regulations of the Federal Energy Regulatory Commission ( Commission or FERC ), 2 PJM

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1 PJM Interconnection Valley Forge Corporate Center 955 Jefferson Avenue Norristown, PA Jennifer H. Tribulski Senior Counsel fax Filing Via etariff Honorable Kimberly D. Bose Secretary Federal Energy Regulatory Commission 888 First Street, N.E. Washington, DC Re: PJM Interconnection L.L.C., Docket No. ER Dear Secretary Bose: Pursuant to Section 205 of the Federal Power Act 1 and part 35 of the rules and regulations of the Federal Energy Regulatory Commission ( Commission or FERC ), 2 PJM Interconnection, L.L.C. ( PJM ) hereby submits modifications to its Open Access Transmission Tariff ( PJM Tariff ) to implement interconnection queue process reforms that are intended to relieve bottlenecks in the interconnection queue and provide for greater certainty and transparency. Specifically included in this Tariff filing are the following proposed reforms, as discussed more fully herein: Six-month queue cycles; Sliding queues for projects that seek to modify the size of their Interconnection Requests by more than a specified amount; 1 16 U.S.C. 824d (2006) C.F.R. Part 35 (2010).

2 Page 2 Alternate queue for projects 20 megawatts ( MW ) that, as determined through a screening process, will not have an impact on the PJM monitored transmission system; Clarified timeframe for notifying PJM if a project is using Capacity Interconnection Rights that are transferring from a deactivating generator; Reduced suspension rights if suspension will negatively impact the timing or cost of a subsequent queue project; Modified deposits for projects that are >2 MWs but 20MWs; and Clarified provisions concerning submission of System Impact Study data. The Tariff proposals contained herein are consistent with the objectives contained in Order No to promote open and non-discriminatory access to the transmission grid by customers seeking to interconnect generation and transmission projects to the grid. PJM requests an effective date of May 1, 2012 for this filing. Assuming Commission acceptance and to ensure smooth implementation as PJM migrates to the proposals set forth herein, PJM proposes a detailed transition period for certain of its Tariff proposals contained herein, as described in more detail in Sections II.A.3, II.D.3, II.E.3, and II.G.3 herein and as contained in the relevant proposed Tariff provisions. I. BACKGROUND PJM first filed its generation interconnection process rules with FERC in March, 1999, several years prior to the issuance of Order No PJM explained that interconnections to the PJM transmission system were becoming more prevalent and it was important for PJM to establish rules for the processing of such requests so that generation projects are encouraged in 3 Standardization of Generator Interconnection Agreements and Procedures, Order No. 2003, FERC Stats. & Regs. 31,146 (2003), order on reh g, Order No A, FERC Stats. & Regs. 31,160, order on reh g, Order No B, FERC Stats. & Regs. 31,171 (2004), order on reh g, Order No C, FERC Stats. & Regs. 31,190 (2005), aff d sub nom. Nat l Ass n of Regulatory Util. Comm rs v. FERC, 475 F.3d 1277 (D.C. Cir. 2007).

3 Page 3 the PJM control area and are handled in a fair and non-discriminatory manner. 4 In March, 2002, PJM filed revisions to its generation interconnection process after a robust stakeholder process, and in part in compliance with directives in FERC s order granting conditional approval to PJM as regional transmission organization ( RTO ). In January, 2003, PJM filed standard interconnection procedures for connecting merchant transmission projects in the PJM control area. 5 In January, 2004, PJM submitted its Order No compliance filing with FERC, expressing to FERC that since its then-current interconnection process was developed through extensive stakeholder processes and are carefully tailored to the operating provisions and market structures of the PJM region it was modifying its current Tariff only as needed to add provisions of the Large Generator Interconnection Procedures ( LGIP ) and Large Generator Interconnection Agreement ( LGIA ) for which PJM s Tariff did not already address or to revise certain terms to be compatible with Order No to the extent feasible without upsetting the careful balances on which its current interconnection process was founded. 6 FERC accepted PJM s process allowing several independent entity variations. 7 Since 1997, 2,167 projects have entered PJM s interconnection queue requesting connection for 341,893 megawatts ( MWs ) of energy and capacity to its transmission system. Periodically over the years PJM and its stakeholders have reviewed PJM s interconnection process to determine whether changes are needed to continue to offer an open, transparent, and efficient interconnection process to all parties involved. 8 Most recently, and related to the 4 PJM Interconnection, L.L.C., Transmittal Letter at 2, Docket No. ER (filed Mar. 31, 1999). 5 PJM Interconnection, L.L.C., Docket No. ER (filed Jan. 10, 2003). 6 PJM Interconnection, L.L.C., Transmittal Letter at 2-3, Docket No. ER (filed Jan. 20, 2004). 7 PJM Interconnection, L.L.C., 108 FERC 61,025 (2004). 8 The most recent queue reform effort resulted in several tariff filings in the time frame addressing the following issues: (1) cluster studying of queued projects; (2) feasibility study deposits; (3) studies of the primary and

