lst-pprtunity-cst.ashx. PJM may call n resurces nt therwise assigned in rder t prvide regulatin, in accrdance with PJM's bligatin t minimize the ttal cst f energy, perating reserves, regulatin, and ther ancillary services. If a resurce is called n by PJM fr the purpse f prviding regulatin, the resurce is eligible fr recvery f Regulatin lst pprtunity csts as well as start-up, n-lad, and energy csts. Please refer t Manual 28: Operating Agreement Accunting fr additinal settlements details. Resurces nt eligible r with n lst pprtunity assciated with prviding regulatin: Energy resurces that are self-scheduled t prvide energy and d nt supply an energy ffer. Demand Resurces Ntwithstanding the abve, resurces that d nt submit an energy ffer curve will have a Lst Opprtunity Cst f zer. Ttal Offer Each resurce must be ranked based n the ttal expected cst f that resurce regulating. PJM calculates the Adjusted Ttal Offer f the resurce as fllws: Revisin: 92, Effective Date: 11/01/2017 PJM

64 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market MCE ranks all available regulating resurces in ascending merit rder price, and simultaneusly determines the least expensive set f resurces necessary t prvide energy, regulatin and synchrnized reserve fr the perating hur taking int accunt any resurces self-scheduled t prvide any f these services. The Rank price is determined as fllws: Shuld the MCE applicatin be unable t fulfill bth the Regulatin and Synchrnized Reserve requirements, regulatin receives the higher pririty. PJM will clear the market t meet the Regulatin Capability Requirement. The Regulatin Capability Requirement sets the amunt f regulating capability that PJM believes it wuld need t absrb sustained RTO ACE deviatins adjusted by the benefits factr f a specific ffered resurce and the resurce s histric perfrmance scre. Benefits factr is discussed later in this sectin. The histric perfrmance scre is discussed in Manual 12 Balancing Operatins, Sectin Disqualificatin and Requalificatin f a Resurce. The market will assign resurces until the cnstraint is met, by With the Regulatin Capability cnstraint satisfied, the Rank Price ($/MW) f the last assigned resurce sets the Regulatin Market Clearing Price (RMCP). This RMCP is used t derive the clearing price fr the Regulatin Capability and Regulatin Perfrmance cmpnents. First the Revisin: 92, Effective Date: 11/01/2017 PJM

65 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market Regulatin Market Perfrmance Clearing Price (RMPCP) is calculated by finding the maximum perfrmance ffer frm the set f all cleared resurces perfrmance ffers as fllws: Then the RMPCP is subtracted frm the RMCP fr the Regulatin Market Capability Clearing Price (RMCCP), which is the residual between the RMCP and RMPCP. The five minute regulatin clearing prices are psted in the Data Viewer user interface public view. RMCP(s) and ther billing determinant infrmatin is als available n the PJM website at If n Regulatin Market Results are psted t the Markets Gateway MUI fr an hur, PJM will cntinue the current assignments, as needed, int the un-psted hur. There will be n impact t the price calculatin. The Regulatin Clearing Prices will cntinue t be calculated every five minutes in real-time and the hurly integrated clearing price will be used fr settlement. Benefits Factr Functin Regulating resurces can fllw either a RegA (traditinal) r RegD (dynamic) signal based n their resurces limitatin and business practices. The regulating resurces cleared in any hur can be any set f r mix f bth traditinal and dynamic resurces. There is an peratinal relatinship between the regulating resurce mix and hw the regulatin requirement is satisfied. This relatinship is included in the market clearing prcess as the Benefits Factr Functin because the relatinship is depicted as a curve. The benefits factr translates a fast mving resurce s MWs int traditinal MWs r Effective MWs. These Effective MWs reflect the rate f substitutin between resurces fllwing the different regulatin signals. Fr market clearing, each dynamic resurce will be assigned a decreasing and unique benefits factr. The benefits factr f the ffered resurce r resurce specific benefits factr is the marginal pint n the benefits factr functin that aligns with the last MW, adjusted by histrical perfrmance, that specific resurce will add t the dynamic resurce stack. Revisin: 92, Effective Date: 11/01/2017 PJM

66 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market The benefits factr ranges frm 2.9 t 0 where a benefits factr f 1 is equivalent t a traditinal resurce. PJM will review the benefits factr as peratinal cnditins warrant t re-evaluate the relatinship when needed. These peratinal cnditins culd include, amng ther factrs, changes t the regulatin signal tuning parameters, changes in the set f resurces prviding regulatin service, and changes t the regulatin requirement. PJM determines the benefits factr based n the expected impact that fast-fllwing resurces have n the NERC reliability criteria. Determinatin f expected respnse will be based a cmbinatin f ff-line mdels, analysis f the regulatin signals, and the histrical peratinal data as it accumulates. Histrical peratinal data will be given increasing weight t the benefits factr determinatin ver time. Changes t the benefits factr functin will be made peridically after review at the Operating Cmmittee. The net impact f the use f the benefits factr is t increase the likelihd f dynamic resurces being selected in the clearing prcess, up t the pint f diminishing returns. Beynd the pint f diminishing returns (1 t 0), the benefits factr will decrease the likelihd f fastfllwing resurces getting clearing. During identified hurs where mre sustaining regulatin (RegA) and less fast-fllwing regulatin (RegD) is warranted, RegD resurces with a benefits factr less than 1 will nt be cnsidered in the regulatin clearing because f its reduced benefits. A cap will be implemented at BF = 1 during these hurs. Capped hurs will be reviewed n a quarterly basis at the Operating Cmmittee. The benefits factr is calculated in ASO ne hur ahead in real time fr each qualified RegD resurce participating in the Regulatin Market. Als, the benefits factr is re-calculated fr each RegD resurce that is cmmitted and prviding regulatin service in real-time fr every 5 Revisin: 92, Effective Date: 11/01/2017 PJM

67 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market minute interval f the hur. The recalculatin accunts fr changes in the resurce s adjusted ttal ffer cst due t ptential change in LMP at its bus which may affect its lst pprtunity cst value. The benefits factr f RegA resurces is always 1. The benefits factr calculatin steps include: Step 1: Calculatin f the Perfrmance Adjusted MW Step 2: Calculatin f the Initial Adjusted Ttal Offer Cst RegD resurces with initial adjusted ttal ffer cst equal t zer will still be given pririty in the ranking, but will instead be rdered using the resurce specific histrical perfrmance scre as a tie-breaker. Step 3: Calculatin f the rlling perfrmance adjusted MW based n the initial adjusted ttal cst in ascending rank rder Step 4: Calculatin f the resurce specific benefits factr based n the defined benefits factr curve Three Pivtal Supplier Test PJM utilizes the Three Pivtal Supplier (TPS) Test in the regulatin market t mitigate market pwer as detailed in sectin 3.2.2A.1 f the PJM Tariff. Each supplier, frm 1 t n, is ranked frm the largest t the smallest ffered MW f eligible regulatin supply adjusted by the resurce-specific benefits factr and the resurce specific perfrmance scre in each hur. Suppliers are then tested in rder, starting with the three largest suppliers. In each iteratin f the test, the tw largest suppliers adjusted by the benefits factrs f the ffered resurces and the resurce specific perfrmance scres are cmbined with a third supplier adjusted by the benefits factr f the ffered resurce and the resurce specific perfrmance scre, and the resulting cmbined supply is subtracted frm ttal effective supply adjusted by the benefits factrs f all ffered resurce and their resurce specific perfrmance scres. The resulting net amunt f eligible supply is divided by the regulatin requirement fr the hur adjusted by the resurce-specific benefits factrs and the resurce specific perfrmance scres (D). Where j defines the supplier being tested in cmbinatin with the tw largest suppliers (initially the third largest supplier with j=3). Equatin 0-1 shws the frmula fr the residual supply index fr three pivtal suppliers (RSI3): Revisin: 92, Effective Date: 11/01/2017 PJM

68 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market Where j=3, if RSI3j is less than r equal t 1.0, then the three suppliers are jintly pivtal and the suppliers being tested fail the three pivtal supplier test. Iteratins f the test cntinue until the cmbinatin f the tw largest suppliers and a supplier j result in RSI3j greater than 1.0. When the result f this prcess is that RSI3j is greater than 1.0, the remaining suppliers pass the test. Any resurce wner that fails the TPS Test will be ffer-capped. Regulating resurces are ffer-capped at the lesser f their cst-based r market-based regulatin ffer price. An ffer-capped resurce will nly be ffer-capped fr a single hur at a time as the TPS Test is rerun fr each hur f the day. Resurce merit rder price ($/MWh) = Resurce regulatin ffer + estimated resurce pprtunity cst per MWh f capability adjusted by the resurce-specific benefits factr and the resurce specific perfrmance scre Hydr Units Since hydr units perate n a schedule and d nt have an energy bid, pprtunity cst fr these units is calculated as fllws: During thse hurs when a hydr unit is in spill, the ED value is set t zer such that the pprtunity cst is based n the full value f LMP. During the perating day, the perating cmpany is respnsible fr cmmunicating this cnditin t the PJM Scheduling Crdinatr, and indicating this cnditin n the Regulatin Updates page f the Markets Gateway System. If a hydr unit is cmmitted day-ahead with MW greater than zer, the frmula is the same as Sectin Regulatin Market Clearing and Dispatch abve, except the ED value is an average f the LMP at the hydr unit bus fr the apprpriate n-peak ( ) r ff-peak ( , ) perid, excluding thse hurs during which all available units at the hydr plant were perating. If this average LMP value is higher than the actual LMP at the generatr bus, the pprtunity cst is zer. Day-ahead LMPs are used fr the purpse f estimating pprtunity csts fr hydr units, and actual LMPs are used in the lst pprtunity csts fr settlement. If a hydr unit is brught n ut f schedule t prvide regulatin r nt cmmitted in day-ahead market with MWs greater than 0, the pprtunity cst is equal t the average LMP (calculated as stated abve) minus the actual LMP at the generatr bus. If the actual LMP is higher than the average, the pprtunity cst is zer. When determined t be ecnmically beneficial, PJM maintains the authrity t adjust hydr unit schedules fr thse units scheduled by the wner if the wner has als submitted a regulatin ffer fr thse units and made the units available fr regulatin. An example f Regulatin Hydr Lst Opprtunity Cst Calculatins can be fund n the PJM website at Regulatin Market Operatins The PJM Operatr peridically evaluates the set f resurces prviding regulatin, and makes any adjustments t regulatin assignments deemed necessary and apprpriate t minimize the verall cst f regulatin. Revisin: 92, Effective Date: 11/01/2017 PJM

69 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market In the event f a regulatin excess, the PJM dispatcher deselects resurces beginning with the highest cst resurce currently prviding regulatin and mving dwnward. In the event f a regulatin deficiency, the PJM dispatcher uses the Intermediate-Term Security Cnstrained Ecnmic Dispatch (IT SCED) applicatin t select resurces t prvide regulatin beginning with the lwest cst resurce currently nt prviding regulatin and mving upward. The RMCP and therefre RMPCP and RMCCP may change based upn regulating resurce adjustments made in real time. Any pprtunity csts that exceed the RMCP are credited after the fact n a resurce-specific basis. The PJM Energy Management System (EMS) will send a RTO based signal(s) t each Lcal Cntrl Center (LCC), as well as signals t individual resurces r plants as requested by the wner. The PJM Operatr cmmunicates any change in resurce regulating assignments t individual Lcal Cntrl Centers. Cmpany ttal in-service regulating capabilities are then telemetered back t the PJM EMS via the PJM data link. Resurce regulatin assignment changes during transitins between n-peak and ff-peak perids begin 30 minutes prir t the new perid, and are cmpleted n later than 30 minutes after the perid begins. Fr a dual qualified regulatin resurce, shuld the assignment change within the perating hur, the resurce will cntinue t be cmmitted r re-cmmitted n the regulatin signal type that the resurce was initially cmmitted n Settlements Please refer t Manual 28: Operating Agreement Accunting, Sectin 4: Regulatin Accunting fr settlement details. Regulatin settlement is a zer-sum calculatin based n the regulatin prvided t the market by generatin wners and purchased frm the market by LSEs. A resurce s regulatin perfrmance scre fr the hur r the prtin f the hur it is regulating will determine the resurce s eligibility fr regulatin credit and lst pprtunity cst fr that hur. A resurce whse perfrmance scre fr the hur r the prtin f the hur is belw 25% will frfeit regulatin credit and Lst Opprtunity fr that hur. Opprtunity cst is calculated as shwn abve in Sectin Market Clearing and Dispatch using actual integrated LMPs as ppsed t that which was frecasted. PJM then adjusts the pprtunity cst calculated fr each resurce based n the actual hurly integrated value f the real-time PJM regulatin signal t accunt fr the fact that the resurce may have been held abve r belw its regulatin set pint fr greater than half the hur and als adjusted by the resurce-specific benefits factr and the resurce specific perfrmance scre. Energy resurces that are self-scheduled t prvide energy and d nt supply an energy ffer are nt eligible t cllect pprtunity cst credits. These resurces will receive credit equal t the RMPCP and RMCCP times the amunt f regulatin self-scheduled n r assigned t them adjusted by the mileage rati between the requested mileage fr the regulatin dispatch signal assigned t the resurce and the mileage fr the traditinal regulatin signal and the resurce s actual perfrmance scre fr an hur. Fr market settlement, regulating resurces are cmpensated with cnsideratin tward the resurce s Regulatin perfrmance, and where applicable, the mileage rati between the Revisin: 92, Effective Date: 11/01/2017 PJM

70 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 3: Overview f the PJM Regulatin Market requested mileage fr the regulatin dispatch signal assigned t the resurce and the mileage fr the traditinal regulatin signal. Revisin: 92, Effective Date: 11/01/2017 PJM

71 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market Sectin 4: Overview f the PJM Synchrnized Reserve Market Welcme t the Overview f the PJM Synchrnized Reserve Market sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin, yu will find the fllwing infrmatin: An verview descriptin f the PJM Synchrnized Reserve Market (see Overview f PJM Synchrnized Reserve Market ). A list f the PJM Synchrnized Reserve Market Business Rules (see PJM Synchrnized Reserve Market Business Rules ). 4.1 Overview f the PJM Synchrnized Reserve Market The PJM Synchrnized Reserve Market prvides PJM participants with a market-based system fr the purchase and sale f the Synchrnized Reserve ancillary service. Resurce wners submit resurce-specific ffers t prvide Synchrnized Reserve, and PJM utilizes these ffers tgether with energy ffers and resurce schedules frm the Markets Gateway System, as input data t the Ancillary Service Optimizer (ASO). ASO then ptimizes the RTO dispatch prfile and frecasts LMPs t determine hurly cmmitments f the inflexible Synchrnized Reserves. Althugh the ASO cnsiders all available resurces during its cmmitment prcess, the hurly cmmitments fr Synchrnized Reserve frm the ASO are limited t inflexible resurces nly and may nly represent a prtin f PJM s Synchrnized Reserve needs fr the hur. In realtime PJM will jintly ptimize the remaining RTO reserve needs simultaneusly with energy and regulatin and calculate a clearing price fr Synchrnized Reserve every 5 minutes based n the current system cnditins. All 5 minute, real-time, Synchrnized Reserve prices will be averaged t calculate the hurly Synchrnized Reserve Market Clearing Price (SRMCP) that will be used fr market settlement. Inflexible resurces are defined as thse resurces that physically require an hurly cmmitment due t minimum run time cnstraints r staffing cnstraints. Inflexible resurces include but are nt limited t synchrnus cndensers that are perating in cndensing mde slely fr the purpse f prviding Synchrnized Reserves and Demand Resurces that are prepared t curtail in respnse t a PJM reserve event. PJM initially uses frecasted LMPs and resurce schedules t estimate the amunt f incidental Synchrnized Reserve present n the PJM system due t ecnmic dispatch and this capability is designated as Tier 1. Tier 1 is prvided by any resurce that is n line, fllwing ecnmic dispatch, and capable f increasing its utput within ten (10) minutes fllwing a call fr a Synchrnized Reserve Event. If the frecasted amunt f Tier 1 estimated fr a given duratin is insufficient t meet the PJM Synchrnized Reserve Requirement, PJM must cmmit resurces t perate at a pint that deviates frm ecnmic dispatch in rder t prvide the remainder f the requirement. The extra capacity that must be cmmitted is designated Tier 2. ASO will cmmit any inflexible resurces that are frecasted t be ecnmic t prvide Synchrnized Reserves during the perating hur. If the slutin des nt fresee the need t cmmit Tier 2 reserves r des nt cmmit enugh inflexible resurces t meet the Synchrnized Reserve requirement due t ecnmics, PJM will jintly ptimize the balance f the Tier 2 required in real-time with energy. Revisin: 92, Effective Date: 11/01/2017 PJM

72 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market During each executin f RT SCED, any additinal Synchrnized Reserves will be cmmitted that are required t meet the Synchrnized Reserve requirement based n current system cnditins while the IT SCED has the ability t prject cnditins further ut int the future and make a recmmendatin t cmmit additinal inflexible resurces fr reserves where they are ecnmic. RT SCED has the ability t re-dispatch nline generating resurces t meet the Synchrnized Reserve requirement in additin t cmmitting additinal flexible resurces t prvide Synchrnized Reserves shuld they be ecnmic. Prices fr Synchrnized Reserves will be calculated simultaneusly with energy, regulatin and nn-synchrnized reserve every 5 minutes by LPC. Fr each prduct, the 5 minute prices will be averaged ver the perating hur t determine the hurly Synchrnized Reserve Market Clearing Price (SRMCP) that will be used fr market settlement. In the after-the-fact settlement, any resurces cleared as selfscheduled t prvide Synchrnized Reserve are cmpensated at the hurly SRMCP. Any plscheduled resurces selected t prvide Synchrnized Reserve are cmpensated at the higher f the hurly SRMCP r their real-time pprtunity cst plus their Synchrnized Reserve ffer price. LSEs required t purchase Synchrnized Reserve are charged the hurly SRMCP plus their percentage share f pprtunity cst credits and Tier 1 credits. 4.2 PJM Synchrnized Reserve Market Business Rules Synchrnized Reserve Market Eligibility Synchrnized Reserve ffers must be submitted fr thse resurces lcated electrically within the Synchrnized Reserve Zne. Resurces nt lcated electrically within the Synchrnized Reserve Zne may nt submit Synchrnized Reserve ffers. Resurces participating in the Synchrnized Reserve market are divided int tw Tiers: Tier 1 is cmprised f all thse resurces n line fllwing ecnmic dispatch and able t ramp up frm their current utput in respnse t a Synchrnized Reserve Event, r Demand Resurces capable f reducing lad, within 10 minutes. Tier 2 cnsists f: additinal capacity that is synchrnized t the grid and perating at a pint that deviates frm ecnmic dispatch (including cndensing mde) t prvide additinal Synchrnized Reserve nt available frm Tier 1 resurces within ten (10) minutes; and dispatchable lad resurces that have cntrls in place t autmatically drp lad in respnse t a signal frm PJM within ten (10) minutes. Tier 1 estimates fr Demand Resurces will equal zer. Tier 1 estimates fr ther resurce types that cannt reliably prvide Synchrnized Reserve service shall be set t zer MW during the market clearing prcess. Such resurce types include, but are nt limited t: Nuclear, Wind, Slar, Energy Strage Resurces, and Hydr units. Owners f any specific resurce(s) r these resurce types may request an exceptin frm the default zer MW estimated value f their resurce(s) if they ntify PJM that the resurce(s) are able t reliably prvide Tier 1 Synchrnized Reserve. PJM will nly grant such requested exceptins n a prspective basis. A resurce will nly be credited fr Tier 1 Synchrnized Reserve if the resurce Revisin: 92, Effective Date: 11/01/2017 PJM

