Ancillary Services

Ancillary Services
For Load Serving Entities

PJM State & Member Training Department
2010 PJM
9/29/2010
Module Objectives
The Student will:
Identify the purpose and features of the PJM Day-Ahead Scheduling Reserve Market Identify the purpose and features of the PJM Market Based Regulation Market Identify the elements of the PJM Synchronized Reserve Market Identify the purpose, requirements and business rules for black start units Describe the importance of reactive reserves to maintaining system reliability
2010 PJM
9/29/2010
Agenda
Day-ahead Scheduling Reserves Market-based Regulation Market-based Regulation Overview Market-based Regulation Features & System Real Time Market Operations Regulation Settlement Regulation Monitoring and Verification Market-based Regulation Business Rules Synchronized Reserve Market Black Start Service Reactive Services Appendix
2010 PJM
9/29/2010
Purpose of Reserve Objectives
Reserve requirements are values of reserve which enable the system to operate reliably and economically while providing protection against load variations, forecast error and equipment failure. Enables control area to restore tie lines to precontingency state within 10 minutes of a contingency that causes an imbalance between load and generation
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Operating Reserves
Operations Definition of Operating Reserves Extra available generation that is scheduled on a dayahead basis and maintained in real-time.
Accounting Definition of Operating Reserves Make-whole payments to pool-scheduled generation Defined in Operating Agreement Schedule 1-3.2.3 &3.3.3 Following slides refer to the Operations Definition
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What is Day-ahead Scheduling Reserve? On a daily basis, PJM must schedule enough capacity to cover the forecast load plus expected sales of energy off the system and operating reserves
RFC Day-ahead Scheduling Reserve VACAR Day-ahead Scheduling Reserve
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Day-ahead Scheduling Reserves
PJM schedules reserves on a day-ahead basis in order to ensure that differences in forecasted loads and forced generator outages do not negatively impact system reliability.
Day-ahead Scheduling Reserve market began June 1, 2008

Day-ahead Scheduling Reserve Requirement is calculated on an annual basis.
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Day-ahead Scheduling Reserve Calculation
Day-ahead Scheduling Reserves = Underforecasted LFE + FOR
Load Forecast Error Component (LFE)
Forced Outage Rate Component (FOR)
Applies to the RFC DASR Requirement Only!
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Load Forecast Error Component

Load Forecast Error Component (LFE)
Focus is on under-forecasted Load Forecast errors which can result in a capacity deficiency. Based on the 80th percentile of a rolling three year underforecasted average Effective January 1, 2010 LFE error component of Day-ahead Scheduling Reserve is 1.90%
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Forced Outage Rate Component

Forced Outage Rate Component (FOR)
Based on a rolling three year average of forced outages that occur from 18:00 the scheduling day (day-1) through the operating day at 20:00 Duration covers timeframe after the Reserve Adequacy Run through the evening peak period for which the system is scheduled Additional reserves can be scheduled if Hot/Cold Weather Alert is issued
Effective January 1, 2010 the FOR error component of the Day-ahead Scheduling Reserve is 4.98%
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Day-Ahead Scheduling Reserve Requirement (RFC)
2010 LFE component is 1.90% 2010 FOR component is 4.98% Total 2010 DASR Requirement is 6.88%
(2.10% in 2009) (4.64% in 2009) (6.75% in 2009)

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Day-ahead Scheduling Reserve Timeline
Calculated annually during the month of November Calculation covers three year window November 1st (year -3) through October 31st (Current Year) Results communicated to Market Implementation Committee, Operating Committee and System Operations Subcommittees Calculations implemented annually on January 1st. Example
Rolling 3 Year Window Calculations Performed Implementation
Nov 1, 2006
Oct 31, 2009 November, 2009
Jan 1, 2010
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Reserve Terminology
Contingency Reserve T < 10 Minutes Supplemental Reserve 10 < T < 30 Minutes
The Day-ahead Scheduling Reserve requirement is the sum of the requirements for all zones within the RTO and any additional reserves scheduled in response to an RTO-wide Hot or Cold Weather Alert or other conservative operations
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Day-ahead Scheduling Reserve Market Methodology
The RFC Day-ahead Scheduling Reserve cleared in the Day-ahead
Market is 6.88% times the RFC Peak Load Forecast at 1200 hours. The RFC Day-ahead Scheduling Reserve scheduled in the Reserve Adequacy Commitment is 6.88% times the RFC peak load forecast at 1800 hours.
Dominion Day-ahead Scheduling Reserve is based on their share of the VACAR Reserve Sharing Agreement and is set annually. (418 mw for 2010)
The RFC and Dominion Day-ahead Scheduling Reserve Requirements are added together to form a SINGLE RTO Day-ahead Scheduling Reserve Requirement which is scheduled economically across the RTO.
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Reserve Requirements Summary
Peak Valley
Peak Valley
Peak Valley
In addition to Day-ahead Scheduling, PJM Operates in real-time to ensure Contingency/Primary (10 minute) and Synchronized/Spinning Reserve Requirements are always maintained.
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Day-ahead Scheduling Reserve Market Overview

The Day-ahead Scheduling Reserve product is : Offer-based market for 30-Minute Reserve that can be provided by both Generation and Demand Resources Market that is designed to clear existing Day-Ahead Scheduling (operating) reserve requirements as defined by reliability standards: (RFC & SERC) Day-ahead, forward market that clears simultaneously with Day-Ahead Energy Market Costs of Day-ahead Scheduling Reserve product will be allocated to real-time obligation ratio share
Purpose: To encourage and incent generation and demand resources to provide the flexible capability to provide 30- minute reserves
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When Will the DASR Market Clear?
DASR Market will clear simultaneously with the DA Energy Market
DASR Offers for the next operating day are submitted by 12:00 noon
DASR Results are posted at 1600 in eMKT
PJM will post preliminary DASR billing data on PJM.com

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DASR Requirement Example

Hour X A B DA Fixed Demand for RTO (RFC = 52,000) Cleared DA Demand for RTO B Energy Scheduled Day-Ahead for RTO RFC Load Forecast @ 1200 D * 6.88% RFC DASR Requirement based on LF (6.88%) VACAR (Dominion) DASR Requirement E+F B +G Total RTO DA Scheduling Reserve Requirement Total Scheduled DA + DA Scheduling Reserve PJM RTO Load Forecast @ 1800 RFC Load Forecast @ 1800 J * 6.88% RFC DASR Requirement based on LF (6.88%) VACAR (Dominion) DASR Requirement K+L I+M N-H RA DASR Requirement for RTO TOTAL RA Additional Reserve Commitments (BOR) 6/1/08
60,000 80,000 80,000 70,000 4,816 418 5,234 85,234 95,000 75,000 5,160 418 5,578 100,578 15,344 Results @ 1600 prior to the Reliability Analysis Day-Ahead Scheduling Reserve Clearing Price
1200 to 1600 1600 to 1800
C D E F G H I* J K L M N O
*Note: Load Forecast values can differ at different times of day

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Who will pay for DA Scheduling Reserve?
Day-ahead Scheduling Reserve settlement is a zero-sum calculation based on the Day-ahead Scheduling Reserve provided to the market by generation and demand resource owners and purchased from the market by participants. Each Load Serving Entity (LSE) on the PJM system incurs a Day-ahead Scheduling Reserve obligation in kWh based its load ratio share within the RTO times the amount of Dayahead Scheduling Reserve assigned in the RTO.
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DA Scheduling Reserve Obligations

Participants may fulfill their Day-ahead Scheduling Reserve obligations by:
Owning Day-ahead Scheduling Reserve resources from which the RTO obtains Day-ahead Scheduling Reserve ; Entering bilateral arrangements with other market participants; or Purchasing Day-ahead Scheduling Reserve from the Day-ahead Scheduling Reserve market.
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Who Can Provide Reserves? Resources with the ability to provide reserve capability in 30 minutes including primarily:
Online Steam generation with capability to increase output from DA dispatch point Offline CTs that can start to provide Reserve Hydro and Pumped Storage Units Dispatchable DSR resources DASR offers may be submitted only for those resources located electrically within the PJM RTO
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Who Can Provide Reserves?

All generators that have submitted energy offers with the parameters that make them capable of increasing energy output within 30 minutes are available to provide Day-ahead Scheduling Reserve
A valid generator or demand response offer must be available in the Day-ahead Energy Market to participate in the DASR market Energy only resources may participate
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Calculation Available Reserves Generators

Generators have a must-offer requirement. If available and no offer price is provided, offer price = zero
If Online: Minimum of
DASR Available MW = (Emergency max Dispatch Pt)
OR
DASR Available MW = (30 * Ramp Rate)
If Off-line:
And (Cold Startup Time + Cold Notification Time < 30 min)
DASR Available MW = Emergency Max

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Hydro Resources Day-ahead Scheduling Reserve Can be provided by: Avail DASR MW
Run-of-river Emer.Max - Dispatch Pt
Pumped hydro in Emer.Max - Dispatch Pt generating mode Pumped hydro Pumped MW in pumping mode
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DASR Generator Offer Screen
The following parameters are Already part of energy offer curve: Ramp Rate Cold Start up & Notification Times Emergency max Value
Participant Supplies Offer Price
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Demand Resources Dispatchable in Real Time

Demand Resources DO NOT have a must-offer requirement.
Load response resources must be registered in the Economic Load Response program, indicate that they can be dispatchable by PJM in real-time and be able to be reduced within 30 minutes. Demand resources may indicate if they are available to provide Day-ahead Scheduling reserve. Default = unavailable.
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Demand Resource Requirements

Demand resources response controls must be approved by PJM prior to participation in the Day-ahead Scheduling Reserve Market including ability to be dispatched by PJMs Unit Dispatch System. Demand resources providing Day-ahead Scheduling Reserve are required to provide telemetry that is capable of providing metering information at no less than a one minute scan rate. Metering information of demand resources is not required to be sent to PJM in real time. Daily uploads at the end of the day if an event has occurred are sufficient, as the response evaluation is performed after the fact.
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Demand Resource Requirements
Demand resources may be aggregated and offered into the PJM Day-ahead Scheduling Reserve Market as one combined resource if the appropriate telemetry is provided for the aggregated resource. Demand resource participation will be limited to 25% of the RTO Day-ahead Scheduling Reserve Requirement. Demand Resources will be allowed to participate in the Dayahead Scheduling Reserve Markets if approved by the appropriate Regional Reliability Council.
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Demand Resources Batch Resources

