Section 4: Integrating Public Policy Drivers

Transcription

1 Public Policy Drivers Section : Integrating Public Policy Drivers PJM DE DC IL IN KY MD MI NJ NC OH PA TN VA WV Section.0: The Role of Public Policy in the RTEP Process Figure.1: Public Policy Drivers PJM s Regional Transmission Expansion Plan (RTEP) process integrates transmission, generation and Demand Side Resources (DSR) to address transmission system constraints involving reliability and persistent economic congestion. The result is one process that integrates many system factors, including forecasted load growth, Demand Side Resource efforts, generation additions (including renewables) and generator deactivations. Moreover, these factors both drive and are driven by PJM Reliability Pricing Model (RPM) auction activity. Over the past several years, an increasing focus by federal and state governments on climate change, energy independence and other policy areas continues to make clear the critical role of the transmission system. And, while the existence of violations of NERC Reliability Standards is the basis for PJM s determination of need, construction of major transmission infrastructure projects bolsters federal and state to promote public policy goals. An important element of these policies is greater use of renewable resources, primarily wind. Integrating wind resources, often distant from the population centers that will use the electricity they produce presents a unique set of challenges to planning new transmission. Moreover, PJM s RTEP process continues to address the need to strengthen the nation s electrical grid to accommodate the retirement of generating resources not able to meet Renewable Resources At-Risk Generation Demand Response Energy Efficiency Public Policy Considerations environmental regulations, including those regarding NO X, SO X and CO 2 emissions. Whether taken individually, or addressing their collective impact in RPM markets, all such policy decisions necessarily impact transmission planning decisions. Existing RTEP Drivers NERC Reliability Criteria Market Efficiency Criteria PJM 2010 Regional Transmission Expansion Plan 71

2 Section Public Policy Drivers Map.1: PJM Backbone Transmission Map The right-of-way route shown on this map is for illustrative purposes only and may not depict the actual route that may eventually be chosen. Substation locations may also be modified if more beneficial connections are determined by PJM. Preliminary 2011 PJM RTEP process analysis suggests that the need for the PATH line has moved several years beyond The outlook for a slower economic recovery reflected in the reduced load growth rates in PJM s January 2011 published forecast has led the PJM Board to direct transmission owners to suspend efforts on the PATH line pending a more complete analysis in 2011 of all RTEP upgrades, including MAPP. Section 5 of this report discusses the PATH suspension. 72 PJM 2010 Regional Transmission Expansion Plan