73 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market was cnsidered during the market clearing prcess, unless such resurce actually prvides Tier1 Synchrnized Reserve during a Synchrnized Reserve Event. Fr further infrmatin n the exceptin prcess, please visit "Cmmunicatin Prcess fr Cnsideratin f Sme Resurces fr Tier 1" at this link: All resurces perating n the PJM system with the exceptin f thse assigned as Tier 2 resurces are by definitin Tier 1 resurces. Any resurce capable f perating in cndensing mde r physically able t perate with an utput less than that dictated by ecnmic dispatch must ffer Tier 2. There is n qualificatin prcess fr Tier 2 resurces. Hwever, cmpensatin refunds exist as described in sectin belw fr respnse by Tier 2 resurces that is less than that which is cmmitted. All n-line nn-emergency generatin resurces prviding energy are deemed t be available t prvide Tier 1 Synchrnized Reserve and Tier 2 Synchrnized Reserve, as applicable t the capacity resurce s capability t prvide these services. During perids fr which PJM has issued a Primary Reserve Warning, Vltage Reductin Warning r Manual Lad Dump Warning, all ther nn-emergency generatin capacity resurces available t prvide energy shall have submitted ffers fr Tier 2 Synchrnized Reserves. PJM will mnitr cmpliance with the Tier 2 must ffer requirement. T mnitr the Tier 2 must ffer requirement, PJM will check t ensure that every generatr subject t the must ffer requirement has submitted a Tier 2 ffer greater than r equal t 90% f its energy ramp rate fr the ramp rate segment including its ecnmic max, multiplied by 10 minutes. If the Tier 2 ffer is less than that quantity, PJM will cntact the generatin wner regarding the Tier 2 ffer. Regardless f nline/ffline state, all nn-emergency generatin capacity resurces must submit a daily ffer fr Tier 2 Synchrnized Reserve in Markets Gateway prir t the ffer submissin deadline (1415 the day prir t the perating day). Offer MW and ther nn-cst ffer details can be changed during the perating day via the hurly update page (Synchrnized Reserve Updates). Tier 2 ffer quantities submitted fr a capacity resurce n the Synchrnized Reserve Offer page in Markets Gateway are autmatically carried ver frm ne day t the next unless updated. Changes made n the Synchrnized Reserve Updates page f Markets Gateway are nt carried ver int the next day. Any changes made t the Synchrnized Updates page supersedes the values n the Offer page. The fllwing infrmatin must be supplied thrugh the Markets Gateway System: Synchrnized Reserve ramp rate fr Tier 1 resurces (MW/minute). A separate ramp rate may be submitted fr multiple segments f a resurce s MW range, and these ramp rates must be greater than r equal t the real-time ecnmic ramp rate(s) submitted fr the resurce. Synchrnized Reserve ramp rates that exceed ecnmic ramp rates must be justified via submissin f actual data frm past Synchrnized Reserve Events t the PJM Perfrmance Cmpliance Department. Resurce s energy ramp rate is used fr Tier 2 MW calculatin. Synchrnized Reserve maximum fr Tier 1 resurces: This value represents the maximum MW utput a resurce can achieve in respnse t a Synchrnized Reserve Event. Synchrnized Reserve maximum fr Tier 1 resurces must be greater than r equal t the ecnmic maximum fr the resurce except Revisin: 92, Effective Date: 11/01/2017 PJM

74 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market fr qualified resurces that have been granted exceptin due t their physical limitatin. Additinal infrmatin n the cmmunicatin prcess fr cnsideratin f resurce physical limitatin can be fund n the PJM website under "Mdificatin t Synchrnized Reserve Market t Better Reflect the Operating Characteristics f Participating Generating Units" at this lcatin: Generatin resurces must be able t prvide 0.1 MW f Tier 2 Synchrnized Reserve Capability in rder t participate in the Tier 2 Synchrnized Reserve Market. Demand Resurces must be able t prvide 0.1 MW f Tier 2 Synchrnized Reserve Capability in rder t participate in the Tier 2 Synchrnized Reserve Market. Synchrnized Reserve availability fr Tier 2 resurces: Resurces may be made unavailable t prvide Tier 2 Synchrnized Reserve nly if they are physically unavailable. Otherwise, they must be made available r self-scheduled t prvide Tier 2 Synchrnized Reserve per the must ffer requirement. Synchrnized Reserve ffer quantity fr Tier 2 resurces (MW): This quantity is defined as the increase in utput achievable by the resurce in ten (10) minutes, r the lad reductin achievable in ten (10) minutes. A nn-emergency generatin capacity resurce that cannt reliably prvide Synchrnized Reserve service may submit an ffer quantity f zer MW. The participant respnsible fr a given resurce must be able t justify a zer MW ffer quantity. Certain unit types including, but nt limited t, Nuclear, Wind, Slar, and Energy Strage Resurces, are expected t have zer MW Tier 2 Synchrnized Reserve ffer quantities. Synchrnized Offer Price fr Tier 2 resurces ($/MWh): Synchrnized Reserve ffer prices will be capped at a maximum value f the resurce s O&M cst (as determined by the Cst Develpment Task Frce) plus $7.50/MWh margin. Offer Price cannt be a negative value All resurces listed as available fr Tier 2 Synchrnized Reserve with n ffer price will have their ffer prices set t zer. Energy use fr cndensing Tier 2 resurces (MW): This is the amunt f instantaneus energy a cndensing resurce cnsumes while perating in the cndensing mde. The value submitted as part f the Synchrnized Reserve ffer must be less than r equal t the actual energy cnsumed as bserved in real time. Shuld a resurce be unable t participate in the Synchrnized Reserve market in any given hur n the perating day, the fllwing update shuld be made 60 minutes prir t the perating hur in the Synchrnized Reserve Update screens f Markets Gateway (bth updates must be made): Set Offer MW t zer Set Available status t Nt Available Cndense t gen cst: This is the cst f transitining a cndenser t the generating mde. The value submitted fr this cst must be less than r equal t the cndensing start cst. Revisin: 92, Effective Date: 11/01/2017 PJM

75 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market Shutdwn Csts: These are the csts a Demand Resurce incurs when reducing lad in respnse t a Synchrnized Reserve Event. Cndense Startup Cst: This is the actual cst assciated with getting a resurce frm a cmpletely ff-line state int the cndensing mde including fuel, O&M, etc. Cndense Hurly Cst: This is the hurly cst t cndense and is equal t the actual, variable O&M csts assciated with perating a resurce in the cndensing mde, including any fuel csts. It des nt include any estimate fr energy cnsumed Cndense Ntificatin Time: The amunt f advance ntice, in hurs, required t ntify the perating cmpany t prepare the resurce t perate in synchrnus cndensing mde. The default value is 0 hurs. Spin as Cndenser: This is used t identify if a cmbustin turbine r a hydr resurce can be cmmitted fr Synchrnized Reserve as a cndenser. Cndense Available Status: Indicates a resurce s availability t prvide vltage/ reactive supprt. This value is nt directly related t Synchrnized Reserve Market Synchrnized Reserve Requirement Determinatin PJM will select resurces in the Primary Reserve and Synchrnized Reserve Zne and Reserve Sub-zne hurly and intra-hurly t prvide primary reserve and synchrnized reserve based n a jint ptimizatin between energy, regulatin, nn-synchrnized reserve and synchrnized reserve. Assignments will be cmmunicated t the resurce wners/peratrs by Markets Gateway and/r the apprpriate applicatin. In the PJM RTO there will be a single Primary Reserve and Synchrnized Reserve Zne and ptential Reserve Sub-zne. Ttal PJM Primary Reserve and Synchrnized Reserve Requirement fr each Primary Reserve and Synchrnized Reserve Zne and Reserve Sub-Zne is determined in whle MW fr each hur f the perating day. The PJM Primary Reserve and Synchrnized Reserve Zne and Reserve Sub-zne Reliability Requirements are dcumented in PJM Manual 13: Emergency Operatins, Sectin 2.2. Due t transmissin security cnsideratins n the PJM system, it is smetimes necessary t carry a minimum amunt f Primary Reserve and Synchrnized Reserve in specific sub-znes in PJM such that lading 100% reserve will nt result in an verlad f any f the PJM transfer interfaces. The Mid-Atlantic Dminin Sub-Zne is defined in the Primary Reserve and Synchrnized Reserve Market t ensure that reserves are available in r deliverable t the eastern part f the system under cnstrained cnditins. The Mid-Atlantic Dminin Sub-Zne is defined by the mst limiting mnitred transfer interfaces. The interface mdeled may be revised by PJM t match peratin and meet the system reliability needs. As system cnditins dictate, PJM may need t redefine r include additinal subznes int the RTO Primary Reserve and Synchrnized Reserve Markets. PJM will ntify the stakehlders in the event any additinal sub-znes need t be created due t unfreseen system cnditins that impact reliability. PJM shall btain and maintain fr each Reserve Zne and Reserve Sub-zne an amunt f Nn-Synchrnized Reserve such that the sum f the Synchrnized Revisin: 92, Effective Date: 11/01/2017 PJM

76 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market Reserve and Nn-Synchrnized Reserve meets the Primary Reserve bjective fr such Reserve Zne and Reserve Sub-zne. PJM shall create additinal Reserve Znes r Reserve Sub-znes t maintain the required amunt f reserves in a specific gegraphic area f the PJM Regin as needed fr system reliability. Such needs may arise due t planned and unplanned system events that limit PJM s ability t deliver reserves t a specific gegraphic area f the PJM Regin where reserves are required. PJM must ensure that adequate synchrnized and primary reserves MW are prcured and maintained t recver frm the lss f the single largest generatr cntingency, which is nrmally the largest nline generatr s utput. Hwever, there is, at times, an utage cnditin at a statin whereby a single fault wuld trip multiple generatrs resulting in a lss f generatin greater than the largest single generatr. In such instances, PJM will carry an increased reserve requirement in equivalent summatin f utput f thse multiple generatrs in accrdance with reserve requirements described in PJM Manual 13: Emergency Operatins, Sectin 2.2. At times, anticipated heavy lad cnditins may result in PJM peratrs carrying additinal reserves t cver increased levels f peratinal uncertainty. PJM may extend the Primary Reserve and Synchrnized Reserve Requirements in the Market Clearing Engines during the n-peak perid in rder t incrprate these actins in energy and reserve pricing when a Ht Weather Alert, Cld Weather Alert r an escalating emergency prcedure (as defined in Manual 13: Emergency Operatins) has been issued fr the Operating Day. The extended Synchrnized Reserve Requirement and Primary Reserve Requirement will be equal t the existing reserve requirement plus the sum f any additinal MW brught nline fr that hur by PJM dispatch t accunt fr peratinal uncertainty after the secnd resurce cmmitment which ccurs after 1415 the day prir t the Operating Day. If reserve deliverability issues are anticipated, then the requirements fr the Sub-Zne(s) in which the additinal resurces are lcated will be extended. Fr example, if additinal resurces are specifically scheduled in the Mid-Atlantic Dminin Sub-Zne in anticipatin f transmissin cnstraints inhibiting the delivery f reserves int that regin, bth the Mid-Atlantic Dminin Sub-Zne and RTO Reserve Zne requirements wuld be extended. If additinal resurces are scheduled in the nn-mid-atlantic Dminin prtin f the RTO Reserve Zne, then nly the RTO Reserve Zne requirement wuld be extended. The requirements will return t their riginal values upn exit frm emergency prcedures r when the additinal resurces have been released by PJM dispatch. PJM will ntify market participants f changes t the reserve requirements in relatin t emergency prcedures via the Emergency Prcedure Psting Applicatin nce the decisin t change the reserve requirements is made. Regardless f the reserve requirements mdeled in the Market Clearing Engines, PJM peratrs will cntinue t initiate emergency prcedures based n the reserve requirements defined in Manual 13: Emergency Operatins Reserve Demand Curves and Penalty Factrs Embedded within the real-time market clearing engines are reserve demand curves fr each real-time reserve prduct in each Reserve Zne and Sub-zne. These demand Revisin: 92, Effective Date: 11/01/2017 PJM

77 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market curves are used t articulate the value f maintaining reserves at specified levels and ensure prduct substitutin between energy and reserves up t the specified penalty factrs. They are defined with $/MWh penalty factrs n the Y axis and desired reserve MW n the X axis. The penalty factr represents the price at which reserves will be valued if the desired reserve MW cannt be met with the available reserves n the system, and als acts as a price cap beynd which reserves will nt be prcured thrugh market clearing. Fr example, assume the penalty factr fr maintain 1,000 MW f synchrnized reserves is $850/MWh. If there are less than 1,000 MW f reserves available, the deficient MW will be valued at $850/MWh. Similarly, if there sufficient reserves t meet the 1,000 MW requirement, yet they are nt available at a prices less than r equal t $850/ MWh, resurces with merit rder prices that exceed $850/MWh will nt be cleared and the deficient MW will be valued at $850/MWh. Hwever, such resurces can still be cmmitted manually by PJM peratins persnnel in rder t maintain reliability. In this case, such resurces will be cmpensated additinally after the fact t ensure their true cst t prvide the service is cvered. The penalty factr als prvides a clear indicatr f the reserve psitin f the RTO and mdeled Reserve Sub-znes. As the price f a reserve prduct increases t a value near the penalty factr, it indicates t market participants that the system is nearing a reserve shrtage. This prvides market participants an advanced signal indicating a ptential reserve shrtage. Separate demand curves exist fr each f the fllwing reserve prduct / Reserve Zne r Sub-zne cmbinatins. RTO Synchrnized Reserve Mid-Atlantic Dminin Synchrnized Reserve RTO Primary Reserve Mid-Atlantic Dminin Primary Reserve The demand curves fr each f these prducts and lcatins are similar in that they share the same penalty factrs n the Y axis; hwever, the desired reserve levels n the X axis differ t reflect the reserve requirement differences amngst the reserve prducts and lcatins. These demand curves are defined as fllws: Step 1 Penalty Factr = $850/MWh Desired Reserve MW = lcatinal reserve requirement fr the specified reserve prduct as defined in Manual 13 Fr Synchrnized Reserve, this is typically equivalent t 100% f the utput f the single largest nline cntingency in the Reserve Zne r Sub-zne Fr Primary Reserve, this is typically equivalent t 150% f the utput f the single largest nline cntingency in the Reserve Zne r Sub-zne Step 2 Penalty Factr = $300/MWh Revisin: 92, Effective Date: 11/01/2017 PJM

78 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market Desired Reserve MW = lcatinal reserve requirement fr the specified reserve prduct as defined in Manual 13 plus 190 MW plus any additinal reserves that are being carried in anticipatin f heavy lad cnditins, as referenced in Sectin abve. Because the reserve requirements are based n the real-time utput f the largest cntingency, the MW values n the X axis f the demand curves used in market clearing can change dynamically with each real-time market clearing case executin. Belw is an example f what the demand curve fr Synchrnized Reserve wuld lk like if the utput f the single largest cntingency was 1,210 MW fr that specific case executin Synchrnized Reserve Obligatin Fulfillment Each Lad Serving Entity (LSE) n the PJM system incurs a synchrnized reserve bligatin in kwh based n their real-time lad rati share and the Synchrnized Reserve Zne ttal assigned MW. During hurs when the Synchrnized Reserve Market Clearing Price (SRMCP) is the same thrughut the Synchrnized Reserve Zne, an LSE s synchrnized reserve Revisin: 92, Effective Date: 11/01/2017 PJM

79 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market bligatin is equal t its lad rati share times the amunt f synchrnized reserve assigned fr the Synchrnized Reserve Zne. During hurs when cngestin causes Synchrnized Reserve Market Clearing Prices (SRMCP) t separate, each LSE s bligatin is equal t its lad rati share within its sub-zne times the amunt f synchrnized reserve assigned in that sub-zne. Any PJM market participant may incur r fulfill a synchrnized reserve bligatin thrugh the executin f a bilateral synchrnized reserve transactin as described belw. Participants may fulfill their synchrnized reserve bligatins by: Owning Tier 1 resurces frm which the Synchrnized Reserve Zne btains synchrnized reserve; Self-scheduling wned Tier 2 resurces; Entering bilateral arrangements with ther market participants; r Purchasing synchrnized reserves frm the market. Nte: Nte that LSEs whse reserve bligatins are satisfied thrugh an agreement t share reserves with external entities subject t the requirements in NERC Reliability Standard BAL-002 will nt have a synchrnized reserve bligatin Synchrnized Reserve Offer Perid Daily Synchrnized Reserve ffer prices fr Tier 2 resurces and Synchrnized Reserve ramp rates must be supplied prir t 1415 day-ahead. T accurately reflect each resurce s reserve capability and availability during the Operating Day, the fllwing infrmatin may be submitted n an hurly basis and/r changed n the Updates screen in Markets Gateway up until 65 minutes prir t the start f the perating hur, at which time the Synchrnized Reserve Market clses. Synchrnized Reserve Availability fr Tier 2 resurces Synchrnized Reserve Offer Quantity (MW) Synchrnized Reserve Maximum (This parameter is called Spin Max n the Markets Gateway Synchrnized Reserve Updates screen) Market participants wh did nt elect t pt-ut f Intraday Updates as detailed in Sectin may als submit and/r change: Synchrnized Reserve Offer Price ($/MWh) Any hurly updates supersede the values n the daily Offers page Bilateral Synchrnized Reserve Transactins Bilateral synchrnized reserve transactins may be reprted t PJM. Such reprted bilateral synchrnized reserve transactins must be fr the physical transfer f synchrnized reserve and must be reprted by the buyer and subsequently cnfirmed by the seller thrugh the Markets Gateway System n later than 1330 the day after the transactin starts. Bilateral transactins that have been reprted and cnfirmed may nt be changed; they must be deleted and re- Revisin: 92, Effective Date: 11/01/2017 PJM

80 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market reprted. Deletin f a reprted bilateral transactin after its start time has passed will result in a change in the end time f the transactin t the current hur. Bilateral synchrnized reserve transactins reprted t PJM may be entered either in MW r as a percentage f the purchaser s bligatin. Participants will als be required t indicate the reserve zne fr which the transactin is applicable. Payments and related charges assciated with the bilateral synchrnized reserve transactins reprted t PJM shall be arranged between the parties t the bilateral cntract. A buyer under a bilateral synchrnized reserve transactin reprted t PJM agrees that it guarantees and indemnifies PJM, PJM Settlement, and the market participants fr the csts f any purchases by the seller in the Synchrnized Reserve Market, as determined by PJM, t supply the reprted bilateral transactin and fr which payment is nt made t PJM Settlement by the seller. Upn any default in bligatins t PJM r PJM Settlement by a Market Participant, PJM shall nt accept any new bilateral reprting by the Market Participant and shall terminate all f the market participant s reprting f Markets Gateway schedules assciated with its bilateral synchrnized reserve transactins previusly reprted t PJM fr all days where delivery had nt yet ccurred. PJM calculates and psts Synchrnized Reserve Zne preliminary billing data n which market participants can use as a resurce fr pricing bilateral synchrnized reserve transactins. The infrmatin can be fund n the PJM website at billing-settlements-and-credit/preliminary-billing-reprts/sync-reserve.aspx Synchrnized Reserve Cmmitment 60-minutes prir t the perating hur PJM will execute the Ancillary Services Optimizer (ASO). The ASO will jintly ptimize energy, synchrnized reserves, nn-synchrnized reserves and regulatin based n frecast system cnditins t determine an ecnmic set f inflexible reserve resurces t cmmit fr the perating hur. Any self-scheduled ffers fr synchrnized reserves that are available at the time f the ASO executin will be assumed valid and cmmitted fr the hur. Any reserve cmmitments n inflexible resurces that are made will be lcked fr the perating hur and cmmunicated via Markets Gateway. The fllwing reserve infrmatin will be psted t Markets Gateway 30-minutes prir t the perating hur: Reserve requirements fr the RTO and each sub-zne Estimated Tier 1 fr the RTO and each sub-zne Ttal synchrnized and nn-synchrnized reserves available fr the RTO and each subzne Ttal pl-cmmitted inflexible reserves fr the RTO and each sub-zne Ttal self-scheduled synchrnized reserves fr the RTO and each sub-zne Frecasted reserve shrtage quantities fr the RTO and any sub-zne Revisin: 92, Effective Date: 11/01/2017 PJM