Load response resources that are considered batch load resources as defined in the Synchronized Reserve Market detailed in PJM Manual for Scheduling Operations (M-11) may participate in the Day-ahead Scheduling Reserve market under the same conditions as exist for Synchronized Reserve with respect to having already reduced prior to receiving a PJM dispatch instruction to do so. Such resources must remain off line for the duration of the PJM dispatch request in order to receive the Day-ahead Scheduling Reserve market payment.
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DASR Demand Offers
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Unit Example
500MW unit that would otherwise be dispatched to full load in Day-Ahead is reduced to 400MW to provide Day-Ahead Scheduling (Operating) Reserve. Units offer is $30, Day-Ahead LMP is $50. With Day-ahead Scheduling Reserve Market in place, the unit is paid a clearing price that includes the $20 opportunity cost, plus any offer to provide Day-Ahead Scheduling (Operating) Reserve. Units with a dispatchable range based on the DA dispatch point could be cleared as Day-Ahead Scheduling Reserve Off-line CTs with a Day-Ahead Scheduling Reserve offer could be cleared
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DASR Clearing Process

DASR Clearing Process Is a simultaneous, least-cost optimization with the energy market as part of the Day-Ahead Market mechanism. The Day-ahead Scheduling Reserve Requirement will be calculated based on the PJM RTO load forecast for the upcoming operating day. Will result in an hourly RTO clearing price for Day-ahead Scheduling Reserve for the next day,
A non-zero clearing price can result even reserves are not deficient
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DASR Clearing Price

The Day-ahead Scheduling Reserve Market clearing price is set equal to the merit order price of the highest cost Day-ahead Scheduling Reserve resource necessary to meet the remaining requirement.
Resource merit order price ($/MWHr) Resource Day-ahead Scheduling Reserve offer Resource Day-ahead Scheduling Reserve opportunity costs
Both generator startup costs and demand resource shutdown costs are divided over the expected commitment period for the resource, as part of the market clearing process. Neither of these costs are included in the clearing price. Day-ahead Scheduling Reserve start-up costs are defined as applicable generator startup costs required to provide Day-ahead Scheduling Reserve or demand resource shutdown costs required to provide Dayahead Scheduling Reserve.
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Simplified Market Clearing Example

Startup + Notif. Time 60 min 120 min 60 min 25 min 20 min 180 min Energy Offer Price $30 $40 $100 $80 $90 $20 Eco Min MW 10 MW 20 MW 20 MW 0 MW 30 MW 30 MW Eme Max MW 50 MW 60 MW 20 MW 50 MW 30 MW 50 MW DA Energy MW Award 50 MW 50 MW 0 MW 0 MW 0 MW 50 MW
Unit A B C D E F
Type ST ST CT CT CT ST
DA LMP $40 $40 $40 $40 $40 $40
Unit B
Sets DA LMP
Units B, D, & E
Available for Reserve
DA Demand Load Forecast DASR Requirement = 7%
150 MW 200 MW 14 MW
Units selected in Dayahead energy market

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Marginal Unit
Unit Available for DASR
Unit Not Available for DASR
Market Clearing Example : Offer Parameters

Startup + Notif. Time 60 Min
Unit A
Type ST
Ramp Rate (MW/min) 3
Energy Offer Price $30
Eco Min MW 10 MW
Eme Max MW 50 MW
DASR Offer Price $1
ST
120 min
$40
20 MW
60 MW
$2
CT
60 Min
10
$100
20 MW
20 MW
$5
CT
25 Min
$80
0 MW
50 MW
$3
CT
20 min
$90
30 MW
30 MW
$10
ST
180 min
$20
30 MW
50 MW
$6
Note: DASR Offer quantity is derived
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Market Clearing Example: Simultaneous Clearing Results

DASR Offer Price + Opp. Cost $11 $2 $5 $3 $10 $26
Uni t A B C D E F
Typ e ST ST CT CT CT ST
Startup + Notif. Time 60 min 120 min 60 min 25 min 20 min 180 min
Ramp Rate (MW/ min) 3 1 10 1 3 5
Energy Offer Price $30 $40 $100 $80 $90 $20
Disp Pt MW 10 MW 20 MW 20 MW 0 MW 30 MW 30 MW
Eme Max MW 50 MW 60 MW 20 MW 50 MW 30 MW 50 MW
DASR Quantity 0 MW 10 MW 0 MW 50 MW 30 MW 0 MW
DASR Offer Price $1 $2 $5 $3 $10 $6
Opp . Cost $10 $0 $0 $0 $0 $20
DA Energy MW Award 50 MW 50 MW 0 MW 0 MW 0 MW 50 MW
DASR MW Award 0 MW 10 MW 0 MW 4 MW 0 MW 0 MW
DA Demand Load Forecast DASR Requirement = 7%
150 MW 200 MW 14 MW
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Market Clearing Example: Summary of Results
Least Cost Solution:
Unit B (ST) sets price in DA Market Unit B (ST) with flexible range and low opportunity cost is committed to provide DASR Unit D (CT) with low opportunity cost is committed to provided DASR Unit D (CT) sets price in DASR Market
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How will resources provide Day-Ahead Scheduling Reserve?

Unlike Synchronized Reserves, the Day-Ahead Scheduling Reserve Requirement is not maintained in Real Time There are no Day-ahead Scheduling Reserve events for resources to respond Resources will be responding to normal PJM dispatch instructions Those resources receiving a day-ahead award for Day-ahead Scheduling Reserve would receive the hourly clearing price for the awarded MW amount as long as they were capable of providing the reserve in real time as scheduled Performance will be measured after the fact
No Penalty for non-performance (penalty = forgone revenue)
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Operating Scenarios Measuring Response

Unit is Online & Following PJM Dispatch with Dayahead Scheduling Reserve Award
1. Eco Min <= (Emergency Max DASR Market Award) ***Resource can be self-scheduled with dispatchable range. Resource is paid DASR Clearing Price * DASR Market Award
IMPORTANT!
Those resources receiving a day-ahead award for Day-ahead Scheduling Reserve, that have a Real-time dispatchable range that is less than the resources Day-ahead dispatchable range become ineligible to receive a Day-ahead Scheduling Reserve Market payment.
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Operating Scenarios - Measuring Response Unit is Offline and requested to start by PJM with Day-ahead Scheduling Reserve Award
1. Start time + notification time of less than or equal to 30 minutes 2. Requested to start at any hour of the day 3. The unit completes startup within specified startup and notification time from the time the PJM operator issued the instruction.
Resource is paid DASR Clearing Price X DASR Market Award

IMPORTANT!
Those resources receiving a day-ahead award for Day-ahead Scheduling Reserve, that have a Real-time dispatchable range that is less than the resources Day-ahead dispatchable range become ineligible to receive a Day-ahead Scheduling Reserve Market payment. 40 9/29/2010
Measurement of Demand Resource Response

For Demand Resources, measurement is the difference between the demand resources MW consumption at the time a resource is requested by PJM dispatch to reduce and its MW consumption after 30 minutes of the request. In order to allow for small fluctuations and possible telemetry delays, demand resources consumption at the start of the event is defined as the greatest telemetered consumption between one (1) minute prior to and one (1) minute following the issuance of the dispatch instruction. Similarly, a demand resources consumption thirty minutes after the dispatcher request is defined as the lowest consumption measured between twenty nine (29) and thirty (31) minutes after the start of the request
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Interaction of Reserve Market Products

Resources can be capable of providing all three reserve products:
Synchronized Reserve, Regulation, and Day-ahead Scheduling Reserve
All three cannot be provided simultaneously, only two products, at most

Day-ahead Scheduling Reserve + Regulation Day-ahead Scheduling Reserve + Synchronized Reserve
Day-ahead Scheduling Reserve + Sync Reserve + Regulation
YES YES NO
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Market Settlements
Actual costs for Day-ahead Scheduling Reserves are allocated according to load ratio share.
Similar to the Regulation and Synchronized Reserve markets, each Load-Serving Entity would carry an obligation to purchase Day-ahead Scheduling Reserve equal to its obligation ratio share of the RTO requirement
Charges are based on the MW obligation carried by each LSE.
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DASR Charges
Day-ahead Scheduling Reserve charges for each participant are equal to:
1. The hourly Day-ahead Scheduling Reserve clearing price times the MW of Day-ahead Scheduling Reserve that which is purchased from the market plus; 2. The participants share of any unrecovered costs incurred by assigned Day-ahead Scheduling Reserve resources over and above the Day-ahead Scheduling Reserve clearing price plus (Operating Reserve) 3. The participants share of any unrecovered costs incurred by those resources PJM committed for the sole purpose of providing Day-ahead Scheduling Reserve (Operating Reserve)
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DASR Market Settlements Summary
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Operating Reserves Accounting
The implementation of Day-Ahead Scheduling Reserve Market will impact Operating Reserves Accounting:
Revenue from the Day-ahead Scheduling Reserve Market will be applied against balancing operating reserve credits that correspond to the hour that the revenue was earned
(similar to the Synchronized Reserve Market).
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A Few Notes About Real-time Scheduling
Regulating Reserves
1% of the forecasted peak load (peak) or 1% of the valley load (off peak) Made up of not less than 75% spinning reserves Resources allocated to regulating reserves shall not be included as Contingency Reserves
Contingency
Reserves
Not less than the largest contingency Made up of at least 50% spinning reserves No more than 25% should be interruptible load
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eMKT and Operating Reserves
Operating Reserve Requirements scheduled in DA
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Agenda
2010 PJM
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Single Regulation Market Region
ComEd
DLCO Mid Atlantic Region AEP AP
DAY DOM
Control Zone 2010 PJM Regulation Market Region
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The Energy Balance
Load
Losses
Power Generated
Interchange
DEMAND
Hertz
59 60 61 58 62
GENERATION
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Imbalance Conditions
Over-generation
Total Generation > Total Demand Frequency > 60 Hertz Generators momentarily speed up
Under-generation
Total Generation < Total Demand Frequency < 60 Hertz Generators momentarily slow down
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Response Time Hierarchy
System Inertia .................................... 0 seconds Frequency Bias Characteristic ..................... < 5 seconds
(Governor & Load Response)
Regulation .................................> 30 seconds Economic Dispatch .......................................... > 5 minutes
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What is Regulation?
Definition: A variable amount of generation energy under automatic control which is independent of economic cost signal and is obtainable within five minutes Generating units or Demand Response Resources that provide fine tuning that is necessary for effective system control Governors respond to minute-to-minute changes in load Regulating units correct for small load changes that cause the power system to operate above and below 60 Hz for sustained period of time
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Regulation vs Economic Dispatch
Load (MW x 1000) 40
36 34 32 30
Regulation
28
26 24 1
2010 PJM
Economic Dispatch
11 13 15 Hour of Day 55
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19
21
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PJM Market with Market-based Regulation
Creates market for regulation Provides Market Clearing Price for regulation Protects supplier by providing opportunity cost of energy Provides more incentive to provide regulation
Regulation Market
SALE
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PJMs Regulation Requirement

PJM will commit regulation based on Reliability First Corp. (RFC) requirements
Requirement for off-peak hours (0000-0459)