4 Page 4 reforms proposed herein, PJM established the Interconnection Process Senior Task Force ( IPSTF ) in February 2011 to address stakeholder-raised issues concerning the need to provide more consistent and realistic assessments of costs associated with queue projects, to ensure more timely completion of project studied within the queue, and to achieve greater transparency into the Interconnection Process. More specifically, as related to cost assessments and transparency, PJM s stakeholders identified a need for a queued project to better understand the status of the projects that are prior to it in the queue i.e., how far along in the process are such earlier queued projects; whether such projects were committed to moving forward; what is the likelihood that its own project would be impacted by decisions made by projects before it. The IPSTF analyzed the PJM interconnection process to ascertain the root causes to issues identified by PJMs stakeholders and, in doing so, analyzed several key issues with a host of contributing factors. Specifically, the IPSTF identified several main causes for delays in its queue process that generally aggregate into two groupings: (1) the sheer number of projects, including hundreds of small projects and a few very large projects in its queue; 9 and (2) the number of restudies that were required when projects drop out or reduced size. secondary Points of Interconnection during the feasibility study; (4) cost allocation betweens queues; (5) scheduling of the scoping meeting; (6) procedures regarding Capacity Interconnection Rights; (6) revising the deposit fees related to System Impact Studies; (7) requiring that a Transmission Interconnection Customer show, within 30 days of submitting an Interconnection Request with PJM, that it has a valid interconnection request with adjacent Control Areas, if necessary; (8) clarifying language concerning Capacity Interconnection Rights with respect to generation Deactivation; and (9) allowing for deferred security. See PJM Interconnection, L.L.C., Letter Order, Docket No. EL (issued Aug. 19, 2008); PJM Interconnection, L.L.C., Letter Order, Docket No. ER (issued Nov. 6, 2008); PJM Interconnection, L.L.C., Letter Order, Docket No. ER (issued Mar. 25, 2009); PJM Interconnection, L.L.C., Letter Order, Docket No. ER (Aug. 17, 2009); PJM Interconnection, L.L.C., Letter Order, Docket No. ER (issued May 5, 2011). 9 As of December 31, 2011, there were 544 projects, representing 74,254 MW of new or uprated generation in the queue.

5 Page 5 To address the bulk of these issues, PJM worked with its stakeholders on three main process reforms that, when taken together, are devised to improve the timeliness, quality and significance of study results along the way, which in turn will increase transparency and result in more consistent and realistic cost assessments. These are described in more detail below and include: (1) six-month queue cycles; (2) revised provisions concerning modifications of Interconnection Requests for projects that seek to reduce size beyond a specified amount; and (3) an alternate queue process for small projects ( 20 MW) which interconnect to lower voltage facilities and are not anticipated to have an impact on the PJM monitored transmission system. The other reforms described herein also are aimed at increased transparency and to reduce the impact of one Interconnection Customer s decisions on subsequent projects in the queue. B. Stakeholder Review and Endorsement The IPSTF met at least monthly between April and November, 2011 developing the proposals contained herein. On November 14, 2011 the IPSTF recommended moving the proposal up to the Markets and Reliability Committee ( MRC ) for endorsement. The MRC endorsed the proposal by acclamation on December 21, 2011 with no objections and one abstention. The Members Committee endorsed the proposal by acclamation on January 26, 2012 with no objections or abstentions. II. DESCRIPTION OF PROPOSED REVISIONS TO THE PJM TARIFF A. SIX MONTH QUEUE 1. Background PJM s current queue structure as defined in the PJM Tariff is based on three-month queues. The queue clusters run as follows: February 1-April 30; May 1-July 31; August 1-