81 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market Any additinal Tier 2 synchrnized reserves required in real-time in excess f the current Tier 1 n the system and the inflexible Tier 2 cmmitments will be cmmitted via the jint ptimizatin f energy, reserves and regulatin. Additinal Tier 2 synchrnized reserve cmmitments made in real-time may be made n flexible reserves resurces by the RT SCED applicatin and inflexible reserves resurces recmmendatins by the IT SCED applicatin. Cmmitments n flexible reserves resurces may change with each executin f the RT SCED applicatin while cmmitments n inflexible reserve resurces will respect the minimum run time f thse resurces. Flexible reserve resurce Tier 2 cmmitments will nt be psted t Markets Gateway but will be telemetered via ICCP r ther cmmunicatin prtcl t resurce wners. Additinal inflexible resurce cmmitments will be cmmunicated t the resurce wners via phne call and ICCP r ther cmmunicatin prtcl. Any resurce that is cmmitted fr Tier 2 when a synchrnized reserve event ccurs is bligated t respnd fr their cmmitment at the start f the event within 10 minutes. Fr the purpse f determining the mst ecnmic set f resurces with which t meet the Synchrnized Reserve requirement, PJM will calculate a resurce-specific merit rder price fr each resurce using the fllwing methdlgy: Resurce merit rder price ($/MWh) = Resurce synchrnized reserve ffer + estimated resurce pprtunity cst per MWh f capability + energy use per MWh f capability + cndense startup cst Nte: Cndense startup cst is nt included in the determinatin f the clearing price. The resurce synchrnized reserve ffer is that which is submitted by the wner via the Markets Gateway System by 1415 hurs n the day preceding the perating day. Estimated resurce pprtunity cst fr cndensing CTs is calculated as fllws: Estimated resurce pprtunity cst fr nn-cndensing resurces is calculated as fllws: Where: LMP is the frecasted hurly LMP at the generatr bus, ED is the price assciated with the set pint the resurce must maintain t prvide its assigned amunt f synchrnized reserve, and GENOFF is the MW amunt f synchrnized prvided. This frmula is smewhat simplistic. The actual calculatin is an integratin that may be visualized as the area n a graph enclsed by the resurce s price curve, the pints n that Revisin: 92, Effective Date: 11/01/2017 PJM

82 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market curve crrespnding t the resurce s desired ecnmic dispatch and the set pint necessary t prvide the assigned amunt f synchrnized reserve, and the LMP. Energy use fr each cndensing resurce is entered in MW by the wner via the Markets Gateway system as part f the synchrnized reserve ffer. Estimated energy use is calculated as part f the merit rder price as fllws: Fr each f these calculatins, frecast LMP is the result f the 1-hur lk-ahead calculated in the ASO. Energy resurces fr which an energy ffer is nt submitted will be ineligible fr pprtunity cst credit. When calculating the SRMCP in real-time, the actual LMP is used instead f the frecast LMP in the previus equatins and calculated in the LPC engine. The 5-minute SRMCP is integrated t calculate an hurly value fr settlements. The pprtunity cst fr a Demand Resurce is zer. PJM may call n resurces nt therwise scheduled t run in rder t prvide synchrnized reserve, in accrdance with PJM's bligatin t minimize the ttal cst f energy, perating reserves, regulatin, and ther ancillary services. If a resurce is called n by PJM fr the purpse f prviding synchrnized reserve, the resurce is guaranteed recvery f synchrnized reserve lst pprtunity csts as well as start-up, n-lad and energy csts. Please refer t Manual 28: Operating Agreement Accunting fr additinal settlements details. Due t transmissin cnsideratins n the PJM system, it is smetimes necessary t carry a minimum amunt f synchrnized reserve in specific areas in PJM such that lading 100% synchrnized reserve will nt result in an verlad f any f the PJM transfer interfaces. The gal is t minimize the cst f synchrnized reserve such that given current system cnditins, the flw n binding transmissin cnstraints is nt increased after a synchrnized reserve event is initiated and the assciated respnse is achieved. Therefre, PJM clears the Tier 2 market based n this lcatinal synchrnized reserve requirement and calculates sub-znal Tier 2 clearing prices. Whenever the lcatinal synchrnized reserve cnstraint is nt binding, the clearing prices are equal. Hwever, when mre synchrnized reserve is required in a given area than wuld have been assigned withut this requirement, the clearing prices will separate. Resurces will be identified and receive the applicable clearing price based n their lcatin with respect t the binding cnstraint(s). That is, resurces fr which synchrnized reserve event respnse wuld help the cnstraint will receive the higher clearing price, whereas resurces fr which synchrnized reserve event respnse wuld aggravate the cnstraint will receive the lwer clearing price. Analysis t determine the lcatin f generatin and lad buses with respect t the binding cnstraint is perfrmed at least nce with each quarterly netwrk mdel update. The Mid-Atlantic Dminin subzne list resulting frm this analysis can be fund n the PJM Web site under MidAtlantic-Dminin Subzne Bus and Resurce List at this lcatin: markets-and-peratins/ancillary-services.aspx. Resurce wners shuld be aware if their resurces are listed in the file and are therefre lcated in the MAD reserve subzne. Resurces that d nt appear in the list may respnd nly t PJM s request fr Synchrnized Reserve event in the RTO Reserve Zne. Resurces that appear in the list may respnd t PJM s request fr Synchrnized Reserve event in the MAD Reserve Sub-zne and the RTO Reserve Zne. Revisin: 92, Effective Date: 11/01/2017 PJM

83 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market Preliminary 5-minute market clearing prices will be made available in real-time thrugh Data Viewer Hydr Units Hydr units cndensing t prvide synchrnized reserve during times when they were nt scheduled t generate incur n pprtunity cst. There may r may nt be an energy use cmpnent, as indicated by the wner as part f the synchrnized reserve ffer. If a hydr unit is held t synchrnized reserve cndense r reduced t prvide synchrnized reserve during a time when it is scheduled t generate, it will incur pprtunity cst. Since hydr units perate n a schedule and d nt have an energy bid, pprtunity cst fr these units is calculated as fllws: The frmula is the same as that shwn under Synchrnized Reserve Cmmitment, O.C. = LMP ED x GENOFF, except the ED value is the average value f the LMP at the hydr unit bus fr the apprpriate n-peak ( ) r ff-peak ( , ) perid, excluding thse hurs during which all available units at the hydr plant were perating. Day-ahead values are used fr the purpses f cmmitting Tier 2 resurces, and actual LMPs are used in the after-the-fact settlement. If the average LMP value is higher than the actual LMP at the generatr bus, the pprtunity cst is zer. During thse hurs when a hydr unit is in spilling mde, the ED value is set t zer such that the pprtunity cst is based n the full value f LMP. During the perating day, the perating cmpany is respnsible fr cmmunicating this cnditin n the Regulatin Hurly Updates page in the Markets Gateway System. When determined t be ecnmically beneficial, PJM maintains the authrity t adjust hydr unit schedules fr thse units scheduled by the wner if the wner has als submitted a synchrnized reserve ffer fr thse units and made the units available fr spin. An example f Tier 2 synchrnized reserve lst pprtunity cst calculatin is very similar t that f regulatin hydr lst pprtunity cst calculatin detailed n the PJM website at Demand Resurces Demand resurces prviding Synchrnized Reserve are required t prvide metering infrmatin at n less than a ne minute scan surrunding a synchrnized reserve event. Residential custmers withut ne-minute metering may participate using the statistical sampling methd detailed in Manual 19: Lad Frecasting and Analysis, Attachment D and subject t PJM apprval. Metering infrmatin fr demand resurces is nt required t be sent t PJM in real time. Lad data fr all Synchrnized Reserve events must be submitted tw business days fllwing the event day. Members that ffer int the Synchrnized Reserve market and d nt prvide cmplete, accurate and timely lad data fr all Synchrnized Reserve events may be suspended frm participating in the Synchrnized Reserve Market until crrective measures are implemented Revisin: 92, Effective Date: 11/01/2017 PJM

84 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market and may be referred t the PJM Market Mnitr and/r the FERC Office f Enfrcement fr further investigatin as necessary. Demand resurces are limited t prviding 33% f the Synchrnized Reserve requirement. Demand resurces that are cnsidered t be batch lad resurces are limited t prviding 20% f the Synchrnized Reserve requirement. If PJM determines that satisfying 20 percent f the Synchrnized Reserve requirement frm Batch Lad demand resurces is causing r may cause a reliability degradatin, PJM may reduce the percentage f the requirement that may be satisfied by Batch Lad demand resurces in any hur t as lw as 10 percent. Demand resurces must cmplete initial and cntinuing training n Regulatin and Synchrnized Reserve Markets as dcumented in Manual 40: Certificatin and Training Requirements, Sectin 2.6: Training Requirements fr demand respnse Resurces Supplying Regulatin and Synchrnized Reserve. When a Demand Resurce that is eligible fr the Synchrnized Reserve Market is called fr a mandatry Emergency r Pre-Emergency Lad Management Event, it will be de-assigned frm Synchrnized Reserves fr any intervals that verlap with the Lad Management Event, starting frm the ntice time f the Lad Management Event, unless therwise apprved by PJM. PJM will nt assign the resurce t Synchrnized Reserves fr the remainder f the mandatry prtin f the Lad Management Event Synchrnized Reserve Market Clearing Price (SRMCP) Calculatin PJM will calculate real-time prices fr Synchrnized Reserve simultaneusly with LMPs every 5minutes in real-time. The real-time prices fr Synchrnized Reserve will be calculated as the marginal cst t serve an additinal MW f synchrnized reserve demand in the RTO Reserve Zne r applicable Reserve Sub-zne while simultaneusly satisfying energy requirements, regulatin requirements, primary reserve requirements and transmissin limitatins. Preliminary real-time 5-minute SRMCPs will be published t Data Viewer fr public view. During perids when there is n synchrnized reserve shrtage, real-time prices fr Synchrnized Reserve will be determined by the cst f the marginal synchrnized reserve resurce. The cst f the marginal synchrnized reserve resurce is defined as its synchrnized reserve ffer plus any pprtunity cst fr this resurce relative t frgne energy r ther ancillary service payments. Nn-shrtage prices fr synchrnized reserves will nt exceed the sum f the Primary Reserve and Synchrnized Reserve Penalty Factrs frm the first step f the demand curve. When there is a simultaneus shrtage f primary and synchrnized reserves the real-time prices fr Synchrnized Reserve will be the sum f the primary reserve and synchrnized reserve penalty factrs. The real-time prices fr Synchrnized Reserve will always be greater than r equal t the NSRMCP in the same lcatin because synchrnized reserve is a higher quality prduct than nn-synchrnized reserves and may be substituted fr it. Revisin: 92, Effective Date: 11/01/2017 PJM

85 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market The real-time prices fr Synchrnized Reserve in each hur will be used t calculate the hurly SRMCP that will be used fr settlement purpses. The hurly SRMCP fr a reserve zne will be the average f the 5-minute SRMCPs in the applicable Reserve Zne r Reserve Sub-zne Settlements Please refer t Manual 28: Operating Agreement Accunting, Sectin 6: Synchrnized Reserve Accunting fr settlement details. Synchrnized Reserve settlement is a zer-sum calculatin based n the synchrnized reserve prvided t the market by generatin wners and purchased frm the market by participants. Tier 1 credits will be awarded t each eligible resurce fr respnse up t 110% f the resurce s capability based n the synchrnized reserve ramp rate(s) submitted by the resurce s wner day-ahead. Credits t individual resurces may be awarded fr respnse greater than 110% f stated capability if ther Tier 1 resurces under-respnd. Credits fr respnse in excess f 110% f capability will be awarded n a pr-rata basis such that the aggregate Tier 1 credits awarded d nt exceed 110% f the ttal pssible credits based n the aggregate capability f all eligible Tier 1 resurces. Resurces prviding regulatin at the initiatin f a synchrnized reserve event will be cmpensated fr Tier 1 respnse. Tier 1 respnse is calculated accrding t the fllwing frmula: Where: Final Output is the resurce s greatest telemetered utput between 9 and 11 minutes after synchrnized reserve event is initiated. Initial Output is the resurce s lwest telemetered utput between 1 minute befre and 1 minute after synchrnized reserve event is initiated. RegMW is the resurce s assigned amunt f regulatin. As a result f this frmula, resurces that are assigned regulatin when a synchrnized reserve event is initiated will be cmpensated based n the amunt f respnse prvided beynd their regulatin cmmitment, as well as fr any respnse in excess f their regulatin high limit r ecnmic maximum (whichever is lwer.) A resurce s regulatin maximum cmmitment will be defined as the resurce s full regulating range (i.e. twice the amunt f assigned regulatin.) Tier 1 synchrnized reserve resurces are cmpensated when the Nn-Synchrnized Reserve Market Clearing Price is nn-zer. When the Nn-Synchrnized Reserve Market Clearing Price is nn-zer Tier 1 synchrnized reserve credits are equal t the lesser f the integrated increase in MWh utput r decrease in MWh f cnsumptin frm each resurce ver the length f a synchrnized reserve event r the Tier 1 estimate attributed t the resurce multiplied by the Synchrnized Reserve Market Clearing Price. During hurs where n synchrnized reserve event ccurs, the Tier 1 Revisin: 92, Effective Date: 11/01/2017 PJM

86 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market resurce will be cmpensated fr the Tier 1 estimated amunt fr nly thse resurce that can reliably prvide Synchrnized Reserve service per the rules in this manual, sectin Synchrnized Reserve Eligibility. Tier 2 synchrnized reserve credits are awarded t generatin wners that have either self-scheduled synchrnized reserve r sld synchrnized reserve int the market. Synchrnized reserve credits fr resurces self-scheduled t prvide synchrnized reserve are equal t Tier 2 clearing price times the resurce s self-scheduled synchrnized reserve capability. Synchrnized reserve credits fr resurces that are pl-scheduled t prvide synchrnized reserve are the higher f: Tier 2 clearing price times the resurce s assigned synchrnized reserve capability, r The resurce s synchrnized reserve ffer times its assigned synchrnized reserve capability plus pprtunity cst and/r energy use incurred. Opprtunity cst and energy use are calculated as shwn abve in Market Clearing using actual integrated LMP as ppsed t that which was frecasted. Resurces that are pl-assigned Tier 2 synchrnized reserve (and actual MWh are less than day-ahead scheduled MWh) and Tier 1 resurces that respnd t a synchrnized reserve event are therefre exempt frm deviatins fr the purpse f accumulating perating reserves charges fr the hurs during which the Tier 2 assignment r Tier 1 respnse is effective Verificatin The magnitude f each resurce s respnse t a synchrnized reserve event (bth Tier 1 and Tier 2) is the difference between the resurce s utput at the start f the event and its utput ten minutes after the start f the event. In rder t allw fr small fluctuatins and pssible telemetry delays, resurce utput at the start f the event is defined as the lwest telemetered utput between ne (1) minute prir t and ne (1) minute fllwing the start f the event. Similarly, a resurce s utput ten minutes after the event is defined as the greatest utput achieved between nine (9) and eleven (11) minutes after the start f the event. All resurces (bth Tier 1 and Tier 2) must maintain an utput level greater than r equal t that which was achieved as f ten minutes after the event fr the duratin f the event r thirty (30) minutes frm the start f the event, whichever is shrter. The respnse actually credited t a given resurce will be reduced by the amunt the MW utput f that resurce falls belw the level achieved after ten (10) minutes by either the end f the event r after 30 minutes frm the start f the event, whichever is shrter. Fr demand resurces that are cnsidered batch lad resurces, a secnd methd f verificatin will be used fr instances where a synchrnized reserve event is initiated and the resurce is perating at the minimum cnsumptin level f its duty cycle. In this case, the magnitude f the respnse will be measured as the difference between (a) the resurce s cnsumptin at the end f the event and (b) the maximum cnsumptin within a ten (10) minute perid fllwing the event prvided that all subsequent minutes fllwing that minute are n less than 50% f the cnsumptin in that minute. Revisin: 92, Effective Date: 11/01/2017 PJM

87 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market Nn-Perfrmance There is n cnsequence fr a Tier 1 resurce that des nt respnd with the amunt f Synchrnized Reserve that was expected f it in respnse t a Synchrnized Reserve Event. Tier 1 resurces are simply credited fr the amunt f respnse they prvide. Since Tier 2 resurces are credited with a capacity payment any time they are expected t be ready t respnd t a Synchrnized Reserve Event, failure t prvide that respnse results in an bligatin t repay that credit fllwing instances f nn-perfrmance. The fllwing cnsequences exist fr a Tier 2 resurce that des nt respnd with its assigned amunt f Synchrnized Reserve: The resurce is credited fr Tier 2 Synchrnized Reserve capacity in the amunt that actually respnded fr all hurs the resurce was assigned r self-scheduled Tier 2 Synchrnized Reserve n the day the event ccurred, and; The wner f the resurce incurs a retractive bligatin t refund at SRMCP the amunt f the shrtfall measured in MW fr all f the hurs the resurce was assigned r self-scheduled ver the immediate past interval, the duratin f which is equal t the lesser f the average number f days between events as determined by the annual review f the last 2 years, r the number f days since the resurce failed t respnd with its assigned r self-scheduled Synchrnized Reserve amunt in respnse t a Synchrnized Reserve Event. The annual review described abve will be cmpleted during the mnth f Nvember and cver a 2 year windw frm Nvember 1st (year 2) thrugh Octber 31st (current year). The calculatin will be the average interval between Synchrnized Reserve Events ver the last tw years f Synchrnized Reserve Event data, runded dwn t a whle day value. The results will be cmmunicated t the Operating Cmmittee in December and implemented annually n January 1st. Market Participants that wn multiple resurces assigned r self-scheduled t prvide Tier 2 Synchrnized Reserve are permitted t demnstrate aggregate respnse, such that any resurce that has respnded greater than their assignment r self-schedule can be used t ffset any resurce that has respnded less than their assignment r self-schedule f Tier 2 Synchrnized Reserve during a Synchrnized Reserve Event. The Market Participant s aggregate respnse shall nt affect hw an individual resurce is credited fr Tier 2 Synchrnized Reserve it prvides as described abve, but shall be used t determine what the Market Participant wes in refund charges fr each resurce that was assigned r selfscheduled t prvide Tier 2 Synchrnized Reserve and respnded less than their assignment r self-schedule f Tier 2 Synchrnized Reserve. Additinal details can be fund in Manual 28, Sectin 6.3: Charges fr Synchrnized Reserve. In cases where a Synchrnized Reserve Event lasts less than 10 minutes, Tier 2 resurces are credited with the amunt f Synchrnized Reserve capacity they are assigned. The wner f the resurce will nt incur a retractive bligatin t refund any shrtfall between the amunt f Tier 2 assigned r self-scheduled and the amunt f respnse prvided during the event. Tier 1 resurces are credited with the amunt f respnse prvided ver the length f the event, as determined via measurement parallel t that which is described abve in the Verificatin sectin. That is, the utput f each resurce at the start f the event is defined as the lwest telemetered utput between ne (1) minute prir t the start f the event and ne (1) minute after the start f the event, and the utput at the end f the event is defined as the greatest Revisin: 92, Effective Date: 11/01/2017 PJM