3 Public Policy Drivers Section Importance to PJM The impact of these changing assumptions has the potential to threaten reliability if previously unexamined changes are not evaluated. To that end, the PJM Board has directed that a broader range of sensitivity analyses be performed and that changes to the planning process be examined that would enhance PJM s ability to manage more effectively the recent whip-sawing of project in-service dates, the result of periodic changes to modeling assumptions. Changes to the planning process are being addressed by the PJM Regional Planning Process Task Force (RPPTF) whose activities are described in Section PJM 2010 RTEP sensitivity studies directed by the PJM Board are discussed below..0.1 Federal Initiatives Recent federal initiatives have called-for an increase in the percentage of the nation s electricity that comes from renewable sources. Although the United States has the technology and renewable natural resources required to meet these goals, the nation lacks the transmission infrastructure necessary to make widespread use of electricity generated from renewable sources. PJM is no different. In pursuit of same, the 2009 American Recovery and Reinvestment Act, for example, dedicates up to $11 billion to constructing transmission lines that will carry electricity from renewable energy sources to population centers all over the country. Wind Tax Credits and Grants The development of wind generation is a significant component of U.S. national energy policy goals for clean and renewable energy resources. In recent years the federal government has encouraged the development of wind generation facilities with legislation that provides tax incentives and Production Tax Credits (PTCs) for wind-powered facilities. The American Recovery and Reinvestment Act (ARRA) provided a three-year extension of the PTC through December 31, Additionally, wind project developers can choose to receive a 30 percent investment tax credit (ITC) in place of the PTC for facilities placed in service in 2009 and 2010, and also for facilities placed in service before 2013 if construction begins before the end of The ITC then qualifies to be converted to a grant from the Department of Treasury..0.2 State Initiatives In the PJM footprint, ten states and the District of Columbia have adopted renewable portfolio standards (RPS), which require electricity suppliers to purchase specified amounts of renewable energy as part of their supply portfolio. Goals range from 10 percent to 25 percent. The impacts associated with the integration of generation to meet state renewable portfolio standards, the implementation of state Demand Resource programs and energy efficiency goals, and the potential retirement of at-risk generation are key drivers of PJM sensitivity studies..0.3 At-Risk Generation At-risk generators face the real possibility of deactivation given the economic impacts of increasing operating costs associated with unit age some more than 0 years old and changing environmental public policy, particularly with regard to carbon emissions. Plant costs drive the ability of a generator to reap consistent revenue streams from PJM s energy, capacity and ancillary service markets. A key at-risk characteristics is a plant s inability to clear a capacity auction given its costs compared to other resources offered into the auction: other more efficient plants renewable energy resources Demand Resources and energy efficiency programs Generator deactivations are both driven by and directly impact RPM auction activity.0. Impacts on Approved Backbone Facilities From a reliability perspective, taken together, sensitivity studies completed by PJM at the direction of the Board demonstrate that a significant reliability need will continue to exist for backbone transmission facilities, over a range of resource assumptions. More importantly, these sensitivity analyses indicate that public policy initiatives have the real possibility of accelerating reliability problems, sooner than identified in the 2010 Baseline Analysis. PJM 2010 Regional Transmission Expansion Plan 73

4 Section Public Policy Drivers.0.5 RTEP Sensitivity Studies PJM 2010 Sensitivity Analyses generally attempt to show the impacts associated with the integration of generation to meet state renewable portfolio standards, the implementation of state Demand Resource programs and Energy Efficiency goals, and the potential retirement of at-risk generation. Initially, three sensitivity scenarios were analyzed: 1) the integration of sufficient wind generation to satisfy existing state renewable portfolio standards, 2) the integration of these same wind resources balanced against the potential retirement of at-risk generation, and 3) the integration of these same wind resources along with Demand Resource programs and energy efficiency programs to satisfy state goals balanced against the retirement of at-risk generation. These analyses focused on the change to thermal loadings on backbone transmission facilities out through PJM s fifteen-year planning horizon to establish when reliability criteria violations would occur given the modeled sensitivity study parameters. Sensitivity Studies Complement Actionable Baseline Results PJM s Operating Agreement describes the application of reliability criteria and the specific market efficiency procedures to be implemented in the course of RTEP analysis. The PJM manuals detail all of the specific assumptions used to evaluate these criteria, creating a bright-line approach to decision-making regarding the inclusion of new transmission infrastructure in the plan. While sensitivity studies are contemplated in the RTEP, public policy issues such as those discussed in this section are not specifically identified in the Operating Agreement as transmission drivers and have not, therefore been considered actionable within the context of RTEP. Only the results of PJM s bright-line test, performed in accordance with PJM s written procedures have been sufficient to support PJM s continued direction to construct transmission projects such as PATH and MAPP. Nevertheless, sensitivity analyses offer a useful complement to the 2010 Baseline Analysis results. Sensitivity study results provide insight as to how baseline results would be affected by adjusting inputs that experience has shown to have the potential to cause material changes in the location and timing of criteria violations. In many cases, the results of these sensitivity analyses not only continue to show significant violations but also in some instances accelerate the timeframes within which those violations are expected to occur. 7 PJM 2010 Regional Transmission Expansion Plan