1% of the forecasted valley load for the operating day
Requirement for on-peak hours (0500-2359)

1% of the forecasted peak load for the operating day
Requirement is on either side of economic set point may be adjusted by PJM if consistent with maintenance of RFC control standards
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PJMs Regulation Requirement (Example)

RTO Forecasted Load For Operating Day
Valley Load 78,000 MW
Peak Load 140,000 MW
Off-Peak
On-Peak
Off-Peak Regulation Requirement Valley Load Forecast 78,000 MW * * 1% 1% = = Regulation Requirement 780 MW
On-Peak Regulation Requirement

Peak Load Forecast
2010 PJM
* *
1% 1%
= = 58
Regulation Requirement 1400 MW

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140,000 MW
Fulfilling Regulation Obligation

All LSEs have hourly Regulation Obligation
pro rata share of PJM Regulation assigned for hour

based on LSE total real time hourly load Obligation can be satisfied by:
self-scheduling own resources enter bilateral transactions with other participants purchasing from PJM Regulation Market
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Regulation External Interfaces
Regulation Screens XML Post & Download Screens Regulation Technical Software
PJM Market Settlements
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eMKT = Market User Interface

Logging in Viewing regulation market messages Submitting regulation offers Viewing public regulation market results Responding to error messages Posting & downloading XML regulation files Bilaterals
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Regulation Subsystems
Market User Interface
PJM EMS Other PJM Systems
Markets Database Security Constrained Economic Dispatch (SCED)

(Schedules & LMPs)
REGO
DMT
DMT = Dispatcher Management Tool REGO = Regulation Optimizer
2010 PJM
Settlements Database
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Real-time Regulation Data/Terms

AReg Assigned Regulation
Static for hour as a result of market Sent by PJM for each resource capable of regulation
TReg Total Regulation

Sent from Resource owner to PJM Represents fleet regulation capability
RegA Regulation Control Signal

Control signal sent by PJM to Resource owner Sent every 2 seconds Bounded by TReg
CReg Current Regulation

Calculated value where fleet is operating relative to regulation band Fleet-wide value sent from Resource owner to PJM Sent every 4 seconds Bounded by TReg
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Real-time Regulation Data/Terms
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Regulation in Real-time Operations

Treg Total MW on regulation
RegA % of total AR signal
PJM generates AR signal (derived from ACE) for each Control Zone (MidAt, AP,CE,AEP,DAY,DUQ,DOM)
Treg Total MW on regulation Reg A % of total AR signal
Market Operation Center

% of MOC RegA signal % of MOC RegA signal
RegA % of total AR signal
TReg Total MW on regulation
Market Operation Center

% of MOC RegA signal % of MOC RegA signal % of MOC RegA signal
Curtailment Service Provider

% of CSP RegA signal % of CSP RegA signal
Reg Unit
Reg Unit
Reg Unit
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Reg Unit
Reg Unit
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Reg Load
Reg Load
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* Note: CSP must reverse sign of AR signal for Demand Resources
Synchronized Reserve and Regulation Optimization

Using hour-ahead regulation availability, amount, and forecasted LMPs:
Software co-optimizes Regulation and Synchronized Reserve assignments to minimize cost of both products and energy (SPREGO) Synchronized Reserve and Regulation assignments for next hour are posted on eMKT
Units cannot be committed for both Synchronized Reserve and Regulation during the same hour
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Regulation Market Time Line

Noon
Regulation offers and cost data must be supplied by 6:00 pm day-ahead and is applicable for the entire 24 hour period for which it is submitted.
Throughout Operating Day

PJM clears Regulation Market hourly and periodically tests performance
6:00 pm
Regulation Offers (price only) due by 1800 EPT for next operating day
midnight
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Regulation Data Flow

PJM EMS
Regulation Offers Bilateral Transactions One AR Signal to each MOC/CSP
Other PJM Systems

PJM Load Forecast Hydro Schedules Reserve Requirements
eMKT
Regulation Clearing Prices Regulation Assignments (hourly) Other detailed information
Two-Settlement & Regulation Software
AR = Area Regulation MOC = Market Operation Center CSP = Curtailment Service Provider
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Settlements
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Input: Regulation Offer
Regulating status
available unavailable self-scheduled
Regulation capability (MW)

Achievable in 5 minutes (Raise or lower)
Regulation offer
capped at $100/MWh Price-based market
Cost-based in AEP/Dominion (see next slide)
Cost component for Demand response resource is $0 unless determined by CDTF
Regulation limits (MW)

high regulating limit low regulating limit Unit output between which the unit is capable of regulating (Not capability of regulation)
For Demand Response: Regulating High Regulating Low = 2 * Regulation Capability
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2010 PJM
Input: Regulation Offer (Continued)
Regulation Low MW Threshold

Optional PJM will not make a regulation assignment less than this value for unit
Example:
Unit lists a Regulation Low MW Threshold of 5 mw.
PJM wants to assign the unit 3 mw of Regulation The unit would not be picked up in the regulation market.
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Cost Based Regulation Offers

As of December 1, 2008 every resource that participates in the regulation market must submit a cost-based offer for regulation in addition to any market-based offer and the relevant data for that resource to support the cost-based offer
Fuel Cost [$/MBtu]: The fuel cost increase associated with operating the unit at lower loads than otherwise optimal and the unit specific heat rate degradation from operating at a reduced output. Heat Rate at Economic Max [Btu/KWh]: The heat rate at the units default economic maximum output. Heat Rate at Regulation Minimum [Btu/KWh]: The heat rate at the units regulation minimum (regulation low limit) ouput. Variable Operating and Maintenance (VOM) [$/MW of Regulation]: The cost increase in VOM resulting from operating the unit at an output that is lower than economic. NOTE: The VOM rate must comply with the specifications in Section 9 of Manual M-15.
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Cost Based Regulation Offers And eMKT

Based on the previous information eMkt will calculate the maximum cost-based offer for regulation and verify that the cost-based offer submitted is less than or equal to the maximum allowed. If the cost-based offer exceeds the maximum allowed, the offer will be rejected, otherwise the offer will be accepted. NOTE: If none of the additional cost information mentioned above is supplied to calculate the maximum cost-based regulation offer, the cost-based regulation offer of the unit can not exceed the applicable margin adder. Parameters not submitted default to zero. Current margin adder = $12 Units not submitting a cost based offer will not be permitted to participate in the Regulation market
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Regulation Hourly Updates

Regulation capability (MW) Regulation limits (MW) Regulation status
unavailable available self-scheduled
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Regulation Hourly Updates

The following may be changed after the Regulation market closes 60 minutes prior to the operating hour through eMKT hourly update screens and/or direct communication with the PJM scheduling coordinator: Status: Available to Unavailable or Self-scheduled to Unavailable High Regulation Limit may be decreased but not increased Low Regulation Limit may be increased but not decreased Regulating capability may be decreased but not increased Regulation Maximum may be decreased but not increased Regulation Minimum may be increased but not decreased
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Band of Regulation
Economic Maximum High Regulation Limit Basepoint + Capability
Economic Basepoint
MW Regulation capability bid into eMKT
MW Regulation capability bid into eMKT
If high and low regulation limits are not most restrictive then REGO uses most restrictive min and max
Basepoint - Capability Low Regulation Limit
Economic Minimum
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Regulation Offer Example
Status
Offer Regulating Regulating Regulating Regulating ($/MW) Capability High (MW) Low (MW) Low (MW) Threshold (MW) $30 10 200 100 5
Available
With this example offer, the generation owner is stating that: - They have 10 MW of regulation (10 up and 10 down) capability - They can regulate if the unit output is between 100 and 200 MW (this is used in the Opportunity cost calculation) - They are offering into the hourly regulation market with a $30 price - They do not want to be assigned any regulation less than 5 MW
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Bilateral Transactions
Entered by Buyer using MUI (eMKT)
Seller MW Start Time End time

Seller confirms Data entered no later than 1600 day after transaction starts
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Determining Regulation Market Clearing Price
Minimize Regulation Production Cost
Meet PJM Regulation Requirement
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Determining Regulation Market Clearing Price

Co-optimization forecasts an RTO dispatch profile and LMP for the
market hour and adjacent hours. Using the dispatch profile and forecasted LMP an opportunity cost is estimated for each resource eligible to provide regulation. The estimated opportunity cost for demand resources will be zero. The estimated opportunity cost is added to the regulation offer price to create a merit order price. All available regulating resources are then ranked in ascending order of their merit order prices and the lowest cost set of resources necessary to simultaneously provide regulation and energy is determined. The highest merit order price assigned to resources to provide regulation becomes the RMCP for that hour. Merit order price for self-scheduled regulation is zero.
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Download Data from Markets Database
Regulation Offers Load Forecast Hydro Unit Schedules Scheduled Transmission Outages Facility Ratings Net Tie Schedules PJM Network Model
Regulation & Two Settlement Technical Software
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Regulation Three Pivotal Supplier Test
PJM utilizes the Three Pivotal Supplier Test in the Regulation Market
to mitigate market power. Three suppliers are jointly tested to determine whether those suppliers are pivotal and could potentially exert market power. Any resource failing the TPS test will be offer capped. Regulating resources are offer-capped at the lesser of their cost-based or market-based regulation offer price. An offer-capped resource will only be offer capped for a single hour as the TPS Test is rerun for each hour of the day.
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Calculate Merit Order Price

Unit Merit Order Price = Regulation Offer + Opportunity Cost
Opportunity Cost = |LMP - ED| * GENOFF

(Operating Hour)
Opportunity Cost = |LMPSH - ED| * GENOFF* TIME

(Shoulder Hours)
LMP ED GENOFF
TIME
forecasted LMP at generator bus price at setpoint unit must maintain to provide full amount of regulation MW deviation between economic dispatch & regulation setpoint percentage of the hour it would take the unit to reduce GENOFF MWs using applicable bid-in ramp rate
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Lost Opportunity Cost Components Calculate Merit Order Price

Regulation opportunity cost is divided into three components: Shoulder hour preceding the initial regulating hour while the unit moves uneconomically into its regulating band to comply with the next hours regulation assignment In the actual regulating hour from reducing or raising the units output uneconomically for the purpose of providing regulation Shoulder hour following the final hour of the regulation assignment while the unit moves from its uneconomic regulation set point back to its economic set point
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Lost Opportunity Cost Calculation

Opportunity cost if unit must be lowered to provide full amount of regulation.
LMP calling for max output
Uplift if unit must be raised to provide full amount of regulation. LMP calling for min output
Unit Price Curve
(AR min) + min output (regulation MW)
(AR
max) (regulation MW)