88 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market telemetered utput between ne (1) minute prir t the end f the event and ne (1) minute fllwing the end f the event. Resurces that chse t respnd t a Synchrnized Reserve Event fr their reserve zne in an hur when they are cleared r assigned regulatin are expected t return t their regulating band within 10 minutes f the end f the Synchrnized Reserve Event. Frm the start f the event, thrugh the event, and fr the 10 minutes after the end f the event, the perfrmance scres fr all regulating resurces in the reserve zne where the Synchrnized Reserve Event takes place will be null. Revisin: 92, Effective Date: 11/01/2017 PJM

89 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4b: Overview f the Nn-Synchrnized Reserve Market Sectin 4b: Overview f the Nn-Synchrnized Reserve Market Welcme t the Overview f the Nn-Synchrnized Reserve Market sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: An verview descriptin f the PJM Nn-Synchrnized Reserve Market (see Overview f PJM Nn-Synchrnized Reserve Market ). A list f the PJM Nn-Synchrnized Reserve Market Business Rules (see PJM NnSynchrnized Reserve Market Business Rules ). 4b.1 Overview f the Nn-Synchrnized Reserve Market PJM has an bligatin t maintain a certain quantity f ttal 10 minute reserves n the system. Ttal 10 minute reserve, r Primary Reserve, includes bth Synchrnized and NnSynchrnized Reserves. As defined in Sectin 4 f this manual, a subset f the Primary Reserve capability must be maintained in resurces that are synchrnized t the system. That quantity is defined by the Synchrnized Reserve requirement. The balance between the Primary and Synchrnized Reserve requirements can be met by the mst ecnmic cmbinatin f additinal Synchrnized Reserve r Nn-Synchrnized reserve r sme cmbinatin f the tw prducts. This means that there is n defined, hurly requirement fr Nn-Synchrnized reserves but it will be prcured when ecnmic t meet the Primary Reserve requirements. The PJM Nn-Synchrnized Reserve Market prvides PJM participants with a market-based system fr the purchase and sale f the Nn-Synchrnized Reserve ancillary service. PJM determines the MW capability f each resurce based n its peratinal characteristics and uses this infrmatin tgether with energy ffers and resurce schedules as input data t realtime market applicatins. The real-time market applicatins ptimize the RTO dispatch prfile while simultaneusly determining the mst ecnmic set f resurces t prvide Synchrnized and Nn-Synchrnized Reserves. Nn-Synchrnized Reserve cmmitments are telemetered t each resurce. As a result f the real-time jint ptimizatin f energy and reserves, PJM will calculate a clearing price fr Nn-Synchrnized Reserve every 5 minutes based n the current system cnditins. All 5 minute, real-time, Nn-Synchrnized Reserve prices will be averaged t calculate the hurly Nn-Synchrnized Reserve Market Clearing Price (NSRMCP) that will be used fr market settlement. 4b.2 Nn-Synchrnized Reserve Market Business Rules 4b.2.1 Nn-Synchrnized Reserve Resurce Eligibility Nn-synchrnized reserves may be prvided nly by generatin resurces electrically within the PJM RTO. Nn-synchrnized reserve resurces are defined as generatin resurces that meet the fllwing eligibility requirements t prvide nn-synchrnized reserve. The Nn-Synchrnized Reserve capability f a generatin resurce shall be the increase in energy utput r achievable by the generatin resurce within a cntinuus 10-minute perid prvided that the resurce is nt synchrnized t the system at the initiatin f the respnse Revisin: 92, Effective Date: 11/01/2017 PJM

90 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4b: Overview f the Nn-Synchrnized Reserve Market Examples f Nn-Synchrnized Reserve resurces generally include: Shutdwn run-f-river, pumped hydr, industrial cmbustin turbines, jet engine/ expander turbines, cmbined cycle and diesels. Demand Resurces will nt be eligible t prvide Nn-Synchrnized Reserve Generatin resurces that have designated their entire utput as emergency will nt be cnsidered eligible t prvide nn-synchrnized reserves. Generatin resurces that are nt available t prvide energy will nt be cnsidered eligible t prvide nn-synchrnized reserves. 4b.2.2 Nn-Synchrnized Reserve Znes and Levels There will be a single RTO Nn-Synchrnized Reserve Market with a static, nested Mid-Atlantic Dminin Reserve Sub-zne. The Mid Atlantic Dminin Reserve Sub-zne is defined t ensure that nnsynchrnized reserves are available in r deliverable t the eastern part f the system under cnstrained cnditins. The Mid-Atlantic Dminin Reserve Sub-zne is defined by the mst limiting mnitred transfer interface. The interface mdeled may be revised by PJM t match peratin and meet the system reliability need. Because Synchrnized Reserve may be utilized t meet the Primary Reserve requirement, there is n explicit requirement fr Nn-Synchrnized Reserves. Nnsynchrnized reserve is eligible t be used t meet the difference between the Primary Reserve and Synchrnized Reserve Requirements if it is ecnmic. During a Synchrnized Reserve Event, PJM may request generatin resurces, which are assigned t prvide Nn-Synchrnized Reserve within ten minutes, t increase their energy utput by the amunt f assigned Nn-Synchrnized capability. Each Primary Reserve requirement will have an assciated reserve demand curve as specified in Sectin b.2.3 Nn-Synchrnized Reserve Offer Infrmatin N ffer data fr nn-synchrnized reserves will be submitted thrugh Markets Gateway. Nn-emergency generatin resurces that are available t prvide energy and can start in 10 minutes r less will be cnsidered available fr Nn-Synchrnized Reserves. PJM will calculate the nn-synchrnized reserve MW quantity available frm each generatin resurce based n the ffered in startup and ntificatin time, the ecnmic minimum, the ecnmic maximum, and the energy ramp rate. All ffers t prvide nn-synchrnized reserves will be $0.00/MWh. 4b.2.4 Nn-Synchrnized Reserve Cmmitments PJM will cmmit Synchrnized and Nn-Synchrnized Reserve simultaneusly in real-time via the jint ptimizatin f energy and reserve. Nn-Synchrnized Reserve cmmitments will be telemetered t each cmmitted generatin resurce via ICCP r ther cmmunicatin prtcl. Revisin: 92, Effective Date: 11/01/2017 PJM

91 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4b: Overview f the Nn-Synchrnized Reserve Market Because the requirement fr Synchrnized Reserves is included within the Primary Reserve requirement, Nn-Synchrnized Reserves can nly be used t meet the difference between the synchrnized and primary reserve requirements if it is ecnmic. Bth Synchrnized Reserves and Nn-Synchrnized Reserves can be used t meet the difference between the Synchrnized and Primary Reserve requirements. PJM will cmmit the mst ecnmic cmbinatin f bth resurces t simultaneusly meet all energy and reserve requirements. When calculating the 5-minute NSRMCP, the unit-specific pprtunity cst fr a generatin resurce that is nt prviding energy, because it is prviding Nn-Synchrnized Reserves, is calculated as: The prduct f: The deviatin f the value f the generatin resurce s utput necessary t fllw PJM dispatch instructin frm the value f the generatin resurce s expected utput level if it had been dispatched in ecnmic merit rder The estimated real-time Lcatinal Marginal Price (LMP) at the generatin bus f the unit Minus: The applicable ffer fr energy frm the generatin resurce If the real-time LMP at the generatr bus is less than the generatr s cst at its Ecnmic Minimum then the generatr has n pprtunity cst. 4b.2.5 Nn-Synchrnized Reserve Market Clearing Price (NSRMCP) Calculatin PJM will calculate NSRMCPs simultaneusly with LMPs every 5-minutes in real-time. The NSRMCP will be calculated as the cst t serve an additinal MW f primary reserve demand in the RTO Reserve Zne r applicable Reserve Sub-zne. Real-time 5-minute NSRMCPs will be published t Data Viewer fr public view. During perids when there is n Primary Reserve shrtage, the NSRMCP is the cst f the marginal primary reserve resurce. If the marginal resurce is a Nn-Synchrnized Reserve resurce, the cst f the marginal Primary Reserve resurce is defined as any pprtunity cst fr this resurce relative t frgne energy r ther ancillary service payments. If the marginal resurce is a Synchrnized Reserve resurce, the cst f the marginal Primary Reserve resurce is defined as its synchrnized reserve ffer plus any pprtunity cst fr this resurce relative t frgne energy r ther ancillary service payments. Nn-shrtage prices fr NnSynchrnized Reserves will nt exceed the Primary Reserve penalty factr. During perids when there is a shrtage f Primary Reserves, the NSRMCP will be equal t the penalty factr f the lcatin where the shrtage ccurred. The NSRMCP will always be less than r equal t the SRMCP in the same lcatin because Synchrnized Reserve is a higher quality prduct than Nn-Synchrnized Reserve and may be substituted fr it. The 5-minute NSRMCPs fr each hur will be averaged t an hurly NSRMCP that will be used fr market settlement purpses. Revisin: 92, Effective Date: 11/01/2017 PJM

92 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4b: Overview f the Nn-Synchrnized Reserve Market Resurces that are assigned Nn-Synchrnized Reserve will be paid the NSRMCP crrespnding t the lcatin in which they prvided the service. Settlement fr the Nn-Synchrnized Reserve market will functin as fllws: On an hurly basis PJM will determine the cst fr each pl scheduled resurce t prvide Nn-Synchrnized Reserve and cmpensate it at the higher f the NSRMCP r the cst t prvide the service (including any lst pprtunity cst). 4b.2.6 Nn-Synchrnized Reserve Obligatin Fulfillment Each Lad Serving Entity (LSE) n the PJM system incurs a Nn-Synchrnized Reserve bligatin in kwh based n their real-time lad rati share f the Nn-Synchrnized Reserve assigned. During hurs when the Nn-Synchrnized Reserve Market Clearing Price (NSRMCP) is the same thrughut the RTO, an LSE s Nn-Synchrnized Reserve bligatin is equal t its lad rati share times the amunt f Nn-Synchrnized Reserve assigned fr the entire RTO. During hurs when cngestin causes NSRMCPs t separate each LSE s bligatin is equal t its lad rati share within its Reserve Sub-zne times the amunt f Nn-Synchrnized Reserve assigned in that Reserve Sub-zne. Any PJM market participant may incur r fulfill a Nn-Synchrnized Reserve bligatin thrugh the executin f a Nn-Synchrnized Reserve bilateral transactin as described belw. Each PJM Member LSE that is nt part f an agreement t share reserves with external entities subject t the requirements in NERC Reliability Standard BAL-002 incurs a nn-synchrnized reserve bligatin based n their hurly real-time lad rati share and applicable reserve zne s Nn-Synchrnized Reserve assigned during that hur. Participants may fulfill their Nn-Synchrnized Reserve bligatins by: Self-supply frm its wn generatin resurces capable f prviding Nn-Synchrnized Reserve Entering bilateral arrangements with ther market participants; r Purchasing Nn-Synchrnized Reserve frm the Nn-Synchrnized Reserve market. 4b.2.7 Nn-Synchrnized Reserve Bilateral Transactins PJM Settlement shall be the Cunterparty t the purchases and sales f Nn-Synchrnized Reserve. Nn-Synchrnized Reserve bilateral transactins must be entered by the buyer and subsequently cnfirmed by the seller thrugh Markets Gateway n later than 1415 the day after the transactin starts. Bilateral transactins that have been entered and cnfirmed may nt be changed; they must be deleted and re-entered. Deletin f a bilateral transactin after its start time has passed will result in a change in the end time f the transactin t the current hur. Nn-Synchrnized Reserve bilateral transactins may be entered in MW. Participants will als be required t indicate the Reserve Zne r Reserve Sub-zne fr which the transactin is applicable. The minimum MW value is.1 MW PJM calculates and psts Nn-Synchrnized Reserve Zne preliminary billing data n which market participants can use as a resurce fr pricing bilateral Nn-Synchrnized Reserve transactins. The infrmatin can be fund n the PJM website at Revisin: 92, Effective Date: 11/01/2017 PJM

93 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 4b: Overview f the Nn-Synchrnized Reserve Market 4b.2.8 Nn-Synchrnized Reserve Settlement Nn-Synchrnized Reserve settlement is a zer-sum calculatin based n the NnSynchrnized Reserve prvided t the market by generatin purchased frm the market by participants. Details n Nn-Synchrnized Reserve settlement can be fund in PJM Manual M28. 4b.2.9 Verificatin The magnitude f each generatin resurce s respnse t a Nn-Synchrnized Reserve event is its utput ten minutes after the start f the event. A generatin resurce s utput ten minutes after the event is defined as the greatest utput achieved between nine (9) and eleven (11) minutes after the start f the event. All generatin resurces that have been cmmitted t prvide Nn-Synchrnized Reserve must maintain an utput level greater than r equal t that which was achieved as f ten minutes after the event fr the duratin f the event r thirty (30) minutes frm the start f the event, whichever is shrter. The respnse actually credited t a given resurce will be reduced by the amunt the MW utput f that resurce falls belw the level achieved after ten (10) minutes by either the end f the event r after 30 minutes frm the start f the event, whichever is shrter. In cases where a nn-synchrnized event lasts less than 10 minutes, nn-synchrnized resurces are credited with the amunt f Nn-Synchrnized Reserve event capacity they are assigned. 4b.2.10 Nn-Perfrmance In the event a resurce that has been assigned t prvide Nn-Synchrnized Reserve fails t prvide the assigned amunt f Nn-Synchrnized Reserve in respnse t a Nn-Synchrnized Reserve Event, the resurce will nly be credited fr Nn-Synchrnized Reserve capacity in the amunt that actually respnded fr the cntiguus hurs the resurce was assigned NnSynchrnized Reserve during which the event ccurred. Revisin: 92, Effective Date: 11/01/2017 PJM

94 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 5: Market Clearing Prcesses and Tls Sectin 5: Market Clearing Prcesses and Tls Welcme t the Market Clearing Prcesses and Tls sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: A descriptin f the PJM scheduling philsphy (see PJM Philsphy ). A descriptin f the tls that are used during the scheduling prcess (see Scheduling Tls ). 5.1 PJM Philsphy The PJM scheduling philsphy in the Day-ahead Energy Market is t schedule generatin t meet the aggregate Demand bids that results in the least-priced generatin mix, while maintaining the reliability f the PJM RTO. PJM will als schedule additinal resurces as needed t satisfy the PJM Lad Frecast and the additinal Day-ahead Scheduling Reserve (Operating Reserve) Objective based n minimizing the cst t prcure such reserves. PJM will als schedule resurces based n ecnmics t cntrl ptential transmissin limitatins that are binding in the Transmissin Reliability analysis that is perfrmed in parallel with and subsequent t the Day-ahead Market analysis. The scheduling prcess evaluates the price f each available resurce cmpared with every ther available generating resurce. The philsphy fr scheduling the PJM RTO requires: Scheduling sufficient generatin in the Day-ahead Energy Market t cver aggregate Demand bids and Day-ahead Scheduling Reserve (Operating Reserve) requirements calculated as a functin f such demand bids Scheduling sufficient generatin in the reliability-based analysis subsequent t the Day-ahead Energy Market t cver the PJM Lad Frecast and additinal Day-ahead Scheduling Reserve (Operating Reserve) requirements Scheduling sufficient generatin t cntrl ptential transmissin limitatins that are binding in the Transmissin Reliability analysis Scheduling sufficient generatin t satisfy the PJM Regulatin Requirement, PJM Synchrnized Reserve Requirement, and ther ancillary service requirements f the PJM RTO. Ensuring PJM Members participate in the analysis and eliminatin f cnditins that threaten the reliable peratin f the PJM RTO Scheduling f resurces by PJM is perfrmed ecnmically n the basis f the prices and perating characteristics ffered by the Market Sellers, using security, cnstrained dispatch and cntinuing until sufficient generatin is dispatched in each hur t serve all energy purchase requirements, as well as the PJM RTO requirements. 5.2 Scheduling Tls Analytical scheduling tls exist t assist PJM with the scheduling prcess. These tls permit PJM scheduling staff t analyze numerus scheduling scenaris. PJM persnnel use several tls t assist in scheduling the resurces fr shrt-term and hurly activities. The scheduling tls include: Revisin: 92, Effective Date: 11/01/2017 PJM

95 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 5: Market Clearing Prcesses and Tls PJM ExSchedule PJM InSchedule Lad Frecasting Algrithms Markets Gateway and Market Database System Hydr Calculatr Energy Market Technical Sftware (RSC, SPD and SFT) PJM Ancillary Service Optimizer (ASO) Real-Time Market Applicatins Transmissin Outage Data System Tgether these tls recgnize the fllwing cnditins: Reactive limits Resurce cnstraints Unscheduled pwer flws Inter-area transfer limits Resurce distributin factrs Self-Scheduled Resurces Limited fuel resurces Bilateral Transactins Hydrlgical cnstraints Generatin requirements Reserve requirements ExSchedule ExSchedule is an applicatin that facilitates the scheduling f interchange transactins between PJM and ther Balancing Authrities. Market participants can view and reserve a prtin f PJM s Net Ramp capability, review Tags linked t their accunt, and submit Day-Ahead Bids that align with their Real-Time interchange transactins. ExSchedule is als used t autmatically assess and validate bilateral interchange transactins per PJM s interchange scheduling business rules. Bilateral interchange transactins that are reprted t PJM must be fr the physical transfer f electric energy. Payments and related charges assciated with such bilateral interchange transactins reprted t PJM shall be arranged between the parties t the bilateral transactin. A buyer under a bilateral interchange transactin reprted t PJM agrees that it guarantees and indemnifies PJM, PJM Settlement, and the market participants fr the csts f any Spt Market Backup, as determined by PJM, t supply the reprted bilateral interchange transactin and fr which payment is nt made t PJM Settlement by the seller. Upn any default in bligatins t PJM r PJM Settlement by a Market Participant, PJM shall nt accept any new Revisin: 92, Effective Date: 11/01/2017 PJM

96 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 5: Market Clearing Prcesses and Tls bilateral interchange transactin reprting by the Market Participant and shall terminate all f the market participant s reprting f assciated with its bilateral interchange transactins previusly reprted t PJM fr all days where delivery had nt yet ccurred PJM InSchedule PJM InSchedule is an Internet applicatin that is used, amng ther functins, t reprt internal Bilateral Transactins Lad Frecasting PJM scheduling staff requires lad frecasts fr up t ten days in the future. Fr each day, a 24hur lad shape is needed. The first step in develping a lad frecast is t btain the weather infrmatin fr the time perid. Weather infrmatin is prvided t PJM at regular intervals by a cntractedfr weather service. Additinal weather data surces include the Natinal Weather Service, radi news, LSE weather infrmatin, and existing lcal PJM RTO cnditins. The frecast perid is reviewed t determine any cnditins that culd affect the PJM RTO s lad, including: Day f week Hlidays Special events Daylight savings time changes Internal participant lad frecasts Peak lads and lad shapes are determined using a similar day s frecast. PJM retrieves the lad data frm a histrical file and adjusts the frecasts, as needed, t reflect grwth r ther discrepancies. Exhibit belw presents the typical apprach PJM uses t frecast lad. Exhibit 2: Lad Frecasting Prcess Revisin: 92, Effective Date: 11/01/2017 PJM