5 Public Policy Drivers Section PJM DE DC IL IN KY MD MI NJ NC OH PA TN VA WV.1: RPS, Demand Resources, Energy Efficiency and At-Risk Generation Changing assumptions about load growth, the level of Demand Resources, the development of new generation resources, and the retirement of existing generation resources have the ability to swing dramatically the dates when criteria violations first occur..1.1 Renewable Portfolio Standards (RPS) Parameters Background PJM s first sensitivity study examined the impact of state RPS. In general, state RPS require suppliers to utilize wind and other renewable resources to serve the energy consumed in the state. Using information from the Database of State Incentives for Renewable Energy, PJM determined the renewable energy percentage requirements for the states (or portions of states) within the PJM footprint. * NOTE Database of State Incentives for Renewables and Efficiency (DSIRE) at is a comprehensive source of information on state, local, utility and federal incentives and policies that promote renewable energy and energy efficiency. DSIRE was established in 1995 and is funded by the U.S. Department of Energy. PJM used the annual energy forecast from the PJM 2010 Load Forecast Report to calculate the amount of energy required to be served from renewable resources to meet the state RPS. PJM then estimated the amount of renewable resources that would need to be available to meet the renewable energy needs of the RTO. Assuming a 30 percent capacity factor for the renewable resources, and accounting for existing renewable resources, PJM estimated that approximately 12,000 MW of new renewable resources would need to be added to the system to meet the state RPS standards in PJM also estimated that approximately 28,500 MW of new renewable resources would need to be added to the system to meet the state RPS in 2020, and approximately 0,500 MW of new renewable resources would need to be added to the system to meet states RPS requirements in Capacity credit value such as the 13 percent for new wind resourced is used to ensure capacity resource adequacy in Reliability Pricing Model (RPM) auctions, based on the unit output PJM can expect from a resource over peak summer hours. Capacity factor such as the 30 percent for wind resources expresses the amount of energy PJM can expect from a generating unit over the entire year. PJM used its existing interconnection queue to determine the makeup and location of renewable resources needed to satisfy state RPS requirements. The majority of the renewables in the interconnection queue are wind-powered resources, clustered in three locations that are favorable for producing wind energy as shown on Map.2: a cluster off the east coast, a cluster along the Appalachian Mountains and a cluster further west. PJM then calculated the aggregate impact of the new renewable resources, using linear analysis, on the flow on the constrained EHV facilities that were identified as part of the 2010 Baseline Analysis..1.2 At-Risk Generation Parameters Background PJM s second sensitivity study built on the first by looking at the impact of state RPS requirements and the potential retirement of at-risk generation. Although many ways exist to classify at-risk generation age, revenue adequacy, size, fuel type this study examined the deactivation of coal-fired units 0 years old or more as replaced by renewables. Using this approach PJM examined the aggregate impact on the constrained facilities identified in the 2015 Baseline Analysis. PJM 2010 Regional Transmission Expansion Plan 75

6 Section Public Policy Drivers Map.2: PJM Renewable Energy Projects 76 PJM 2010 Regional Transmission Expansion Plan

7 Public Policy Drivers Section.1.3 Demand Resources and Energy Efficiency (EE) Parameters PJM also completed a third sensitivity study that built on the previous two, evaluating the aggregate impact of state RPS requirements, state Energy Efficiency and Demand Resource programs, and the potential retirement of at-risk generation. This sensitivity study was similar to the second sensitivity study noted above, except that load projections were reduced based on the various state programs for EE and Demand Resources. Information on Energy Efficiency programs and Demand Resource programs for each state within PJM was compiled, in a manner consistent with PJM s approach to the development of the RPS sensitivity input assumptions. Table.1 shows the annual aggregate Demand Resources and EE assumed to be available based on the various state requirements. The load in each Transmission Owner (TO) zone was reduced by the calculated amount of EE in each respective TO zone. Table.1: Available Demand Resources and EE (MWs) Year Demand Resources EE , , , ,757, , ,62 5, ,300 6, ,976 6, ,511 7, ,285 8, ,295 9, ,30 9, ,312 9, ,32 10, ,811 11,21 PJM 2010 Regional Transmission Expansion Plan 77

