ML19210E924

Forwards Responses to NRC Supplementary Requests for Financial Info for Restart Proceeding

ML19210E924
Person / Time
Site:	Three Mile Island
Issue date:	12/07/1979
From:	Hafer F GENERAL PUBLIC UTILITIES CORP.
To:	Vollmer R NRC - TMI-2 OPERATIONS/SUPPORT TASK FORCE
References
NUDOCS 7912130243
Download: ML19210E924 (120)

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• Q GPU Service Corporation 100 Interpace Parb nay Parsippany. New Jersey 07054 201 263 6500 TELEX 136-482 Writer s D. rect Dial Number (201) 263-6013 December 7, 1979 Mr. Richard H. Vollmer Director, Three Mile Island-2 Support Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission 7920 Norfolk Avenue Bethesda, Maryland 20014 Re: NRC Docket No. 50-289 -- T!!I-l Res tart Proceeding

Dear Mr. Vollmer:

In response to the N1:C's supplementary requests for finan-cial information telecopied to C. W. Smyth on November 9, 1979, enclosed are eight copies of the following:

1. Response to Request No. 2 (unrecovered cost of TMI replacement energy).

2. Response to Request No. 3 (description of Penelec's temporary investments).

3. Response to Request No. 4 (TMI-l capacity factor).

4. Response to Request No. 5 (final disposition of PaPUC 's TIII-l show cause proceeding).

5. Response to Request No. 7 (revenue effect of rate increases).

6. Additional response to Request No. 9 (developments in PaPUC's consolidated Met-Ed/Penelec show cause proceeding).

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7912130 GPU Serece Corporation rs a ;ubs d vy cf Genera! Pub;c Ut.!.! es raton

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Please acknowledge receipt of this material by signing, dating and returning time enclosed copy of this letter.

A stamped, pre-addressed envelope is enclosed for that purpose.

Very truly yours,

/ 0 F. D. Hafer Vice President, Rate Case flanagement FDH/ ret cc: J. C. Peterson - With enclosures H. Silver - No enclosures; to be distributed by NRC 1548 002

Person Responsible for Preparation:

F. D. Hafer, Vice President Rate Case Management, GPU Service Corp.

Telephone: (201) 263-6013 Date: December 7, 1979 GENERAL PUBLIC UTILITIES CORPORATION Metropolitan Edison Company, Pennsylvania Electric Company and Jersey Central Power & Light Company NRC Docket No. 50-289 Three Mile Island Unit No. 1 Restart Proceeding Response to NRC Staff's Eupplemental Financial Information Request No. 2, tele-copied 11/9/79 (item nunber refers to initial requests dated 9/21/79):

"(3) On what basis does GPU assume that current costs of TMI replacement energy are not recovered? Explain in detail."

Response

As explained on pages 4 through 8 of our response to the NRC's Financial Information Request No. 10-(c) dated 10/19/79, the energy cost adjustment charges of GPU's subsidiaries were increased effective July 1, 1979 to reflect the increases in energy costs the subsidiaries faced as a result of the TMI-2 accident. In order to moderate increases in charges to customers, however, the energy clause charges were levelized over the 18-month period ended 12/31/80. On the assumption that TMI-1 would return to service by 1/1/80, at the time 'he clause increases were approved by the subsidiaries' state commissions, it was assumed that this period would include low cost nuclear generation from TMI-l for 12 of the 18 months. As a result of the delay in the return of TMI-l to service, which is not now expected to occur until late 1980 at the earliest, and increases in energy costs unrelated to the TMI-2 accident, particularly increases in oil costs, the clause increases that became effective in July will not be sufficient to fully recover the energy costs now projected for the subsidiaries, particu-larly those projected for Met-Ed and Jersey Central. Met-Ed has accordingly petitioned the PaPUC to increase its energy cost adjustment charge effective 1/1/80, as described in more detail in our responses to the NRC's Sipplemental Financial Information Request No. 9 dated 11/6/79 and 12/7/79, and a filing with the NJ BPU to increase Jersey Central's energy cost adjustment charge is planned for early 1980.

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Person Responsible for Preparation:

J. G. Graham, Treasurer GPU Service Corporation Telephone: (201) 263-6130 Date: December 7, 1979 GENERAL PUBLIC UTILITIES CORPORATION Metropolitan Edison Company, Pennsylvania Electric Company and Jersey Central Power & Light Company NRC Docket No. 50-289 Three Mile Island Unit No. 1 Restart Proceeding Response to NRC Staff's Supplemental Financial Information Request No. 3, tele-copied 11/9/79 (item number refers to initial requests dated 9/21/79):

"(3) Describe the " temporary investments" under " external financing" that are projected for GPU and Penelec".

Response

GPU's, i.e., Penelec's temporary investments shown for the year 1986 in our response to the NRC's Financial Information Request No. 3 dated 10/17/79 represent the utilization of temporary excesses of available cash over cash requirements.

Penelec, the GPU Company least affected by the TMI-2 accident, is projected to have excess cash available from time to time in 1980, and correspondingly would invest such funds in typical short-term instruments such as commercial paper, treasury bills and the like.

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6 I" Person Responsible for Preparation:

R. C. Arnold, Vice President Generation, GPU Service Corp.

Telephone: (201) 263-6290 Date: December 7, 1979 Page 1 of 2 GENERAL PUBLIC UTILITIES CORPORATION Metropolitan Edison Company, Pennsylvania Electric Company and Jersey Central Power & Light Company NRC Docket No. 50-289 Three Mile Island Unit No. 1 Restart Proceeding Response to NRC Staff's Supplemental Financial Information Request No. 4, tele-copied 11/9/79 (item number refers to initial requests dated 9/21/79):

"(4.a) Provide justification for the assumed 71 percent plant capacity factor for TM1-1. Indicate the actual plant capacity factor experienced by TMI-l when it was in commercial opera-tion. Provide total (GPU) operating cost estimates assuming plant capacity factors of 50 percent and 60 percent."

kesponse:

The 71% annual capacity factor projected for TMI-l following its return to service (i.e., for the years 1981 through 1985) reflects two basic assumptions:

(1) that the unit will undergo a normal refueling outage of 6 weeks duration each year, and (2) that the unit will experience a 20% forced outage rate dur-ing the remaining hours of the year.

Based on TMI-l's past performance, which the table below shows has been significantly better than the naticnal average for all nuclear units, which in the aggregate have achieved a lifetime capacity factor of about 60%, the 71% capacity factor projected for TMI-l is conservative.

Annual TMI-l Generation 1974-1978 Net Gen. Ca pac ity Year (Gwh) (1) Factor (%) (2) 1974 (4 months) (3) 1 978 87.8%

1975 5 542 81.5 1976 4 336 63.6 1977 5 463 80.4 1978 5 674 83.5 Lifetime through 197d 22 993 78.0%

(1) Total unit (owned 50% by Met-Ed, and 25% each by Penelec and Jersey Central).

(2) Ratio of the unit's actual generation to its maximum possible generation, based on the unit's current net summer rating of 776 MW.

(3) Unit began commercial operation on 9/2/74.

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Page 2 of 2 In response to the reqc for estimates of TMI-l's total operating costs assuming capacity factors >

and 60 percent, reference is made to our re-sponse to the NRC's Financlai information Request No. 4-(a) dated 10/15/79.

That response projected the following operating, maintenance and fuel expenses for TMI-1, based on a 71% capacity factor:

Proj ected TMI-l Operating Expenses as Budgeted

($ millions) 1981 1982 1983 1984 1985 O&M Expenses Other Than Fuel $24.8 $27.4 $30.0 $32.9 $36.2 Fuel Expense 11.6 14.4 17.5 20.0 23.2 Total Operating Expenses $36.4 $41.8 $47.5 $52.9 $59.4 Since the non-fuel operating and maintenance expenses of a base load gen-erating station are essentially fixed, i.e., do not vary with unit output, TMI-l's fuel expense is the only expense that would vary significantly if TMI-l were to operate at capacity factors of 50 and 60%. At these assumed capacity factors, the unit's fuel expense is projected to be as follows:

Projected TMI-l Fuel Expense at Lower than Budgeted Capacity Factors

($ millions) 1981 1982 1983 1984 1985 60% Capacity Factor $ 9.8 $12.2 $14.8 $16.9 $19.6 50% Capacity Factor $ 8.2 $10.1 $12.3 $14.1 $16.3 Accordingly, the total operating costs pcojected for TMI-l would be re-duced to the following levels, assuming 50 and 60 percent capacity factors:

Total Projected TMI-l Operating Expenses at Lower than Budgeted Capacity Factors (S millions) 1981 1982 1983 1984 l$15 60% Capacity Factor $34.6 - $39.6 $44,8 $49.8 $55.8 ,

50% Capacity Factor $33.0 $37.5 $42.3 $47.0 $52.5 1548 006

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Person Responsible for Preparation:

F. D. llafer, Vice President Rate Case Management, GPU Service Corp.

Telephone: (201) 263-6013 Da t e : December 7, 1979 GENERAL PUBLIC UTILLTIES CORPORATION Metropolitan Edison Company, Pennsylvania Electric Company and Jersey Central Power & Light Company NRC Docket No. 50-289 Three Mile Island Unit No. 1 Restart Proceeding Response to NRC Staff's Supplemental Financial Information Request No. 5, tele-copied 11/9/79 (item number refers to initial requests dated 9/21/79):

"(4.b) Notify the Staff of the final disposition of the PaPUC show cause proceeding regarding the inclusion of TMI-l capital and operating costs in the rates of Met-Ed and Penelec"

Response

We will furnisti the NRC with a copy of the PaPUC's final order in this proceeding, which we currently estimate will be concluded by the end of March, 1980.

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Person Responsible for Preparation:

F. D. Ilafer, Vice President Rate Case Management, GPU Service Corp.

Telephone: (201)_263-6013 Date: December 7, 1979 GENERAL PUBLIC UTILITIES CORPORATION Metropolitan Edison Company, Pennsylvania Electric Company and Jersey Central Power & Light Company NRC Docket No. 50-289 Three Mile Island Unit No. 1 Restart Proceeding Response to NRC Staff's Supplemental Financial Information Request No. 7, tele-copied 11/9/79 (item number refers to initial requests dated 9/21/79):

"(10.c) Indicate the revenue effect of rate increases granted, both in the year granted and in the subsequent year. If the subsequent year is not known, annualize amounts received in the year granted."

Response

This information is available from our response to the NRC's Financial Information Request No. 10-(c) dated 10/19/79. Ilowever, we do intend to summarize the 10-(c) material and complete our response to the NRC's Supplemental Financial Request No. 8, and accordingly will mail this information to the NRC Staff on Monday, December 10, 1979.

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9 Person Responsible for Preparation:

F. D. llafer, Vice President Rate Case Management, GPU Service Corp.

Telephone: (201) 263-6013 Date: December 7, 1979 Page 1 ef 2 GENERAL PUBLIC UTILITIES CORPORATION Metropolitan Edison Company, Pennsylvania Electric Company and Jersey Central Power & Light Company NRC Docket No. 50-289 Three Mile Island Unit No. 1 Restart Proceeding Additional response to NRC Staff's Supplemental Financial Information Request No. 9, telecopied 11/9/79 (item number refers to initial requests dated 9/21/79):

"(10.b and 10.c) Subsequent to our September 21, 1979 request, it was reported (Wall Street Journal, November 2, 1979, p. 12) that the Pennsylvania Public Utility Commission (PPUC) issued a show cause order to Met-Ed regarding the company's ability to provide utility service in Pennsylvania. Provide copies of the PPUC order and copies of Met-Ed's response to the order, when available. Continue to keep the NRC Staf f informed of all developments in the show cause proceeding. Provide copies of all subsequent PPCU orders and other directives and Met-Ed responses related to this proceeding."