97 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 5: Market Clearing Prcesses and Tls The lad frecasts fr each 24-hur perid are input in the Marginal Scheduler prgram. PJM scheduling staff als psts these frecasts n the OASIS Markets Database System The Markets Database System is a tw-part system: The Markets Database stres the basic resurce data supplied by the PJM Members, including perating limits and resurce availability. The Markets Gateway Web site that prvides the Internet-based user interface that allws Market participants t submit generatin ffer data, Demand bids, Increment Offers, Decrement bids and Regulatin Offers, Synchrnized Reserve Offers, int the Markets Database. The Markets Database is a very large database that cntains infrmatin n each generating resurce that perates as part f the PJM Energy Market, Demand Infrmatin, Increment Offers, Decrement Bids, Regulatin Offers, Synchrnized Reserve Offers, Day-ahead Energy Market results, Day-ahead Scheduling Reserve Market Clearing Prices, Regulatin Market Clearing Prices and Synchrnized Reserve Market Clearing Prices. A descriptin f the Markets Database can be fund in the Markets Database Dictinary ( markets-gateway/market-database-data-dictinary.ashx?la=en). Market participants may access the Markets Database by using the PJM Markets Gateway Web site via the Internet using manual entry r bulk uplad/dwnlad via XML frmat. Please refer t the Energy Market Daily Exhibit belw: Exhibit 3: Energy Market Daily PJM clears the synchrnized reserve and regulatin markets n an hurly basis. The fllwing is the timeline by which this hurly clearing is accmplished: 60-minutes prir t the perating hur PJM will execute the Ancillary Services Optimizer (ASO). The ASO will jintly ptimize energy, synchrnized reserves, nn-synchrnized Revisin: 92, Effective Date: 11/01/2017 PJM

98 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 5: Market Clearing Prcesses and Tls reserves and regulatin based n frecast system cnditins t determine an ecnmic set f inflexible reserve resurces t cmmit fr the perating hur The data that needs t be submitted by PJM Members t participate in the Day-ahead Energy, Synchrnized Reserve, and Regulatin Markets is described in detail in the Markets Database Dictinary Hydr Calculatr Fr PJM RTO-Scheduled Resurces, PJM is respnsible fr develping the schedules fr the run-f-river and pumped strage plants lcated within the PJM RTO and turned ver t PJM fr crdinatin. T assure hydraulic crdinatin f the hydr plants, PJM uses a cmputer prgram called the Hydr Calculatr. The Hydr Calculatr cmputes hurly reservir elevatins and plant generatin frm input river flws and plant discharges. PJM scheduling staff uses the Hydr Calculatr t cncentrate n ecnmic placement f available hydr energy PJM Energy Market Technical Sftware The PJM Energy Market Technical Sftware is a set f cmputer prgrams, which perfrms a security-cnstrained resurce cmmitment and ecnmic dispatch fr the Day-ahead Market. The individual prgrams are: Resurce Scheduling & Cmmitment (RSC) Perfrms security-cnstrained resurce cmmitment based n generatin ffers, demand bids, Day-ahead Scheduling Reserve Offers, Increment Offers, Decrement bids and transactin schedules submitted by participants and based n PJM RTO reliability requirements. RSC will enfrce physical resurce specific cnstraints that are specified in the generatin ffer data and generic transmissin cnstraints that are entered by the Market Operatr. RSC prvides an ptimized ecnmic resurce cmmitment schedule fr the next seven days and it utilizes a Mixed Integer linear prgramming slver t create an initial resurce dispatch fr the next perating day. Scheduling, Pricing & Dispatch (SPD) Perfrms security-cnstrained ecnmic dispatch using the cmmitment prfile prduced by RSC. SPD calculates hurly resurce generatin MW levels, LMPs and Day-ahead Scheduling Reserve Clearing Prices fr all lad and generatin buses fr each hur f the next perating day. SPD utilizes a linear prgramming slver t develp the ecnmic dispatch slutin while respecting generic transmissin cnstraints that affect dispatch, such as reactive interface limits, and thermal limits. Simultaneus Feasibility Test (SFT) SFT perfrms AC cntingency analysis using cntingency list frm PJM EMS and creates generic cnstraints equatins based n any vilatins that are detected. These generic cnstraints equatins are then passed them back t SPD fr reslutin. SFT ensures that the Day-ahead Market results are physically feasible cnsidering PJM RTO security cnstraints and reliability requirements. Revisin: 92, Effective Date: 11/01/2017 PJM

99 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 5: Market Clearing Prcesses and Tls Exhibit 4: Settlement Subsystems The Energy Market technical sftware develps the Day-ahead Market results based n minimizing prductin cst f energy and reserve t meet the Demand bids and Decrement bids that are submitted int the Day-ahead Market while respecting the PJM RTO security cnstraints and reliability requirements that are necessary fr the reliable peratin f the PJM RTO. Subsequent t the clse f the generatin Re-bidding Perid at 1415, the RSC is the primary tl used t determine any change in steam resurce cmmitment status based n minimizing the additinal startup csts and csts t perate steam resurces at ecnmic minimum in rder t prvide sufficient perating reserves t satisfy the PJM Lad Frecast (if greater that cleared ttal demand in the Day-ahead Market) and adjusted Day-ahead Scheduling Reserve (Operating Reserves) requirements. The purpse f this secnd phase f resurce cmmitment is t ensure that PJM has scheduled enugh generatin in advance t meet the PJM Lad Frecast fr the next perating day and fr the subsequent 6 days. CTs resurces are included in the scheduling prcess and are scheduled in the Day-ahead Market. Hwever, the decisins cncerning actual peratin f pl-scheduled CT resurces during the perating day are nt made until the current perating hur in real-time dispatch. Dwnlad Data frm Markets Database Revisin: 92, Effective Date: 11/01/2017 PJM

100 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 5: Market Clearing Prcesses and Tls Exhibit 5: Dwnlad Data frm Markets Database Exhibit 6: Energy Market Data Flw Revisin: 92, Effective Date: 11/01/2017 PJM

101 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets Sectin 6: Reserve Requirements in PJM Energy Markets Welcme t the Reserve Requirements in PJM Energy Markets sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: A descriptin f the requirement/supply relatinship (see Frecasting PJM Generatin Requirement ). Hw PJM regulatin requirements are determined (see PJM Regulatin Requirements ). Hw PJM synchrnized reserve requirements are determined (see PJM Synchrnized Reserve Requirements ) Hw the marketing infrmatin is prcessed (see Prcessing Market Infrmatin ). Scheduling bridges the gap between advance utage and market infrmatin (pre-scheduling) and real-time peratins (dispatching) f mnitred facilities. Details n the dispatching prcedures fr all facilities can be fund in PJM Manual 12 Dispatch Operatins. The gal f the PJM is t develp schedules that preserve the security f the PJM RTO n an unbiased basis fr all PJM Members. The scheduling prcess fr each day cnsists f the Day-ahead Energy Market and f the develpment Current Operating Plan (COP) based n reliability analysis that is perfrmed in parallel with and subsequent t the Day-ahead Energy Market clearing. 6.1 Frecasting PJM Generatin Requirement The first step in the scheduling prcess is t examine the relatinship between Day-ahead Demand Bids and Decrement Bids with and Generatin Offers and Increment Offer and t clear the Day-ahead Market based n these bids and ffers. In the reliability analysis that fllws the Day-ahead Market, the relatinship between PJM Lad Frecast requirement and generatin supply fr the Real-time Energy Market is cnsidered. Exhibit 7 illustrates the Real-time Market relatinships in the frm f a bar chart. Revisin: 92, Effective Date: 11/01/2017 PJM

102 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets Exhibit 7: Requirement Versus Resurce Supply Exhibit abve presents the fllwing infrmatin: The PJM requirement is represented by the bar n the left. The height f this bar is the ttal PJM capacity requirement in MW. The capacity requirement cnsists f tw cmpnents: Energy requirement, cnsisting f the PJM lad frecast plus External Transactin sales t External Cntrl Areas Day-ahead Scheduling Reserve (Operating Reserve) requirement The PJM resurce supply is represented by the bar n the right which cnsists f fur supply cmpnents: External Transactin purchases frm External Cntrl Areas Resurces that are self-scheduled by the PJM Members Resurces and capacity that has been bid int the Day-ahead Market and the Realtime Market and is scheduled by PJM t meet the energy and reserve requirement Additinal capacity t satisfy the Day-ahead Scheduling Reserve (Operating Reserve) requirement is cmmitted at the discretin f the PJM The identity f the resurces that are self-scheduled r PJM RTO-scheduled is given by the market infrmatin cntained in the Markets Database as shwn in the Markets Database Dictinary ( Revisin: 92, Effective Date: 11/01/2017 PJM

103 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets The PJM RTO s lad frecast is described in Sectin 2 f this PJM Manual. The amunt f External Transactins as scheduled by the PJM Members is als cnsidered when establishing the amunt f generatin that must be scheduled PJM Regulatin Requirement The ttal PJM Regulatin Requirement fr the PJM RTO is determined in whle MW fr the ramp and nn-ramp perids each day. Further detail is described in Manual 12 Balancing Operatins, Sectin Determining Regulatin Assignment. PJM Actins PJM clears the Regulatin Market by establishing the list f resurces t prvide regulatin fr the next perating hur and by calculating the Regulatin Market Clearing Prices (RMCCP and RMPCP) every 5 minutes, then averaging fr the hur as defined in Sectin 3 f this Manual. Hurly participant Regulatin bligatins are determined after-the-fact, based n the LSE s actual lad ratis. Participants can estimate their share f the PJM Regulatin Requirement in advance by cmparing their hurly lad frecast t the PJM hurly lad frecasts prvided by the PJM PJM Member Actins PJM Members submit Individual Synchrnized Reserve and Regulatin ffer data fr each Resurce that is available t prvide synchrnized reserve and/r regulatin (fr generatin r demand resurces meeting the Regulatin quality standard and Synchrnized Reserve quality standard), differentiated as self-scheduled, External Transactin sale/purchase (identifying seller and buyer) and available fr PJM RTOscheduling. This infrmatin is maintained within the PJM Markets Gateway Web site and is passed t the PJM Ancillary Service Optimizer (ASO). Exhibit 8 summarizes this infrmatin. PJM Members update regulating resurce perating limits and availability in the PJM Markets Gateway Web site. Revisin: 92, Effective Date: 11/01/2017 PJM

104 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets Exhibit 8: Synchrnized Reserve and Regulatin Data Flw The PJM RTO s ttal available Regulatin service is calculated and cmpared with its requirements. Any significant shrtage is reprted t PJM dispatcher fr pssible actin. See the PJM Manual fr Balancing Operatins (M-12) fr a descriptin f the Regulatin allcatin prcess during the curse f system peratin Regulatin Service PJM perates a bidding market fr Regulatin services in the PJM RTO. PJM Members that have generatin r demand resurces meeting the Regulatin quality standard may submit Regulatin ffer data fr each individual resurce that is available t prvide regulatin. The ffer infrmatin is maintained within the PJM Markets Gateway Web site and is passed t the Ancillary Service Optimizer (ASO). Generatin wners and Demand Resurces wishing t sell regulatin service must supply a regulatin ffer price by 1415 the day prir t peratin and is applicable fr the entire 24-hur perid fr which it is submitted. The remainder f the necessary data may be submitted r changed up until sixty (60) minutes prir t the perating hur, at which time the Regulatin market clses. The exhibit belw defines the Regulatin parameters f a qualified generating resurce. Revisin: 92, Effective Date: 11/01/2017 PJM

105 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets Exhibit 9: Generatr Regulatin Service The PJM RTO s ttal available Regulatin service is calculated and cmpared with its requirements. Any significant shrtage is reprted t PJM dispatcher fr pssible actin. See the PJM Manual fr Balancing Operatins (M-12) fr a descriptin f the Regulatin allcatin prcess during the curse f system peratin. 6.2 PJM Synchrnized Reserve Requirements The PJM RTO Reserve Zne is defined as that amunt f 10-minute reserve that must be synchrnized t the grid. The PJM Primary Reserve and Synchrnized Reserve Zne and Reserve Sub-zne Reliability Requirements are dcumented in PJM Manual 13: Emergency Operatins, Sectin 2.2. PJM Actins PJM clears the Synchrnized Reserve and Nn-Synchrnized Markets by establishing the list f resurces t prvide Synchrnized Reserve and Nn-Synchrnized Reserve fr the next perating hur and by calculating the Synchrnized Reserve Market Clearing Prices (SRMCP) and Nn-Synchrnized Reserve Market Clearing Prices (NSRCP) every 5 minutes, then averaging fr the hur as defined in Sectins 4 and 4b f this Manual. Hurly participant Synchrnized Reserve bligatins are determined after-the-fact, based n the LSE s actual lad ratis. Participants can estimate their share f the PJM Synchrnized Reserve Requirement in advance by cmparing their hurly lad frecast t the PJM hurly lad frecasts prvided by PJM. PJM Member Actins Revisin: 92, Effective Date: 11/01/2017 PJM

106 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets PJM Members submit Individual Synchrnized Reserve and Regulatin ffer data fr each Resurce that is available t prvide Synchrnized Reserve and/r regulatin (fr generatin r demand resurces meeting the Regulatin quality standard and Synchrnized Reserve quality standard), differentiated as self-scheduled, External Transactin sale/purchase (identifying seller and buyer) and available fr PJM RTOscheduling. This infrmatin is maintained within the PJM Markets Gateway website and is passed t the PJM real-time market applicatins. PJM Members update Synchrnized Reserve resurce perating limits and availability in the PJM Markets Gateway Web site Synchrnized Reserve Service PJM perates a bidding market fr Synchrnized Reserve services in the PJM RTO. PJM Members that have resurces meeting the Synchrnized Reserve quality standard may submit Synchrnized Reserve ffer data fr each individual resurce that is available t prvide synchrnized reserve. The ffer infrmatin is maintained within the PJM Markets Gateway Web site and is passed t the Ancillary Service Optimizer (ASO), Intermediate Term Security Cnstrained Ecnmic Dispatch engine (IT SCED) and Real Time Security Cnstrained Ecnmic Dispatch Engine (RT SCED). Resurce wners wishing t sell synchrnized reserve r regulatin service must supply an ffer by 1415 the day prir (the clse f the Generatin Rebidding Perid); hwever, hurly updates may be submitted r changed up until sixty-five (65) minutes prir t the perating hur, at which time the Regulatin, Synchrnized Reserve and Nn-Synchrnized Reserve markets clse. 6.3 Prcessing Market Infrmatin Our attentin nw fcuses n the elements that make up the requirement and supply picture in bth the Day-ahead Energy Market and in the Real-time Energy Market. In the Day-ahead Energy Market, participants submit Demand bids, Demand Reductin Bids, Decrement Bids, Increment Offers and Generatin Offers int the Day-ahead Energy Market and PJM clears the Market based n these bids and ffers using least-cst security-cnstrained resurce cmmitment and dispatch PJM Member Lad Frecasts Each PJM Electric Distributin Cmpany (EDC) within the PJM RTO prvides PJM with a frecast f its requirements by 1030 n the day befre the Operating Day. Regardless f hw the PJM EDC s lad is supplied, the PJM EDC submits the fllwing Operating Day frecast infrmatin t the PJM: Midnight valley MW Mrning peak MW Afternn peak MW Evening peak MW The hurs fr which the frecasts apply are specified and changed peridically by PJM and cmmunicated t the PJM Members either electrnically r by facsimile. Revisin: 92, Effective Date: 11/01/2017 PJM

107 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets PJM cmpares the frecasts submitted by the PJM Members against the PJM RTO lad frecast which is develped by PJM. The PJM Members frecasts cver nly fur specified hurs, while the PJM RTO frecast is fr each hur f the Operating Day. Any significant discrepancies between the PJM Members frecasts and the crrespnding PJM RTO frecasts are reprted t PJM dispatcher. In general, the PJM RTO frecast takes precedence ver the aggregate f the individual PJM Members frecasts Reserve Service The Day-ahead Scheduling Reserve (Operating Reserve) bjective is a Cntrl Zne requirement (nt allcated t PJM Members individually). PJM schedules sufficient generating resurces t meet the PJM Day-ahead Scheduling Reserve (Operating Reserve) bjective as part f the Day-ahead Scheduling Reserve Market Clearing prcess. See the PJM Manual fr Emergency Operatins (M 13) and sectin (Day-ahead Scheduling Reserve Market Reserve Requirement) f this manual fr the detailed methdlgy fr determining Reserve Requirements Self-Scheduled Resurces PJM Members can chse t self-schedule their generatin in the Day-ahead Market r t Offer int the Day-ahead Market and allw PJM t schedule their generatin in the Day-ahead Market. Subsequent t the Day-ahead Market, any generatr that was nt selected in the Dayahead Market may chse t self-schedule. Anther ptin is t purchase generatin frm the market. The PJM Members scheduling chices are dependent n their scheduling philsphy Deviatins frm Day-ahead Market fr Pl Scheduled Resurces If a generatin resurce has been scheduled in the Day-ahead Market and wishes t deviate frm that schedule (i.e. nt run), the generatin wner shuld cntact the PJM Scheduling Crdinatr t determine if this curse f actin is pssible. The PJM Scheduling Crdinatr will then: If the PJM Scheduling Crdinatr determines that the generatin resurce is nt needed fr reliability purpses fr the perating day, the generatin wner can decide nt t run the resurce and n frced utage will be incurred. The generatin wner will be respnsible fr all imbalance and perating reserve charges. If the PJM Scheduling Crdinatr determines that the resurce is needed fr reliability purpses, he/she will infrm the generatin wner. The generatin wner may still elect t nt run the resurce, but a frced utage fr the duratin f the scheduled peratin f the resurce will be generated. The generatin wner will be respnsible fr all imbalance and perating reserve charges. The guideline fr ntifying PJM f deviatins fr pl scheduled resurces will be the sum f the resurce s ntificatin time plus the time t start. If this sum ttals t zer, then the minimum ntificatin time will be 45 minutes prir t the scheduled peratin f the resurce. This allws PJM adequate time fr determining if the resurce is needed fr reliability Fees fr Cancellatin f Pl Scheduled Resurces At the end f each mnth, PJM calculates the credits due t each PJM Member fr plscheduled resurces that were selected t run as part f the reliability study, and that PJM canceled befre cming n-line. The cancellatin fee is defined as the actual csts incurred Revisin: 92, Effective Date: 11/01/2017 PJM

108 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets that are typically included in Start-up Csts, when PJM cancels a pl-scheduled generatin resurce s start and the resurce has nt yet reached the pint after generatr breaker clsure which is typically indicated by telemetered r aggregated state estimatr MWs greater than zer. Cancellatin Fees shall be, capped at the apprpriate Start-up Cst fr the resurce as specified in its ffer data. Requests fr such credits must be submitted, in writing, t the PJM Manager f Market Settlement Operatins Department, within frty-five days f invice being received by participant fr the mnth in questin Resurce Specific Data Requirements Internal PJM Members Offer Data fr resurce specific ffers is submitted directly int the Markets Database via the Markets Gateway Web site. Exhibit 10 summarizes the data requirements fr capacity and energy resurces Exhibit 10: Capacity and Energy Resurce Data Requirements If ffer data fr a capacity resurce is nt submitted by 1030 f the day befre the perating day, PJM uses the ffer data and resurce availability previusly entered int the Markets Database and cnsiders the data a binding ffer. Fr a mre detailed descriptin f the data, please see the PJM Markets Database Dictinary ( media/etls/markets-gateway/market-database-data-dictinary.ashx) External Market Sellers An External Resurce is a generatin resurce that is lcated utside the metered bundaries f PJM. If an external resurce is qualified as a capacity resurce in PJM, then in accrdance with the PJM Tariff, all external resurces being ffered in as capacity resurces must bid int the PJM Day-ahead Market as generatin resurces. Revisin: 92, Effective Date: 11/01/2017 PJM