8 Section Public Policy Drivers.1. Sensitivity Analysis Results PJM s 2010 Sensitivity Analyses, listed in Table.2, identified sixteen 500 kv NERC criteria thermal overloads. These results generally indicate an acceleration of reliability criteria violations identified in the baseline RTEP analysis. Each sensitivity study identified two 500 kv thermal criteria violations in 2015, as also identified in the 2010 Baseline Analysis. In several instances, sensitivity studies identified thermal violations earlier than when they occurred in the baseline analysis, three as early as Several were delayed to later years or remained unchanged. The sensitivity analysis indicates that the implementation of related public policy initiatives could have the potential to accelerate reliability criteria violations than would otherwise be the case. * NOTE Table.2 1) This column reflects the impacts from the integration of sufficient wind generation to satisfy existing state renewable portfolio standards, Table.2: Projected NERC Criteria Thermal Violations From TO Base RPS to Existing (1) RPS to At-Risk Generation (2) RPS+Demand Resources+EE to At-Risk Generation (3) T157 Tap Doubs 500 kv Mt. Storm T157 Tap 500 kv Lexington Dooms 500 kv Jacks Mountain #1 Juniata 500 kv Pruntytown Mt. Storm 500 kv Jacks Mountain Juniata 500 kv Keystone Jacks Mountain 500 kv Bath County Valley 500 kv Keystone Conemaugh 500 kv Greenland Gap Meadow Brook 500 kv Conemaugh Jacks Mountain #2 500 kv > > 2025 Cunningham Elmont 500 kv > Mt. Storm Greenland Gap 500 kv > Doubs Brighton 500 kv > > 2025 Harrison Pruntytown 500 kv > Black Oak Bedington 500 kv > ) This column reflects the impacts from the integration of these same wind resources balanced against the potential retirement of at-risk generation, and 3) This column reflects the impacts from the integration of these same wind resources along with demand response and energy efficiency programs to satisfy state goals balanced against the retirement of at-risk generation. 78 PJM 2010 Regional Transmission Expansion Plan

9 Public Policy Drivers Section PJM DE DC IL IN KY MD MI NJ NC OH PA TN VA WV.2: Off-Shore Wind Conceptual Study PJM continues to engage state regulators on issues key to PJM s future success and ability to meet the growing demand for electricity. Among the key future challenges with a direct bearing on regional transmission planning are the impacts of renewable portfolio standards. To that end, PJM s 2010 Regional Transmission Expansion Plan (RTEP) Process included a conceptual study of windpowered resources off the shores of Delaware, Maryland, New Jersey and Virginia. In collaboration with commission staffs from those states and the District of Columbia, PJM initiated a high-level study to assess the impacts of up-to 30,000 MW of such resources on PJM Bulk Electric System (BES) transmission facilities..2.1 Public Policy Trend An increasing focus by federal and state governments on climate change and energy independence continues to make clear the critical role of the transmission system. For example, an important element of these policies is greater use of renewable resources, primarily wind. Integrating wind resources, often distant from the population centers that will use the electricity they produce, raises significant transmission public policy issues: Impacts on reliability and economic efficiency across multiple regions Amounts of transmission that should be built, where it should be built, and who should pay for it The growing impacts of renewable resources on generation mix (coupled with Demand Resource program initiatives) on load growth will continue to shape the scope and type of BES transmission expansion plans that PJM s RTEP process is expected to identify in 2010 and beyond. PJM s RTEP process addresses state Renewable Portfolio Standards (RPS) by incorporating the market responses as reflected in load, generation, and other RTEP input parameters. Currently, the aggregate effects of all RTEP input assumptions drive the bright line reliability criteria violations that require actionable transmission expansion plans. More explicit consideration of RPS and other public policy mandates in PJM s RTEP process are under active consideration under the auspices of PJM s Regional Planning Process Task Force (RPPTF) as discussed further in Section Regardless, even as these PJM stakeholder initiatives continue to unfold, the location and magnitude of RPS resources and status of other public policy initiatives will continue to impact future PJM transmission expansion decisions. In response to input from state commissions in Delaware, Maryland, New Jersey, Virginia and the District of Columbia, PJM conducted the sensitivity study discussed here. PJM 2010 Regional Transmission Expansion Plan 79