Response

As an additional response to this request, enclosed are copies of the following:

1. PaPUC's prehearing order in Docket No. 1-19040308 entered 11/30/79.

2. Met-Ed/Penelec motion in Docket No. I-79040308 dated 11/29/79 requesting expedited treatment of Met-Ed's energy clause increase petition, and resolution of "used and useful" issue with respect te TM L-l .

3. Material filed with the PaPUC in Docket ?:o.1-79040308 on 12/6/79, consisting of the following:

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3. Continued (a) Met-Ed/Penelec Statement A (statement of F. D. Hafer in support of Met-Ed's petition to increase its energy cost adjustment charge),

and Exhibit A-3 (actual and forecast Met-Ed energy cost data).

(b) Supplement 1 to Met-Ed/Penelec Statement B and Exhibit B-3 (statement of Met-Ed's energy clause revenues, expenses and deferrals for the four-month period July-October, 1979; witness:

D. L. Huff).

(c) Met-Ed/Penelec Exhibits D-1, D-2, D-3, D-4 (various Met-Ed/NRC correspondence related to TMI-1, including the NRC's order and notice of hearing dated 8/9/79; witness: R. C. Arnold).

(d) Met-Ed/Penelec Statement E and Exhibit E-1 (overview of GPU's capacity planning, past performance of TMI-l and economic benefits attributable to the unit; witness: B. H. Cherry).

(c) Met-Ed/Penelec Statement G and Exhibits G-1, G-2, G-3, G-4 and G-5 (power pooling agreements, estimates of savings in energy costs attributable to THI-related short-term power purchases; witness: E. Newton, Jr.).

(f) Met-Ed/Penelec Statement H and Exhibit H-1 (Met-Ed sales forecast, year 1980).

(g) Met-Ed/Penelec Statement I (description of GPU's ef forts to reduce the cost of TMI replacement energy by entering into favorable short-term power purchase agreements with other utilities; witness: R. H. Sims).

(h) Met-Ed/Penelec Statenent T and Exhibit J-l (rate comparisons, Met-Ed versus neighboring utilities; witness: E. F. Carter).

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fs PENNSYLVANIA PUBLIC UTILITY COMMISSION Harrisburg, PA 17120 Public Meeting held Novarber 29, 1979 Commissioners Present:

W. Wilson Goode, Chairman Michael Johnson James H. Cawley ,

Susan Shanaman Linda C. Taliaferro Pennsylvania Public Utility Commission, et al.

v. Docket No. I-79040308 Metropolitan Edison Company and Pennsylvania Electric Company, Respondents PREHEARING ORDER BY THE COMMISSION:

This order supplements the prehearing order issued at this docket on November 16, 1979. On November 27, 1979 a further prchearing conference was held before the Comnission presiding en banc. This order contains the rulings and determinations at that prehearing conference.

A. Conduct of the hearings.

Upon the oral motion of the Staf f, the presiding commissioners ruled that the decision or decisions of the Commissiot: on the merits in this proceedir.g will be issued as an initial decision or decisions subject to the filing of exceptions by the parties within a specified time and the ruling of the Commission on those exceptions.

B. Parties.

The presiding commissioners allowed the intervention of the following additional persons:

11. Mrs. Patricia A. Smith

12. Pennsylvania Feundrymen's Association and Lebanon Steel Foundry of Lebanon, jointly (" Pennsylvania Foundrymen's Association, et al.")

13. Universal Cyclops Corporation, Electralloy Corporation, Eric Malleable Iron Company, Franklin Steel Company, National Forge Company, Proctor & Gamble Paper Products Company, Talon Textron and Welch Foods, Inc., jointly

(" Universal Cyclops Corporation, et al.")

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I A ruling was deferred on a request to intervene by Lehigh-Pocono Committee of Concern. The Committee was directed to confer with counsel for the Office of Consumer Advocate to determine whether the Consumer Advocate could represent the Committee's interests.

A ruling was also deferred on a petition to interveno filed by the New York Attorney General's Office, Robert Abrams Attorney General ("NYAG").

In response to the NYAC's request to promptly receive all documents filed in this proceeding, the Secretary was directed to serve a copy of all documents hereafter received, at reasonable cost, on the NYAG.

C. Issues.

Respondent Metropolitan Edison Company (" Met Ed") orally moved,in the alternative, that the presiding commissioners:

(a) sever the matter of Met Ed's Petition for Modification of the June 15, 1979 Order and decide that matter expeditiously,

. or (b) expeditiously hear and decide the matter of Met Ed's Petition for Modification within the context of these proceedings.

The presiding commissioners refused to accept the oral motion of Met Ed as stated above, and directed that any written petition on this matter be filed not later than Thursday, November 29, 1979. The parties were directed to file their comments to the Met Ed petition not later than noon on Friday, December 7, 1979.

Respondents, Met Ed and Pennsylvania Electric Company, stated their intent to use calendar year 1980 data as the basis for calculating and presenting the effects of removing the' costs associated with Three Mile Island, Unit No. 1.

The presiding commissioners directed all parties to file comments separately on this issue not later than noon on Friday, December 7, 1979.

D. Scheduling of hearings.

The presiding commissioners set December 10, 11 and 12, 1979 in Hearing Room No. 1 in Harrisburg, Pennsylvania for the initial hearings in this proceeding.

The Respondents agreed to submit prepared direct testimony one week in advance of hearings at which the witnesses will be available foc cross-examination.

The subject matter of the initial hearings will be the matter of Met Ed's Petition for Modification. Subsequent hearings will address the status of Three Mile Island, Unit No. 1.

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This order may be amended or supplemented as additional matters relating to the conduct of these proceedings are considered; THEREFORE, IT IS ORDERED: That this order shall be served on all parties to this proceeding.

BY THE CO>DfISSION, 4-

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Secretary (SEAL)

ORDER ADOPTED: l'over:ter 29, 1979 ORDER ENTERED: Novmber 30, 1979 1548 013 O

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'Mr. William P. Thierfelder, Secretary SECRETARY'S OFFI

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Re: Metropolitan Edison Company and

. Pennsylvania Electric Company t- ..

Docket No. I-79040308

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Dear Sir:

- . Enclosed herewith on behalf of Metropolitan Edison Company and Pennsylvania Electric Company is an original and five copies of a written procedural motion i which confirms the oral motion made at the Prehearing Conference in the above proceeding on Cuecemb'e?,) 27, 1979. ,

tJHenW Very truly yours, i

RYAN 3 RUSSELL S McCOMAGHY t

Samuel B. Russell SBR /mp Enclosures cc: The Honorable W. Wilson Goode, Chairman )

The Honorable James Cawley ) with copy of The Honorable Michael Johnson ) enclosure The Honorable Susan Shanaman )

The Honorable Linda C. Taliaferro )

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BEFORE THE PENMSYLVANIA PUBLIC UTILITY COMMISSION Pennsylvania Public Utility  :

. Commission et al.  :

Docket No. I-79040308 V*

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. Metropolitan Edison Company  :

and Pennsylvania Electric  :

Company, Respondents  :

MOTION OF METROPOLITAN EDISON COMPANY (" MET-ED") AND PENNSYLVANIA ELECTRIC COMPANY ("PENELEC") REQUESTING:

A. A SEVERANCE (FROM THE PRESENT CONSOLIDATED PROCEEDINGS) 0F MET-ED'S PETITION FOR MODIFICATION OF THE ENERGY CLAUSE CHARGE FIXED FOR MET-ED UNDER THE COMMISSION ORDER ENTERED

~ JUNE 19, 1979 AT THE ABOVE DOCKET, OR, IN THE ALTERNATIVE, REQUESTING EXPEDITED HEARING AND DECISION WITH RESPECT TO

_ THAT PETITION IN THE PRESENT CONSOLIDATED PROCEEDINGS, AND B. AN INITIAL DECISION WITH RESPECT TO THE FIRST ISSUE RAISED UNDER THE COMMISSION'S ORDER TO SHOW CAUSE ENTERED SEPTEMBER 21, 1979, NAMELY, "WHY THI-l SHOULD BE CONSIDERED

, USED AND USEFUL IN THE PUBLIC SERVICE".

To the Pennsylvania Public Utility Commission:

A. Request For A Severance, Or, In the Alternative, For Expedited Hearing and Decision, Within the Present Consolidated Proceeding, on Met-Ed's Petition for Modification of Its Energy Clause Charge

1. By Order entered June 19, 1979 at the above docket, the Commission suspended the normal operation of Met-Ed's energy clause (which is the standard form o f electric utility energy clause prescribed by the Commission at I.D. 214) and fixed a non-fluctt.ating or "levelized" energy clause charge in the amount of 8.8 raills per kwh (i.e., 8.4 mills 1548 015

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for energy costu and .4 mills for the associated gross receipts tax) to be collected by Met-Ed during the eighteer rmonth period commencing July 1, 1979.

2. By its petition filed on November 1, 1979, Met-Ed requested that the Commission modify itr afonesaid Order by increasing the above mentioned levelized 8.8 mills per kwh charge by an amount of 6.9 mills per kwh. That petition, together with the attachments thereto, is incorporated herein by reference pursuant to 1 Pa. Code 633.3.

3. At its public meeting on November 8, 1979, the Commission consolidated, for purposes of hearing, its Orders to show cause issued at the above docket under dates of September 21, 1979 and November 1, 1979, and Met-Ed's petition for modification.

4. By its memorandum filed on November 23, 1979 in respo.nse to the Commission's Prehearing Order dated November ]6, 1979, Met-Ed stated a number of reasons why a prompt hearing and decision with respect to its petition is of such importance to Met-Ed and its ability to serve its customers. Thae memorandum is incorporated herein by refer-ence pursuant to 1 Pa. Code 533.3.

5. Since the entry of the Commission's Order on June 19, 1979, various factors have changed, causing in-creases in the experienced anc anticipated levels of Met-Ed's energy costs Such changes a re detailed in Me t-l'd ' s petition for modi fica tion.

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6. As appears from Table 3 attached to Met-Ed's petition for modification of its energy clause charge, Met-Ed's energy costs for the six months ending December 31, 1979 are expected to average approximately 25 mills per kwh.

7. Under the Commission's above mentioned June 19, 1979 Order, Met-Ed is permitted to collect currently a total of 16.4 mill of energy costs per kwh of energy fur-nished to its customers, namely, 8 mills of energy costs per kwh via its base rates and 8.4 mills _ of energy costs per kwh via its energy clause.

8. If Met-Ed's energy clause had operated in its normal mode since June 30, 1979, (a) the amount of Met-Ed's uncollected energy costs (and the amount of its short-tern bank borrowings which had to be incurred to finance such uncollected costs) would be substantially less than is presently the case and (b) the amounts of the energy clause charges to customers since June 30, 1979 would have correspondingly been substantially greater than the amounts recovered under the levelized charge fixed by the Commission.

9. The greater the delay in modifying Met-Ed's presently inadequate energy clause charge, the greater the increase that will have to be made later (a) to recover the rapidly ac; mmulu tint, and uncollected energy costs und (b) to prevent the e::haus tion of Me t-Ed's shor t- term borrowing capability (which h n to be utilized to finance such un-collected energy costa). See Appendix A to Respandents' 1548 017

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- ti - s above mentioned memorandum filed on November 1, 1979.

10. Although an electric utility's energy costs represent by far the largest component of that utility's

' cost of serving its customers, such energy costs are easily and readily identifiable.

-F 11. The Commission, on a number of occasions er in the recent past, has very quickly made adjustments, on an

, emergency or expedited basis, in the levels of electric utility energy cost charges.