6 Page 6 October 31; and November 1-January 31. For instance, the W1 queue began on February 1, 2010; the W2 queue began on May 1, 2010; the W3 queue began on August 1, 2010; the W4 queue began on November 1, 2010; the X1 queue began on February 1, 2011; etc. At the end of the third month of a queue cluster for example, the W4 queue - PJM is required to begin the Feasibility Studies for those projects and typically completes such studies within 90 days. 10 Under the tariff, the W4 queue Interconnection Customers have 30 days to decide whether to move to the System Impact Study in order to maintain queue priority. 11 By virtue of the timing provided for in the Tariff, prior to Interconnection Customers in the W4 queue having to decide on whether to move to the System Impact Study or to withdraw, the Feasibility Studies for the subsequent queue cluster the X1 queue have already commenced. PJM s analysis shows that approximately 87% of the MWs that entered into a Feasibility Study Agreement withdraw prior to going into service. The high historical withdrawal rate necessitates frequent restudies of projects and the timing of the queues requires that we issue studies prior to previously queued Interconnection Customers making decisions on whether to go forward or not. 2. Tariff Proposal Simply, the overlap of the queues which results from the schedule and timelines currently contained in the Tariff has caused rounds of restudies which can negatively impact the timeliness of studies and the meaningfulness and certainty of results. PJM believes that building in time for earlier queued Interconnection Customers to make their decisions of whether to stay in the queue or withdraw before a later queue s study phase begins would ensure the accuracy of the model against which a queue is studied. Building in time for such decision-making would also ensure 10 Tariff Section See Tariff Section

7 Page 7 that the decisions of earlier queued Interconnection Customers would be captured in later study phases, which would result in a reduction in restudies and, in turn, more certainty and meaningful results. To allow for the additional time, PJM proposes six-month queue cycles from May 1- October 31 and November 1-April 30. As proposed, PJM will take one month after the closing of a queue to complete Scoping Meetings and to complete its model build. Next, PJM will complete the Feasibility Studies over the next 90 day period. As is currently the case, Interconnection Customers will still have one month to decide as to whether they will move to the System Impact Study or withdraw. Although PJM will conclude Feasibility Studies within approximately 120 days following the close of the queue rather than 90 days under the threemonth queue cycle currently employed, PJM anticipates that with all of the changes described in this Tariff filing, the overall study process will become more timely due in large part to the anticipated reduction in the need for restudies, and thus the benefits outweigh this modest increase in study time for Feasibility Studies. The Tariff changes necessary to reflect a six-month queue cycles are as follows: (1) Sections and , 110.1, 111.1, 112.1, and 112A.1 modifications to the dates for which the graduated deposit are to reflect the six-month nature of the queue; (2) Section modification to when a scoping meeting will be held; (3) Section 36.2 modification to reflect that Feasibility Studies will be conducted twice per year and the date by which such studies will be completed; (4) Section modification to the timing for completion of System Impact Studies.

8 Page 8 3. Effective Date and Transition PJM seeks an effective date of May 1, 2012 to implement its six-month queue. The change to timeframes reflecting the six-month queue primarily will take effect on May 1, 2012 and will apply to projects entering the queue on or after May 1, However, PJM seeks to transition the six-month queue modifications with respect to the timing of System Impact Studies in Section to accommodate projects that are in the queue and being studied as of the May 1, 2012 effective date. As reflected in the proposed tariff language, the transition will be as follows: Queue Date Queue PJM Commence System Impact Study prior to Nov. 1, 2011 X3 and earlier No change to current process 12 Nov. 1, 2011-Jan. 31, 2012 X4 July 1, 2012 Feb. 1, 2012-Apr. 30, 2012 Y1 November 1, 2012 on or after May 1, 2012 Y2 or later (i) June 1 for projects entering the queue between May1-October 31 of the preceding year; and (ii) December 1 for projects entering the queue between November 1-April 30 of the same year. B. MODIFICATION OF INTERCONNECTION REQUESTS SLIDING QUEUE 1. Background PJM currently permits modifications of an Interconnection Request for various reasons, including a reduction in the amount of electrical output (in the case of a Generation Interconnection Request) or transmission capability (in the case of a Transmission Interconnection Request), without losing its queue position. 13 For instance, up until the return of 12 PJM s current System Impact Study timeline is to commence studies as follows, by: (i) June 1 for projects that entered the queue between November 1-January 31; (ii) September 1 for projects that entered the queue between February 1-April 30; (iii) December 1 for projects that entered the queue between May 1-July 31; and (iv) March 1 for projects that entered the queue between August 1-October 31. See Tariff Section Tariff Section 36.2A, et seq.