10 Section Public Policy Drivers.2.2 Scope and Input Assumptions PJM evaluated the reliability and market efficiency impact of off-shore wind under four scenarios: no wind (reference system) and at nameplate capacity levels of 10 GW, 20 GW and 30 GW. These were modeled in equal amounts across four discrete injection points: Hudson 230 kv, Larrabee 230kV, Indian River 230 kv and Fentress 500 kv, as shown on Map.3. PJM first performed reliability screening of single contingencies (NERC Category B) and double circuit tower outages (NERC category C) to identify potentially constrained flowgates. These were subsequently monitored in production cost simulations to assess congestion impacts, consistent with studies conducted as part of PJM s annual market efficiency analyses. Map.3: Off-Shore Wind Conceptual Study Injection Points 500 kv MAPP Line Onshore Injection Points Indian River Hudson Larrabee Power Flow Base Case PJM performed the study on its 2010 RTEP model, using the 2010 Load Forecast and expected upgrades for the year Given the hypothetical, future-based context of the analysis, the following approved backbone transmission facilities were modeled in-service: Fentress TrAIL 500 kv line Carson - Suffolk 500 kv line Susquehanna - Roseland 500 kv line PATH 765 kv line MAPP 500 kv line Power flow cases were developed consistent with the modeling parameter described in Sections 2 and 3. Wind Profile PJM utilized wind profile data developed as part of the Eastern Wind Integration Transmission Study (EWITS), an interregional initiative under the auspices of the US Department of Energy (DOE). * NOTE The sensitivity studies discussed earlier in Section.1., evaluated impacts on the PJM transmission system as a result of the impacts from state Renewable Portfolio Standards (RPS), Demand Resources/EE and at-risk generation and, in particular, their impact on reliability criteria violations driving the need for the PATH line. 80 PJM 2010 Regional Transmission Expansion Plan

11 Public Policy Drivers Section As Map. shows, certain clusters of wind facilities such as those off the shore of New Jersey are expected to have capacity factors higher than typical on-shore wind. While some renewable resources can operate in a manner similar to the traditional fossil fueled power plants, other renewable energy sources, such as wind, are recognized as variable resources. Their ability to generate power is directly determined by the immediate availability and/or magnitude of their specific fuel. For example, wind turbines can generate electricity only when wind speed is within a range consistent with the physical design of the related turbines. Wind-powered generation projects, by their very nature, require geographic areas with favorable wind characteristics such as speed, persistence and daily/seasonal patterns. PJM s footprint encompasses a number of such areas as shown Map.. From a capacity perspective, the duration and velocity characteristics of prevailing off-shore winds over peak summer periods could improve the availability of energy from such units when needed. As a result, higher performance over summer peaks could yield operating history statistics over time that permit capacity values in excess of the 13 percent wind class average presently in effect for wind-powered facilities without this operating history. Figure.2: Wind Profile Comparison: Off-Shore vs On-Shore Wind (MW) 1,200 1, EWITS Wind Site: PPL Electric Utilities Corp. EWITS Wind Site: Jersey Central Power & Light EWITS Wind Site: Commonwealth Edison Co. PJM 2010 Regional Transmission Expansion Plan 81

12 Section Public Policy Drivers Map.: Wind-Powered Generation Interconnection Request Clusters 82 PJM 2010 Regional Transmission Expansion Plan