12. In order to provide for the urgently needed expedited hearing and decision on the petition to modify its energy clause charge (which Met-Ed urges to be accomplished by January 1, 1980), Met-Ed requests that the e

Commission either (a) grant a severance of that petition from the present consolidated proceedings (so that it may be the subject of expedited hearing and decision as a separate proceeding) or, in the alternative, (b) provide for expedited hearing and decision on tha t petition within the context of the present consolidated proceedings.

B. Request That An Initial Decision Be Made As To Whether Three Mile Island Unit No. 1

("TMI-1") Should Be Considered Used and Useful In The Public Service

13. By its Order entered September 21, 1979, the Commission Ordered Met-Ed and Penelce to show cause with recpect to two issues, namely:

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"(1) why TMI-l should be considered used and useful in the public service, and (2) why all of the costs associated with TMI-l should not be removed from their respective

, , base rates."

14. The first of such issues involves the

,. _ determination of a conclusion of law which is common to both

' of the Respondent companies.

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15. The determination of the second of such issues involves the necessity of developing, with respect to each of the two Respondents, Met-Ed and Penclec, a separate base rate case record related to a timely test year period, including the necessarily detailed base rate case direct testimony and cross--examination of the various witnesses of each of the Respondents as well as the witnesses presented by the Commission Staff and the various other parcies to the proceeding.

16. If the first of such issues is the sub-ject of an initial decision and if such decision concludes that TMI-l continues to be used and useful, there will be no necessity for the subsequent presentation of evidence, conduct of hearings or any determination with respect to the second of such issues.

] 7. While this matter does not involve the high degree o f urgency for an ecrly decision as is the case with Met-Ed's above mentioned petit. ion for modification of its energy clause charge, the making o f the requested initial 1548 019 m

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decision (on the foregoing first issue concerning TMI-1) with reasonable promptness during the course'of the present proceedings offers the possibility of achieving substantial savings in the amounts of time and effort that might other-

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wise be required on the part of the Commission, its Staff and the parties to the consolidated proceedings.

Therefore, Met-Ed and Penelec join in 18.

the suggestion made at the Prehearing Conference on November 27, 1979 by counsel for the Senior Power Action Group and submit th'at it is in the public interest that an initial decision be made, as promptly as possible during the course of the present proceedings, with respect to the aforesaid

'first issue raised under the Commission's September 21, 1979 Order to show cause.

Respectfully submitted,

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,h',h [Afifk umuel B Russell Ryan, Russell E, McConaghy Attorneys for Metropolitan Edison Company and Pennsylvania Electric Company Of Counsel James B. Liberman

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. 6 Met-Ed/Penclec Statement A Witnesses. J. G. Graham F. D. Hafer Statement of F. D. Hafer In Support of Met-Ed's Petition to Increase Its Levelized Energy Cost Adjustment Charge Q. Would you please state your n am e , address and occupa-tion.

A. My name is F. D. Ha fe r and my business address is 100 Interpace Parkway, Parsippany, New Jersey. I am Vice President, Rate Administration, of CPU Service Corp-oration (" Service Company"), a subsidiary of General Public Utilities Corporation ("GPU"), the owner of all of the conmon stock of Metropolitan Edison Company

("Me t-E d ") and Pennsylvania Electric Company ("Penelec").

A brief summary o f my educational and professional background is attached as Appendix A.

Q. What is the purpose of your t e s t im o ny ?

A. Together with witness John G. Graham, Treasurer of GPU, I am testifying in support of Met-Ed's petition for a 6.9 mill increase in its levelized energy cost adjustment' charge filed in this docket on November 1, 1979. That petition has been marked fo r identification as Met-Ed/

Penelec Exhibit A-2, 1548 021

Q. With respect to the clause petition, could you distinguish the areas of your responsibility and those of Mr. Graham?

A. Yes. A major factor affecting the determination of the level of the clause increase Met-Ed has requested was its projected le ve l of short-term debt during the year 1980, as shown by Figures 1 and 2 of Appendix B to Exhibit A-2. Figure 1 shows that without a revision in Met-Ed's 8.8 nill level charge currently in effect, Met-Ed's short-term debt is projected to exceed its limit under the revolving credit ag re em e n t Me t-Ed has with its lending banks by May of 1980. Fi gu re 2 shows that the requested 6.9 uill increase, provided it were to become e f f e.tiv e on January 1, 1980, would keep Met-Ed's short-term debt within manageable limits. .'. l t h o u g h I am prepared to give a broad ov e rv i ew of financial matters, detailed support for the cash flow projections employed in this analysis, the terms of the revolving credit agreement as they apply to Met-Ed and GPU, and the necessity fo r maintaining Met-Ed's short-term debt below its allowed limit will be provided by Mr. Graham. I will also give an ov e rv i ew of the operation o f Me t-Ed 's clause under the provi s ions of its tariff, and the energy cost projections and assumptions underlying our req ue s ted increase will be supported by me. With respect to the latter, I will again defer to specialized witnesses for detailed support as may be necessary.

1548 02)(

Q. Could you briefly describe the functioning of Met-Ed's en-ergy clause prior to the TMI-2 accident on March 28, 19797 A. Yes. In acco. dance with the Commission's di re c t iv e s in I.D.

214, e f f ect ive July 1, 1978, Met-Ed im p l e m e n t e d a " net energy cost rate," or an energy cost adjustment clause that recovered the fuel cost of Met-Ed's internal ge ne r-ation, exclusive of costs incurred after the fuel had been d e liv e r e d to the plant site, and purchased power costs exc lu s iv e of installed capacity and demand charges.

The clause was based on a 6-month rolling average of historical costs and had an error correction factor to automatically adjust for clause over or under collections.

The ta: tff pages describing the provisions of this clause, wh ich has been temporarily levelized as a result of the TMI-2 accident, is attached as Appendix A of Ex h ib i t A-2.

Q. You note that Met-Ed's 6 -m o n t h historical clause was levelized following the TMI-2 accident. Could you elabor-ate on that?

A. Actually, Met-Ed's 6-m o n t h clause was levelized from July 1, 1978 through April 30, 1979 in accordance with procedures mandated by the Commission for effecting a transition from Met-Ed's clause previously in effect to the 6-month c la u s e prescribed by the Commission. In May and June 1979, following the end of this transition procedure, energy cost adju s tmen t charges based on a 6-month rolling 1548 023

average historical costs were billed. Effective July 1, 1979, the charges that would h av e been billed under the 6-month clause were temporarily replaced by a level factor of 8.8 mills per Kwh, by the Commission Order entered June 19, 1979 in Docket No. I-79040308. It was anticipated in the Commission's O rde r that the 8.8 mill level ch a rg e would remain in effect for 18 m on ths until December 31, 1980. The addendum to Met-Ed's tariff authorizing the level charge ( Appendix A o f Exhibit A-2) does, however, p e rm i t an earlier revision if requested by Met-Ed or directed by the Commission.

Q. Why was the clause levelized?

A. The levelizing of the clause was basically adopted to moderate steep monthly increases in adjustment charges to customers that otherwise would have been billed under the 6-month clause as a result of the sharp increases in Met-Ed's energy costs that occured following the TMI-2 accident. It was assumed that Met-Ed's unrecovered energy costs which would accumulate during the initial months of billing the level charge (i.e., from July through December 1979) would be recovered in 1980 follow-ing the return of TMI-1 to service, which at the t im e the level charge was d e t e rm i n e d , was expected to occur by January 1, 1980.

Q. What were the other significant assumptions underlying the Commission's determination of the 8.8 mill level charge?

1548 024 A. The Commission basically accepted Met-Ed's projections of the cost of TMI replacement energy, which Met-Ed es tim a t ed would av e r ag e about $ 10 million per month with both TMI units out of service, and drop to about

$3.5 million per month following the return of TMI-1 to s e rv i c e . In both cases, the e s t im a t e s represented the

" gross" cost of TMI replacement energy, before off-setting reductions in energy costs expected to result from s ho r t- t e rm power purchases that GPU was actively seeking at the t im e to lessen the im p a c t of the TMI-2 accident. On a " net" basis reflecting these reductions, which the Commission estimated would amount to about 25% of the gross TMI replacement energy cost, the Com-mission's e s t im a t e s of the cost of TMI replacement energy were $ 7.5 million per month with both TMI units out, and $ 2.5 million per month with only TMI-2 out. The Commission added its estimated TMI replacement energy costs to Met-Ed's energy costs originally budgeted for the 18-month period from July 1, 1979 to December 31, 1980 on the assumption of normal operation of the TMI units, and projected total energy costs for the period of approximately $200 million. The 8.8 mill level charge was then d e t e rm i n e d by dividing this amount by total sales of 12,257 Gwh projected for the period, deducting the 8 mills of energy costs per Kwh included in retail base rates, and applying a tax factor to make provision for the 4.5% Pennsylvania Gross Receipts Tax. In addition,

_ 5_ 1548 025

although the Commission did not reflect either of the d i r e c t iv e s in its determination of the 8.8 mill level charge, it (a) authorized the inclusion of the de-mand component of the cost of TMI-related power pur-chases as part of the costs recoverable by the energy clause for the period from July through December, 1979, and (b) instructed Met-Ed to negotiate with PJM to eliminate the " split savings" component of the cost of CPU's TMI-related interchange purchases from PJM so as to price such purchases at cost.

Q. Met-Ed's peition for an increase in the 8.8 mill level factor indicates that its energy corts have exceeded the costs assumed in determining that factor. Could you indicate the reasons for this?

A. Fi rs t , and most importantly, the expected return date of TMI-1 has slipped from the January 1, 1980 date assumed in d e t e rm i n i ng the 8.6 mill level factor to a late 1980 date at the earliest. As will be testified to by witness R. C. Arnold, this slippage is due to the lengthy procedures instituted by the NRC as a precondition for the return of THI-l to service. In its annual review meeting before the Commission held on Se p t em b e r 21, 1979, Met-Ed included, on page 30 of the booklet handed out at the meeting and incorporated in this record as Exhibit F-1, a capsule summary of the NRC's t e n t a t iv e TMI-1 restart schedule. That schedule indicates that the 1548 026 NRC could render a decision in the TMI-l restart proceeding by mid-August, 1980, and Met-Ed has, for purposes of its energy clause petition, accordingly assumed a TMI-l return date of 9/1/80. Until the regulatory and political c lim a t e surrounding the TMI accident stabilizes and although Met-Ed and GPU will exert every ef fort to get TMI-l returned to service as soon as possible, this projected return date must be c ons id e red t e n t a t iv e at best.

Q. You noted that the Commission a s sum e d Me t-E d would be able to achieve substantial savings in energy costs by virtue of arranging short-term power purchases with other utilities.

What has Met-Ed's experience been with such purchases since the accident?

A. Met-Ed be li ev e s that it, or mo re precisely, that GPU acting on behalf of Met-Ed and the other GPU operating companies, has beer. ve ry ag r e s s iv e in seeking out such purchases, and it is confident that it has carried out th e Commission's directives on this sc ore. However, because the price of oil has risen substantially since the time the budget used in determining the level factor was prepared, the savings in energy costs achieved from the purchases have been largely offset by increases in the cost o f TM1 replacement energy, which is largely oil-fired in source. Analysis of our experience with the purchases through September indicates that they have

_ , _ 1548 027

reduced Met-Ed's energy costs by about $ 12.5 million over the 5-month period from May through September, or by about $ 2.5 million per month. This e s t im a t e is supported by the t e s t im o ny and exhibits of witness E. Newton, Jr.