109 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets Fr an external resurce t be ffered as a unit resurce, a valid generatr ffer, which cnsists f a price-based schedule, is submitted in the Markets Gateway system and a valid energy schedule is submitted in the ExSchedule system. External Market sellers reprt the fllwing data fr resurce-specific ffers, reprted n the business day befre the next perating day, up t seven days in advance: Specific generatin resurce (the CCPPTTUUSS reference number and resurce name frm the Markets Database). This number is supplied by PJM t the PJM Member upn creatin f the resurce in the Markets Database. If the resurce is submitted at least 30 days befre the bid date, see the PJM Manual fr Pre-Scheduling Operatins (M-10). Minimum and maximum energy fr each hur Minimum and maximum generatin fr each hur Minimum and maximum run times Resurce availability fr each hur Availability f regulatin upper and lwer energy limits fr each hur Respnse and cnstraint data Whether r nt t use start-up and n-lad fees The Netwrk Custmer may request Netwrk External Designated transmissin service fr the delivery f a designated netwrk resurce. Requests fr service are subject t Available Transmissin Capability (ATC) and ther PJM Reginal Practices ( etls/asis/ reginal_practices-clean-pdf.ashx).energy Scheduling (ExSchedule and etag) Requirements: A valid NERC etag is required fr all hurs that the external resurce will be bid int PJM. The firm OASIS reservatin assigned t the external resurce shall be linked t the tag. The tag will als have a special exceptin attached in the frm f the Tken/Value pair: EXCEPTION / CAPBACK, and the tag will be subject t PJM interchange ramp limits Day-ahead Market between 1030 and 1330 As specified in the Energy Market Business Rules, Bidding and Operatins Timeline sectin, all bids must be received by 1030(EPT). Frm 1030 t 1330(EPT), the bids will be evaluated. Results will be psted in the Markets Gateway system by 1330(EPT). External Capacity Participants will be required t check the Markets Gateway system t see if the bid has been accepted. Fr bids accepted in the Day-ahead Market, External Capacity Participants may submit adjustments t the hurly prfile f their tag in rder t avid balancing market MW deviatins Rebidding Perid between 1330 and 1415 If the unit is accepted in the Reliability Run, External Capacity Participants will be required t submit a NERC etag that matches the hurly energy prfile. If the bid is nt accepted in the Day-ahead Market the participant may chse t either mdify an already existing tag t zer (0) MW, r take n actin. Revisin: 92, Effective Date: 11/01/2017 PJM

110 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets If the participant wishes t schedule the resurce as a self-scheduled/must run unit they may chse t d s and must submit an etag. The participant must als ntify the PJM Generatin Dispatcher that the unit is being self-scheduled int PJM as a cntract Real Time Market If the bid is nt accepted in the Day-ahead Market r Reliability Market, but is requested during the perating day the Generatin Dispatcher will ntify the participant wh will then submit an etag t match the request. This tag will be subject t all scheduling timing requirements and PJM interchange ramp limits. Revisin: 92, Effective Date: 11/01/2017 PJM

111 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 7: External Transactin Scheduling Sectin 7: External Transactin Scheduling Welcme t the External Transactin Scheduling sectin f the PJM Manual Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: Hw PJM may utilize a net interchange cap t manage interchange during emergency cnditins An verview descriptin f PJM-MISO Crdinated Transactin Scheduling (see Overview f PJM-MISO Crdinated Transactin Scheduling ). A list f the PJM-MISO Crdinated Transactin Scheduling Business Rules (see PJMMISO Crdinated Transactin Scheduling Business Rules ). Other infrmatin regarding External Transactin Scheduling, including that f PJM-MISO Crdinated Transactin Scheduling, is cntained in the PJM Reginal Transmissin and Energy Scheduling Practices dcument. 7.1 Net Interchange Cap During emergency cnditins, PJM may elect t implement a cap n net interchange transactins t mitigate the impact f interchange vlatility n system and price stability. The net interchange cap will represent the maximum level f RTO-wide net interchange beynd which the scheduling f additinal nn-dispatchable transactins using Spt Market Imprt r nn-firm hurly pint t pint transmissin service will be disallwed. The net interchange cap may be implemented fr the peak hur(s) f the day and the several surrunding hurs when the fllwing cnditins are met. The applicatin f the cap will be evaluated individually fr each eligible hur. A Ht r Cld Weather Alert r escalating emergency prcedures as defined in Manual 13: Emergency Operatins fr the RTO, Mid-Atlantic Dminin r Mid-Atlantic regins is in effect fr the hur PJM dispatch has called n firm resurces whse minimum perating criteria must be hnred fr the hur (e.g., dispatched demand respnse resurces r cmbustin turbines) The level f interchange anticipated by PJM dispatch at the time the firm resurce cmmitments are made, cupled with the firm resurce cmmitments, are sufficient t meet the prjected lad pickup fr the hur When implemented, the interchange cap will apply fr the entire hur. PJM dispatch may subsequently elect t adjust the interchange cap intra-hur in respnse t reliability cncerns. The interchange cap value will be set equal t the interchange MW anticipated by PJM dispatch at the time the cap is implemented plus a 700 MW margin t allw additinal interchange t be scheduled fllwing the implementatin f the cap in accrdance with interchange scheduling rules. Market participants will be ntified f the ptential fr the implementatin f the interchange cap day-ahead when a ht weather alert r cld weather alert has been issued fr the perating day. Ntificatin f the actual implementatin f the cap will ccur as sn as the cap is Revisin: 92, Effective Date: 11/01/2017 PJM

112 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 7: External Transactin Scheduling implemented. The interchange cap will typically be implemented ne t tw hurs in advance f the hur t which it is applied, cincident with the scheduling f additinal firm resurces. The implementatin ntificatin will include the hur(s) t which the cap applies and the MW value at which the net interchange cap has been set. Ntificatins will ccur via the Emergency Prcedure Psting Applicatin. 7.2 Overview f the PJM-MISO Crdinated Transactin Scheduling PJM-MISO Crdinated Transactin Scheduling (PJM-MISO CTS) is an ptinal prduct available fr scheduling real-time energy market transactins between PJM and MISO. PJM-MISO CTS facilitates the efficient scheduling f interchange between the tw reginal transmissin rganizatins (RTO) by utilizing frecasted LMPs and participant-prvided interface bids t clear nly thse transactins deemed ecnmically cnsistent with prjected interface price spreads. Market Participants submit PJM-MISO CTS bids in PJM s ExSchedule system. Validated bids are then passed t bth PJM and MISO s lk-ahead cmmitment engines. In real-time, PJM sends MISO the frecasted LMPs calculated fr PJM s MISO interface, while MISO sends PJM the frecasted LMPs calculated fr MISO s PJM interface t use as inputs t the CTS clearing prcess. Every 15 minutes in real-time, each RTO uses its lk-ahead cmmitment engine t clear nly thse CTS bids that have an interface bid price that is less than r equal t the prjected interface price psitive spread and which is scheduled in the directin that is cnsistent with that price psitive spread. PJM and MISO then exchange the CTS clearing results. A cmmn clearing prcess then recnciles the CTS bids independently cleared by PJM and MISO. Fr each CTS bid, nly thse transactin MW that were cleared by bth PJM and MISO will be scheduled t flw. 7.3 PJM-MISO Crdinated Transactin Scheduling Business Rules Please refer t the PJM Reginal Transmissin and Energy Scheduling Practices fr rules gverning submissin f PJM-MISO CTS transactins CTS Bid Clearing The Intermediate Term Security Cnstrained Ecnmic Dispatch (IT SCED) engine clears CTS bids in PJM. A similar engine clears CTS bids fr MISO. Only the CTS bids cmmnly cleared between PJM and MISO will be scheduled t flw. The recnciliatin f cmmnly cleared CTS bids is discussed in sectin In preparatin fr CTS clearing, IT SCED receives CTS bids plus the frecasted interface LMP fr MISO s PJM interface. Using these inputs plus the frecasted LMP fr PJM s MISO interface, which is calculated within the IT SCED case, IT SCED will clear a CTS bid segment if ne f the fllwing cnditins is satisfied: Fr a bid scheduled frm PJM t MISO: Fr a bid scheduled frm MISO t PJM: Revisin: 92, Effective Date: 11/01/2017 PJM

113 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 7: External Transactin Scheduling Where: $PJM_interface: LMP fr the MISO interface as calculated by PJM $MISO_interface: LMP fr the PJM interface as calculated by MISO In the event that nly a prtin f the CTS MW ffered are needed in rder t satisfy pwer balance in the IT SCED case, CTS MW bid segments may be partially cleared. In the case f a tie amng multiple bids, cleared MWs will be prrated acrss tying bids based n the size f the marginal MW segment fr each tying bid. The prratin f cleared MW acrss tying bids is calculated based n the fllwing frmula: MWtransactin = MWneeded fr pwer balance (MW frm transactin s marginal segment/ ttal MW available at tying CTS Bid Price) CTS Cmmn Clearing Cmmn Clearing is a prcess that recnciles the results f CTS clearing frm the MISO CTS and PJM IT SCED slutins. Fr each CTS bid, nly thse transactin MW that were cleared by bth PJM and MISO will be scheduled t flw. Therefre: The Cmmn Clearing prcess executes fr each 15 minute scheduling interval (HH:00, HH:15, HH:30, HH:45) at apprximately 25 minutes befre the start f CTS transactin. Fr example, the cmmn clearing prcess fr 12:00 runs at apprximately 11:35. The cmmnly cleared CTS results are psted in the ExSchedule prtal immediately fllwing the executin f the cmmn clearing prcess. Please see the PJM Reginal Transmissin and Energy Scheduling Practices fr additinal details regarding the cmmunicatin f CTS clearing results CTS Clearing Suspensin Fr reliability r system maintenance reasns, either PJM r MISO may suspend the evaluatin and clearing f CTS transactins temprarily. During the affected time, all CTS transactin will be cleared t 0 MW. Pssible reasns fr CTS suspensin include but are nt limited t: Emergency peratinal cnditin where all exprt transactins with nn-firm transmissin service are being curtailed; Initiatin f Maximum Emergency Generatin Actin prcedures; Scheduled system utage / maintenance; Inability t send r receive accurate frecast LMP data t/frm partner RTO; A message will be displayed in the ExSchedule system whenever CTS suspensin is in effect CTS Settlement PJM-MISO CTS transactins are settled in the same manner as typical real-time interchange transactins. The prjected IT SCED interface LMPs are used fr clearing purpses nly. CTS transactins are settled at the real-time interface LMPs. CTS transactins are nt eligible fr Revisin: 92, Effective Date: 11/01/2017 PJM

114 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 7: External Transactin Scheduling make whle payments if the real-time PJM-MISO interface price spread des nt cver the CTS bid price. Revisin: 92, Effective Date: 11/01/2017 PJM

115 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 8: Psting OASIS Infrmatin Sectin 8: Psting OASIS Infrmatin Sectin Remved: Infrmatin regarding Psting OASIS Infrmatin is cntained in the nline OASIS User Guide, which is available at: asis/asis-user-guide.aspx. Revisin: 92, Effective Date: 11/01/2017 PJM

116 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 9: Hurly Scheduling Sectin 9: Hurly Scheduling Welcme t the Hurly Scheduling sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin, yu will find the fllwing infrmatin: Hw schedules may be adjusted n an hurly basis (see Hurly Scheduling Adjustments ). 9.1 Hurly Scheduling Adjustments During the curse f Bulk Electric System peratins, planned and unplanned events may cntinually ccur. This sectin discusses the prcess by which pre-planned perating schedules may be changed by PJM r PJM Members t reflect new cnditins. A PJM Member may adjust the schedule f a resurce under its dispatch cntrl (SelfScheduled Resurce) n an hur-t-hur basis beginning at 2200 f the day befre the Operating Day under the fllwing cnditins: Subject t the right f PJM t schedule and dispatch Self-Scheduled Resurces in an Emergency. Prvided that PJM is ntified nt later than 65 minutes prir t the hur in which the adjustment is t take effect. The fllwing adjustments may be made: A PJM Member may self-schedule any f its resurce increments, including hydr pwer resurces nt previusly designated as Self-Scheduled Resurces and nt selected as a PJM RTO Scheduled Resurce. A PJM Member may request the scheduling f a new Bilateral Transactin that uses nn-firm transmissin service. A PJM Member may remve frm service a resurce increment, including a hydr pwer resurce that it had previusly designated as a Self-Scheduled Resurce, prvided that PJM has the ptin t schedule energy frm such resurce increment at the price ffered in the scheduling prcess, with n bligatin t pay any start-up fee. An External Market Buyer may refuse delivery f sme r all f the energy it requested t purchase by ntifying PJM dispatcher f the adjustment in deliveries nt later than 20 minutes prir t the hur in which the adjustment is t take effect. Any such refusal f delivery shall be subject t nn-delivery charges as described in the PJM Manual fr Operating Agreement Accunting (M-28). 9.1 Hurly Schedule Adjustments At times Market Sellers may benefit frm having the ability t differentiate and update their ffers, and ther assciated parameters, n an hurly basis t mre accurately reflect their true cst f generatin r accunt fr ther perating cnditins. This sectin discusses the timing, parameters, and prcess fr updating schedules fr use in the Real-time Energy Market. Revisin: 92, Effective Date: 11/01/2017 PJM

117 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 9: Hurly Scheduling Generatrs and Demand Resurces may alter their ffers fr use in the Real-time Energy Market during the fllwing perids (real-time update perids): During the Generatin Rebidding Perid which is defined frm the time the Office f Intercnnectin psts the results f the Day-Ahead Energy Market until Starting at 1830 (typically after the secnd resurce cmmitment is cmpleted) and up t 65 minutes prir t the start f the perating hur (T-65 min). The fllwing generatin ffer parameters may be updated during the real-time update perids, with exceptins as nted belw: Incremental Offer Price Fr Price-based ffers, it may be increased r decreased fr uncmmitted hurs, but may nly be decreased fr cmmitted hurs. When determining whether an update cnstitutes an increase r decrease, each segment f the updated ffer curve will be cmpared t each segment f the incremental ffer curve that existed fr the schedule and hur at the time the resurce mst recently received a cmmitment fr that hur. Fr Cst-based ffers, they may be increased r decreased fr bth cmmitted and uncmmitted hurs. Incremental Offer MW During the Generatin Rebidding Perid, Offer MW may nly be updated fr hurs that did nt receive a cmmitment in the Day-Ahead Market. Fllwing the clse f the Generatin Rebidding Perid, n updates t the Incremental Offer MW may be made, regardless f resurce cmmitment status. Emergency Minimum and Maximum MW Limits Ecnmic Minimum and Maximum Limits These parameters are nt subject t the T-65 min update deadline and may be updated thrugh the end f the perating hur t which the updates apply. These parameters are nt subject t the T-65 min update deadline and may be updated thrugh the end f the perating hur t which the updates apply. Startup Cst (Cld, Intermediate, Ht) and N-Lad Cst Cst-based Startup and N-Lad values (n either a price-based r cst-based schedule) may be increased r decreased fr bth cmmitted and uncmmitted hurs. Price-based Startup and N-Lad values may nt be updated utside f the pen enrllment perids as specified in Sectin f this Manual. Minimum Run Time Updates specifying hurly differentiated Minimum Run Time values may nly be submitted starting at 1830 day-ahead thrugh T-65 minutes. Revisin: 92, Effective Date: 11/01/2017 PJM

118 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 9: Hurly Scheduling Ntificatin Time Minimum Run Time may nt be updated fr any hur that has received a cmmitment in the Day-Ahead r Real-time Market. Updates specifying hurly differentiated Ntificatin Time values may nly be submitted starting at 1830 day-ahead. Schedule Availability During the Generatin Rebidding Perid, Schedule Availability may nly be updated fr schedules that did nt receive a cmmitment in the Day-Ahead Market. N updates t Schedule Availability may be made fllwing the clse f the Generatin Rebidding Perid, regardless f schedule cmmitment status, except fr dual fuel resurces. Switch t Cst Schedule Flag Resurces designated as Dual Fuel Capable in Markets Gateway may submit hurly differentiated schedule availability fr cst-based schedules fllwing the clse f the Generatin Rebidding Perid, fr uncmmitted hurs nly, in rder t cmmunicate fuel availability. May nt be updated during the Generatin Rebidding Perid. Any hurly updates made t the Offer Updates r Detail Updates pages f Markets Gateway supersede the daily values n the Offer and/r Detail pages. Hurly updates made n the Offer Updates r Detail Updates pages are nt autmatically carried ver int the next perating day. The fllwing Demand Resurce ffer parameters may be updated during the real-time update perids, with exceptins as nted belw: Incremental Offer Price Offer Price may nt be updated fr any hur that has received a cmmitment in the Day-Ahead r Real-time Market. Incremental Offer MW During the Generatin Rebidding Perid, Offer MW may nly be updated fr hurs that did nt receive a cmmitment in the Day-Ahead Market. N updates t Incremental Offer MW may be made fllwing the clse f the Generatin Rebidding Perid, regardless f resurce cmmitment status. Ecnmic Minimum and Maximum MW Limits Shutdwn Cst Shutdwn Cst may nt be updated fr any hur that has received a cmmitment in the Day-Ahead r Real-time Market. Minimum Dwn Time Limit Revisin: 92, Effective Date: 11/01/2017 PJM

119 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 9: Hurly Scheduling Updates specifying hurly differentiated Minimum Run Time values may nly be submitted starting at 1830 day-ahead thrugh T-65 minutes. Minimum Dwn Time may nt be updated fr any hur that has received a cmmitment in the Day-Ahead r Real-time Market. Ntificatin Time Updates specifying hurly differentiated Ntificatin Time values may nly be submitted starting at 1830 day-ahead thrugh T-65 minutes. Any hurly changes made n the Offer Updates r Hurly Updates screens in Markets Gateway supersede the values n the Offers and Parameter pages Intraday Offers Optinality The ability t submit intraday ffers in Markets Gateway is an ptinal feature. Market Sellers wh wish t submit updates t their generatin resurce ffers after the clse f the Generatin Rebidding Perid have t frmally pt in in the resurce s Fuel Cst Plicy and in Markets Gateway. By default, generatin resurces will be designated as pted ut f intraday ffers. Market Sellers may still submit ffers fr a generatin resurce that has been pted ut f intraday ffers int the Day-Ahead Market and update thse ffers during the Generatin Rebidding Perid fr any hurs nt cmmitted in the Day-Ahead Market. Hwever, the market Seller will nt be able t submit any ffer parameter updates fllwing the clse f the Generatin Rebidding Perid, except as fllws: Ecnmic Minimum and Maximum Operating Limits, Emergency Minimum and Maximum Operating Limits and ther infrmatin n the Unit Hurly Updates screen in Markets Gateway may still be updated thrugh the end f the perating hur. Certain Regulatin Offer parameters may be updated in real-time as specified in Sectin f this Manual. Certain Synchrnized Reserve Offer parameters may be updated in real-time as specified in Sectin f this Manual. Fr Market Sellers that have pted in, any intraday updates t cst-based ffers must cmply with the criteria defined in the resurce s apprved Fuel Cst Plicy. Market Sellers must specify the pt in/pt ut electin fr each generatin resurce individually. The electin t pt in t intraday ffer updates must be specified in the generatin resurce s Fuel Cst Plicy. The Market Seller s electin in Markets Gateway must be cnsistent with the resurce s Fuel Cst Plicy. Market Sellers shuld pt the resurce ut f intraday ffer updates in Markets Gateway if the resurce s Fuel Cst Plicy des nt specify methds fr intraday ffer updates. Opt in/pt ut electins apply at a minimum n a mnthly basis. Market Sellers must designate th their electin by midnight f the 15 day f the mnth prir t the mnth the electin will begin. The electin will cntinue until the user cancels. An exceptin t this deadline will apply t electin changes that are driven by a change t the frequency f cst determinatin in the resurce s apprved Fuel Cst Plicy. In this case, the electin may be changed upn apprval f the revised Fuel Cst Plicy. Revisin: 92, Effective Date: 11/01/2017 PJM