13 Public Policy Drivers Section.2.3 Study Findings Production cost simulation studies revealed that, at a 10,000 GW level, off shore wind sensitivities show load cost payments across PJM decreasing by about 5.5 percent, as shown on Figure.3. From a production cost perspective, the addition of offshore wind unloaded higher cost resources at the margin, mostly coal-fired generating units. However, doubling the amount of wind off-shore to 20,000 GW did not yield a doubling of load cost payment savings. Rather, the economic efficiency of off-shore wind, under current input and transmission system assumptions, showed diminishing returns. Studies at the 20,000 MW level identified power flow constraints causing congestion on existing transmission facilities in and around off-shore wind injection points. This limited savings in load payments to approximately 7.5 percent. Increasing the generation modeled by another 50 percent to 30 GW yielded virtually the same savings as at the 20,000 MW level: transmission congestion that limited the ability to deliver off-shore wind generation. As a consequence, simulations showed that offshore generation had to be curtailed to maintain transmission system facilities within established reliability criteria limits. Figure.3: Load Payment Savings Across PJM Off-Shore Wind 10 GW Off-Shore Wind 20 GW Off-Shore Wind 30 GW 0.0% - 1.0% - 2.0% Percent Change (%) - 3.0% -.0% - 5.0% - 6.0% - 7.0% - 8.0% Off-Shore Wind Capacity PJM 2010 Regional Transmission Expansion Plan 83

14 Section Public Policy Drivers Backbone Line flows Although need for the MAPP project was justified to solve reliability criteria violations associated with delivering energy into eastern PJM from western resources, the conceptual study also demonstrated the capability of the line to support the integration of off-shore wind energy. PJM s simulations showed that injecting 10,000+ MW of energy into the PJM system from off-shore facilities caused the MAPP facility to transmit energy from east to west during off-peak hours, which are generally periods when higher capacity factors would be more typically observed. This east-to-west flow demonstrates the MAPP line s ability to support the integration of off-shore wind into the PJM system..2. Next Steps Given the conceptual nature of this study, PJM anticipates additional study as part of 2011 RTEP cycle of analyses including a more detailed renewable integration study that will further evaluate the impact of off-shore wind. These additional studies conducted in collaboration with state regulatory authorities will provide PJM s various constituents with valuable information and insights as public policy initiatives continue to evolve. 8 PJM 2010 Regional Transmission Expansion Plan

15 Public Policy Drivers Section PJM DE DC IL IN KY MD MI NJ NC OH PA TN VA WV.3: Impacts of Generator Deactivation Retirement Map.5: Generation Retirements Generator deactivations alter power flows that often yield transmission line overloads. Per FERC order, PJM cannot compel the owners of units proposed for retirement to remain in service. Such retirements may take effect upon 90 days prior notice. This time period is designed to allow PJM to assess the reliability effects of proposed retirements, and to make compensation arrangements with the generator owner to keep units on-line that are needed for reliability. Owners of existing generating plants that plan to retire or reduce the plant s output capability must notify PJM in order to address capacity credit issues and any potential PJM System economic and/or reliability concerns. After a generator officially notifies PJM of retirement, system upgrades will be identified to resolve any reliability problems associated with the retirement. PJM has received a number of recent requests to deactivate generators, as summarized on PJM s website at the following link: planning/generation-retirements.aspx. Generation deactivation requests driving the need for Reliability Must Run contracts for Eddystone, Cromby and Hudson units are summarized in the following sections. PJM 2010 Regional Transmission Expansion Plan 85