84
max output
MW
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Shoulder Hour Lost Opportunity Costs
Costs may also be incurred in the hours surrounding a regulation assignment.
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Shoulder Hour Lost Opportunity Cost Calculation
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Total Regulation Lost Opportunity Cost
Same calculation would be done on the hour after a regulation assignment comparing the regulating hour with the following hour. Previous example (both shoulder hours being equal) would yield a lost opportunity cost for the following hour of $192.30 Shoulder hour opportunity costs would be added to the regulating hour Lost Opportunity Cost calculation to determine the amount of opportunity cost credits (if any) required to make the unit whole
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Hydro and Regulation

Since hydro units operate on a schedule and do not have an energy bid
opportunity costs are calculated slightly differently. Formula is the same, however ED value is different ED (Hydro)
average of the LMP at the hydro unit bus for the appropriate on-peak (0700-2259) or off-peak (00000659, 2300-2359) period excluding those hours during which all available units at the hydro plant were operating.
ED (Non-Hydro) price at setpoint unit must maintain to provide full amount of regulation
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Hydro and Regulation

If the average LMP is higher than the actual LMP at the generator bus, the opportunity cost is 0
Day-ahead LMPs are used for the purpose of estimating opportunity costs for hydro units and actual LMPs are used in the after-the-fact accounting
If a hydro unit is brought on out of schedule to provide regulation, the opportunity cost is equal to the average LMP minus the actual LMP
If the actual LMP is higher than the average LMP, the opportunity cost is 0.
During the hours the hydro unit is in spill, the ED value is set to 0 such that the opportunity cost is based on the full value of LMP
During the operating day the operating company is responsible for communicating
this to the scheduling coordinator and updating the regulation updates page of eMKT
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Hydro and Regulation Opportunity Cost Calculation Opportunity Cost = |LMP - ED| * GENOFF
(Operating Hour)
Opportunity Cost = |LMPSH - ED| * GENOFF* TIME

(Shoulder Hours)
LMP ED
GENOFF TIME
forecasted LMP at generator bus average of the LMP at the hydro unit bus for the appropriate on-peak (0700-2259) or off-peak (00000659, 2300-2359) period excluding those hours during which all available units at the hydro plant were operating. MW deviation between economic dispatch & regulation setpoint percentage of the hour it would take the unit to reduce GENOFF MWs using applicable bid-in ramp rate
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Hydro Schedules and Regulation

When
determined to be economically beneficial, PJM maintains the authority to adjust hydro unit schedules for those units scheduled by the owner if the owner has also submitted a regulation offer for those units and made the units available for regulation.
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Determining RMCP for Each Hour

Calculated on an hour-ahead basis
50 45 40 35 25 20 $45 $45 $40 $35 $30 $25 $20 $15 $10 $5 1 3 5 7 9 11 13 15 Hour of Day
92
RMCP H 15 = $45/MWh
10
5
17
19
21
23
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Agenda
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Real-time Operations (DMT)

DMT=Dispatcher Management Tool LPA=Locational Pricing Algorithm
Markets Database
EMS=Energy Management System
LPA
LMPs, MW Dispatch Instructions
DMT
Regulation Assignments
EMS
Regulation Signal
Resource Owner
State Estimator Solution
Regulating Capability
PJM dispatchers have the ability to override or supplement hour-ahead regulation results due to changes in system conditions or unit availability. PJM dispatchers maintain total regulation capability within +/- 2% but no less than +/-15 MW bandwidth around RTO Regulation Requirement
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Regulation Market Operations

Adjustments to assigned regulation can be made within the current market hour by the PJM dispatcher If there is excess regulation,
PJM dispatcher de-selects units beginning with highest cost resource currently providing regulation continues moving downward
If there is deficiency,
PJM dispatcher select resources beginning with lowest cost unit currently not providing regulation continues moving upward
Hour-ahead RMCP does not change
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Assignment Changes
Regulation assignments posted on eMKT 30 minutes prior to the operating hour This is the vehicle for Regulation assignment notifications Companies in-service capabilities telemeter back to PJM EMS via data link PJM Operator will communicate verbally any differences to what is posted on eMKT
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Market Clearing Merit Order Example
Unit A B C D E F G H
Status Available Self-Scheduled Available Available Available Self-Scheduled Available Available
Regulation Capability 10 5 7 8 3 4 5 10
Regulation Bid $2 $0 $4 $5 $3 $0 $3 $3
Energy Bid $13 $20 $19 $14 $15 $19 $18 $9
Hourly LMP $22 $22 $22 $22 $22 $22 $22 $22
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Total LOC for the operating hour and adjacent hours.
Unit Status Regulation Capability 10 5 7 8 3 4 5 10 Regulation Bid $2 $0 $4 $5 $3 $0 $3 $3 Energy Bid $13 $20 $19 $14 $15 $19 $18 $9 Hourly LMP $22 $22 $22 $22 $22 $22 $22 $22 LOC
A B C D E F G H
Available SelfScheduled Available Available Available SelfScheduled Available Available
$9/MW $0/MW $3/MW $8/MW $7/MW $0/MW $4/MW $13/MW
LOC = LMP - Energy Bid

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+
Unit Status Regulation Capability 10 5 7 8 3 4 5 10 Regulation Bid $2 $0 $4 $5 $3 $0 $3 $3 Energy Bid $13 $20 $19 $14 $15 $19 $18 $9 Hourly LMP $22 $22 $22 $22 $22 $22 $22 $22 LOC A B C D E F G H Available SelfScheduled Available Available Available SelfScheduled Available Available $9/MW $0/MW $3/MW $8/MW $7/MW $0/MW
=
Merit Order Price $11 $0 $7 $13 $10 $0 $7 $16
$4/MW $13/MW
Merit Order Price = Reg. Bid + LOC

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Unit
Status
Regulation Capability 5 4 7 5 3 10 8 10
B F C G E A D H
Self-Scheduled Self-Scheduled Available Available Available Available Available Available
Merit Order Price $0 $0 $7 $7 $10 $11 $13 $16
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Unit Status Regulation Capability 5 4 7 5 3 10 8 10 Merit Order Price $0 $0 $7 $7 $10 $11 $13 $16
RMCP Regulation Market Clearing Price
B F C G E A D H
Self-Scheduled Self-Scheduled Available Available Available Available Available Available
Regulation Requirement = 24MW

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Agenda
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Regulation Settlement
Zero-sum calculation based on regulation provided by generation owners regulation purchased by LSEs
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Self Scheduling vs. Pool Assigned Regulation
Resources that self-schedule for regulation or Synchronized for a given hour are price takers. Those resources will be paid the clearing price times the number of MWs that they are scheduled for. Lost Opportunity is not considered in the commitment of a selfscheduled resource nor will it be awarded its LOC by PJM. However, these resources are guaranteed to run.
Pool assigned resources must enter a bid price which is used in determining whether the resource will be economically chosen for that hour. Although pool assigned resources are not guaranteed to run, when they do they will be paid their LOC.
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Regulation Credits Resource owners receive hourly credits PJM-scheduled or Self-scheduled regulation MWh priced at Regulation Market Clearing Price Additional revenue for any portion of regulation bid plus lost opportunity cost not recovered by regulation market clearing price revenues
For PJM scheduled regulation only (generation)
Additional revenue for any other unrecovered costs incurred by a resource called on by PJM solely for providing Regulation
I.e. Startup costs (generation)
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Regulation Charges
(RMCP * Adjusted Obligation) + Share of Opportunity Cost Above RMCP + Share of Unrecovered Costs
Adjusted obligation is original obligation plus bilateral sales minus bilateral purchases Shares of Opportunity Costs and Unrecovered Costs is based on amount of Regulation purchased from the market
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Agenda
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Adequacy & Quality of Regulation
Monitored in two steps
Generating unit certification Regulating capability verification

Standardized regulation test accomplishes both steps
Manual 12, Section 4 for details
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Regulation Testing
Accomplished after-the-fact Scores used both as a qualifier and as a tie-breaker for units with equal merit order prices Composite score is average of highest five of last seven tests
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Regulation Testing
Run during times when major fluctuations of load are not expected Units must maintain a minimum composite test score
75% compliance required
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Regulation Test Pattern
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Regulation Test Pattern

Unit output
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Regulation Certification
Conducted by PJM to certify response time of generating units assigned regulation Units must be able to respond with assigned regulation in 5 minutes Three consecutive acceptable scores are needed for unit to be certified PJM relies on owners data for initial qualification
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Agenda
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Regulation Market Eligibility

Regulating resources must be electrically located within PJM RTO Resource must
have real-time telemetry Internet SCADA for Demand up to 50 MW or PJMNet connection for larger than 50 MW Internet SCADA installed at customer expense be able to receive regulation signal (AReg) be able to respond automatically to regulation signal demonstrate minimum performance standards exhibit satisfactory performance on dynamic evaluations adequately telemeter MW output to PJM control center telemeter total regulation MW to PJM control center (TReg, CReg)
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Regulation and Demand Resources Notes

Opportunity
costs for Demand Resources will be zero
Demand Resources will be limited to providing 25% of the Regulation requirement

Demand
Response must attend initial training on Regulation and Synchronized Reserve Markets Demand Response must be registered in Economic Load Response program
Demand Response must send Notification to PJM via Load Response Application prior to reducing (through Regulation Assignment) in order to receive payment for load reduction through energy market
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Regulation Market Eligibility
Self-scheduled regulation must be submitted at least 60 minutes prior to the operating hour Regulation data (excluding offer price) may be changed hourly up to 60 minutes prior to the operating hour
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Regulation Status Changes

The following changes may be made after the regulation market closes through direct communications with the PJM Scheduling Coordinator or the eMKT Unit Hourly Update Screens:
Available to Unavailable Self-scheduled to Unavailable High Regulation Limit may be decreased but not increased (Scheduling Coord.) Low Regulation Limit may be increased but not decreased (Scheduling Coord.) Regulating capability may be decreased but not increased (Coord. Or eMKT) Regulation Maximum may be decreased but not increased (eMKT) Regulation Minimum may be increased but not decreased (eMKT)
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Regulation Status Changes
Within the Operating Hour..