While the es tima ted mon thly savings of $2.5 million from the purchases is in line with the level of savings assumed by the Commission in determining the 8.8 mill level factor, we e s t im a t e that Met-Ed's cost of TMI replacement energy with both TMI units out has increased from our original estimate of $ 10 million per month to about $14 million per month, which represents the average monthly replacement cost Met-Ed has experienced since the TMI accident, i.e., from April through October, 1979.

This increase has accordingly more than offset the savings we in a v e achieved from the outside power purchases so far.

Q. Could you brie fly indicate how GPU's negotiations to reduce the cost of interchange purchased from PJM have fared?

A. Yes. On October 10, 1979, in response to the Commission's Order, Met-Ed and Penelec filed a petition seeking Commission approval of a PJM proposal to price GPU's TMI-related interchange purchases from PJM at cost plus 10%, rather than on PJM's no rm a l " split-savings" basis.

We e s t im a t e that savings in interchange costs from this proposal could be as high as $32 million in 1980 on a CPU basis, of which Met-Ed's share would be about $5.5 1548 028 million, but note that this estimate is not incremental to the savings achieved from the outside power purchases.

That is, if the PJM proposal were adopted, the interchange energy purchased under it would largely be in replacement of, rather than in addition to, many of the s h o r t- t e rm power purchases we are now making. We would therefore to some extent be s im p ly substituting PJM savings for s av i n g s we are now achieving from the outside power purchases. A major advantage of PJM interchange under the cost plus 10% proposal, however, would be the greater reliability of its supply, as compared to the purchases.

Q. lia s the PJM proposal gone into effect?

A. The PJM proposal has been approved by the Pennsylvania Commission by its Order entered 11/20/79, but currently is awaiting approval by the Maryland and District of Columbia Commissions. Following approval by these commissions, a filing with the Federal Energy Re g u l t. t o ry Commission ("FERC") will be made and it is anticipated that the FERC will approve the proposal without delay.

Q. In reference to the TMI-related purchases, you noted that witness Newton is providing detailed te s t imony and exhibits. Is similar t e s t im o ny being supplied with respect to PJM's cost plus 10% proposal?

A. Yes, it is. Witness R. H. Sims will discuss the current status of the PJM proposal in detail, and also review the contractual arrangenents associated with the outside power purchases. In addition, Mr. Newton's exhibits will s um m a r i z e the assumptions as to the level of both the outside power purchases and the PJM purchases that were employed in preparing Met-Ed's energy clause increase petition.

Q. You noted earlier that the slippage in the expected return date of TMI-1, and consequently the increase in Met-Ed's energy costs that will result due to the delay in the return of TMI-l to service, is the p r im a ry reason for the need to increase Met-Ed's level energy cost adjustment charge. Have there been, or are there increases in Met-Ed's energy costs as well?

A. Yes. Oil costs have increased substantially since the budget used in de t e rm i n ing the 8.8 mill level charge was prepared, and are expected to continue to increase in the future. The cost of coal by comparison has been r e l a t iv e ly stable, but may well increase in reaction to the oil price increases. We are now projecting an average coal cost of about $36 per ton for the year 1980. In October, Met-Ed's average cost of coal was about $34 per ton. In the case of oil, Met-Ed's cost increases have been far greater. In the prior proceeding, it was assumed that Met-Ed's av e r ag e cost of oil for the year 1980 would be about $19.20 per barrel. In October, 1979, Met-Ed paid an average of $28.50 per barrel --an increase of nearly 50% over the level previously projected

_ 10 - 1548 030

for 1980. Although Met-Ed's oil-fired generation does not supply a large pe rc entag e of its energy requirements, increases in oil prices substantially increase Met-Ed's interchange costs because interchange is largely supplied from oil-fired sources.

Q. Could you indicate the combined effect of these increases, as compared to the level of energy costs it was assumed Met-Ed would experience in the prior pcoceeding?

A. Since July, the first month in which the 8.8 mill level charge was billed, Met-Ed's actual energy costs have averaged about 26 mills per Kwh, as compared to total charges for energy costs allowed (under the Commission's June 19, 1979 Order) of 16.4 mills (8 mills included in base rates, plus the 8.4 mill energy cost component of the 8.8 mill level charge). As noted earlier, the Commission's de t e rm i n a t io n of the 8.8 mill level charge was based on average energy costs projected for an 18-month period, in which TMI-I was ar,umed to be in service for the last 12 of the 18 m on th s . The lower energy costs that were expected to occur on the assumption that TMI-l would be back on line by Janua'ry 1, 1980 will

. not in fact occur, and the costs now being experienced by Met-Ed will instead continue at their current level well into 1980. This would indicate that the 8.8 mill charge should be increased by nearly 10 m ill s , including taxes.

1548 031 Q. Met-Ed's experience under the level clause through October would ind ic a t e that a substantial cost under-recovery has occurred.

A. That's true. I might point out that this result was an-ticipated in the prior proceeding, but it was also a s s um e d in that proceeding that the initial under-recovery in 1979 would be made up in 1980. This will not now happen due to the delay in TMI-l's return to service.

As shown by Met-Ed's statement of clause revenues, expenses and deferrals that will be supported by witness D. L. Huff, Met-Ed's balance of retail energy costs unrecovered as of October 31, 1979 was approximately

$51 million, exclusive of the $14 million balance re c ov e r ab le by base rates. By the end of the year, we e s t im a t e the unrecovered balance will increase to about

$61 million. If Met-Ed's level charge were increased just to recover this deferred balance, an increase of 8.1 mills, including taxes, would be indicated.

Q. According to your projections, would such an increase be sufficient to provide for the cost increases you discussed previously?

A. No it would not. A " full cost recovery" re-determination of the level charge, essentially replicating the method employed in the prior proceeding would indicate that the 8.8 mill charge should be increased by 10. 6 m ill s .

1548 032 Q. How then did you determine that the 6.9 mill requested increase would be sufficient?

A. Our approach was to determine the minimum clause increase necessary from the standpoint of financial prudence, or the increase that is minimally required to permit Met-Ed to finance, using its currently availabic resources, energy costs not currently ~being recovered, thereby e f f ec tiv ely deferring a substantial portion of the increased energy costs that will result from the delay in the return of TMI-l to service to the period following the unit's return, at which t im e such deferred costs would be billed.

Q. And your cash flow analysis indicated that a 6.9 mill increase would represe c cuch a minimum increase, that is, provide a margin of safety with respect to Met-Ed's sh or t- t e rm debt limit?

A. Yes, it would, provided it becomes effective on January 1, 1980. As we pointed out in our response to the Commis-sion's prehearing order dated 11/16/79 that was filed with the Commission on 11/23/79, the clause increase required to keep Met-Ed's short-term debt below the margin of safety increases sharply if the increase is delayed. For example, if the e f f ec tiv e date of the clause increase were delayed until Fe b r u a ry 1, 1980, the increase for the period from February through June of 1980 would have to be 8.4 mills pe r Kwh to keep 1548 033

Met-Ed's short-term debt from exceeding the margin of safety. The corresponding increase assuming a March I e f f e c t iv e date would be 10. 7 mill s .

Q. In making these projections, what was assumed with respect to retaining TMI-1 in rate base?

A. All of our projections assume that Met-Ed's base rates will ~

not be reduced to eliminate the capital and operating costs of TMI-1. If Met-Ed's rates were so reduced -- and Met-Ed is confident that it will be able to demonstrate that they should not be -- Met-Ed's clause increase request would have to be increased by an amount equal to the reduction to keep its short-term debt within the same margin of safety.

Q. What is the impact of the requested increase on charges to customers?

A. As we noted in the clause increase petition, (Exhibit A-2) the 6.9 mill increase would increase charges to all retail customers by about 15.7% (Table 10) and charges to the aver-age residential customer by about 12.3% (Table 9). Even with this increase, Met-Ed's rates would still be lower than the rates applicable to residential customers served by several other Pennsylvania utilities as shown by Figure 6 of Appendix B to Exhibit A-2. We have since updated these comparisons to reflect rates in effect as o f Decem ber 1, 1979 with essentially the same results, as will be testified to by witness E. F. Carter.

1548 034 Q. Please describe what is represented on Met-Ed/Penelec Exhibit A-37 A. That exhibit provides a detailed breakdown, by month, of Met-Ed's actual energy costs during the period of July through September, 1979, and projected energy costs for the period of October of 1979 through December of 1980.

We expect shortly to update that exhibit to provide the actual data for the month of October, 1979.

Q. Do you h av e any additional comments to make?

A. Yes. Although Met-Ed is projected to continue to experience substantial cost under-recoveries even if it's requested 6.9 mill clause increase is granted, the reconciliation pro-cedures employed with the clause, which have long been ad-vocated by Met-Ed, insure that there is no possibi.lity of

, customers experiencing pe rma ne n t overcharges should Met-Ed's e s t im a t e s p ove to be wrong.

Q. Does this conclude your t e s t im ony at this time?

A. Yes, it does.

1548 035 Appendix A F. D. Hafer I am Vice President, Rate Administration of GPU Service Corporation.

I have been an employee and/or officer of the GPU System for 17 years. I began such employment in September 1962, having previously attended Drexel Institute in Philadelphia, Pennsylvania, during the period September 1959 through June 1962, where my principal field of study was engineering.

During the period September 1962 to June 1968 I was employed by Metropolitan Edison Company, initially as an engineering trainee in the Planning Department, subsequently as engineering assistant in the Economic Analysis and Rates Department and, for the last two years there, my employment was as adminis-trative assistant to that Company's Vice President and Chicf Engineer. In June 1968, I was transferred to General Public Utilities Corporation, where I initially served as a staff assistant, becoming Assistant Treasurer in March 1970 and Treasurer in September 1970.

In August 1977 I was elected Vice President - Rate Administration for GPU Service Corporation. During the course of 1977 I was elected to the Boards of Directors of Metropolitan Edison, Jersey Central and Pennsylvania Electric Company. I continued to hold the position of Treasurer for both the Service Company and the Parent Company until the new treasurer was named in September of 1978.

I have appeared as a witness in rate cases of Pennsylvania Electric Company and Metropolitan Edison Company before the Pennsylvania Public Utility Commission, and of Jersey Central 1548 036

Power 6 Light Company before the New Jersey Board of Public Utility Commissioners. I have presented testimony in rate cases for those corapanies before the Federal Power Commission, and have testified before that Commission in a Section 206 investigation involving Metropolitan Edison Company. I have testified as a witness before the Securities and Exchange Com-mission in a contested proceeding under the Public Utility Holding Company Act of 1935 relating to Metropolitan Edison Company.

I attended the Irving Trust Company utility finance seminar and served as one of three utility industry representatives on the Atomic Industrial Forum ad hoc committee to assess the impact of President Ford's economic program which was presented to a joint session of Congress on October 8, 1974.

On behalf of General Public Utilities Corporation and its subsidiaries, I have periodically made presentations to Moody's Investor Service, Standard S Poor's and other rating agencies.

In the cource of my duties, I met frequently on an informal basis with utility financial analysts representing banks, insurance companies, pension trusts, brokerage firms and the like. I am a member of an informal group of utility analysts and utility financial officers that meet periodically to dis-cuss matters relating to the electric utility industry. On occasion, I also have represented General Public Utilities Corporation at the periodic meetings of financial officers of public utility holding companies registered under the

-Public Utility Holding Company Act of 1935.