9 Page 9 a System Impact Study Agreement, an Interconnection Customer may reduce its electrical output or capability, as applicable, by up to 60 percent. After the System Impact Study Agreement is executed, and before executing an Interconnection Service Agreement ( ISA ) an Interconnection Customer may reduce its electrical output or transmission capability, as applicable, by the larger of 20 percent of the capability studied in the System Impact Study or 50 MW. Any further reductions would require the project to withdraw and reenter the queue. PJM has found that Interconnection Customers reduce the electrical output/transmission capability of their projects typically as a result of the identification of potentially significant upgrades identified during the Feasibility and/or System Impact Studies. Interconnection Customers thus seeks to reduce the size of their projects to avoid identified violations and the related upgrades. PJM has found that Interconnection Customers that reduce once, may reduce again as the project progresses through the queue. 2. Tariff Proposal Currently, requests to modify the size of a project within the existing Tariff language do not prompt a Material Modification analysis. 14 If the requested reduction in size is within the amount currently permitted, the project can remain in its current queue position. PJM seeks to add the Material Modification element to reductions in size that are beyond the limits specified below. However, rather than requiring the project to submit a new Interconnection Request if its reduction would be a Material Modification, the Interconnection Customer would slide to the beginning of the next queue so as not to completely lose ground, but also to reduce the need for restudies to remaining projects in its original queue cluster. The proposal as described herein 14 Material Modification is defined as: Any modification to an Interconnection Request that has a material adverse effect on the cost or timing of Interconnection Studies related to, or any Network Upgrades or Local Upgrades needed to accommodate, any Interconnection Request with a later Queue Position. See Section 1.18A.02.

10 Page 10 strikes a balance between (a) allowing a generator flexibility to reduce size up to a certain level without even triggering a Material Modification determination, and to reduce beyond that level without losing queue priority if the reduction is not considered a Material Modification; and (b) still permitting a reduction even if there is a Material Modification, but requiring the Interconnection Customer to slide back to the next queue (yet not requiring the project to terminate and come in with a new Interconnection Request). Specifically, in proposed Section 36.2A.1.1, prior to the commencement of the Feasibility Study, an Interconnection Customer may reduce the size of its project by up to 60 percent of the electrical output (MW) (in the case of a Generation Interconnection Request) or the capability (in the case of a Transmission Interconnection Request). This contemplates that the Interconnection Customer may learn additional details about the general location at which it seeks to interconnect during the scoping meeting that would prompt it to want to reduce size prior to the Feasibility Study even beginning. The 60 percent figure was adopted for this stage as it is in line with what PJM s Tariff currently permits up to the System Impact Study Agreement and is consistent with Order No In proposed Section 36.2A.1.2, after commencement of the Feasibility Study but prior to execution of the System Impact Study Agreement, an Interconnection Customer may reduce the size of its project by up to 15 percent. If the Interconnection Customer seeks to reduce by more than 15 percent, PJM will conduct a Material Modification analysis and if no Material Modification is identified, it can reduce as much as it wishes and retain its queue position. But if a Material Modification is identified it can reduce by up to 60 percent and it will slide to the beginning of the next queue and be studied in a new Feasibility Study along with that subsequent

11 Page 11 queue cluster. The IPSTF discussed various levels of reductions before arriving at the proposed amounts. The IPSTF arrived at the 15 percent figure as such level would provide the most flexibility with the least likelihood of causing impact on subsequently queued projects. The 60 percent figure is consistent with what is contained in PJM s current Tariff and Order No In proposed Section 36.2A.2, after executing the System Impact Study Agreement but prior to executing an ISA, an Interconnection Customer may reduce the size of its project by up to the greater of 10 MW or 5 percent. If the Interconnection Customer seeks to reduce by more than the greater of 10 MW or 5 percent, PJM will conduct a Material Modification analysis and if no Material Modification is identified, it can reduce as much as it wishes and retain its queue position. But if a Material Modification is identified it can reduce by up to the greater of 50 MW or 20 percent and it will slide to the beginning of the next queue and be studied in a new System Impact Study along with that subsequent queue cluster. Again, with respect to this proposal, the IPSTF discussed various levels of reductions before arriving at the proposed amounts. The 10 MW or 5 percent, was determined to be the level that would provide the most flexibility with the least likelihood of causing impact on subsequently queued projects. The 50 MW or 20 percent is consistent with what is contained in PJM s current Tariff and Order No When sliding to the next queue, an Interconnection Customer will maintain queue priority with respect to other projects in its queue that also were required to slide, as well as to all later queue projects in subsequent queues, but it will lose its queue priority with respect to other projects that remain in what was its original queue. (See proposed Sections 36.2A.1.2 and 36.2A.2). 15 So, for instance, if projects in queue positions X1-03, X1-04, and X1-06 were 15 PJM also proposes a minor conforming changes to proposed Sections 36.2A and 201.