If the unit is currently
Available for current hour regulation operation,
And
Is self-scheduled to supply regulation for next hour regulation market,
Then the unit is

Required to provide at least 60 minute notice prior to the hour to self-schedule regulation on the unit
NOT CONSIDERED FOR REGULATION MARKET UNTIL THE FOLLOWING HOUR
Self-scheduled to supply regulation for current hour regulation,
Is made available for current hour regulation operation,
Self-scheduled to supply regulation for current hour regulation,
Becomes unavailable for current hour regulation operation,
NOT CONSIDERED FOR REGULATION MARKET
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Regulation eMKT Screens
Area
MW offers due 60 minutes prior to the hour
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Regulation eMKT Screens - Demand
MW offers due 60 minutes prior to the hour
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Only future market hours are open

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Regulation eMKT Screens Demand
Only future market hours are open

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Filter by month
Entered by buyer
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Ancillary Service Market Prices
Prices posted 30 minutes prior to the market hour
Scroll down for Regulation prices
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Regulation Market Results
Posted 30 minutes prior to the market hour
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Synchronized Reserve and Regulation Results (Private)
18
Regulation assignments posted 30 minutes prior to the hour

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Synchronized Reserve and Regulation Results (Demand -Private)
Assignments posted 30 minutes prior to the hour
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Exercise
Due to a control problem in real-time (0415), my unit can no longer provide regulation for the rest of the day.
Notify PJM Scheduling Coordinator How do I model this in eMKT?
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Exercise
Make regulation unavailable in real-time as of 0415. All data due to eMKT by 60 minutes prior to operating hour.
Set date for today
20 20 20 20 20 0 0
10 10 10 10 10 10 10
150 150 150 150 150 150 150 Unavailable Unavailable
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Regulation Summary
LSE Regulation obligation may be fulfilled by:
Using own resources Entering Bilateral arrangements Buying from PJM Regulation market (default)
Regulation assignments can change hourly Regulation offers submitted and assignments posted through eMKT Regulating resources must meet performance criteria
LSE
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Questions?
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Agenda
Market-based Regulation Synchronized Reserve Market

Synchronized Reserve Market Overview Synchronized Reserve Market Timeline & Operation Synchronized Reserve Market Clearing Synchronized Reserve Market Settlement (Tier 1 & Tier 2) Synchronized Reserve Market Verification & Penalties
Black Start Service Reactive Services Appendix
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Consolidation of Synchronized Reserve Markets
PJM Synchronized Reserve Market has two Synchronized Reserve Zones and one sub-zone
RFC Synchronized Reserve Zone
Mid-Atlantic Sub-Zone
Southern Synchronized Reserve Zone (existing)
The limiting factor between the RFC market and Mid-Atlantic Sub-Zone will be the AP South reactive transfer interface
This will function the same way the Eastern Sub-Zone did previously but will include the entire Mid-Atlantic region
The limits and flows will be determined to provide west-toeast transfer capability
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Synchronized Reserve Market Areas

RFC Synchronized Reserve Zone DLCO ComEd AEP AP Mid Atlantic Synchronized Reserve Sub-zone
DAY
Control Zone Ancillary Service Region
DOM
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Southern Synchronized Reserve Zone

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RFC Synchronized Reserve Zone (As of 2/1/07)
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Synchronized Reserve Requirements (As of 2/1/07)

The RTO (except DOM) will have a single requirement
DVP will remain separate and will keep the same requirement as today
When AP South transfers are near the limit:
Mid-Atlantic Sub-Zone will have a locational requirement Would result in a higher clearing price in the MidAtlantic
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Reliability First Corp. Synchronized Reserve Requirement
Reliability First Corporation Synchronized Reserve Requirement

Each Balancing Authority, either individually or through participation in a Reserve Sharing Group, shall have a documented methodology to determine its Synchronized Reserve requirement Have a minimum Synchronized Reserve requirement of at least 50% of the Balancing Authoritys most severe single contingency
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Requirements RFC Synchronized Reserve Zone (excluding Dominion) Requirement will be the greater of: Calculated RFC minimum requirement OR Largest contingency in RFC Synchronized Reserve Zone
Normally 1350 MW
Mid-Atlantic sub-zone requirement will be equal to: Largest contingency in Mid-Atlantic region
Normally 1300 MW
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Dominion Reserve Requirement
VACAR Requirements VACAR Contingency Reserve (15 min)

Largest Unit in VACAR
1.5
DVP Contingency Reserve (15 min)
VACAR Operating Reserve 418 MW for 2010
Peak Load Share (VACAR)
DVP Synchronized Reserve (10 Minute)
DVP Contingency Reserve (15 min)
DVP 15 minute Non-Synchronized Resources
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Tier 1 and Tier 2 Resources
Tier 1 Economic
Tier 2 Noneconomic
Marginal, partially loaded units online, following economic dispatch and able to increase output in response to a Spinning event; Demand Response that drops load in response to request Condensers (CTs and hydro), steam reduced to provide spinning, CTs on at min operating at a point that deviates from economic dispatch, Demand Response that can drop load
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Tier 1 Capability Calculation - Example
10 min Ramp Point (380 MW)
Synchronized Maximum (400 MW)

Total Remaining Capacity = 100MW
Ramp Capability = 80MW
Estimated Dispatch Point (300 MW)
Synchronized Ramp Rate = 8 MW/min, therefore max T1 capability = 8 MW/min * 10min = 80 MW
Ramp Rate is more limiting, so T1 capability = 80 MW

Initially, no Tier 1 estimate for Demand Response
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Synchronized Reserve Providers
Who can provide Synchronized Reserves? Synchronized generators (steam, hydro, combustion turbine) Either online or condensing Demand Response
Limited to 25% of the Synchronized Reserve Requirement for each Reserve Zone
Not permitted in Dominion
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Demand Response as Synchronized Reserve

Demand Response must meet the following criteria to participate in the Synchronized Reserve Market:
Ability to receive and acknowledge All-call messages
As an alternative, customer may receive Synchronized Reserve Event status point via SCADA or ICCP at customer expense
Controls to automatically drop load

Controls must be approved by PJM
At most, one level of operator intervention in order to drop load

Telemetry that is capable of providing metering information at no less than a one minute scan rate around a call for Synchronized Reserve
Metering not required to be sent to PJM in real time. Data must be submitted within 24 hours of Synchronized Reserve Event
Recommended 10 minutes of data at start and end of Synchronized Reserve event
Demand resources may be aggregated and offered into Synchronized Reserve Market as one combined resource
Aggregated resources must be within same Synchronized Reserve Market Zone
Attendance at training on Ancillary Services for Load Response

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Synchronized Reserve Users
Who must acquire Synchronized Reserves? All load serving entities (LSEs) Obligation determined from real time load ratio share Obligation is by synchronized reserve zone
(or sub-zone if applicable)
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Synchronized Reserve Obligation

Enter bilateral agreements with other market participants
Selfscheduling Tier 2 resources

(Does not waive the obligation)
Purchasing from the Synchronized market
Owning Tier 1 resources or allocation from other Tier 1 resources

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Fulfilling Obligation: Tier 1 Calculation

Tier 1 estimated on a companys resources will count directly
towards that companys obligation (Tier 1 estimate cannot make obligation negative) Excess Tier 1 will be allocated to companies with remaining obligations, based on obligation ratio share Tier 1 calculated hourly
Units Tier 1 estimations are based on the more limiting of:
Difference between estimated dispatch point and Synchronized Reserve
maximum limit Appropriate Synchronized Reserve ramp rate times 10 minutes Synchronized Reserve maximum limit and Synchronized Reserve ramp rates enterable
through eMKT Economic limits and ramp rate values used as default if these limits are not specified
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Self - Scheduling
Resources may self-schedule for Tier 2 Synchronized Reserve until 60 minutes before each hour with the following exceptions:
If a resource was scheduled prior to the 1 hour point, but becomes unavailable before or during the operating hour, another resource may be selfscheduled in its place If a resource was unavailable for energy and therefore not evaluated as part of the Synchronized Reserve market, but becomes available during or before the hour, the resource may be self scheduled for Synchronized Reserve at that time
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Fulfilling Obligation: Bilateral Transactions
Entered by Buyer using eMKT or XML upload Confirmed by Seller on eMKT Data entered and confirmed no later than 1600 day after transaction starts (confirmation after 1600 will default the transaction to starting the day of confirmation)
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Fulfilling Obligation: Purchasing from Market
Any obligation remaining will be fulfilled by purchasing Synchronized Reserve from the market, at the Synchronized Market Clearing Price (SRMCP)
Backstop for fulfilling obligation

Loads located in a sub-zone will pay the sub-zone SRMCP, loads not in a sub-zone will pay the synchronized reserve zone SRMCP
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Agenda

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Market Timeline
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Prior to Operating Day

By 1800 the day prior to the operating day the following information must be submitted:
Synchronized Reserve offer price Energy use in MW (condensers only)

Synchronized Reserve Offer MW may be entered with offer price, to set default for entire day
All data submission pages will be available prior to the operating day (each page will be discussed in detail later)
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Prior to Operating Day - Offers

Tier 1 Information*
>= Economic Max
Synchronized Reserve Maximum
Synchronized >= Economic Ramp Rate Reserve Ramp Rate
* Not applicable to Demand Response
**
**
Capped at O&M plus $7.50 for generators
Tier 2 Offer
Synchronized Quantity (MW)
For condensing units

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Energy Use Synchronized (MW)* Status

(called condensing status in eMKT)
**
Synchronized Capped at $7.50 for Demand Response Offer ($/MW)

Available, Unavailable Self scheduled
* Not applicable to Demand Response
154
**
** May be update until 60 minutes prior to 9/29/2010 operating hour
Input: Synchronized Reserve Offer

Synchronized Reserve Cost Data
Heat Rate at Economic Max MW in [Btu/kWh] Heat Rate at Economic Max Synchronized MW in [Btu/kWh] VOM Variable Operating and Maintenance in [$/MBtu]
For condensing units, only VOM required Used in Synchronized market only to validate true cost
See PJM Manual M-15 Cost Development Guidelines for details
Offer will be rejected by eMKT if greater than cost plus $7.50
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Synchronized Status
For Combustion Turbines, if Unit Status is Unavailable or Max Emergency
Unit could still be assigned Tier 2 Synchronized Reserve

Unavailable or Max Emerg due to Emissions or Fuel limitations
If CT is truly unavailable (maintenance or forced outage)

Change Synchronized Status to Unavailable (as well as unit status) Or alternatively, make Synchronized Reserve MW = 0
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Market Timeline
Two hours prior to operating hour:
Tier 1 estimation will be run, based on current Synchronized Reserve maximums and Synchronized ramp rates for each unit Estimated unit dispatch levels will be calculated taking into account transmission constraints and scheduled transactions Tier 1 estimates derived from more limiting of: capability between dispatch point and Synchronized maximum; or Synchronized ramp rate times 10 minutes
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Market Timeline
90 minutes prior to operating hour:
Tier 1 estimation results will be posted as soon as complete, but not later than 90 minutes before the operating hour If Tier 1 estimations cannot be posted by 90 minutes prior, the previous hours estimates will be used Tier 1 estimations posted publicly by reserve zone/sub-zone and privately by units
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Market Timeline
60 minutes prior to operating hour:
Units self-scheduled Tier 2 quantities due Units Tier 2 offer quantities due Market clearing will begin - joint optimization of regulation and Synchronized reserves Tier 1 estimate begins
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Market Timeline
30 min prior to operating hour
PJM re-estimates amount of Tier 1 Synchronized Reserve available on each resource Market clearing prices and Tier 2 assignments posted
Assignments posted on eMKT MUI This is the vehicle for Tier 2 Synchronized Assignment notification Changes to posted assignments and condenser changes will be communicated verbally
Tier 2 assignments passed to Unit Dispatch System Tier 1 estimates posted for next operating hour
If the available Tier 1 is sufficient to meet the synchronized reserve requirement, self-scheduled Tier 2 offers will not clear, no Tier 2 will be assigned, and the Tier 2 clearing price will be zero.
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Synchronized Market Operation
Synchronized Reserve Assignments