120 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Sectin 10: Overview f the Demand Resurce Participatin Welcme t the Overview f the Demand Resurce Participatin sectin f the PJM Manual Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: An verview descriptin f the Demand Resurce Participatin in the PJM Energy Market (see Demand Resurce Participatin ). A list f the Demand Resurce Registratin Requirements (see Demand Resurce Registratin Requirements ). A list f the Demand Resurce Energy Market Participatin (see Demand Resurce Energy Market Participatin ). A list f the Demand Resurce Metering and Settlement Data Requirements ( Demand Resurce Metering and Settlement Data Requirements ) Overview f Demand Resurce Participatin The integratin f Demand Respnse int the PJM Markets recgnizes the imprtance f lad respnse t a fully functining market as well as the effect f lad respnse n the reliability f the grid. The purpse f these rules is t enable Demand Resurces under the directin and cntrl f Curtailment Service Prviders t participate in the varius PJM markets. Curtailment Service Prviders (CSPs) are Members r Special Members f PJM that participate in the PJM Markets by causing Demand Resurces t reduce demand. PJM Emergency r Pre-Emergency Lad Respnse enables Demand Resurces that reduce lad during emergency r pre-emergency cnditins t receive payment fr thse reductins. Demand Resurces in the Energy Only Optin f Emergency Lad Respnse are defined as Demand Resurces that receive nly an energy payment fr reductins. Demand Resurces in Full Emergency r Pre-Emergency Lad Respnse are defined as Demand Resurces that receive bth an energy payment fr reductins and a capacity payment. Demand Resurces in Capacity Only Optin f Emergency r Pre-Emergency Lad Respnse are defined as Demand Resurces that receive nly a capacity payment fr reductin. PJM Ecnmic Lad Respnse enables Demand Resurces t respnd t PJM energy, synchrnized reserve, and/r day-ahead scheduling reserve prices by reducing cnsumptin and receiving a payment fr the reductin r fllwing PJM signal t reduce r increase lad if prviding regulatin services. The Day-ahead Optin will prvide a mechanism by which any qualified market participant may ffer Demand Resurces the pprtunity t reduce the lad they draw frm the PJM system in advance f real-time peratins and receive payments based n day-ahead LMP fr the reductins Revisin: 92, Effective Date: 11/01/2017 PJM

121 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin The Real-time Optin will prvide a mechanism by which any qualified market participant may ffer Demand Resurces the pprtunity t cmmit t a reductin and receive payments based n real-time LMP fr the reductins. Energy Settlements shall be limited t demand reductins that are executed in respnse t the real-time and/r day-ahead LMP r as dispatched by PJM and that are nt implemented as part f nrmal peratins. Reductins that d nt meet these requirements will nt be eligible fr settlement. Examples f ineligible settlements include, but are nt limited t the fllwing: Settlements based n variable demand where the timing f the demand reductin supprting the settlement did nt change in direct respnse t the real-time and/r dayahead LMP Cnsecutive daily settlements that are the result f a change in nrmal demand patterns that are submitted t maintain a CBL that n lnger reflects the relevant end-use custmer s demand. Settlements based n On-Site Generatr data if the On-Site Generatin is nt supprting demand reductins executed in respnse t the real-time and/r day-ahead LMP Settlements based n demand reductins that are the result f peratinal changes between multiple end-use custmer sites in the PJM ftprint except that settlements based n such demand reductin shall be allwed if the demand reductin alleviates cngestin. Settlements based n lad reductins frm nrmal peratins that wuld have ccurred withut PJM dispatch, r that wuld have ccurred absent PJM energy market cmpensatin as apprved under Order 745. PJM shall disallw settlements fr demand reductins that d nt meet the requirements set frth abve. If the CSP cntinues t submit settlements fr demand reductins that d nt meet the requirements set frth abve then PJM shall suspend the CSP s Energy Market activity and refer the matter t the FERC Office f Enfrcement Ecnmic Lad Respnse Participant Review Prcess PJM shall review the participatin f a CSP, EDC and/r LSE in the Energy Market under the fllwing circumstances: The CSPs registratins are disputed mre than 10% f the time by the relevant EDC r LSE. The CSP s settlements are disputed mre than 10% f the time by the relevant EDC r LSE. The CSP s settlements are denied by PJM mre than 10% f the time. PJM shall have 30 days t cnduct the required review. PJM may refer the matter t the PJM MMU and/r the FERC Office f Enfrcement if the review indicates the relevant CSP and/r EDC r LSE is engaging in activity that is incnsistent with the Ecnmic Lad Respnse rules. Revisin: 92, Effective Date: 11/01/2017 PJM

122 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin 10.2 Demand Resurce Registratin Requirements Curtailment Service Prviders shall register Demand Resurces that chse t participate in the PJM Energy, Capacity, Synchrnized Reserve, Day-Ahead Scheduling Reserve r Regulatin Market accrding t the rules and requirements set frth belw. A CSP is required t have effective agreement with a custmer t register a lcatin Registratin cmbinatins One r mre CSPs may register the same lcatin (EDC accunt number) t ne r mre registratins based n the fllwing cnditins: Scenari Ecnmic (Energy, SR, DASR, Reg) Ecnmic (Energy Only) Ecnmic Regulatin Only Emergency r PreEmergency Capacity Only Emergency Emergency r PreEnergy Only Emergency Full (Capacity and Energy) CSP1 Yes N N N Yes N CSP1 Yes N N Yes N Yes CSP1 Yes N N N N Yes CSP2 N N N Yes N N CSP1 N N Yes N N N CSP2 N Yes N N Yes N CSP1 N Yes Yes N N Yes CSP2 N N N Yes N N CSP1 N N Yes N N N CSP2 N Yes N N N Yes CSP3 N N N Yes N N Ecnmic (Energy, SR, DASR, Reg) registratin will allw participatin in the energy market and ancillary service market(s) if certified and apprved by PJM. Ecnmic (Energy Only) an ecnmic registratin that nly allws participatin in the Energy market. This is nrmally used when 1 ecnmic CSP has an Ecnmic Regulatin Only registratin and the secnd ecnmic CSP has the Ecnmic (Energy Only) registratin. Ecnmic Regulatin Only registratin that nly allws participatin in the regulatin market. Emergency Capacity Only registratin that nly allws participatin in capacity market as an RPM r FRR capacity resurce. If the registratin is dispatched fr emergency cnditins the resurce will nt receive an energy payment. Only resurces that rely n n-site generatin t fulfill its lad reductin bligatins and have envirnmental restrictins as defined and required by applicable lcal, state r federal law, rdinances and regulatins, n when it can perate Revisin: 92, Effective Date: 11/01/2017 PJM

123 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin such that it is nly permitted t perate if PJM is in emergency cnditins may register as Emergency Capacity Only resurce. Pre-Emergency Capacity Only registratin that nly allws participatin in capacity market as an RPM r FRR capacity resurce. If the registratin is dispatched fr Pre-Emergency cnditins the resurce will nt receive an energy payment. Emergency Full (Capacity and Energy) same as Capacity Only registratin but receives emergency energy cmpensatin when dispatched fr emergency cnditins.. Only resurces that rely n n-site generatin t fulfill its lad reductin bligatins and have envirnmental restrictins n when it can perate such that it is nly permitted t perate if PJM is in emergency cnditins may register as Emergency Full resurce. Pre-Emergency Full (Capacity and Energy) same as Capacity Only registratin but receives emergency energy cmpensatin when dispatched fr Pre-Emergency r emergency cnditins. Lcatin that registers with ne CSP fr Emergency Full r Pre-Emergency Full can register with secnd CSP nly fr Ecnmic Regulatin-Only Lcatin that registers with ne CSP fr Emergency Capacity Only r Pre-Emergency Capacity Only can register with secnd CSP fr: Ecnmic (Energy, SR, DASR, Reg) r; Ecnmic (Energy Only) and/r; Ecnmic Regulatin Only Lcatin that registers with ne CSP fr Emergency Capacity Only r Pre-Emergency Capacity Only, and with secnd CSP fr Ecnmic Regulatin Only, can als register with third CSP fr Ecnmic (Energy Only). A single lcatin may nly register as either Pre-Emergency r Emergency resurce fr the Delivery Year Curtailment Service Prviders The fllwing business rules apply t Curtailment Service Prviders: Prir t participating in the PJM Markets, Curtailment Service Prviders must cmplete a registratin in the apprpriate PJM esuite applicatin which identifies the specific lcatin(s) based n the unique EDC accunt number that will participate and their assciated lad reductin capability. Curtailment Service Prviders shall maintain the accuracy f the registratin infrmatin prvided t PJM fr each demand resurce and each time the CSP registers the lcatin r extends the registratin, the CSP will review all infrmatin t ensure it is reasnably accurate and update as necessary. On a peridic basis, PJM may request supprting infrmatin frm the CSP t verify that the infrmatin prvided by the CSP is reasnably accurate. In rder t register demand resurces all specific infrmatin as defined in the elrs User Guide shall be prvided including the fllwing: Business Segment - CSPs shall classify lcatins accrding t the lcatin s primary purpse r business use. CSP shuld first determine if the lcatin s business use falls under ne f the fllwing primary categries: Hspitals, Industrial / Revisin: 92, Effective Date: 11/01/2017 PJM

124 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Manufacturing, Office Building, Residential, Retail Service, Crrectinal Facilities r Schls. In cases where the lcatin des nt fit int ne f the primary categries the CSP shall select frm ne f the fllwing categries: Agriculture, Frestry and Fishing, Mining, Transprtatin, Cmmunicatins, Electric, Gas and Sanitary Services r Services. A descriptin f each categry will be included in the apprpriate PJM system user guide. Lad Reductin Methd and assciated Capability - The CSPs shall prvide fr each lcatin the lad reductin methd and the assciated lad reductin kilwatts capability. Lad reductin methds indicate the type f electrical equipment that will be cntrlled t prvide the demand respnse activity and include: Heating, Ventilatin and Air Cnditining (HVAC), Lighting, Refrigeratin, Manufacturing, Water Heaters, Batteries, Plug Lad and Generatin. In cases, where multiple nsite generatrs are behind the meter, CSPs shuld reprt aggregate lad reductin capabilities fr all generatin units. A Plug Lad represents an electrnic device that s plugged int a scket, which is nt already represented by the methds described abve. Examples f Plug Lad include IT Peripherals, such as large cmputers, mnitrs, printers, ruters, cpiers and scanners r appliances such as washers, dryers r dishwashers. The CSP shall prvide the lad reductin kilwatt capability fr each methd which represents a reasnable estimate f the lcatin s expected hurly energy lad reductin (at the retail meter) that will be perfrmed during a system emergency when whlesale energy prices are high and the resurce participates in the whlesale market. The lad reductin kilwatts capability may be significantly different than the capacity cmmitment r the ecnmic energy ffered int whlesale market n a daily basis. The lad reductin capability shuld nt reflect the entire lad fr the lcatin unless the lcatin expects t reduce all lads during a PJM emergency when participating in the whlesale capacity and/r energy market. If Generatin will be used t reduce all f the lad at the lcatin and the lcatin will reduce lad with ther lad reductin methds then the Generatin lad reductin capability shuld reflect the expected lad after the ther lad reductin methds have been deplyed (this will allw the sum f each lad reductin methd capability t reflect the ttal lad reductin capability fr the lcatin). The CSP shall reprt the fllwing generatin attributes fr each generatin unit at the lcatin. Only lcatins with n-site generatin that will be used t prvide the lad reductin and have envirnmental restrictins as defined and required by applicable lcal, state r federal law, rdinances and regulatins, that require emergency cnditins t perate may qualify as an Emergency Demand Resurce. On-Site Generatr Type - CSPs shall prvide PJM with the type f n-site generatin used fr lad reductin. On-Site Generatr types are: Internal Cmbustin Engine, Cmbustin Turbines, Steam Engines and Cgeneratin units (this als include Central Heat and Pwer units). Generatr Fuel Type - Lcatins that use generatrs, in whle r in part as a lad reductin methd shall prvide PJM with the primary fuel type used fr each generatr which includes: Cal, Diesel, Natural Gas, Oil, Gasline, Kersene, Prpane, Wd, Landfill Gases and Waste prducts. In cases where the n-site generatr has a mixed fuel type, CSPs shuld reprt n the primary fuel surce as the n-site generatr fuel type. Revisin: 92, Effective Date: 11/01/2017 PJM

125 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Generatr Vintage - The year the generatr was built (included n nameplate). If yu d nt knw the exact year the CSP shuld use reasnable estimate. Generatr Retrfit Year - If the generatr was retrfit fr pllutin cntrl equipment please include the year f the retrfit r a reasnable estimate f year if specific year is nt available Nameplate Capacity - MW rated capacity fr the generatr Permit Status - The current status f envirnmental permits fr the generatr where: "Available" - indicates that the CSP represents t PJM that the end-use custmer generatr has all the Lcal, State and Federal permits required t perate in the PJM Market as a demand respnse resurce. Unless ntified therwise, the Office f the Intercnnectin shall deem such representatin applies t each time the On-Site Generatr is used t reduce demand t participate in the PJM markets and that the OnSite Generatr is being perated cnsistent with all applicable permits. "Nt Available" - indicates that the CSP represents t PJM that the end-use custmer generatr des nt have the required Lcal, State and Federal permits required t perate in the PJM Market as a demand respnse resurce. The CSP shall enter a lad reductin value f zer, until all required permits becme available. "Permit Applicatin in Prgress" - indicates that the CSP represents t PJM that ne r mre f the required Lcal, State and/r Federal permits fr the end-use custmer generatr are pending and are expected t be received prir t the effective date f registratin. CSP will terminate the registratin, if the n-site generatr is the nly surce fr the demand respnse activity, and update the status if necessary permits are nt received prir t such end-use custmer generatr s registratin effective date. "Nt Applicable" indicates that the CSP represents t PJM that ne r mre f the Lcal, State and/r Federal permits fr the end-use custmer generatr are nt required fr generatr t participate as a demand resurce and all ther necessary permissin frm apprpriate Lcal, State and Federal envirnmental agencies has been received. Permit Type The permit type indicates whether n-site generatrs can run during emergency r nn-emergency cnditins: Emergency Only An Emergency Only permit type indicates that the n-site Generatr has the Lcal, State and Federal permits required t perate in the PJM Market as a demand respnse resurce during grid emergency cnditins. This als indicates that such lcatin may qualify as Emergency resurce instead f being a Pre-Emergency resurce. Nn-Emergency A Nn-Emergency permit type indicates that the n-site Generatr has the Lcal, State and Federal permits required t perate in the PJM Market as a demand respnse resurce during emergency and nn-emergency grid cnditins. Ecnmic registratin must have the same EDC, LSE, Transmissin zne and Pricing pint where each lcatin is defined as a unique EDC accunt number and may be included n the registratin subject t aggregatin rules in this manual. Emergency registratins, Ecnmic Regulatin Only registratins, and Ecnmic registratins fr Residential custmers that d nt participate in the Day-Ahead Market must have the same EDC and Transmissin zne. Revisin: 92, Effective Date: 11/01/2017 PJM

126 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin If CSP has Ecnmic Regulatin Only registratin then Ecnmic registratin will nly allw same lcatin(s) t participate in energy market ( Ecnmic (Energy Only) in chart abve) and they will nt be permitted t participate in the SR r DASR market. If CSP has Ecnmic registratin with any certified ancillary service (SR, DASR r Reg) then Ecnmic Regulatin Only registratin may nt be submitted. Ecn Regulatin Only CSP must be able t manage regulatin fr lcatin whether r nt the lcatin has been called t prvide capacity during an emergency r preemergency situatin r is prviding a lad reductin as an ecnmic resurce in the energy market. Ecnmic demand resurce registratin may be assciated with a dispatch grup. The dispatch grup will allw the Curtailment Service Prvider t have ne real time r DayAhead energy market bid fr the entire dispatch grup. The dispatch grup must have the registratins with the same Transmissin Zne and energy market pricing pint. Registratins that participate in ancillary service markets will nt be permitted t use a dispatch grup unless apprved by PJM. Registratin cannt be in a dispatch grup and as a standalne registratin. This will ensure that each registratin is nly available t bid nce in the market and avid duplicatins. Registratins must be cnfirmed befre they may be added t a dispatch grup. Registratin that clears in Day-Ahead market is nt allwed t be assigned t dispatch grup n same day it cleared in Day-Ahead market. If CSP des try t assign t dispatch grup n such day then PJM will remve (because this may create cnflict between single registratin that cleared in Day-Ahead market and dispatch grup that may be dispatched in real time market fr same Operating Day). The CSP is respnsible fr ensuring that at least 1 registratin is in a dispatch grup when bid in the Day-Ahead r Real Time energy market thrugh the apprpriate PJM system. Demand resurces may be registered simultaneusly as Ecnmic Lad Respnse Resurces and Emergency r Pre-Emergency Lad Respnse Resurces. Demand resurces may switch CSPs. The CSP registering the switching Demand resurce shall prvide PJM with the registratin infrmatin f the resurce. Registratins may nly be submitted when there is an effective cntract with the custmer fr the term and prduct n the registratin. CSP will check their recrds t ensure they have an effective cntract t supprt the registratin and cntact custmer as apprpriate befre they submit the registratin. PJM will treat the switching as a new registratin. If the current registratin is a full emergency r full Pre-Emergency registratin and the Delivery Year has begun, the new registratin will be denied. Bth new and current CSPs will be ntified by PJM f the switch and will be given 5 business days t affirm they have a valid cntract with the end-use custmer fr the term and prduct as included n their registratin and ntify PJM thrugh the apprpriate system that the custmer has affirmed the cntract. After 5 business days, if nly ne CSP has affirmed their registratin in the apprpriate PJM system, that CSP s registratin will cntinue and the ther registratin will be terminated as sn as pssible. If bth Revisin: 92, Effective Date: 11/01/2017 PJM