12 Page 12 required to slide to the X2 queue, they would become the first three projects in the X2 queue and would have queue priority over other projects in the X2 queue. PJM will permit an Interconnection Customer to slide no more than two times before its project is deemed terminated and withdrawn. (See proposed Section 36.2A.6). This proposal will benefit those Interconnection Customers that are ready to move forward in their queue and are not seeking to make changes to their projects size. First, such projects will not be subject to as many restudies if the projects that have reduced in size have been placed in later queues. Second, based on PJM s experience that the projects that reduce once, may reduce again, once those projects are removed from their original queue, the remaining projects will receive study results that are not as likely to change because the projects reducing size that would have cause the need for restudies have been removed from that queue, and thus, they will gain certainty in the requirements for system upgrades. 3. Effective Date PJM requests an effective date of May 1, 2012 for its proposed changes to the Modification section and this proposal will apply to all projects currently in the queue as of May 1, 2012 and all subsequently queued projects. C. ALTERNATE QUEUE 1. Background As noted previously in this filing, the decisions of a project can impact the timeliness, certainty, and meaningfulness of results to other projects in the queue. PJM s analysis of its interconnection queue shows that there are a vast number of smaller projects ( 20 MW) in the queue, approximately 66 percent of recent queue volumes; many of which are likely to drop out

13 Page 13 after the Feasibility Study or System Impact Study phases, as mentioned previously. 16 PJM has also found that typically these projects are connecting on lower voltage facilities (i.e., not to a PJM monitored transmission facility as described in PJM Manual M-03) but are seeking interconnection through PJM s process because they wish to participate in PJM s wholesale markets. PJM, along with the relevant Transmission Owner(s), conducts studies to determine if there are any impacts on the PJM transmission system, but in most cases these projects do not require Network or Local Upgrades. Thus, withdrawal by Interconnection Customers in the alternate queue should have no impact on other projects in the alternate queue or in the queue for larger projects. This in turn should mitigate the number of restudies in the main queue. 2. Tariff Proposal During the course of the IPSTF, PJM held several subgroup meetings specifically devoted to how best to handle smaller queued projects. After much discussion, several key criteria emerged which form the foundation of the proposal contained herein, such as a requirement that the project is not interconnecting to a PJM monitored facility and that the project would not cause the need for upgrades on the transmission system. Further discussions among all the participants in the IPSTF resulted in the following proposal which includes screening criteria and an alternate queue process. In summary, the screening criteria and alternate queue process are designed to ensure that projects in the alternate queue would not directly or indirectly (such as through an uprate to an existing project) impact the transmission 16 For instance, PJM has found that Interconnection Customers may hold multiple queue positions for one project because it is the only way to evaluate various locations for the project. If the Interconnection Customer waits until it has performed its own analysis to enter the queue, it may come in behind other projects in the same location and may be responsible for more upgrades than if it had come in earlier. PJM must study each project as if it were going to move forward through the process.

14 Page 14 system and that Interconnection Customers cannot abuse the alternate queue by putting in multiple Interconnection Requests behind a single point of interconnection. Specifically, the screening criteria include that the: (i) project cannot be connected to a PJM monitored transmission facility as defined in PJM Manual M-03, (ii) project cannot be an uprate or addition to an existing facility, (iii) project distribution factor for any PJM monitored transmission facility may not exceed 5 percent as evaluated against the case chosen to model the New Services Queue associated with the timing of the receipt of the Interconnection Request and the MW impact of the project cannot be greater than 1 percent of the element rating, (iv) project may not connect to the same Point of Interconnection as any other project, and (v) aggregate impact of all projects connecting on any individual radial connection to a PJM monitored transmission facility shall not exceed 1 percent of line rating. (See proposed Sections , , and ). The evaluation process will occur as follows: The evaluation of these projects will be conducted by the Transmission Owner under the direction of PJM and (i) may include study processes similar to those as described as Generation Feasibility Study, System Impact Study, and Facilities Study, (ii) shall include studies as required to ensure the reliable planning and operation of the applicable power system, (iii) shall have engineering studies conducted by the appropriate Transmission Owner(s). These studies shall include thermal studies, short circuit studies, stability studies, and additional appropriate studies as required for the reliable integration of the Interconnection Request. PJM will monitor and coordinate completion of any studies required under the alternate queue process, which studies are to be completed in a timely manner. In the event it is expected that the cost and initial time estimate of required system