Individual unit dispatch signals will respect Tier 2 assignments
Synchronized Reserve Events

Synchronized events will be called via the All-Call system Timestamp on All-Call message is official event start time
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Call for Synchronized Reserve

Loading of Synchronized Reserve is a Reliability service!
The resource owners, without regard to price and as quickly as possible, implement the requested percentage of Synchronized Reserve. Continue to implement Synchronized Reserve until directed by PJM dispatcher to discontinue.
PJM Generation Dispatcher

100% Spinning Reserve Request All Call 100% Spinning Reserve Request All Call
Market Operation Center (MOC)

100% Spinning Reserve Request
Curtailment Service Provider
At most, one level of operator intervention between PJM and customer reducing load.
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Gen Unit
Gen Unit
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DSR Customer
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Market Timeline During operating hour: Operators will be able to commit or de-commit additional resources as necessary to meet Synchronized Reserve Requirement during the operating hour.
Additional units will be committed if real time conditions vary from Tier 1 estimate. Units will be chosen according to merit order price ranking
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Agenda

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Optimization
Synchronized market clearing is a joint optimization between regulation and Synchronized reserves The goal of the optimization is to minimize the total cost of producing energy, regulation, and Synchronized reserve Resources cannot be committed for both Tier 2 Synchronized and regulation during the same hour If Demand Side Response clears less than its economic max for energy it can participate in the difference in the synchronized reserve market
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Tier 2 Commitment
Tier 2 required based on:
Area Tier 2 Requirement = Area Synchronized Requirement - Tier 1 Estimate - Fixed Contributions - Available Transfer Capability (Reserve zones only)
If adequate Tier 1 Synchronized Reserve is available (based on Tier 1 Estimate), Tier 2 Requirement is zero
SRMCP would be zero for this hour(s)
Amount of Tier 2 assigned comes from:

Tier 2 Assigned = Tier 2 Requirement - Tier 2 Self Scheduled
Tier 2 Assignments obtained from Synchronized Reserve Market Clearing Fixed Contribution = PJM Operator intervention to ensure reliability
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Tier 2 Commitment
Tier 2 selection based on merit order stacking of available resources
Merit order price includes Synchronized offer plus estimated opportunity cost plus energy usage, if any, plus startup costs Start-up costs spread over expected duration of commitment
Highest merit order price cleared determines SRMCP
SRMCP = Synchronized Reserve Market Clearing Price Each area and reserve zone will have its own SRMCP
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Tier 2 Offer Modification Example

Example:
Actual Tier 2 offer: 50mw Tier 1 Estimate: 10 mw Tier 2 self scheduled: 15 mw Tier 2 mw amount eligible for clearing: 25 mw
Actual Tier 2 Offer: 50 MW
Tier1 est: 10MW
Tier 2 Self Sched: 15 MW

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Tier 2 amount eligible for clearing: 25 MW

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Clearing Prices Synchronized Reserve Market Clearing Prices (SRMCPs):

Separate market will be cleared for RFC Synchronized Reserve Zone and Southern Synchronized Reserve Zone Separate price will be posted for the Mid Atlantic Synchronized Reserve Sub-Zone Price will equal the RFC Synchronized Reserve Zone unless transfer limited conditions exist. Clearing prices determined from bid plus opportunity cost of Tier 2 resources committed to meet reserve requirement SRMCP will be zero if no Tier 2 is committed
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Unit Merit Order Price = Synchronized Offer + Opportunity Merit Cost + Startup Cost + Energy Use Cost
Opportunity Cost (Non-Condensing units)= |LMP -ED| * GENOFF LMP ED GENOFF forecast LMP at generator bus price at setpoint unit maintains to provide full amount of Synchronized reserve MW deviation between economic dispatch & Synchronized setpoint
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Opportunity Cost (Condensing units) = Max(0, LMP - energy offer)*MW capability/Synchronized capability
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Lost Opportunity Cost Calculation

Opportunity cost if unit must be lowered to provide Synchronized reserve LMP calling for max output
Unit Price Curve
Synchronized Setpoint
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max outpoint
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Hydro Opportunity Costs

Hydro units condensing to provide Synchronized reserve when not scheduled to generate incur no opportunity costs
Hydro units can submit energy use component of bid, if applicable

If a hydro unit is held offline to provide Synchronized when it is scheduled to generate, it will incur opportunity costs Hydro opportunity costs for Synchronized calculated the same way as for regulation
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Spin Market Clearing Example

Unit conditions as shown All CTs can operate as condensers No unit limited by Synchronized ramp rate
Unit A Type Steam Steam Steam Steam CT CT Steam CT
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Synch Max 200 250 150 200 50 20 300 40
Est Disp Point 190 250 150 195 0 20 285 0
Tier 1 Estimate 10 0 0 5 0 0 15 0
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Total Synchronized Req. = 205 MW Tier 1 Estimate = 30 MW
B C D E F G H
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Tier 2 Offer submission: (No later than 60 min before operating hour)
Tier 2 Self Scheduled = 45 MW Tier 2 Requirement = 130 MW
Unit A B C D E F G H
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Tier 1 Estimate 10 0 0 5 0 0 15 0
Tier 2 Self Sched 0 15 0 10 0 20 0 0
Tier 2 Offer MW 20 15 15 35 50 20 50 40
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Results:
Unit B D C E G
Tier 1 Estimate 0 5 0 0 15 10 0 0
Tier 2 Self Sched 15 10 0 0 0 0 0 20
Tier 2 Offer MW 15 35 15 50 50 20 40 20
Tier 2 Offer $ $10 $15 $12 $18 $20 $25 $28 $35
Tier 2 Rank Price $16 $17 $18 $19 $26 $30 $38 $45
Tier 2 Cleared 0 20 15 50 35 10 0 0
A SRMCP Synchronized H Market F Clearing Price ($30)

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Tier 2 Cleared = 130 MW

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Offer + Opportunity Cost

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Results:
Receive SRMCP of $30/MW assigned
Tier 1 Estimate = 30 MW Tier 2 Self - Scheduled = 45 MW Tier 2 Assigned = 130 MW Total Requirement = 205 MW
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Agenda

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Settlement Overview
Tier 2 Credits
Resources self-scheduled or PJM scheduled to provide Tier 2 Synchronized reserve are paid the SRMCP times MW assigned. Additional credits for costs not recovered by SRMCP
Tier 1 Credits Resources responding to loading of Synchronized Reserve paid $50 premium above event LMP for MW delivered Tier 1 Charges Based on percentage share of total credits above what participants own resources supplied Charges and Credits only apply if Synchronized Reserve is actually dispatched and loaded
Tier 2 Charges
SRMCP times self-scheduled or MW purchased from Market toward participants obligation Participants share of unrecovered above SRMCP Charges and Credits apply whenever Tier 2 Synchronized is assigned regardless whether it is ever actually asked to load
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Tier 1 Compensation Example

Hourly Integrated LMP = $80 Synchronized Reserve Event LMP = $90 Units Integrated MW Increase over the Synchronized Event = 20 MW
Synchronized $ Adder
Synchronized Event Average LMP
MW Increase
Compensation for Tier 1 = (20 MW) [($50 + $90) - $80] = (20 MW) ($60) = $1,200
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Hourly LMP
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Tier 1 Compensation
Premium will be paid for energy delivered by Tier 1 resources in response to a Synchronized request Minus regulation capability For events that span multiple hours, an integrated response will be calculated for each hour
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Tier 1 Compensation Limit
Tier 1 credits awarded for response up to 110% of the units capability

Capability is determined from the Synchronized ramp rates and Synchronized maximum entered for each unit
Credit may be awarded for more than 110% if other units under-respond, awarded on a prorata basis such that the aggregate Tier 1 credits do not exceed 110% of aggregate capability of all units
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Tier 1 for Regulating Units
Units assigned regulation when a spinning event is initiated will be compensated based on:
the amount of response provided beyond their regulation commitment
A units regulation commitment is defined as the units full regulating range (i.e. - twice the amount of assigned regulation.)
any response in excess of their regulation high limit or economic maximum (whichever is lower.)
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Spinning vs Regulating
During a synchronized reserve event, units may remove regulation on the unit and increase in response to the spinning request. - At discretion of generation owner/operator - If unit is taken out of regulation temporarily to provide Synchronized Reserve, when regulation signal begins to reduce, unit must return to its regulation assignment. - Typically during a spinning event the units regulation signal will be maxed out. Typically the regulation signal will begin to lower prior to the end of the synchronized reserve event. -If unit increases output above regulation commitment due to a basepoint change, it will be compensated for Tier 1 Synchronized
Regulating units taken off regulation for a synchronized reserve event must return to regulation within 20 minutes in order to be compensated for regulation for the hour. Units not returning will forfeit regulation revenue for the hour.
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Tier 1 Charges
Tier 1 charges for each participant equal to percentage share of total Tier 1 credits paid to all generators Percentage share of credits determined by:
Tier 1 provided from that participants own resources up to the amount of obligation remaining load ratio share of any excess Tier 1 provided by generation owners in excess of their individual obligations
Tier 1 charges will only exist if a Synchronized event occurs within a given hour
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Tier 2 Compensation
Self-scheduled Tier 2 credits equal the SRMCP (for the correct location) times the amount of Tier 2 Self-Scheduled
PJM Assigned Tier 2 will be credited the higher of:
(SRMCP)*(Assigned Synchronized Capability) (Synchronized offer)*(Assigned Synchronized capability) + (Opportunity Cost in Real time) + (Energy use incurred in Real time for units in condensing mode only) + Startup costs
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Tier 2 Compensation
Unit called on by PJM for the purpose of providing Synchronized is guaranteed recovery of all costs including:
Startup No load Minimum Energy costs Recovered through Operating Reserve
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Tier 2 Charges
Tier 2 charges for each participant are the obligation share of:
all Tier 2 self-scheduled towards the participants obligation plus that which is purchased from the market times the respective SRMCP the total costs incurred by assigned Tier 2 above the SRMCP costs of Tier 2 resources assigned in addition to those estimated before the operating hour
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Tier 2 Charges
Obligation share is determined hourly by load ratio share within each reserve zone Costs of resources assigned after the market clearing are allocated to entities whose available Tier 1 in real-time was less than estimated
Only for those companies that had a Tier 1 estimate applied to their original obligation
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Agenda

