1. PJM©2010 1 www.pjm.com Welcome to PJM

2. PJM©2010 2 www.pjm.com Today’s Agenda 1.Introductions 2.PJM Overview 3.State and Federal Regulation Steve Boyle 4.Open Discussion

3. PJM©2010 3 www.pjm.com PJM Overview Bill Walker Sr. Business Solutions Analyst Applied Solutions walkew@pjm.com +01 610 666 3169

4. PJM©2010 4 www.pjm.com KEY STATISTICS PJM member companies 650+ millions of people served 51 peak load in megawatts 144,644 MWs of generating capacity 164,905 km of transmission lines 90,525 GWh of annual energy 729,000 generation sources 1,310 square km of territory425,431 area served 13 states + DC internal/external tie lines 250 26% of generation in Eastern Interconnection 23% of load in Eastern Interconnection 19% of transmission assets in Eastern Interconnection 20% of U.S. GDP produced in PJM 6,038 substations PJM’s role in the US and the Eastern Interconnection

5. PJM©2010 5 www.pjm.com Regional Transmission Organizations (RTOs) & Independent System Operators (ISOs) in North America 50,270 60,000 112,197 144,644 28,127 33,939 45,248 * Peak Load in MW

6. PJM©2010 6 www.pjm.com PJM Transmission Owners

7. PJM©2010 7 www.pjm.com PJM Committee Structure

8. PJM©2010 8 www.pjm.com Member Committee Voting Protocol Transmission Owners Generation Owners Other Supplier End Use Customers Electric Distributors 5/70.71 2/80.25 21/230.91 5/5 1.00 Required to pass = 0.667 Number of Sectors = 5 Required Affirmative = 5 x 0.667 = 3.335 3.47 3/5 0.60

9. PJM©2010 9 www.pjm.com PJM’s Energy Markets

10. PJM©2010 10 www.pjm.com Existing Generation, Capacity As of 12/31/2009

11. PJM©2010 11 www.pjm.com Cumulative Increase in Capacity Resources over First Five RPM Auctions (2007 – 2011) Total Increase = 9,986 MW

12. PJM©2010 12 www.pjm.com 2012/2013 Base Residual Auction Clearing Prices ($/MW-Day) RTO MCP = $16.46 MAAC & SWMAAC MCP = $133.37 DPLS MCP = $223.30 EMAAC & PSEG MCP = $139.73 PSN MCP = $185.00

13. PJM©2010 13 www.pjm.com Offers of Demand-Side Resources as Capacity in PJM by Delivery Year

14. PJM©2010 14 www.pjm.com Payments to Curtailment Service Providers RPM Implemented

15. PJM©2010 15 www.pjm.com State renewable portfolio standard State renewable portfolio goal www.dsireusa.org / May 2010 Solar water heating eligible * † Extra credit for solar or customer-sited renewables Includes non-renewable alternative resources WA: 15% x 2020* CA: 33% x 2020 NV : 25% x 2025* AZ: 15% x 2025 NM: 20% x 2020 (IOUs) 10% x 2020 (co-ops) HI: 40% x 2030 Minimum solar or customer-sited requirement TX: 5,880 MW x 2015 UT: 20% by 2025* CO: 30% by 2020 (IOUs) 10% by 2020 (co-ops & large munis)* MT: 15% x 2015 ND: 10% x 2015 SD: 10% x 2015 IA: 105 MW MN: 25% x 2025 (Xcel: 30% x 2020) MO: 15% x 2021 WI : Varies by utility; 10% x 2015 statewide MI: 10% + 1,100 MW x 2015* OH : 25% x 2025 † ME: 30% x 2000 New RE: 10% x 2017 NH: 23.8% x 2025 MA: 22.1% x 2020 New RE: 15% x 2020 (+1% annually thereafter) RI: 16% x 2020 CT: 23% x 2020 NY: 29% x 2015 NJ: 22.5% x 2021 PA: ~ 18% x 2021 † MD: 20% x 2022 DE: 20% x 2020* DC: 20% x 2020 VA: 15% x 2025* NC : 12.5% x 2021 (IOUs) 10% x 2018 (co-ops & munis) VT: (1) RE meets any increase in retail sales x 2012; (2) 20% RE & CHP x 2017 KS: 20% x 2020 OR : 25% x 2025 (large utilities )* 5% - 10% x 2025 (smaller utilities) IL: 25% x 2025 WV: 25% x 2025* † 29 states + DC have an RPS (6 states have goals) 29 states + DC have an RPS (6 states have goals) DC Renewable Portfolio Standards (RPS)

16. PJM©2010 16 www.pjm.com Proposed Generation

17. PJM©2010 17 www.pjm.com Wind Generation in PJM - Operational and Proposed

18. PJM©2010 18 www.pjm.com Proposed Wind in PJM Footprint As of 09/2009

19. PJM©2010 19 www.pjm.com PJM Load and Wind Resources – April 7, 2010 Load MW Wind MW Locational marginal Price- $/MWh

20. PJM©2010 20 www.pjm.com PJM SynchroPhasor Deployment Project Production Quality System to Support 150+ Monitored Substations

21. PJM©2010 21 www.pjm.com Grid Storage Types Pumped HydroCompressed AirFlywheels Stationary BatteryMobile BatteriesWater Heaters

22. PJM©2010www.pjm.com Mid-Atlantic Grid Interactive Car Consortium (MAGICC) – electric companies, research institutes, and vehicle manufacturers Over three years of experience with the MAGICC battery electric vehicle responding to the PJM regulation signal Smart Grid and Plug-in Hybrid Electric Vehicles (PHEVs)

23. PJM©2010 23 www.pjm.com Aggregating distributed storage

24. PJM©2010 24 www.pjm.com Operational Details Altairnano, Inc – Lithium Ion nano titanate battery Energy: 300 kWh Efficiency: 90% round trip Power: 1 MW for 15 minutes Usable Charge Range: 5% - 99% AES Grid-Scale Energy Storage System

25. PJM©2010 25 www.pjm.com Fast Regulation: Speed Matters… A fossil power plant following a regulation command signal Energy Storage (batteries / flywheels) accurately following a regulation command signal Energy Storage Output Regulation Signal

26. PJM©2010 26 www.pjm.com Water Heater 105-gallon electric water heater demonstrates minimization of cost while responding to the PJM wholesale price signal and the PJM frequency regulation signal.

27. PJM©2010 27 www.pjm.com Fast Regulation: Speed Matters… PJM pilot water heater -- January 14, 2011; Midnight to 3:00 a.m. PJM Frequency Regulation Signal Water heater power consumption +/-2.25 Kw base point

28. PJM©2010 28 www.pjm.com Smart Grid – “Two Way Communication and Control” Transmission Distribution Energy Users Network Operations Energy Providers Consumer Devices

29. PJM©2010 29 www.pjm.com Regional Benefits of PJM’s Markets Reliability – resolving constraints and economic efficiency– from $470 million to $490 million in annual savings Generation investment – decreased need for infrastructure investment – from $640 million to $1.2 billion in annual savings Energy production cost – efficiency of centralized dispatch over a large region – from $340 million to $445 million in annual savings Grid services – cost-effective procurement of synchronized reserve, regulation – from $134 million to $194 million in annual savings $2.2 billion in annual savings

30. PJM©2010 30 www.pjm.com Thank you - Questions?