1548 037

NETROPGLITAN EDISON COMPANY Forecast (1) System r'nergy Costs (2)

July, 1979 August, 1979 September, 1979 October, 1979 ,,

Mills / . hills [~ Mills / Mil'Is/

($000) MVH kWH ($000) HVH KWH ($000) MVH kWu ($000) WH KVH Internal Generacian Coal Tttus $ 1,969 122,670 16.052 $ 2,046 134,249 15.241 $ 1,875 129,921 14.431 $ 1,862 120,791 15.418 Portland 1,402 102,551 13.665 1,435 106,149 13.515 1,064 79,011 13.4 f ' 1,967 134,113 14.667 Co w augh 913 _56,348 16.204 1,172 75,083 15.612 2,169 140,377 785 _50,778 15.463 15.45(

Total 4,264 281,569 15.213 4,653 315,481 14.749 5,108 349,309 14.622 305,682 15.096 4.614 Oil LTl Ce bustion Turbines 4@:m 295 5,726 51.584 651 11,655 55.873 276 5,062 54.656 755 13,126 57.516 CX3 Hydro York Haven -

11,311 - -

13,181 - -

14.075 * - -

8,360 -

Nuclear 7MI CX3 3 (5,357) -

1 (5,331) -

1 (4,658) - - - -

' local Internal Ceneration 4,582 _29_3249 15.624 5,305 334,986 15.836 5,335 363,788 14.803 L3o 16.412 f _3 4 168 Interchange and Other Energy Purchasp Intercnange Purchased I rm PJM (3) 485 14.358 33.773 877 23,064 38.010 1,212 26,794 45.223 1 26.702 45.900 f rm GPU _ _I t908 89t964 21.212 1,417 64,145 22.088 900 202 265 44.401 I t 223 46,636 26.231 lotal 2,393 104,322 22.941 2,294 87,209 26.299 2,112 47,059 44.869 2,449 73,333 33.393 Interchange (Sold)

To PJM (1,506) (52,352) 28.768 (1,805) (60,037.) 30.058 (1,384) (41,764) 33.134 (508) (15,915) 31.900 To GPU (513) (43 940) 103.984 (901) (23,852) 37.783 (22 116) (56,922) 37.178 (588) (23 J41) 25.290 *ts :C tn Total (2,0T9) T57,292) 35.254 (2,706) (83,e89i 32.254 7 3,500) (98,en) 35.467 (1,o96) ( 39,is) 27~.9TJ g p 4 o 3>

Other Energy Purchased (4) forderline 1 10 53.800 1 11 48.273 1 11 51.545 - - -

O[

m re MP - - - - - - -

7,828 276,600 APS 7,093 257,012 27.598 8,727 325,700 28.300 k O =

26.795 7,795 267,875 29.098 - - -

m **o Jme s town 50 2,140 23.620 186 8,186 22.738 210 9,271 22.620 286 12,600 22.700 PF4L 2,019 57,440 35.160 1,165 30,100 38.719 1,105 28,700 38.513 551 18,750 29.400 Ontario ,__l,409 29.949 1,660 52 .'"* f 47 J43 2 592 31.555 1,566 493 _577 31.581 1,574 49 tEGO 31.600 w Total _10 5/2

___.__2__.

363,645 29.074 11,7_39 416,589 28.173 10,677 351 434 30.036 10 239 1 _._

357,750 28.620 9 Total Energy Purchased (Net) 10,946 410,675 26.654 11,327 419,909 26.975 303,607 11,592 391,832 o

9,289 30.572 29.585 es c

7 Total Energy Costs $ 15 d28 703,924 22.059 $ 16,632 754,h95 22.031 S 14,674 667,595 21.978 $ 16,961 719t000 23.590 m

)

Total Sales ,$_15_1528 618,743 25.006 $ 16,632 65 Q 67_ 25.432 $ 14,674 661,723 22.173 $ 16,961 642,264 26.409 ,q (1) July, August and Septa ber, 1979 actual October, November and December, 1979 forecast t3 (2) " Energy Costs" are costs recoverable by retait energy clause, all fuel costs auc all purchased power costs except demand charges and installed capacity payments E

(3) Assmed PJ't pricing proposal of aversy incrmental cost plus 102 ef fective 11/01/79 (4) Includes capacity costs

M'. TROP 01.lTAN LDISON COMPANY Forecast (1) Systen Energy Ccats (2) -

November, 1979 December, 1979 6 Months Ended December, 1979 Mills / Mills / Mills / *

($000) MWH KVH ($000) MWH KWH ($000) MWH KWH Internal Cencration Coal Titus $ 1,388 88,069 15.760 $ 2,196 141,813 15.485 $ 11,336 737,513 15.371 Portland 2,069 138,678 14.919 3,444 218,123 15.789 11,381 778,625 14.617 Conemiugh 1,252 84,093 14.828 1,613 107,764 14.959 7,904 514,443 15.368 Total 4,709 310,840 15.149 7,253 467,700 15.506 30,621 2,030,581 15.080 Oil Combustion Turbines 798 13,557 58.863 833 13,896 59.945 3,608 63,022 57.250

!!yd ro York llaven -

8,090 - -

8,360 - -

63,377 -

Nuclear TMt - - - - - -

5 (15,346) -

Total Internal Generation 5,507 332,487 16.563 8,086 489,956 16.504 34,234 2,141,634 15.985 Interchange and Other Energy Purchased Interchange Purchased From P.T.1 (3) 1,680 40,686 41.292 1,940 46,982 41.292 7,420 178,586 41.549 from GPU 810 33f02 _24.250 520 _20,833 6,778 24.626

_24.960 _271 24_5 Total 2,490 74,088 33.609 2,460 67,815 36.275 14,198 453,831 31.265 Interchange (Sold)

To PJM (260) (6,898) 37.692 (183) (4,100) 44.634 (5,646) (181,066) 31.182 T o C P'J (700) (2 M 77) _25.201 __ ( 1,154) ,45J71)

( 25.212 (5,972) _ (182 dO3) 32.705

~* Total (960) (34,675) 27.686 (1,337) (49,B]) 26.809 (llg8) (363,669) ~31.947 W

4 Other Energy Purchased (4) g bo r<te rl ine - - - - - -

3 32 51.125 AEP 5,383 190,200 28.302 5,383 190,200 28.302 18,594 657,000 28.302 APS 1,328 61,500 21.593 1,328 61,500 21.593 26,271 973,587 26.984 O Jamestown 286 12,600 22.698 28 6 12,600 22.698 1,304 $7,397 22.719

( eJ PP&L - - - - - -

4,840 134,990 35.955 Q Ontario _ 1,574 _4_9u800 ll.606 _ld74_ _49,800 L 6_06 1 357 __298J 12 31.335 Total _ 8_,571, 314,_100 _2_7.287 __8,571_ 314,lg0_ 27.287 60,;369 g2l618_g 28.45j Total Energy Purchased (Net) 10,101 353,513 28.574 9,694 332,044 29.195 62,949 2,211,780 21.461 Total Energy Costs $_15.008 _686,000 $_17_, 780__ 822,00_0 21.630 _$__9 7,18 3 4,353,414

- _ _ _ _ _ ._ _22.752_ _ _ _ _ __ _

22.3_2_4 Total Sales 664 3 712,232 24.964 $ 97,183 24.583

$_15,6_08_ ____t _8 6__ _23.492 $_17,_7_8_0, 3,953,315 (1) July, August and Septa ber, 1979 actual, October, November and December,1979 forecast E 00 (2) " Energy Costs ** are costs recoveral,le by retail energy clause, all fuel costs and all purchased power costs except demand charges and installed capacity C payments N

(3) As sumed PJM pricing proposal of average incremental cos t plus 101 e f fective 11/01/7)

Q (4) Includes capacity costs

• METROPOLITAM EDISON COMPANY .

Forecast System Energy Costa (1)

January, 1980 February, 1980 March, 1980 April, 1980 Mills / Nills 7 Mills / Mills /

($000) pdm KWH ($000) P4H kWH ($000) MWH KWH ($000) MWH KWH

_ Internal Ceneration Coal Titus $ 2,220 142,997 15.525 $ 1,748 109.003 16.036 $ 2,027 127,797 15.861 $ 1,495 92,782 16 113 Portland 3,352 210,517 15.923 3,042 196,935 15.447 3,246 210,517 15.419 3,190 203,726 15.658 Coneaugh I,907 12h096 14.772 1,785 120,768 14.780 11 910 129t096 14.795 1,855 124 930 14.848, Tctal 7,479 482,610 15.497 6,575 426,706 15.409 7,183 467.410 15.368 6 540 421,438 15.518 Oil Coubustion Turbines 530 8,851 59.880 502 8,2e2 60.613 541 8,824 61.310 $27 8 509 61.934 MyJro Y,rk Paven -

8,338 - -

7,d00 - -

8 338 - -

8 068 -

Nuc h ar m .; - - - - - - - - - - -

Total Internal Generation 8g 499,799 16.024 7.,077 442 t7 8 15.983 1 724 484 572 71 0M g,015_ 16.13

_ , [5_.940 Ir.t e r da a t.g e and Other Energy Purchased Interd en;e INrchase.1 Fra PJM (2) 12,334 265,811 46.401 10,587 228,158 46.402 6,875 148,165 46.401 5,900 127,168 46.395 Frm Ci c 55 2j 89 23.022 102 41 422 23.066 153 _ 6,671 22.935 358 15t632 _2_2.902 Total 12,189 263,200 46.193 10,689 232,5t0 45.958 7,028 154,636 45.390 6,255 142,b00 43.624 I r. t e r c h .s .f v (Sold) qa 73 - - - - - - . - - - -

- 1s 6% (149) (51399) 27.598 (132) (4,768) 27.685 (326) (11 808) 27.608 (337) (12 27.589 m To t .,1 (149) (5,399) 27.598 (132) (4,768) 27.685 (326) Tl i~,, sos) 27.608 73D) M,,.215) 215) 27.5e9

.Am.

g Ot! .r Ei.ergy Purchased (3) p, - - - - - - - - - - -

.'. P 3 1,469 62,500 23.504 1,469 62,500 23.504 1,469 62,500 23.504 1,469 62,500 23.504 J_ Jar.c s town 307 12,400 24.758 307 12,400 24.758 307 12,400 24.758 307 12,400 24.758 p m t. - - - - . _ _ _ - _ - -

O Catario ___12 944 56,500 34.407 1.,944 56 2 500 34.407 I t 944 56,500 34.407 1,_944 Sot500 34.407 Total _3,720 13!_,400 28.311 3,720 _1_31 4y E 311 _ 3_,_720_ 13p4p 28gli ___3,7 0 ]!.4fg 2g3_11 Total Energy Purchased ( h t) 15,900 394,201 40.487 14.277 359,212 39.746 10,422 274.428 37.978 9,651 261,985 36.838 Total Er ergy Costs $23g69 894 dO_0 _2_6. 8g $ 21,3% 802,000 2g626_ $ 18,l_46 g000 g.9_08 $ 16,708_ g0p 23 86_9 Total Sales 7_85,420 $_21g 24.577

_$23g69 _30.517 789,1p g03 {l8,14_6 g331, $ 16 170_8 _6831] _24.458_

'o fa (1) "Enerry Costs" are costs recoverable by retail energy clause, all fuel cosi t and all purchased power costs except demand charges and installed capacity ]

papents.

u (2) Assmed PJM pricing proposal cf average incremental cost plus lot effective !!/01/79. o m

(3) Includes capacity costs. e

METROPOLITAN EDISON COMPANY Forecant S m em Energy Costs (1)