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Response Calculation / Verification
Unit responses are verified by the PJM Performance Compliance Dept following each event Actual responses compared to assignments at start of Synchronized event used to determine penalties
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Response Calculation / Verification
Response Reduction Integrated Response
MW0 is the lowest output at T0 (start) +/- one minute MW1 is the highest output at T1 (10 minutes, or event end, if sooner) +/- one minute T2 is the end of the event or 30 minutes past the start of the event
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Penalties
No penalties exist for Tier 1 (payment made for actual response only) Tier 2 units that fail to respond to a Synchronized event when assigned or self-scheduled at the beginning of the event are penalized as follows:
Unit forfeits Tier 2 revenue for the amount of non-response over the contiguous hours the unit was assigned Tier 2 when the event occurred Owner of the unit incurs an additional obligation in the amount of the shortfall for the next three same-peak days (Similar profile day) Obligation penalty may be offset by over-response from other units assigned or self scheduled Tier 2
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Penalties - Example
Units assigned 50 mw Tier 2 each hour until 1300
Synchronized event starts @ 1015
Unit first assigned 50 mw Tier 2 @ 0800
Synchronized events ends @1045 unit fails to respond by 30 mwh
Penalties: 1) Unit will forfeit 30mw worth of Tier 2 credit from 0800 until 1300
2) Company will incur 30mw additional obligation for next three same peak days (Similar profile days)
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Synchronized Reserve Ramp Rates Synchronized Ramp Rates Ramp rates are used for Tier 1 estimation only If no Synchronized ramp rates are entered, the energy ramp rates will be used MW values represent the upper bound for the segment (first ramp rate applies from 0 to first mw point) Entry is limited to 10 segments Entered in MW/min
Units should update unit capabilities in eMKT
to reflect most current and accurate capabilities.
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Synchronized Reserve Ramp Rates
100
For 0-100 MW output, Synchronized ramp rate is 5 MW/min
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Synchronized Reserve Offers
Sorted by Generation Portfolio
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Synchronized Reserve Market/Synchronized Reserve Offers
Daily Offers are entered in Synchronized Reserve Offers Tab. Hourly Offer MW and Available Status on the Synchronized Updates Tab override the values from the Synchronized Reserve Offers Tab. SR may commit the resource for lesser of {Offer Mw or ([Economic Max Economic Min] Dispatch Energy Mw)}.
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Synchronized Reserve Hourly Updates
Sorted by Generation Unit

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DSR /DSR Hourly Updates Self Scheduled

Economic Min must equal Economic Max when selecting Self Scheduled
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Synchronized Reserve Bilateral Transactions
Entered by Buyer Can be MW amount or percentage of obligation Confirmed by Seller Must be confirmed by 1600 the day following the start date of the transaction
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Synchronized Reserve Market Results

Posted 90 minutes before each operating hour:
Synchronized Reserve Market Results (Public)
Total spin requirement Tier 1 estimate
Synchronized Reserve and Reg Results (Private)

Unit specific Tier 1 estimates
Posted 30 minutes before each operating hour

Ancillary Service Market Prices Synchronized Reserve Market Results (Public)
Total amount of Tier 2 committed
Synchronized Reserve and Reg. Results (Private)

Individual Tier 2 Assignments
Regulation Market Results
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Ancillary Service Market Prices (Public)
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Synchronized Reserve Market Results (Public)
This information posted 30 Minutes prior to the hour

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Synchronized Reserve and Regulation Market Results for Generation Private
Unit Specific Tier 1 Estimates posted 90 minutes prior to the hour. Tier2 MW and Reg MW posted 30 minutes prior to the hour.
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Synchronized Reserve and Regulation Market Results for Demand Response Private
Posted 30 minutes prior to the operating hour!
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Summary

Synchronized Reserve and Regulation very similar in their design Synchronized Reserve resources classified as Tier 1 and Tier 2 Tier 1 resources used first to meet obligation Separate settlements for Tier 1 and Tier 2 resources Penalty structures in place for non-delivery of assigned Tier 2 Synchronized Reserve eMKT used to submit and view Synchronized information
SUMMARY
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Questions?
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Agenda
Market-based Regulation Synchronized Reserve Market Black Start Service Reactive Services Appendix
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What is Blackstart Generation?
Generating Unit that can start and synchronize to the system without having an outside (system) source of AC power
Generally Combustion Turbines or Hydro units Critical for System Restoration Starting point for restoring the power system following a complete System Shutdown Used to provide start-up power to non-blackstart units Location-specific Benefits all Transmission Customers Also includes generation that can self-isolate from power grid and remain operating i.e. - Trip to house load
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Why a Blackstart Service?

With divestiture of generation: Some LSEs have no generation resources Blackstart capability not being maintained or tested No formal method to compensate generation owners for expenses incurred to provide blackstart Need to ensure blackstart capability is available when needed Very severe consequences if inadequate blackstart capability Long system restoration times Health and safety issues
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Goal of the Blackstart Service Incent existing, critical blackstart capable units to continue to maintain the equipment, materials and talent required for this capability Cost-based service
NOT a market Very location specific
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Critical Blackstart Determination

Transmission Owners determine critical blackstart units with PJM oversight and approval based on System Restoration Plans
Based on minimum blackstart requirements as identified in Attachment A of Manual 36
limited to 3 blackstart units at a plant

Exceptions process in place to handle unusual blackstart requirements
TOs deploy blackstart capability during System Restoration
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Critical Blackstart Generation

Transmission Zone Total Black Start (MW) - Critical Total Black Start (MW) - Capable AE 304 312 DPL 260 268 PEP 343 395 PHI Total 907 975 AEP Black Start 489 589 AEP Load Reject 1800 2230 AEP Total 2289 2819 APSS 83 140 BC 344 344 ComEd 1018 1293 Dayton 78 139 DLCO 15 15 JC 368 554 ME 266 266 PN 475 486 FE/GPU Total 2647 3237 PE 906 1981 PL 125 959 PS 759 2270 DOM N/A 905
* As of May 2008
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Critical Blackstart Generation & CIP

Each Reliability Coordinator, Balancing Authority, Transmission Operator, Generator Operator, and Load Serving Entity shall have procedures for the recognition of and for making their operating personnel aware of sabotage events on its facilities and multi-site sabotage affecting larger portions of the Interconnection. Critical Asset Identification Method The Responsible Entity shall identify and document a risk-based assessment methodology to use to identify its Critical Assets. Cyber Security Policy The Responsible Entity shall document and implement a cyber security policy that represents managements commitment and ability to secure its Critical Cyber Assets. Awareness The Responsible Entity shall establish, maintain, and document a security awareness program to ensure personnel having authorized cyber or authorized unescorted physical access receive ongoing reinforcement in sound security practices. The program shall include security awareness reinforcement on at least a quarterly basis.
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Critical Blackstart Generation & CIP

Electronic Security Perimeter The Responsible Entity shall ensure that every Critical Cyber Asset resides within an Electronic Security Perimeter. The Responsible Entity shall identify and document the Electronic Security Perimeter(s) and all access points to the perimeter(s). Physical Security Plan The Responsible Entity shall create and maintain a physical security plan, approved by a senior manager or delegate(s) . Test Procedures The Responsible Entity shall ensure that new Cyber Assets and significant changes to existing Cyber Assets within the Electronic Security Perimeter do not adversely affect existing cyber security controls. Cyber Security Incident Response Plan The Responsible Entity shall develop and maintain a Cyber Security Incident response and recovery plan.
The Generator Operator of each blackstart generating unit shall test the startup and operation of each system blackstart generating unit identified in the BCP as required in the Regional BCP (Reliability Standard EOP-007-0_R1). Testing records shall include the dates of the tests, the duration of the tests, and an indication of whether the tests met Regional BCP requirements.
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Product Description Performance Standards

Ability to self-start without any outside source of power Close unit onto a dead bus within 90 minutes of request to start Ability to run for 16 hours or as defined by LCC restoration plan Maintain frequency and voltage under varying load Maintain black start procedures for each unit
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Blackstart Commitment Commitment

Initial 2 year commitment with annual right to terminate by each party (upon fulfillment of remainder of 2 year commitment) All succeeding annual commitment must be at least an additional year to maintain a rolling 2 year commitment
Any changes in cost will commence in the second year of commitment
2 year commitment is to ensure replacement blackstart capability may be obtained in the event of a unit retirement
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Blackstart Commitment Penalty for failure to fulfill two year commitment

Forfeit received blackstart revenue for period equal to period of non-performance
Maximum of one years revenues
Example: Unit is retired 18 months into its 2 year blackstart commitment

Penalty is equal to 6 months historical blackstart revenue (period of non-performance) plus suspension of future blackstart payments
Penalty may be applied if unit is retired or decides not to provide blackstart prior to fulfillment of its commitment
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Blackstart Testing Testing

Annual blackstart tests
Scheduled at Gen. Owners discretion with PJM approval
All blackstart units must be tested within 6 months of blackstart service implementation
Failed tests -- 10 day grace period Monthly blackstart revenue then forfeited from date of first unsuccessful test until test is passed
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Blackstart Testing
Testing
PJM will pay for up to two Blackstart start attempts (if necessary)
Any un-recovered testing costs should be submitted to the Manager of Market Settlements
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Blackstart Testing Testing Process

Notify PJM Performance Compliance of expected date of Blackstart Test Notify PJM Dispatch prior to starting generator
Email at Blackstart@pjm.com
Submit Blackstart Test Results and supporting documentation to PJM Performance Compliance within 14 days of test
eDART used for secure file upload
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Black Start Data Secure File Upload
data
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Blackstart Testing
Standard Test Results form:

Available on Blackstart Working Group web page
Under Committees tab
Available on eDART File upload page
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Blackstart Unit Fuel Limitation Reporting
Black
Start unit operators shall not permit their fuel inventory for Critical Black start CTs to fall below 10 hours if it falls below this level, unit operators shall notify PJM and place the unit in Max Emergency.
www.pjm.com
Blackstart Unit Planned Outage Restrictions
Designed to limit the number of Blackstart units on Planned maintenance at any one time Pertains to Planned Outages only Only 1 critical Blackstart unit at the same plant may be on Planned outage at the same time
Some transmission zones have additional restrictions Allowance for unit substitutions if appropriate
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Blackstart Unit Planned Outage Restrictions
Example 1:
Plant A, Units 1,2 and 3 critical blackstart units Unit 2 is on Maintenance outage Planned outage on Unit 1 would be allowed to proceed as scheduled
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Blackstart Unit Planned Outage Restrictions Example 2:

Plant A, Units 1,2 and 3 critical blackstart units
Unit 3 is on Planned outage
Additional Planned outage on Unit 1 and 2 would not be approved until Unit 3 is returned Generation Owner could substitute another blackstart unit at same plant (I.e. Unit 4) to allow outage on Unit 1 or Unit 2 to proceed
Cost and test data for Unit 4 must be acceptable to PJM
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Blackstart Revenue Requirements
Generator Annual Blackstart Revenue Requirement {(Fixed Blackstart Costs)
+ (Variable Blackstart Costs)

+ (Training Costs) + (Fuel Storage & Carrying Costs)} * (1 + Incentive Factor)
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Blackstart Charges Charges

Detailed in Schedule 6A of OATT Zonal rates based on blackstart capability within zone Allocated to point-to-point customers based on monthly peak usage Remaining revenue requirement in each zone is allocated to network customers serving load in that zone based on monthly peak loads Charge allocation identical to Reactive Support and Voltage Control Service (Schedule 2)
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Black Start Revenue Requirements
Effective: July 1, 2010

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Summary Blackstart is a cost-based service - not a market Transmission Owners, with PJM identify critical blackstart units Restrictions on Blackstart Planned outages Generator annual revenue requirements submitted to PJM Annual Blackstart testing requirements in place
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Agenda
Market-based Regulation Synchronized Reserve Market Black Start Service Reactive Services Appendix
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The Beginnings. Formed in response to Summer 1999 Low Voltage Root Cause Analysis Scope was to
Develop short-term solution for accurate portrayal of voltage and reactive resources and capability Investigate the development of Reactive product that would be market-based
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Work to date...
Created Reactive Reporting Requirements through eDART
Automatic Voltage Regulator (AVR) out of service Changes to reactive capability
Stressed need for education on importance of Reactive

PJM Spring Seminar PJM produced video/CBT
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Short term...
Creation of Reactive Emergency Levels

In these heightened voltage critical times
Increased Reactive Reporting PJM to direct voltage schedule or discrete reactive levels Units MVAR performance evaluated against requested values Letters sent to poor performing units
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Reactive Supply (Schedule 2) Credits

Monthly credits are provided to generation and transmission owners with FERC-approved reactive revenue requirements
Charges
Allocated to point-to-point customers based on monthly peak usage Remaining revenue requirements not allocated for each zone are allocated to network customers based on monthly peak load
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Reactive Supply (Schedule 2)
NOTE: The monthly reactive revenue requirements are the annual reactive revenue requirements divided by twelve.
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Long Term .
Work with System Planning to develop Generator Standards and Power Factor Standards to ensure that reactive is provided in deficient areas
Incorporated into the Regional Transmission Expansion Planning Process (RTEPP)
Ensure installed reactive capability exists
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Reactive Services Tariff Changes

Generators dispatched lower than their economic setpoint to provide additional reactive supply will receive opportunity cost payments if LMP is higher than bid Units would lower MW output to provide additional MVAR support Thermal surrogate can not easily be created
Reactive Service is in addition to existing OATT Schedule 2 Annual Revenue Requirements payments
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Condensers dispatched for reactive support receive higher of:
SRMCP x Synchronized capability Cost of condensing + Energy use + Startup + any Opportunity costs Condensers dispatched for reactive support are expected to provide Tier 2 Synchronized Reserve as well
If cant; Inform PJM; payment on cost basis
Cost of redispatch for reactive support allocated to load within zone where units where redispatched
NOT part of Operating Reserve calculation
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If redispatched units cant achieve expected MVAR

output: Inform PJM quickly Performance Compliance to monitor after-the-fact performance May withhold compensation if reactive support requested was not provided
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Generator Reactive Capability Testing Manual 14D Attachment E Requirements apply to: All units > 70 MW
Units <70 MW should still verify capability on a periodic basis and report and changes to capability via eDART
All units designated as Black Start
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Generator Reactive Capability Testing (Contd) Requirement Details Test done once every five years
Generators to determine actual best time
May be done in conjunction with annual net MW capability test May choose to do test during normal operations, provided that all test requirements met
3 business days notice required, ensuring testing impacts are incorporated into studies.
Shorter notification requests will be accommodated assuming system conditions permit Submit Reactive Testing Ticket in eDART to accomplish this notification 30 minutes notice prior to commencing test in order to reevaluate impact on current system conditions
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Generator Reactive Capability Testing (Contd) Test Schedule Testing targeted between 5/1 9/30. Testing targeted Mon Friday between 09:00 11:00. Functional Test
Purpose to demonstrate ratings can be obtained for periods required under normal operating conditions All auxiliaries required for normal operation in service Performed at or near Demonstrated Capability
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Generator Reactive Capability Testing (Contd)
System Voltages During Test

To be maintained within normal operating limits Close coordination required between PJM, LCC and MOC
Coordinated system adjustments (LTC, capacitors / reactor switching, MVAR adjustments) to permit testing.
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Generator Reactive Capability Testing (Contd) Lagging Test (putting mvars onto the system)
All reasonable measures shall be taken to allow results to be based on actual operating conditions Test conducted for a minimum of one hour or until temperatures have stabilized
Leading Test (absorbing mvars from the system)

If not possible to maintain voltages, non-Black Start Units may calculate results, although these are unacceptable on an ongoing basis Black Start units require actual testing of both leading and lagging
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Generator Reactive Capability Testing (Contd)

Attachment E Manual 14D
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Questions?
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Contact Information
PJM Customer Relations Telephone: (610) 666-8980 Toll Free Telephone: 866-400-8980 Fax: (610) 666-4379 World wide web: www.pjm.com email: http://www.pjm.com/about-pjm/who-we-are/contact-us.aspx Subscribe to PJM e-mail lists at: http://www.pjm.com/about-pjm/newsroom/newsletter-notices.aspx
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Appendix
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Successful Regulation Market Implementation
Prior to implementation insufficient regulation available in some situations Post implementation observations sufficient regulation available purchase price remained the same significant improvement in system control Results Reduced transaction notification times 20 minutes changes (and self-scheduling units); 30 minutes for new transactions Increased Interchange Ramp
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If regulating, hydro unit is generating less MW during most economic hours
But it will generate those MW during some other hours because water is still available
Opportunity cost is difference between the $ the unit would have made when regulating and what it makes when water is used
Approximate this with the on-peak average LMP
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Opportunity cost = (LMP-ED)(Genoff) ED is average on peak LMP at the generator bus
excludes hours during which all units at plant are operating if average LMP > actual LMP, opportunity cost is zero GENOFF is amount unit must reduce to provide regulation
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If hydro unit is spilling,
ED is set to zero opportunity cost is based on actual LMP

Spill conditions
are forecast by PJM for day-ahead opportunity costs are reported to PJM by Operating Company during Operating Day
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Hydro Opportunity Costs Example
$/MW
Hourly LMPs
Avg LMP w/o full load hours
Hydro schedule 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour 9/29/2010
Fixed Blackstart Costs CDR * 365 * Unit Capacity * X
CDR = PJM Capacity Deficiency Rate

$176.83/MW
Unit Capacity = Installed Capacity X = Allocation factor for blackstart

Hydro = 0.01 unless supported by documentation Diesel/CT = 0.02 unless supported by documentation
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Variable Blackstart Costs Unit O&M * Y
Y is O&M that is attributed to Blackstart Y = 0.01 unless supported by documentation

(1-Y) must be applied to the units O&M costs on the units cost-based energy schedule
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Training Costs 50 staff hours/year/facility * $75/hour
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Fuel Storage and Carrying Costs
(# Run hours) * (Fuel burn rate) * (12 Month Forward Strip + Basis) * (Bond Rate)
12 month forward strip = average forward price of units fuel Basis = transportation cost to blackstart unit Bond Rate = Representative interest rate (Moodys Utility index for bonds rated Baa1) Revenue Requirement on fuel carrying, not fuel product
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Incentive Factor
Z = 10% All blackstart costs are multiplied by incentive factor
Credits
Monthly credits are 1/12 annual revenue requirement
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Purpose of Reserve Objectives

RFC Day-ahead Scheduling Reserve VACAR Day-ahead Scheduling Reserve

Day-ahead Scheduling Reserves

Day-ahead Scheduling Reserve market began June 1, 2008

Day-ahead Scheduling Reserve Calculation

Day-ahead Scheduling Reserves = Underforecasted LFE + FOR

Load Forecast Error Component (LFE)

Forced Outage Rate Component (FOR)

Applies to the RFC DASR Requirement Only!

Load Forecast Error Component

Day-ahead Scheduling Reserves = Underforecasted LFE + FOR

Forced Outage Rate Component

Day-ahead Scheduling Reserves = Underforecasted LFE + FOR

Day-Ahead Scheduling Reserve Requirement (RFC)

(2.10% in 2009) (4.64% in 2009) (6.75% in 2009)

Applies to the RFC DASR Requirement Only!

Day-ahead Scheduling Reserve Timeline

Oct 31, 2009 November, 2009

Contingency Reserve T < 10 Minutes Supplemental Reserve 10 < T < 30 Minutes

Day-ahead Scheduling Reserve Market Methodology

The RFC Day-ahead Scheduling Reserve cleared in the Day-ahead

Reserve Requirements Summary

Day-ahead Scheduling Reserve Market Overview

When Will the DASR Market Clear?

DASR Market will clear simultaneously with the DA Energy Market

PJM will post preliminary DASR billing data on PJM.com

DASR Requirement Example

1200 to 1600 1600 to 1800

*Note: Load Forecast values can differ at different times of day

Who will pay for DA Scheduling Reserve?

DA Scheduling Reserve Obligations

Who Can Provide Reserves?

Calculation Available Reserves Generators

DASR Available MW = Emergency Max

DASR Generator Offer Screen

Participant Supplies Offer Price

Demand Resources Dispatchable in Real Time

Demand Resource Requirements

Demand Resource Requirements

Demand Resources Batch Resources

DASR Demand Offers

DASR Clearing Process

DASR Clearing Price

Simplified Market Clearing Example

DA LMP $40 $40 $40 $40 $40 $40

DA Demand Load Forecast DASR Requirement = 7%

Units selected in Dayahead energy market

Unit Available for DASR

Unit Not Available for DASR

Market Clearing Example : Offer Parameters

Ramp Rate (MW/min) 3

Energy Offer Price $30

DASR Offer Price $1

Note: DASR Offer quantity is derived

Market Clearing Example: Simultaneous Clearing Results

Ramp Rate (MW/ min) 3 1 10 1 3 5

Energy Offer Price $30 $40 $100 $80 $90 $20

DASR Offer Price $1 $2 $5 $3 $10 $6

Opp . Cost $10 $0 $0 $0 $0 $20

DA Demand Load Forecast DASR Requirement = 7%

Market Clearing Example: Summary of Results