16 Section Public Policy Drivers.3.1 Eddystone and Cromby Retirements In December 2009 Exelon notified PJM of its intent to retire the Eddystone units #1 and #2 and Cromby units #1 and #2 on May 31, All four units are within the in the PECO transmission zone, as shown on Map.5. Consistent with established procedure, PJM evaluated the impact of the proposed deactivations on transmission system reliability. Map.6: PECO Zone: Upgrades Required by Eddystone and Cromby Retirements Criteria Violations and Upgrades PJM RTEP analysis of the requested retirements identified 15 reliability criteria violations as shown in Table.3 and shown on Map.6. Multiple reliability impacts were identified with all four units deactivated. A number transmission system enhancements are required to address thermal, voltage and short circuit violations. Required upgrades are listed in Table.3 and shown on Map.6. Reliability Must Run (RMR) Status * Several required upgrades will not be in-service by the requested May 31, 2011 retirement date. As a result, PJM requested Cromby Unit #2 RMR status until December 31, 2011 and requested Eddystone Unit #2 RMR status until June 1, 2012 until all of the neccessary upgrades can be put in place. * NOTE Reliability Must Run: A generation resource subject to the dispatch of PJM that, as a result of transmission constraints, PJM determines, in the exercise of Good Utility Practice, must be run in order to maintain the reliability of service in the PJM Region. 86 PJM 2010 Regional Transmission Expansion Plan

17 Public Policy Drivers Section Table.3: Upgrades Driven by Thermal Overloads Electrical Occurrence Electrical Result PJM Reliability Test Upgrade Expected In-Service Date Outage of Macdade-Ridley-Morton 230 kv line and Island Road - Eddystone 230 kv line Outage of Macdade-Ridley-Morton 230 kv line and Island Road - Eddystone 230 kv line Outage of North Wales - Hartman 230 kv line and Basecase Outage of North Wales - Hartman 230 kv line and Basecase Outage of Emilie - Neshaminy 138 kv line, Jarrett - Whitpain 230 kv line and Basecase Outage of Linwood - Chichester 230 kv line and Philips Island generating units CT2, CT3 and ST Outage of Linwood - Chichester 230 kv line and Philips Island generating units CT2, CT3 and ST Outage of Grays Ferry - Tunnel 230 kv line, Macdade - Ridley - Morton 230 kv line, Plymouth Meeting 138 kv bus and Basecase Outage of New Freedom - East Windsor 500 kv line and Basecase Outage of Chichester bus section 1, Chichester - Foulk 230 kv line, Foulk 230/13.8 kv transformer # 2, Chichester 230/138 kv transformer, Eddystone - Master 138 kv line, Chichester 138/69 kv transformers # 7 and 8 Outage of Heaton 138 kv station bus section 2 and Heaton - Woodbourne 230 kv line with stuck breaker 805 and 995 Outage of Heaton 138 kv station bus section 2 and Heaton - Woodbourne 230 kv line with stuck breaker 805 and 995 Outage of Heaton 138 kv station bus section 2 and Heaton - Woodbourne 230 kv line with stuck breaker 805 and 995 Phase-ground fault on the Printz line side of the breaker ( close-in line fault). Phase-ground fault on the Chichester line side of the breaker ("close-in" line fault) Overload on Chichester 230/138 kv transformer Overload on Eddystone - Saville 138 kv line Overload on Jarrett - Whitpain 230 kv line Overload on Jarrett - Heaton 230 kv line Overload on Hartman - Warrington 230 kv line Overload on Linwood - Chichester 230 kv line Overload on Linwood - Chichester 230 kv line Overload on Chichester - Saville 138 kv line Overload on Tunnel - Parrish 230 kv line Overload on Plymouth Meeting - Bryn Mawr 138 kv line Overload on North Wales and Heaton 138 kv area Overload on Cromby 138 kv station Overload on Perkiomen 138 kv station Overdutied breaker at Eddystone 230 kv CB # 785 Overdutied breaker at Eddystone 230 kv CB # 365 n-1-1 Thermal Violation n-1-1 Thermal Violation Add a second 230/138 kv transformer at Chichester, A dd an inductor in series with the parallel transformers Replace terminal equipment at Eddystone and Saville and replace underground sectiion of the line 12/16/2011 5/27/2011 n-1-1 Thermal Violation Replace terminal equipment at Whitpain and Jarrett 5/27/2011 n-1-1 Thermal Violation Replace terminal equipment at Heaton and Jarrett substations 5/27/2011 n-1-1 Thermal Violation Replace terminal equipment at Warrington and Hartman 5/27/2011 Generation Deliverability Replace terminal equipment at Chichester 5/27/2011 Generation Deliverability Replace terminal equipment at Chichester 5/27/2011 Generation Deliverability/ Common Mode Violation Reconductor the line and upgrade terminal equipment 12/31/2012 Generation Deliverability Replace terminal equipment at Parrish 5/27/2011 Common Mode Violation Install 230/138 kv transformer at Eddystone 6/1/2011 Baseline Voltage Study Violations Baseline Voltage Study Violations Baseline Voltage Study Violations Add a second 230/138 kv transformer at Heaton. Add a circuit breaker on the Heaton - North Wales 138 kv line. Add a 35 MVar capacitor at Heaton Replace 230/69 kv transformer # 6 at Cromby. Add two 50 MVar 230 kv capacitor banks at Cromby Add 138 kv circuit breakers at Cromby, Perkiomen, and North Wales. Add a 35 MVar 138 kv capacitor at Perkiomen 12/16/ /31/2011 8/1/2011 Short Circuit Violation Upgrade the circuit breaker 5/31/2011 Short Circuit Violation Upgrade the circuit breaker 5/31/2011 PJM 2010 Regional Transmission Expansion Plan 87