May, 1980 ~

. June, 1980 July, 1980 August. 1980 Mills / MTil7 Mills / Mills /

($000) MWH KWH ($000) MWH KWH ($000) MW!? KWH ($000) NWH KWH p ternal Generation cual Titus $ 1,869 115,636 16.163 $ 2,243 138,384 16.209 $ 2,333 142,997 16.315 $ 2 369 142,997 16.567 Portland 2,432 155,391 15.651 3,191 201,221 15.858 3,362 210,517 15.970 3,358 210.517 15.951 tonemaugh _ 1, 911 129,096 14.803 _ 1 1885 124,930 15.088 1,944 129 2 096 15.059 12 4_68 96_,_961 15.140 Total 6,212 400,123 15.525 7,319 4 6 '+ ,5 3 5 15.756 7,639 482,610 15.829 1,195 450,475 15.972 Oil Conbustion Turbines $28 8,452 62.470 532 E,370 63.560 569 8,851 64.287 575 8.851 64.964

!!yd ro York Haven -

8,338 - -

8,C58 - -

8,338 - -

8,338 -

Nuclear 73g_g _ _ _ _ _ _ _ _ _ _ _ _

Total Internal Ceneration gg 416,913 _lil 66 7,851 30,973 16.323 8,2_08 _49_97p t 16.423 _7 t770 _467,_664 _16.6_14 Interchanee and Other Energy Purchased Intercha"2e Purchased Fro, PJM (2) 6,0!8 129,692 46.402 3.566 76,861 46.395 3,315 71,440 46.403 5,846 125,998 46.398 Frm CPU 736 31,998 _2_3. 001, 364 _1h02 5 2_2.715 410 _!_8,086 22 6_69 _ l,178 _50x872 _2 3. t_5 6 Total 6,754 161,63 41.711 3,930 92,886 42.310 3,725 99,526 41608 _ 73 03 176.870 39.713 Interci.ange (Sold)

To PJM - - - - - - - - - - - -

To GPU (193) __7,003)

( _27.56_0 (752) ,_.7.259)

(2 27.587 (738) (26 t725) 27.615 ( 19_l ) _ (6,934) 2.7.545 (27,259)

~ ~

Total (193) (7,003) 27.560 (752) 7 2_7.587 (738) h 725) 27.615 (l91) 161937.) 2735 Oth r Energy Purchased (3) p,t p - - - _ _ _ _ _ _ _ _ _

~ APS 1,469 62,500 23.504 1,469 62,500 23.504 1,469 62,500 23.504 1,469 62,500 23.504 g Jamestown 307 12,400 24.758 307 12,400 24.758 307 12,400 24.758 307 12,400 24 758 ppa _ _ _ _ _ _ _ _ _ _ _ _

Cntario _l,9_4_4_ _56,500 34.407 1,944 56_1500 34.407 1,944 56 2 500 34.407 12 944 561500 34.407 O Total 3,720 28.311 3,720 131,400 2d.311 3,720 131,400 28.311 3,720 131 28.311 13! dOO_. _ _ _ _ _ _ __ __t_4 0 0_ ___

C Total Energy Purchased (Nc ' 10,281 286,087 35.937 6,898 191,027 35.011 6,707 194,201 34,537 10,553 301,336 35.021

-85

- Total Energy Costs 0 7_0h000 $ 14,749 $ 14,915 694,000 21.491 $ 18,323 769,000 23

$ 17_1_21_ _2 M _12 _h000 6_7 2_1.754. ___

_J_2 7 Total Sales ,$30 2_ 334,868 _26. 8p 1,l_4,749 632u774 23.308 $ 14,915 628,475 23.732 p 8,3_p 661,745 27.689 ca (1) " Energy Costs" are costs recoverable by retail energy clause, all fuel co:.s and all purchased power costs except demand charges and installed capacity pay:ents.

y v.

(2) Assu:ned PJM pricing proposal of average incremental cost plus 10% ef fective 11/01/79. o m

(3) Includes capacity costs. m

METROPOLITA!i EDISON COMPANY Forecast Systeen Energy Costs (1)

September, 1980 October, 1980 November, 1980 Mills / Mills / Mills /

($000) WH EWil ($000) MVH 1:WH ($000) HVH KW!!

Internal Ceneration Coal Titus $ 2,295 138,384 16.584 $ 1,629 97,050 16.785 $ 2,277 135,294 16.830 Portland 2,522 156,589 16.106 2,615 159,095 16.437 3,352 203,726 16.453 Con.maugh 1,474 _961812 15.225 1,975 129,096 15.299 1,8;25 124,930 15.409 Total 6,291 391,785 16.057 6,219 385,241 16.143 7,554 463,950 16.282 Oil Combustion Turbine 553 8,423 65.654 568 8,557 66.378 558 8,272 67.456 Pydro York llaven -

8,068 - -

8,338 - -

8,068 -

Nuclear TMI 540 223t488 2.416 562 231,312 2.430 524 223d88 2.345 Total Internal Generation 7 , 3_8_4 631,76_4 _1 1_. 6,8_8

_ 7,349 633,448 _11.b02 _ 8,636 7 3 778 _1_2.271 Interchange and other Energy Purchaned Interchange Purchased From PJM (2) - - -

26 6 5,739 46.350 81 1,748 46.339 From GPU 228 10,095 22.585 524 23,141 22.644 115 5,132 22.408 Total 228 10,095 22.585 790 28,880 27.355 196 6,880 28.468 a

a sterchange (Sold) o PJM (2,020) (71,621) 28.204 (1,256) (43,612) 28.7'9 (2,278) (81,075) 28.097 To CPU (790) (28 t638) 27.586 (776) (28 116) 27.600 (22 014) (72,983) 27.595 Total (2,810) (100,259) 28.027 (2,032) T 71, 728) _28.329 (4,292) (!$4,058) 27.860 Other Energy Purchased (3)

AEP - - - - - - - - -

APS 1,469 62,500 23.504 1,469 62,500 23.504 1,469 62,500 23.504 Jamestown 307 12,400 24.758 307 12,400 24.758 307 12,400 24.758 PI'6 L - - - - - - - - -

Ontario _ 1,944 56,500 34.407 1,944 56,500 34.407 1,944 _5M00 34.407 Total 3,720 131,400_ 28.311 3,720 131,400 28.311 3,720 131,400 28.311 Total Energy Purchased (Net) 1,138 41,236 27.598 2,478 88,552 27.984 (376) (15,778) 23.831

~

(.J'l Total Energy Cost _$___8,5 2 2 673,000 12.663

~

$ 9 u827 722,000 13.611 $ 8,260 688,000 12.006 y uw A Total Sales $ 8,522 669 628 12.726 $ 9,827 645,398 15.226 $ 8,260 6661 279 12.397 g _ _ _ _ . _

vi o

O (1) " Energy Costs" are costs recoverable by retail energy clauu , all fuel costs and all purchased power costs except demand A charges and installed capacity paynents.

• N (27 As sumed PJM pricing proposal of average incremental coat plua ICI ef fective 11/01/19.

(3) Includes capacity costs.

METROPOLITAN EDISON COMPANY Forecast Syntets Energ LC osts (1) l e

Decemberu!980 12 Months Ended December 1980 Mills / Mills /

($000) MWH KV!! ($000) MVH EVH Internal Ceneration Coal Titus $ 2,421 142,997 16.930 $ 24,926 1.5.*6,318 16.331 Po r t la nd 3,699 210,517 17.571 37,361 2,329,268 16.040 Conemaugh _ 2,001 129,096 15.500 h463 y 7 15.056

_2220_40 Tatal 8.121 482,610 16.827 84,327 5,319,493 25.852 Oil Combustion Turbines 599 8,805 U .030 6,582 103,647 63.874 Hydro

• York Haven -

8,338 - -

98,438 -

Nuclear TML $65 239 g 2.356 2,191 9182 145 2.386 Total Internal Generation 9,285 739,610 12.554 93.100 6,4391 123 14.458 Interchange and Other Energy Purchased Interchange Purchased From PJM (2) 970 20,893 4 t, .4 2 7 55,758 1,201,673 46.400 Frun CPU 268 Il e867 22.584 4,491 196,330 22.875 Total 1,238 32,760 37.790 60,249 1,398,003 43.096 Interchange (Sold)

To PJM (398) (12,023) 33.103 (5,952) (208,331) 28.570 To CPU (2,008) (72, 747) 2 M t03 ( 8,40_6) (304 tS95) 27.597 Total T84,/70)

(2,406) 28.183 T14.358) _(512 M ) 27.992 Other Energy Purchased (3)

AEP - - - - - -

APS 1,469 62,500 23.504 17,628 750,0G0 23.504 Jamestown 307 12,400 24.758 3,684 148,800 ppst _

24.758 Ontario 1,944 562 500 34.407 23,328 34.407 Total 678J00 3,72_0 _1_31 g g _2h 311 _i4 JiO 12 5]6n00 28.31[

Total Energy Purchased (Net) 2,552 79,390 32.146 90,531 2,461,877 36.774

~

Total Energy Costs $ 11 837 819,000 14.453 $183 631 _8,901 h L7"1 2 000 20.631 00 Total Sales $ lj,837 09 t l43 _16.692 8,244,274 pq

$181631 (1) o C " Energy Costs" are costs recoverable by retail energy clause, all fuel casts and all purchased power m costa except demand charges and installed capacity payments.

4 m U (2) Assumed PJP. pricing proposal of everage incrementti cost plus 10% ef fective !!/01/79.

(3) Includes capacity costs.

%. Supplement 1 to Met-Ed/Penelec Statement B Witness: D. L. Huff Q. Mr. Huff, are you familiar with the petition of Metropolitan Edison Company for a modification of the Commission's Order entered June 19, 1979 at I-79040308, which has been marked for identification as Met-Ed/Penelec Exhibit A-2?

A. Yes, I am.

Q. Was a part of that petition prepared by you or under your supervision?

A. Yes, the Statement of Retail Energy Clause Revenues, Expenses and Deferrals which is part of Appendix A to the petition, and which has been marked for identification as part of Met-Ed/Penelec Exhibit A-2, was prepared under my supervision.

Q. Please briefly identify what is represented by that portion of Met-Ed/Penelec Exhibit A-2?

A. As stated in Paragraph 5 of Met-Ed's pet ~ition, this schedule provides information with respect to the operation of the levelized energy adjustment charge (mandated by the Commission's Order entered June 19, 1979) for the three month period ended September 30, 1979. This inforraation also has been supplied to the Commission in the Company's monthly reports, filed pursuant to Paragraph 12 of that Order. Further, this data corresponds to the reporting requirements set forth in items (a) through (c) of the third paragraph of the Addendum 1

to Rider B (the Energy Cost Adjustment Clause) of Met-Ed's Tariff Elcetric Pa.PUC No. 42, which was filed with the Com-mission on June 22, 1979 in compliance with the June 19th 1548 044

. s Order. Rider B and the Addendum are also part of Appendix A to the petition.

This schedule shows that for the three month period ended September 30, 1979, retail clause revenues for energy costs amounted to $15.3 million. Total system energy costs amounted to $46.8 million. As stated in Footnote 2 of this schedule, those costs include the demand component of the cost of TMI-related short-term power purchases, consistent with Paragraph 4 of the Commission's Order entered June 19, 1979.

For the three month period ended September 30, 1979, the energy costs (above the level recovered by base rates) applicable to retail sales amounted to $29.5 million. As ,

of the end of September, 1979: $42.3 million of retail energy costs were deferred.

Q. Mr. Huff, I show you what has been marked for identification as Met-Ed/Penelec Exhibit B-3 and ask you if that exhibit was prepared by you or under your supervision?

A. Yes, Exhibit B-3 was prepared under my supervision.

Q. Would you please identify what is represented by that exhibit.

A. Exhibit B-3 provides the same type of information contained in the schedule which I have just described, updated to reflect retail energy clause revenues, expenses and deferrale through the end of October, 1979. For the four month period ended October 31, 1979, energy costs (above the level recovered by base rates) applicable to retail sales amounted to $43.1 million, 1548 045

an increase of $13.6 million over the three month level at -

September 30. Met-Ed's balance of retail energy costs deferred rose from $42.3 million as of the end of September, 1979 to $50.9 million for the four month period as of the end of October.