15 Page 15 upgrades to mitigate thermal and short circuit violations cannot be provided to the Interconnection Customer within six months from the scoping meeting, an estimate of the time required to complete these initial studies shall be provided to the Interconnection Customer within thirty days of the scoping meeting. In the event that the Transmission Provider anticipates that the Interconnection Customer s study cost responsibility will substantially exceed the deposit, the Transmission Provider shall provide the Interconnection Customer with an estimate of the study costs and the Interconnection Customer s cost responsibility. Within ten business days of receiving such estimate, the Interconnection Customer may withdraw its Interconnection Request by providing written notice to the Transmission Provider, in which event the deposit paid to Transmission Provider shall be refunded. Unless the Interconnection Request is withdrawn within ten business days, the Interconnection Customer agrees to pay the amount of its actual cost responsibility and will pay additional deposits as required to meet the estimated study cost. If the Interconnection Customer fails to provide the required additional deposit within ten business days, the Interconnection Request shall be deemed terminated and withdrawn. (See proposed Section 112.5) 3. Effective Date PJM proposes an effective date of May 1, 2012 for the proposed tariff revisions concerning the alternate queue which will apply to all projects entering the queue on or after May 1, 2012.

16 Page 16 D. NOTIFICATION OF TRANSFERRING CAPACITY INTERCONNECTION RIGHTS FROM DEACTIVATING UNITS 1. Background When a generating unit deactivates in PJM, the Capacity Interconnection Rights ( CIRs ) associated with that unit will expire within one year from the Deactivation Date, unless the holder of the rights submits a new Generation Interconnection Request up to one year after the Deactivation Date. 17 PJM permits transfer of such CIRs to an existing customer in the queue. Currently, the tariff does not specify the point in time at which an Interconnection Customer in the queue must inform PJM that it is going to utilize transferred CIRs. On more than one occasion, PJM was not informed of an Interconnection Customer s intent to utilize transferred CIRs until after the Facilities Study Agreement was executed and just prior to the signing of an ISA. Use of transferred CIRs can reduce the need for such Interconnection Customer to construct Network or Local Upgrades, which could impact the study results of other projects in the queue, thus causing the need for restudies, which in turn impacts the timeliness and certainty of study results. 2. Tariff Proposal PJM proposes to require that an Interconnection Customer provide notification to PJM that it intends to utilize CIRs from a deactivating generator on or before the date it executes its System Impact Study Agreement. (See proposed Sections and 204.3) While PJM allows an Interconnection Customer to utilize the transferred CIRs at a different Point of Interconnection than the original holder of the CIRs, PJM has clarified its tariff language to state that any necessary studies that PJM may perform could result in the loss of a portion of or all of 17 Tariff Section

17 Page 17 the CIRs as determined by such studies. PJM also clarified that if the Interconnection Request to which the CIRs have been transferred is terminated and withdrawn, the CIRs will not terminate until the end of the one year period from the Deactivation Date if that period has not already ended, thus providing the opportunity to re-transfer the CIRs. (See proposed Section ) 3. Effective Date and Transition PJM requests an effective date of May 1, 2012 for the tariff revisions regarding CIRs transferred from a deactivating generator. To ensure a smooth transition for projects that are already in the queue, and which may have already entered into a System Impact Study Agreement, PJM has established the following transition: For Interconnection Customers who were in the queue prior to May 1, 2012, such Interconnection Customers must provide notice of intent to utilize such CIRs when it executes its Facilities Study Agreement, or, if it has already executed a Facilities Study Agreement, then by no later than November 1, (See proposed Section ) E. SUSPENSION 1. Background In PJM, an Interconnection Customer or New Service Customer may suspend all work of a Transmission Owner on Transmission Owner Interconnection Facilities (which includes Network and Local Upgrades) under an Interconnection Construction Service Agreement. 18 Similarly, a New Service Customer may suspend all work of a Transmission Owner on Direct Assignment Facilities and/or Customer Funded Upgrades under an Upgrade Construction 18 Sections 3.4 and of Appendix 2 of Attachment P of the Tariff.