127 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin CSPs have affirmed their registratin, bth registratins will be terminated as sn as pssible. In rder t accmmdate day-ahead lad respnse the switch r terminatin will becme effective at 0001f the third business day after the previus registratin is terminated r deemed terminated by PJM. The previus registratin will remain active fr the sle purpse f settlement f lad reductins that ccurred befre the switch became effective. Demand Resurce intending t run an On-Site Generatr in supprt f lcal lad represents t PJM that it hlds all applicable envirnmental and use permits fr running thse generatrs by submitting a registratin. Cntinuing participatin will be deemed as a cntinuing representatin by the wner that each time its On-Site Generatr is run it cmplies with all applicable permits, including any emissins, run-time limit r ther cnstraint n plant peratins that may be impsed by such permits. T assist CSPs in btaining the electric usage infrmatin f the end-use custmer the fllwing Custmer Usage Infrmatin Authrizatin frm has been develped. A Curtailment Service Prvider shall nt submit a request t be an Emergency resurce (instead f Pre-Emergency) unless it has dne its due diligence t cnfirm that the Demand Resurce meets the requirements and has btained frm the end-use custmer dcumentatin supprting the exceptin request. The Curtailment Service Prvider shall prvide the Office f the Intercnnectin with a cpy f such supprting dcumentatin within three (3) business days f a request therefr. Failure t prvide such supprting dcumentatin by the deadline shall result in the Demand Resurce being classified as a Pre-Emergency resurce. Custmer Usage Infrmatin Authrizatin fr PJM Lad Respnse Prgrams ( Authrizatin ), the end-use custmer, ( Custmer ) hereby authrizes, and, its electric distributin cmpany(ies) ( EDCs ), t release its electric usage infrmatin, including hurly r sub-hurly usage histry (kwh/kw), EDC lss factrs, and peak lad cntributin assignments fr the current delivery year and the upcming delivery year, if knwn, t, the curtail service prvider ( CSP ), which has been r may be retained by Custmer t act n its behalf in the PJM Lad Respnse Prgrams. Custmer s EDCs and end-use sites are identified n Attachment A-1 and A-2 heret, which are incrprated herein by reference. 1. Custmer s cntact infrmatin fr purpses f its participatin in the PJM Lad Respnse Prgrams is as fllws: Custmer Name: Cntact Persn: Revisin: 92, Effective Date: 11/01/2017 PJM

128 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Mailing Address: City State Zip Cde Telephne Number: Fax Number: Cntact Persn s Address: 2. Custmer hereby advises CSP that it deems the infrmatin btained pursuant t this Authrizatin t be cnfidential and therefre requests that such infrmatin nt be divulged t any third party, except as required t participate in the PJM Lad Respnse Prgrams. 3. This Authrizatin shall terminate as fllws (mark ONE f the ptins belw): This Authrizatin shall be perpetual and shall nt terminate unless written ntice is prvided t CSP at least days in advance. This Authrizatin shall autmatically terminate n, with n further ntice t CSP being required. 4. I understand that terminatin f this Authrizatin will nt affect any actin that CSP tk in reliance n this Authrizatin befre it autmatically terminated r befre CSP received Custmer s written ntice f terminatin. 5. The undersigned affirms that he/she has authrity t execute this Authrizatin n behalf f Custmer. IN WITNESS WHEREOF, Custmer executes this Authrizatin t be effective as f the date written belw. Custmer: By: Print Name Title Signature Date Revisin: 92, Effective Date: 11/01/2017 PJM

129 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin ATTACHMENT A 1 LIST OF SITES FOR WHICH EDC,, HAS AUTHORIZATION TO PROVIDE ELECTRIC USAGE INFORMATION TO CSP Accunt Number(s): Service Address: Accunt Number(s): Service Address: Accunt Number(s): Service Address: Accunt Number(s): Service Address: PJM Activities The fllwing business rules apply t PJM activities: PJM will, as necessary, prpse r determine an alternative CBL calculatin tgether with supprting analysis. The prcess fr determining an alternative CBL is set frth belw. PJM will cnfirm with the apprpriate Lad Serving Entity (LSE) and Electric Distributin Cmpany (EDC) whether the lad reductin is under ther cntractual bligatins. (The EDC and LSE have ten (10) business days t respnd r PJM assumes acceptance.) Other cntractual bligatins may nt preclude participatin, but may require special cnsideratin by PJM such that apprpriate settlements are made within the cnfines f the existing cntract. PJM will infrm the CSP, EDC and LSE f the demand resurce s acceptance int the prgram as apprpriate. PJM will create LSE negative DEC bids fr DR that clears in DA market fr dispatch grup based n registratin DR lad reductin capability. PJM will create LSE negative DEC bids fr DR that clears in DA market fr registratins based n amunt that cleared in DA market. Revisin: 92, Effective Date: 11/01/2017 PJM

130 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Electric Distributin Cmpany ( EDC ) and Lad Serving Entity ( LSE ) activities EDC will have 10 business days t review the all registratins and verify the EDC accunt number, Zne, Pricing pint, Line lsses, existence f EDC interval meter if applicable, accuracy f peak lad cntributin (PLC), and whether r nt the custmer may r may nt participate based n the Relevant Electric Retail Regulatry Authrity rders, rdinances r reslutins. If the infrmatin prvided by the CSP is incrrect the EDC may deny the registratin. Once the registratin is denied the CSP may crrect the inaccurate infrmatin and resubmit the registratin nly t the EDC, as apprpriate. LSE will have 10 business days t review registratins except the Emergency registratin and Ecnmic Regulatin Only registratin and verify whether r nt the custmer may r may nt participate based n the Relevant Electric Retail Regulatry Authrity rders, rdinances r reslutins. LSE will als review registratin t determine if the lad reductins fr the lcatin(s) are subject t an LSE cntractual bligatin. If the infrmatin prvided by the CSP is incrrect the LSE may deny the registratin. Once the registratin is denied the CSP may crrect the inaccurate infrmatin and resubmit the registratin nly t the LSE, as apprpriate CBL Certificatin Prcess All Ecnmic registratins, except Ecnmic Regulatin Only registratins, shuld g thrugh the CBL certificatin prcess t ensure that the CBL used t predict the custmer lad and therefre determine the quantity f each hurly lad reductin is reasnably accurate and nnbiased. All registratins shuld use a CBL with a relative rt mean square errr ( RRMSE ) n greater than 20% unless therwise apprved by PJM. Registratins with a RRMSE greater than 20% based n hurly lad data prvided in the registratin prcess are cnsidered variable lad custmers. CBL certificatin is perfrmed by the CSP prir t registratin submissin. CSP shuld always calculate an RRMSE fr the standard CBL defined in the tariff. An alternative CBL may be requested if the alternative CBL is mre accurate than the standard CBL and has an RRMSE less than r equal t 20%. The RRMSE will be based n 60 mst recent days f cntiguus hurly lad data where the mst current lad data shuld be 60 days r less than the date the RRMSE is calculated unless therwise apprved by PJM. PJM and CSP shall have 30 days frm the day the alternative CBL prpsal is received by the ther party t agree n a prpsed alternative CBL calculatin. If the parties agree n an alternative CBL calculatin, then the agreed upn CBL calculatin shall be effective frm the date f the registratin. If PJM and CSP d nt agree n an alternative CBL calculatin within 30 days, then PJM shall determine the CBL calculatin within 20 days f the expiratin f the prir 30 day perid. The CBL established by PJM shall be binding n the parties unless agreement n an alternative CBL is reached befre the end f the 20 day perid. The prcess fr determining the apprpriate CBL shall nt delay the registratin, prvided that the alternative CBL established shall be used fr all applicable energy settlements. PJM shall peridically publish herein alternative CBL calculatins established thrugh this prcess. Relative Rt Mean Squared ERROR (RRMSE) calculatin is perfrmed as fllws unless therwise apprved by PJM: Revisin: 92, Effective Date: 11/01/2017 PJM

131 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin T perfrm the RRMSE calculatin, daily CBL calculatins are first perfrmed fr the CBL methd using hurs ending 14 thrugh hurs ending 19 unless therwise apprved by PJM as the simulated event hurs fr each f the 60 nn-event days accrding t the CBL methd rules. Actual Hurly errrs are calculated by subtracting the CBL hurly lad frm the actual hurly lad fr each f the simulated event hurs f the nn-event day. The Mean Squared Errr (MSE) is calculated by summing the squared actual hurly errrs and dividing by the number f simulated event hurs. The Average Actual Hurly Lad is the average f the actual hurly lad fr each f the simulated event hurs. The Relative Rt Mean Squared Errr (RRMSE) is calculated by taking the square rt f the MSE then divide that quantity by the average f the actual lad Ecnmic Energy Market Participatin Qualified Curtailment Service Prviders may ffer the lad reductins f demand resurces int the Day-ahead and/r Real-time Energy Market pursuant t the PJM Manuals, Markets Gateway User Guide, and the fllwing rules and requirements. Curtailment Service Prvider that wuld like t participate in the Energy market shall submit a bid fr each demand resurce (registratin r dispatch grup) which includes: Transmissin zne and pricing pint based n where the demand resurce is lcated and the assciate pricing pint used t settle the lad in the retail market and as defined by PJM. Demand resurce market type which determines hw the bid will be utilized by the Energy Market: Day-Ahead Market If hur clears in Day-Ahead market then demand resurce shuld respnd with assciated MWs. PJM will nt dispatch in Real Time fr hurs that clear in Day-Ahead market. Real Time Market (Balancing) demand resurce shuld fllw the Real Time dispatch signal fr the MW that have been dispatched Bth: If specific hur clears in Day-Ahead market then demand resurce shuld respnd with assciated MWs. PJM will nt dispatch in Real Time market fr hurs that clear in Day-Ahead market. If hur des nt clear in Day-Ahead market then hur is eligible t be dispatched in Real Time market. Hurly Incremental Offer curve (minimum increments f 0.1MW) that represents up t 10 cmbinatins f MW lad reductin and ffer price. This determines the price ffered int the Day-Ahead market fr respective MW amunt in each hur and the price ffered fr dispatch in the Real Time market. Revisin: 92, Effective Date: 11/01/2017 PJM

132 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Any hurly changes made n the Offer Updates r Hurly Updates screens in Markets Gateway supersede the values n the Offers and Parameters pages. Changes made n the Demand Respnse Updates pages f Markets Gateway are nt carried ver int the next day. Hurly availability which determines the specific hurs when the demand resurce may be cleared in the Day-Ahead Market and the assciated MW vlume that is available t clear fr each hur. This als determines the specific hurs when the demand resurce may be dispatched in the Real Time market and the assciated MW vlume that may be dispatched fr each hur. Ecnmic Min and Max MW used t determine the dispatch f demand resurces in the Real Time Energy Market can be changed up t 65 minutes befre the perating hur by the CSP. Fr example, hurly updates fr HE 15 which starts at 1400 can be changed up t 1255 during the same day. Shut dwn csts, fr each perid. The default will be zer if nt submitted. Shutdwn cst will be expressed in dllars, and represents the fixed cst assciated with cmmitting a lad respnse resurce. Hurly differentiated shut dwn cst can be specified at 1930 day-ahead thrugh T-65 minutes. Shutdwn csts may nt be updated fr any hurs in which the resurce received a cmmitment in the Day-Ahead r Realtime Market. Minimum dwn times fr which the lad reductin must be cmmitted. The default will be zer if nt submitted. Minimum dwn time will be expressed as a number f hurs, and represents the minimum number f cntiguus hurs fr which a lad respnse bid must be cmmitted in the Day-ahead Market r dispatched in Real Time Market. Hurly differentiated minimum dwn times can be specified starting at 1830 day-ahead thrugh T-65 minutes. Lad Respnse bids in the Day-Ahead market r hurly MW availability in the RealTime market shuld exclude lsses (transmissin zne lsses and share f 500 kv lsses). This means bids shuld be based n expected retail metered lad reductins grssed up fr line lsses. Day-Ahead Energy Market bids and assciated infrmatin must be submitted based n verall Energy Market rules and assciated time line as described in this manual. Shutdwn cst will be expressed in dllars, and represents the fixed cst assciated with cmmitting a lad respnse resurce. Demand resurces will be eligible t set Day-Ahead and Real Time Energy market prices if selected as the marginal resurce Net Benefits Test t determine Net Benefits Threshld The Net Benefits Threshld is the pint n the aggregate supply curve at which the participatin f Demand Respnse Resurces results in a greater verall savings t the lad n the system cmpared t the Demand Respnse Resurces remaining n the system as lad. PJM shall cmpute the Net Benefits Threshld mnthly as described belw. PJM shall pst the Net Benefits Threshld and assciated supprting infrmatin fr each mnth by the 15th f the prir mnth n pjm.cm. CSP will nly receive cmpensatin fr demand resurces cleared in Revisin: 92, Effective Date: 11/01/2017 PJM

133 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Day-Ahead market r dispatch by PJM in the Real Time market if the applicable LMP is greater than r equal t the mnthly NBT. The Net Benefits Test is executed using the fllwing steps: Step 1: Retrieve generatin ffers frm the same calendar mnth f the prir calendar year fr which the calculatin is being perfrmed. These generatin ffers will use market-based price ffers t the extent available, and cst-based ffers t the extent market-based price ffers are nt available. Nte: T the extent that generatin ffers are unavailable frm histrical data due t the additin f a Zne t the PJM Regin, PJM shall use the mst recent generatin ffers that best crrespnd t the characteristics f the calendar mnth fr which the calculatin is being perfrmed, prvided that at least 30 days f such data is available. If less than 30 days f data is available fr a resurce r grup f resurces, such resurce[s] shall nt be cnsidered in the Net Benefits Test calculatin. Step 2: Adjust a prtin f each prir-year ffer representing the typical share f fuel csts in energy ffers in the PJM Regin fr changes in fuel prices based n the rati f the reference mnth spt price t the study mnth frward price. T accmplish this adjustment, spt fuel prices fr the reference mnth will be cmpared t frward prices fr the study mnth. First, the spt prices fr representative PJM fuels will be averaged tgether fr the reference mnth. Fr natural gas, the Henry Hub price is used, since natural gas prices tend t mve in cncert with Henry Hub. Fr il, the New Yrk Harbr price fr N. 2 fuel il is used. Fr cal adjustments, PJM has determined a mix f 20% Pwder River Basin, 50% Nrthern Appalachia, and 30% Central Appalachia cal t be representative f the fuel used by PJM resurces. Representative cal prices will be cmbined in a weighted average t frm a representative RTO cal price fr the reference mnth. Frward prices will be used t determine a similar representative price fr the study mnth. These tw values will be used as a rati. If the representative price frm June 2010 was $4.10, and the frward price fr June 2011 was $4.51, then the rati wuld be 1.1 (prices were up 10%, r June 2011 s price is 110% f June 2010 s price.) The ffers f generatin units will then be adjusted by this scaling factr. The price f fuel typically represents 80 t 90 percent f a generatr s ffer with the remainder being variable peratins and maintenance csts and ther uncertainties. As such, 85 percent f each generatr s ffer will be scaled by the fuel scalar. Where generatrs ffer multiple pints n a curve, each pint n the curve is adjusted in this manner. Step 3: Cmbine the ffers t create daily supply curves fr each day in the perid. Step 4: Average the daily curves fr each day in the mnth t frm an average supply curve fr the study mnth. Step 5: Use a nn-linear least squares estimatin technique t determine an equatin that reasnably apprximates and smths the average supply curve. PJM shall publish Revisin: 92, Effective Date: 11/01/2017 PJM

134 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin the details f the equatin and parameters each mnth alng with the Net Benefit Threshld results. Step 6: Determine the net benefit level as the pint at which the price elasticity f supply is equal t 1 fr the estimated supply curve equatin established in Step Demand Resurce Metering and Settlement Data Requirements The settlements submitted t PJM by Curtailment Service Prviders must cnfrm t the fllwing requirements fr data, including metered data, and Custmer Baseline Lad (CBL) calculatins. All settlement related calculatins fr ecnmic and emergency demand resurces are prvided in Manual Metered Data Demand Resurces must be equipped with interval meters recrding electrical usage at the EDC accunt level. The interval f data cllectin must be sufficient t prvide PJM with hurly, ne minute r real time lad data as applicable fr whlesale market. Residential Direct Lad Cntrl aggregates may have interval meters installed n a statistical sample f EDC accunts per PJM Manual 19: Lad Frecasting and Analysis, Attachment D and subject t PJM apprval. Fr lad reductin that is nt metered directly by PJM, Curtailment Service Prviders are respnsible fr frwarding the apprpriate meter data (as defined in this Manual) t PJM within 60 days f the reductin. Participants submitting a settlement fr an energy payment when lad reductin cmplies with a synchrnized reserve event r regulatin assignment must use data prvided by the lad meter. This data shall be frwarded thrugh the apprpriate PJM system. If the meter data files are nt received within 60 days, n payment fr participatin is prvided. Lad data must be prvided fr all hurs f the day and fr all days necessary fr PJM t calculate the CBL fr settlements r t measure cmpliance as necessary. When n-site generatin is used slely t enable the Participant t prvide demand reductins then the CSP may prvide qualified meter generatin utput data, upn apprval by PJM, frm the n-site generatin fr each hur f the event day instead f actual lad metered data. Prvisin f hurly meter data frm the n-site generatin will be deemed a certificatin by the CSP that the n-site generatin was nt used fr any purpse ther than t supprt the lad reductin during the event day. If the On-Site Generatr is used n a regular basis fr nrmal peratins then the CSP may prvide qualified meter data frm the On-Site Generatr fr each hur f the event prvided the amunt f generatin run t prvide Ecnmic Lad Respnse can be quantified in a manner that is acceptable t PJM. Fr example, if a 5 MW OnSite Generatr that nrmally prvides 3 MW bsts its utput t 5 MW in respnse t LMPs the CSP will be eligible t receive a demand respnse energy settlement fr the additinal 2 MW f utput. Meter data will be frwarded t the EDC upn receipt, and these parties will then have 10 business days t review accuracy and prvide feedback t PJM. Objectin by the EDC t the Meter Data shall be clearly set frth in the Cmments related t the Settlement Data. The CSP shall crrect and re-submit the Settlement Data within 2 business days. The bjecting EDC shall have 5 business days t review the re-submitted Settlement Data r PJM will assume acceptance. Revisin: 92, Effective Date: 11/01/2017 PJM

135 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin All lad reductin data are subject t PJM Market Mnitring Unit audit Custmer Base Line (CBL) The fllwing tables list all available CBLs and represent the different parameters used fr each calculatin. The 3 Day Type with SAA (symmetric additive adjustment) represents the standard, tariff defined CBL which is utilized fr mst Nn-Variable ecnmic demand resurces and is set frth in sectin 3.3A.2 f the PJM Tariff. The alternative CBLs n the list have been created ver time t prvide ptins, especially fr Variable Lad custmers that have an RRMSE abve 20%. PJM will make available the Custmer Baseline (CBL) calculatins t the apprpriate EDC and LSE fr ptinal review. The CSP shall infrm PJM, f any significant change t the demand resurce s peratins that increases r decreases the demand resurce s CBL. A significant incremental change is defined as any peratinal r physical change t the demand resurce s facilities that will adjust mre than half the hurs in the demand resurce s CBL by at least 20% fr mre than twenty cnsecutive days. PJM may require and apprve such adjustments t the CBL as are necessary t reflect the significant incremental change. Revisin: 92, Effective Date: 11/01/2017 PJM

136 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Revisin: 92, Effective Date: 11/01/2017 PJM

137 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Revisin: 92, Effective Date: 11/01/2017 PJM

138 PJM Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Ntes: A) MBL(Max Base Lad). The MBL CBL fr weekdays shall be the average f the daily minimum hurly lads during the event hurs ver the 5 mst recent weekdays preceding the lad reductin event within the 45 calendar day perid preceding the lad reductin event. The daily minimum lad calculatin must be based n a minimum f three hurs. If the number f event hurs is less than three, then the daily minimum lad calculatin will use the fllwing hurs f the same calendar day: hur prir t event, event hur(s), hur after event, in that rder until three hurs are attained. Exceptins: use nly event hurs in same calendar day if start f event is smetime between 2100 and midnight OR if end f event is smetime befre B) Metered Generatin. The use f this methdlgy must be apprved by PJM. Histrical data will be required shwing that the unit des nt nrmally run r is nt nrmally active. If the data Revisin: 92, Effective Date: 11/01/2017 PJM