Q. Does this complete your testimony at this time?

A. Yes, but I do wish to point out that I have also submitted Met-Ed/Penelec Statement B and Met-Ed/Penelec Exhibits B-1 and B-2, in connection with a base rate future teet year period.

In the event that additional testimony may be required in connection with that data or any subsequently filed Met-Ed base rate data, I will furnish such testimony.

1548 046

Met-Ed/Penelec Exhibit B-3 Witness: D. L. Huff METROPOLITAN EDISON COMPANY gg)

Statement of Retail Energy Clause Revenues, Expenses and D<ferrals 4 Months Ended October 31, 1979 4 Months October July August Se pt ember October 1979 Sales and Revenues Pennsylvania Retail Sales (Cwh) 582 613 625 596 2416 Level Energy Cost Adjustment Charge (mills /Kmh) 8.8 8.8 8.8 8.8 8.R Clause Revenues Before Billing Adjustments

($ millions) $ 3.1 $ 5.4 $ 5.5 $ 5.2 $21.2 Billing Adjustments (0.0) 0.0 0.0 (0.0) J .0)

Clause Revenues as Adjusted $5.1 $5.4 $5.5 $ 5.2 $21.2

( Le ss ) : Pa. Cross Receipts Tax @ 4.5% (0.2) (0.2) (0.3) (0.2) (0.9)

Retail Clause Revenues for Energy Costs $ 4.9 $ 5.2 $ 5.2 $ 5.0 $70.3 fxpenses Total System Energy Costs ($ millions) $15.5 $16.6 Si4.7 $19.5 $66.3 Total System Sales (Cwh) 619 654 662 632 2567 Energy Costs per Kwh Sold (sills) 25.1 25.4 22.2 30.8 25.8 (Less): Energy Costs per Kwh included in Retail Base Rates (8.0) (8.0) (8.0) (8.0) (8.0)

Energy Costs per Kwh above Base 17.1 ~ 17.4 14.2 22.8 17.8 Energy Costs (above Level Recovered by Base Rates) Applicable to Retail Sales (Costs per Kwh Times Retail Sales) $10.0 $10.7 $ 8.8 $13.6 $43.1 De fe r ral s Balance of Retail Energy Costs Deferred at Beginning of Month ($ millions) $28.1 $33.2 $38.7 $42.3 $28.1 Plus: Current Month's Deferral ( 10.0 10.7 8.8 13.6 43.1 (Less): Current Month's Retail Clause Revenues for Energy Cost s (4.9) (5.2) (5.2) (5.0) ( 20. 3)

Balance of Retail Energy Coets Deferred at End of Month $33.2 $3R.7 $42.3 $50.9 $50.9 (1) as reported monthly to the Commission (2) includes demand component of cost of THI-related short-term power purchases ($7.0 million for 4 months ended October 31, 1979).

(3) includes demand component of cost of THI-related short-term power purchases ($6.6 million for 4 months ended October 31, 1979).

1548 047

Met-Ed/Penelec Statement E Witness: B. _H . Cherry TESTIMONY OF B. H. CHERRY Before the Pennsylvania Public Utility Commission Q. Please state your name and address?

A. My name is Bernard H. Cherry. My address is 100 Interpace Parkway, Parsippany, New Jersey.

Q. By wh om are yo i employed, and in what capacity?

A. I am employed by GPU S e rv i c e Corporation (GPUSC) as Vice President, Corporate Planning.

Q. Please state yot'r educational, professional background?

A. A resume of my educational and professional background is set forth in Appendix A.

Q. Mr. Cherry, wh a t is the purpose and subject area of your t e s t im o ny in this case?

. A. The purpose of my t e s t im o ny is twofold: 1) to present a history of the planning and operation o f T MI- 1, and 2) to demonstrate the substantial benefits that Met-Ed and Penelec customers hcve already received and can expect to r e c e iv e in the future, as a result of the operation of TMI-1.

Q. Which of the exhibits that have been marked for id en t i f i-cation were prepared by you and under your supervision?

A. ?!ct-Ed/Penclec Exhibit E-1 has been prepared by me or under my supervision.

1548 048

Q. Have there been su b s t an t iv e benefits to Met Ed and Penelec customers as a result of the construction and operation of TMI-1?

A. Yes, there have been.

Q. Would you tell us what they are, please?

A. Yes. In t e rm s of dollar savings, l' . t Ed and Penelec customers have saved about $250 million because GPU built and operated THI-1 rather than an oil-fired plant. This s av i ngs accrued over the period of TMI-1 operation, from Sept. 1974 through Dec. 1978. Relative to a coal-fired plant, our customers have saved about $72 million. We expect that the dollar savings will be e n o rm ou s ov e r a period of 30 years (starting in Sept.

1974), more than $10 billion re l a t iv e to an oil-fired plant and more than $2 billion relative to a coal-fired pl an t.

Q. Given that TMI-1 was built, what are the advantages to PJM and PJM's customers?

A. In terms of oil savings, operation of TMI-1 s av e s about 6.7 million barrels of oil per year in PJM. If we assume the current price of $25 per barrel, this amounts to a savings of $168 million per year.

Q. Would you please describe brie fly the generation planning process?

1548 049

3-A. In the development of a generation plan, a multitude of some-t im e s noncomparable considerations must be studied and eval-usted and finally a judgement rende red on a specific course of ac tion.

We begin with an energy and load forecast for twenty years that defines expected demand for electric power by our customers. It is then necessary to design a system expan-sion plan to assure that the required capacity is available in a reliable, cost e f f e c t iv e , and envirennentally accepta-ble manner. The resulting plan is a mix of base load, inter-mediate or cycling, and peaking capacity units, bulk trans-mission and local distribution networks, all geographically c on f igu red in a manner to assure system stability and re-liability af the power supply. This is done in a decision e n v i r o nm e n t that recognizes emerging regulations on tech-nelogy, the maturation of that technology, and in recent years the considerable uncertainties regarding fuel prices.

Q. Please describe the planning th i nk i ng at GPU prior to and at the t im e the decision was made to construct TMI-l?

A. Ap p r oxim a t e ly thirty years ago GPU cmbarked on a program designed to achieve the benefits of e c o n om y of scale in generation facilities by installing units sized to the total GPU system load, rather than the loads of the indi-vidual membe rs of the system. Moreover, in order to realize the economies of transporting electric energy by wire rather than coal by railroad, the GPU System built an extensive transmission system and the first two 1548 050

units at its Shawville Station near the coal fields in Western Pennsylvania. As the system load grew, two addi-tional units were installed at Shawville and another at Seward, also located near the Pennsylvania coal fields.

While it was fe a s ib le fcr the GPU companies to build a significant part of the generating capacity at or near mine mouth, reliability considerations also made it necessary to build generating capacity in the Eastern portions of the se rv i c e area. Therefore, during this same t im e frame, coal-fired generating units were installed at the Portland Station (on the Delaware River) and at the Sayreville Station in New Jersey.

The GPU System also did some pioneering work on the develop-ment of extra high voltage transmission and in the promotion of tenancy-in-common ownership by nona f filia ted utilities or la rge mine mouth coal-fired generating stations, which led to the Keystone and then subsequently the Co nem a ug h and llome r City Stations near Johnstown. The CPU System is a partici-p a r. t , as owner of a fractional interest, in these three sta-tions; Penelec operates these three stations for the respective owners. Additionally, GPU companies constructed the Saxton Nuclear Experimental Generating Station to gain first hand experience with the construction, operation and maintenance of a nuclear generating facility. Through the Atomic Energy Act of 1954, the Federal Government had a c t iv e ly encouraged the development of nuclear generation of electric caergy.

1548 051

The decision environment in the mid 1960's, when commitments were being made for TMI-1, was cons id e rab ly different from that of today. Th is was an era when the price of fuel oil was approximately $2.40 per barrel, as compared with recent prices of $25.00 or more. This was a time when facilities were being constructed without the regulations of the Clean Air Act Amendments of 1970, and there was a strong national c ommi tm e n t to expand our nuc1 car generating capacity.

Thus, by the mid 1960's, GPU had substantial existing wholly owned Western coal-fired generating capacity ( Sh awv i ll e ,

Seward, and Warren) and was committed to several Western Pennsylvania coal facilities then under construction -

Keystone (in service 1967/68), Conemaugh (in service 1970/71),

and 1:om e r City Units 1 and 2 (in service 1969). Given thess commitments, and recognizing that our system was spread from the Atlantic Ocean through the States of New Jersey and Pennsylvania to Lake Erie, our future planning fo cu sed on the need for additional base load capacity in the East. Our fo recas t indicated that increasingly larger quantities of electrical energy would be moving cast; hence, for system stability and reliability reasons our attention was directed toward such locations as Oyster Creek (near Toms River, New Jersey) and Three Mile Island (near Middletown, Pennsylvania).

On November 9, 1965 the northeast power failure occurred.

On June 5, 1967 the PJM power f ailu re occurred. In re-sponse, Public Utility Commissions of the several states (including Pennsylvania) in which the PJM companies operate took a n um b e r of steps to insist that those utilities 1548 o52

both increase their demand forecasts and install addition-al generating capacity to provide greater reserve margins.

These steps included meetings of those Commissions as a group with the Ch ie f Execu t ive Officers of the PJM com-panies as well as continuing pressures from the steffs of the Commicsions. This insistence on the part of the Commissions was c ub s e qu e n t l- documented by the Annual Report of the New Jersey Board of Public Utility Commis-sioners for the year 1970. In that report the Board re-lated the fact that it had directed New J e rs ey electric utilities to install generating capacity to meet an obj ec t iv e of providing a 20% reserve margin while assuming their load would double by 1978. Identical conclusions as to the need to construct additional gen-erating facilities to provide at least a 20% reserve margin over the then forecast peak loads we re reached by your Commission in its Order of August 8, 1972 in the Met-Ed case at C.19312 and its Order of August 17, 1973 in the Penelec case at C.19561.

Q. Would you please describe the specific studies that led to the decision to construct TMI-l?

A. Beginning in 1962, a series of studies had been made be-tween mine mouth generation in Western Pennsylvania and 1548 053

coal-fired generation in Eastern Pennsylvania and New Jersey. These studies were un i f o rm ly favorable to mine mouth generation, with the resulting transportation of energy by wire rather than by rail. These studies led to th e construction of the above mentioned mine mouth generating plants in Western Pennsylvania of Keystone, llome r City and Conemaugh.

The re l a t iv e e c o n om i c s of mine mouth and Eastern coal-fired generation were also explored in connection with the economic evaluation of Oyster Creek (Report On E c 9n om i c Analysis For Oyster Creek Nuclear Generating Station, February 17, 1974). This also demonstrated the economic ad va n t ag e of the Western Pennsylvania mine mouth generation re la t iv e to Eastern coal-fired generation.

When studies were made in 1965 of additional nuclear generation for the CPU system (for a unit which b e c am e TMI-1), the economic comparison was made between n u c '. c a r and mine mou th ge ne ra t ion. These 1965 studies showed a long t e rm advantage for the nuclear installation, but probable short term advantage for the then proposed llome r City mine mouth plant. As a result of these studies, a decision was made in June 1965 to proceed first with llome r City.

1548 054

In 1966, the economics of additional nuclear generation were re-examined, but this time in comparison with a coal-fired unit at the same site as would be selected for the nu c le a r unit. There are two reasons for this shift in bases of comparison, 1) the particularly at-t rac t iv e conditions applicable to the llome r City Plant were no longer available as an al t e rna t iv e , and 2) coal suppliers had suggested that fuel might be delivered to the CPU site for 20d per million Btu, although this was not a firm offer of such a supply.