18 Page 18 Service Agreement. 19 The Interconnection or New Service Customer may requests suspensions of work for a cumulative period of up to three years. PJM has found that the increasing number of projects that have gone on suspension has a negative impact on the queue. 20 That is because PJM must continue to model such projects in subsequent interconnection studies; yet, PJM s experience has been that many suspended projects ultimately terminate their projects. In addition to causing the need for restudies when the project withdraws, the suspension period adds up to three years of uncertainty for other projects in the queue prior to the decision on withdrawal is made. 2. Tariff Proposal PJM recognizes that Order No provides for a three-year suspension period to afford generators maximum flexibility to adjust to varying business and other issues and to encourage new generation. 21 While PJM s interconnection process offers much flexibility to generators, and PJM has interconnected 31,357 MWs of new or uprated generation over the last 14 years, it has seen tremendous growth in its interconnection queue. Delays in the queue are in part caused by the need for restudies, including restudies caused by customers who withdraw during suspension. To alleviate the uncertainty caused by suspended projects, PJM proposes a targeted modification to the suspension provisions as follows: if PJM determines that a project seeking suspension would result in a material adverse impact on the cost or timing of any subsequently queued projects, it will be limited to a one-year suspension period. Where there will be no material adverse impact on cost or timing of any subsequently queued project, the project may 19 Sections 6.4 and of Appendix III of Attachment GG of the Tariff. 20 For instance, as of December 31, 2011, 32 projects, representing 3,444 MW of new or uprated generation in the queue, were under suspension. 21 Order No. 2003at P 177.

19 Page 19 suspend for up to three years. (See proposed Section 3.4 of Appendix 2 of Attachment P of the Tariff; proposed Section 6.4 of Appendix III of Attachment GG of the Tariff.) PJM asks FERC to find that this is an acceptable independent entity variation as it is targeted to address a specific issue PJM is facing in its interconnection process. FERC has accepted limitations on the suspension period under similar circumstances Effective Date and Transition PJM requests an effective date of May 1, 2012 for the tariff revisions regarding suspension, and will apply the new suspension provisions to all projects that entered the queue on or after February 1, 2011 (i.e., the X1 queue). PJM and its stakeholders chose this date as it is tied to the point in the IPSTF stakeholder process when this proposal was introduced. (See proposed Sections 3.4 and of Appendix 2 to Attachment P, and proposed Sections 6.4 and of Appendix III of Attachment GG) F. MODIFIED DEPOSITS 1. Background and Tariff Proposal The current deposit structure for smaller that are > 2 MW and 20 MW in size ranges from $1,200 to $7,000, also depending on the size of the project and when it entered the queue. A portion of such deposit is non-refundable. 23 As more small projects enter the queue, PJM analyzed whether it was collecting enough in deposit monies to cover study costs. While Interconnection Customers are subject to the actual cost of the study, the deposit must be adequate to ensure that if a project withdraws and does not respond to future study invoices PJM s and its Transmission Owners costs are covered for study work completed. PJM therefore 22 Midwest Independent Transmission System Operator, Inc., 124 FERC 61, 183 at PP (2008); Southwest Power Pool, Inc., 128 FERC 61,114 at PP (2009) 23 Tariff Sections 110.1, 111.1, and 112.1

20 Page 20 proposes a flat, refundable, study deposit for such projects as follows: (i) $10,000 for projects entering the queue during the first four months of the queue; (ii) $12,000 for projects entering queue during the fifth month; and (iii) $15,000 for projects entering the queue during the sixth month. (See proposed Sections 110.1, 111.1, 112.1, and 204.3A.) Effective Date PJM proposes an effective date of May 1, 2012 for the proposed study deposit modifications will apply to all projects entering the queue on or after May 1, G. CLARIFIED SYSTEM IMPACT STUDY DATA SUBMISSION 1. Background and Tariff Proposal PJM requires various data at the time an Interconnection Customer returns its executed System Impact Study Agreement and deposit. Failure to provide the required data or deposit will result in termination of the Interconnection Request. 25 PJM s current process does not explicitly provide for a cure period for deficient data submittal and, thus, PJM seeks to clarify its Tariff to provide that if certain of the data that is provided is deemed deficient, the Interconnection Customer will have 10 business days to cure such deficiency. Specifically, PJM will allow a cure period for deficiencies in: for the case of Generation Interconnection Customers machine modeling data or, for wind generating facilities, electrical design specification or other data such as system layout data; or, in the case of Transmission Interconnection Customers, modeling data. (See proposed Section 204.3) 24 PJM is currently working with its stakeholders to determine the appropriate level of deposit for projects that are 2 MW in Sections 112A.1 and 112B.1 of the Tariff and plans to make a filing in the near future once such discussions are complete. At this time, PJM has made conforming changes to Section 112A.1 to reflect the sixmonth queue proposal contained herein. 25 Tariff Section