18 Section Public Policy Drivers.3.2 Hudson Unit #1 Prior to the 2010 RTEP, the need for the RMR on Hudson Unit #1 had been set to expire in However, primarily due to the delays in the expected in-service date for the Susquehanna - Roseland 500 kv line, a number of reliability criteria violations shown on Map.7 would occur in 2012 if the Hudson Unit #1 unit were to retire prior to the summer of 2012: Map.7: 2012 Overloads Hudson Unit #1 Retirement Contingency overload on West Wharton - Greystone 230 kv circuit Contingency overload on Kittatinny - Newton 230 kv circuit Contingency overload on Glendon - Gilbert 115 kv circuit Contingency overload on Roseland - West Caldwell D 138 kv circuit Contingency overload on Roseland - West Caldwell G 138 kv circuit Contingency overload on Cedar Grove F - Clifton K 230 kv circuit Contingency overload on Larrabee - Atlantic 230 kv circuit 88 PJM 2010 Regional Transmission Expansion Plan

19 Public Policy Drivers Section Relationship to Susquehanna - Roseland 500 kv Status PJM has developed an operational solution to address the criteria violations that would otherwise be expected to occur in 2012 without the Susquehanna - Roseland line. The operational solution included extending the Reliability Must Run (RMR) for Hudson Unit #1 into 2012 and operating to the NERC category C double-circuit tower line contingencies that are driving the need for the line. Operating to the double circuit towerline contingencies will provide PJM Operations staff the time needed to implement demand resources to manage flow on constrained facilities once other generation redispatch options have been exhausted. Analysis shows the combination of retaining the Hudson Unit #1 on RMR along with implementing demand resources would be effective at controlling the thermal violations expected to occur in 2012 without the Susquehanna - Roseland line. PJM also conducted a preliminary market efficiency analysis of 2012 and 2013 to determine the impact of operating to double-circuit tower line contingencies driving the need for the Susquehanna - Roseland 500 kv line. The market efficiency analysis assumed Hudson Unit #1 in-service in 2012 and The study results showed a net increase in gross congestion in each year, primarily in New Jersey: $160 million in 2012, and $280 million in PJM 2010 Regional Transmission Expansion Plan 89

20 Section Public Policy Drivers 90 PJM 2010 Regional Transmission Expansion Plan