21 Page Effective Date and Transition PJM proposes an effective date of May 1, 2012 for the proposed clarifications to System Impact Study data submission. With respect to Interconnection Customers who already returned their System Impact Study Agreement and required data prior to May 1, 2012, and it is determined that the modeling and electrical data specified above is deficient, such Interconnection Customers will have until June 1, 2012 to cure such deficiencies or their Interconnection Requests will be deemed terminated and withdrawn. (See proposed Section 204.3) H. MISCELLANEOUS TARIFF CHANGES 1. Deficiencies in Interconnection Request In order for an Interconnection Request to be deemed valid, an Interconnection Customer must submit its deposit along with an application and various information. PJM permits an Interconnection Customer to cure deficiencies within 10 business days. Although not intended, PJM s cure period, as currently written, implies that an Interconnection Customer can submit an application without the required deposit, and then have 10 days to cure its failure to submit a deposit. PJM must receive the deposit to begin processing an Interconnection Request, including covering the effort for making a deficiency determination. Thus, PJM proposes to clarify its Tariff to make clear that the cure period applies to the information submittal, but not to the deposit requirement, effective May 1, (See proposed Section ) 2. Restudies During Feasibility Study PJM s practice has been to hold off on conducting restudies during the Feasibility Study phase and, instead, captures any changes during this phase during the System Impact Study

22 Page 22 phase. This helps with the efficiency of the queue. PJM therefore proposes to remove the restudy provision in Section of its tariff, effective May 1, III. EFFECTIVE DATE PJM requests an effective date of May 1, 2012 for the Tariff sections offered in this filing which is at least 60 days from the date of this filing. If accepted, PJM will apply the Tariff provisions consistent with the transition proposals described in Sections II.A.3, II.D.3, II.E.3, and II.G.3, and as provided in the proposed Tariff language contained herein. IV. DOCUMENTS ENCLOSED PJM encloses the following: 1. This transmittal letter; 2. Attachment A Revised pages of the PJM Tariff (clean version); and 3. Attachment B Revised pages of the PJM Tariff (redlined version). V. COMMUNICATIONS Correspondence and communications with respect to this filing should be sent to the following persons: Craig Glazer Vice President Federal Government Policy PJM Interconnection, L.L.C G Street, N.W. Suite 600 Washington, D.C (202) glazec@pjm.com Jennifer Tribulski Senior Counsel PJM Interconnection, L.L.C. 955 Jefferson Avenue Valley Forge Corporate Center Norristown, PA (610) tribuj@pjm.com VI. SERVICE PJM has served a copy of this filing on all PJM Members and on all state utility regulatory commissions in the PJM Region by posting this filing electronically. In accordance

23 Page 23 with the Commission s regulations, PJM will post a copy of this filing to the FERC filings section of its internet site, located at the following link: with a specific link to the newly-filed document, and will send an e- mail on the same date as this filing to all PJM Members and all state utility regulatory commissions in the PJM Region alerting them that this filing has been made by PJM and is available by following such link. If the document is not immediately available by using the referenced link, the document will be available through the referenced link within 24 hours of the filing. Also, a copy of this filing will be available on the FERC s elibrary website located at the following link: in accordance with the Commission s regulations and Order No VII. CONCLUSION PJM respectfully requests that the Commission accept this filing as it is intended to add efficiency and transparency to the interconnection queue process and provide Interconnection Customers with a greater degree of certainty in study results. Further, PJM requests that the Commission grant an effective date of May 1, 2012.

24 Page 24 Respectfully submitted, Craig Glazer Vice President Federal Government Policy PJM Interconnection, L.L.C G Street, N.W. Suite 600 Washington, D.C (202) glazec@pjm.com Jennifer Tribulski Senior Counsel PJM Interconnection, L.L.C. 955 Jefferson Avenue Valley Forge Corporate Center Norristown, PA (610) tribuj@pjm.com On behalf of PJM Interconnection, L.L.C. cc: Jignasa Gadani, Director, Division of Tariffs and Market Development East, FERC Dan Nowak, Division of Tariffs and Market Development-East, FERC Valerie Martin, Office of Energy Market Regulation Nicholas Tackett, Office of Energy Market Regulation