Even on the basis of this low delivered fuel price, if it should materialize, a nuclear unit installation was found to be advantageous. In November 1966 the decision was made to proceed with a nuclear installation in December 1966, the TMI site was selected for the installation.

The cost e s t im a t e s used in these 1965 and 1966 studies are far different from those that are presently made for both types of plants because of changes in cost levels and because of ch anges in scope related in large part to environmental and regulatory c ons id e ra t io ns .

The major environmental cost of using a coal-fired base load installation includes such items as the discharge of noxious and toxic gases, including sul f ur dioxide and nitrogen 1548 055

_9 oxides, the discharge of particulate., and the presence of unsightly coal and ash storage areas.

Another economic study was pe r f o rme d as part of the environ-mental report that Metropolitan E d i s o r. Company submitted to the Atomic Energy Commission, predecessor of the Nucicar Regulatory Commission, at the t im e Met-Ed was applying for an operating license. This economic study also showed that TMI Units I and 2 would be more economical than either coal-or oil-fired base load units for operating periods in excess of 5,200 hours0.00231 days <br />0.0556 hours <br />3.306878e-4 weeks <br />7.61e-5 months <br /> per year (capacity factor greater than 59%).

Q. Mr. Cherry, would you please describe the operating history of TMI-1?

A. TMI-l's nucicar reactor achieved its first chain reaction on June 5, 1974 and the first electricity was produced on June 19, 1974. During pre-commercial operation, 472,296 megawatt hours of electric energy were produced. On Labor Day, September 2, 1974 the unit went into commercial operation and has since established an exceptional reliability record. From Septem-ber, 2, 1974 until March 28, 1979, the date of the TMI-2 accident, the 75% undivided interests in TMI-I owned by Met-Ed and Penelec provided 17.9 million megawatt hours of electric energy or an average of 4.0 million megawatt hours per year. Such average annual generation is eq u iv a le n t to 1548 056

the average annual re q u i r em e n t s of approximately 530,000 residential customers served by the two utilities. Through 1978, the average annual capacity factor fo r TMI-1 was about 78%, which was substantially above the national average for nuclear generating units and for modern base load coal-fired generating units. Even if TMI-1 does not resume operation until January 1, 1981, for example, its capacity factor for the period September 1974 through December 1980 would still be about 56%, greater than the reported li f e t im e capacity factors (through August 1979) of some 20 nuclear plants owned by other electric utilities. Exhibit E-1 compares the capacity factor for TMI-I to reported values for other nuclear generating units in Pennsylvania.

Q. Have you racently studied the econc=ic benefits that TMI-1 has provided to Met-Ed and Penelec customers relative to alternative methods of electrical energy generation that were available to Met-Ed and Penelec?

A. Yes I have.

Q. To what extent, if any, would operation of TMI-l avoid the need to burn oil?

A. It would, of course, avoid the burning of considerable quantities of oil.

Q. How much oil would operation of TMI-1 save in 1980?

A. No rm a l operation of TMI-1 in 1980 would be expected to save about 6. 7 million barrels c2 oil th rough ou t the PJM system.

1548 057

. . - .m.

This is based on a computer simulation of the operation of PJM, inc lud f.ng the economic ordered dispatching of un i t s throughout the system. Absence of TMI-l from the list of operable plants requires that a num b e r of oil-fired steam units, and to a lesser degree oil-fired combustion turbines, be operated to a greater extent than would be required if TM1-1 were in service. Burning this extra oil when an alternative source of energy (TMI-1) is available is contrary to national policy and to President Carter's stated ob j e c t iv e of reducing oil consumption for purposes of electricity production.

Q. In addition to the economic benefit of TMI-1, is there any other benefit?

A. Yes. GPU has as a goal attainment of a mix of f ue ls for baseload generation rather than placing reliance on any one fuel. Experience has shown fuel supplies can be disrupted.

Commencing in 1974, reliable oil supplies have been dis-rupted by international events. In a recent winter, the region f a ced a coal strike and, in addition, blizzards and crippling cold which froze coal stockpiles.

Nuclear units, because of their economics are usually bece loaded. When oil is in short supply, coal is used more e x t e n s iv e ly to make up the deficiency. Conversely, when coal is unaveilable oil is used more extensively. The multiple fuel mix has not only helped GPU avoid serious fuel shortages, 1548 058

but has permitted CPU to supply electrical energy to neigh-boring utilities when they could not maintain fuel supplies -

to meet their load.

TMI-l o f fe rs Met-Ed and Penelec customers lowest cost electri-cal energy and independence from fuel supply disruptions.

Q. Does this complete your t e s t im o ny at this time?

A. Yes. In th e event that te s tim ony may be required, in c onj u nc t ion with a base rate future test period, with re s pe c t to projected nucicar fuel costs, I will furnish such te s t imony .

1548 059

MET-ED/PENELEC STATEMENT - APPENDIX A EDUCATIONAL BACKGROUND AN D EXPE RIENCE OF BERNARD H. CHERRY Graduated from the University of Illinois with a Bachelor of Science degree in Chemistry and Mathematics and a Master of Science degree in Nuclear Engineering. Did graduate work in nuclear science and engineering at Co lum b i a U n iv e r s i ty . In addition, has participated in courses'in Energy Supply and Decision Analysis at the Massachusetts Institute of Technology.

Prior to joining GPU Service Corporation, from 1963 through 1969 served initially as a nuclear engineer and finally as Ad-vanced Reactor Development Manager with United Nuclear Corpora-tion. Re s po n s ib il i t ie s included the development of advanced fuels for breeder reactors and for the management of light water reactor fuel reload projects.

Joined GPU Se rv i c e Corporation in 1970 as Nuclear Fuels Manager re s pons ib le for all phases of nuclear fuel procurement analysis and planning for the GPU System.

From 1974 through 1977, served as Manager of Fuels with responsibility for overall fuel supply, planning, procurement, and strategy for the utilization of coal, oil, and nuclear fuel in the GPU System.

In 1977 was appointed Vice President of Corporate Planning for GPU Se rv ic e Corporation with responsibility for all aspects of the development of energy supply and demand strategy for the GPU System, including generation selection, load forecasting, long range planning and fuel supply coordination and planning.

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_2_

In addition to Mr. Cherry's work at GPU Se rv ic e Corpora-tion, he is ac tive ly engaged in a num b e r of other activities related to energy supply planning and load forecasting. These a c t iv i t ie s have included serving as Chairman of an Energy Modeling Fo rum Group focusing on the fo reca s t ing of energy demand (funded by the Electric Power Research Institute and administered by Stanford University, membership on the Electric Power Research Systems and Materials Task Force, the Chairman-ship of the Edison Electr i c Institute Nuclear Fuels Committee for three years, membership on American Nuclear Society Fuel Cycle E x e c u t iv e Committee, membership on the Atomic Industrial Forum Nuclear Fuels Task Force, membership on the Atlantic Council Nuclear Fuel Study Group and former member of the Board of Gove rnors of the World Nuclear fuel Market. He has co-authored 1976 Atlantic Council Nuclear Fuel Policy Paper and the A t la n t ic Council Policy Paper on Nuclear Power and Non proli fera tion.

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Met-Ed/Penelec Exhibit E-1

. Witness, B. H. Cherry CUMULATIVE CAPACITY FACTORS FOR NUCLEAR UNITS IN THE COMMONWEALTH OF PENNSYLVANIA (Cumu la t iv e through August 1979)

Unit Capacity Factor, %

Beaver Valley 1 34.6 Peach Bottom 2 64.5 Peach Bottom 3 66.1 Three Mile Island 1 69.9 1548 062

Met-Ed/Penelec Statement G Witness: E. Newton Jr.

Q. Please state your name and address.

A. My name is Edmund Newton Jr. My business address is P.O. Box 1018, Reading, Pennsylvania.

Q. By whom are your employed and in what capacity?

A. I am employed by GPU Service Corporation ("GPUSC") as Vice President-System Operations.

Q. Please state your educational and professional background.

A. A resume of my educational and professional background is set forth in Appendix A.

Q. Mr. Newton, what is the purpose and subject area of your testimony in this case?

A. The purpose of my testimony is to suppor: the interchange and purchased power co=penents of the forecast energy costs shown in Appendix B, Table 3, and the average annual PJM running rate depicted in Appendix B, Figure 5, of the petition of Metropolitan Edison Company for modification of Commission Order entered June 19, 1979 at I-79040308, a copy of which has been marked for identification as Met-Ed/Penelec Exhibit A-2. I will also supplement the testimony of Mr. R. H. Sims who will describe the GPU efforts made during the period following the Three Mile Island ("TMI")

accident to secure lower cost energy than that available on a split-savings basis from the Pennsylvania-New Jersey-Maryland Interconnection

("PJM") and the resulting short-term purchase agreements entered into by GPU. I will further present and discuss the major interconnection and bulk power supply agreements to which Metropolitan Edison Company

(" Met-Ed") is a party and explain how these agreements affect Met-Ed's bulk power supply and operations, and in particular, form the backdrop for the economic purchase of energy following the TMI accident.

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Q. Which of the exhibits which have been marked for identification were prepared by you or under your supervision?

A. Met-Ed/Penelec Exhibits G-3 through G-5 inclusive, were prepared by me or under my supervision. Exhibits G-1 and G-2 are composites of the principal interconnection and bulk power supply agreements affecting Met-Ed, and I will identify, discuss and sponsor them.

Q. You said that you proposed to discuss the major interconnection and bulk power supply agreements to which Met-Ed is a party and explain how these agreements affect its bulk power supply and operations. Would you please identify those agreements?

A. The agreements to which I referred are (1) the GPU Power Pooling Agreement, dated July 21, 1969, as supplemented (identified as Met-Ed/Penelec Exhibit G-1), among Met-Ed, Pennsylvania Electric Company ("Penelec") and Jersey Central Power & Light Company (" Jersey"), which is the basic agreement under which the GPU System operates; and (2) the PJM Agreement, dated September 26, 1956, as supplemented (identified as Met-Ed/Penelec Exhibit G-2), to which the GPU Companies acting in concert, are a party. Both of such agreements, and all amendments and supplements to them, are filed as Tariffs with the Federal Energy Regulatory Commission.

Q. Would you please describe Met-Ed/Penelec Exhibit G-l?

A. Exhibit G-1 is a composite of the GPU Power Pooling Agreement, as amended to date. It includes the original agreement and all subsequent amendments in their presently effective form. As I mentioned the agreement is the major agreement controlling the bulk power operation of the CPU system and establishes the basis under which that operation is carried out and the resulting interchange transactions and billings among the GPU companies are carried out.

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3-The body of this agreement comprises a statement of general principles while supplemental schedules are attached which set forth in detail the various undertakings and transactions covered by the agreement. These supplemental schedules are modified from time to time as changing circum-stances require. The general philosophy underlying the CPU System is set out very clearly in Section 1 of Article II of the GPU Power Pooling Agreement, as follows:

"In order to obtain the maximum benefits of interconnecteu operation, the location, size and character of the installed generating facilities or the amount and source of any purchased generating capacity, shall be determined on a basis which is most economical for the systems of the individual parties as well as for the Integrated System, giving due consideration to the meintenance of proper and adequate service to the customers of each of the individual parties."

In essence, that agreement and the language I have quoted is designed to reflect the fact that Met-Ed and its affiliates constitute an " integrated public-utility system," as that term is defined in Section 2(a) (29) of the Public Utility Holding Company Act of 1935. An essential part of that statutory definition is the requirement tha t the physical assets of the entire GPU system, whether owned by one or more electric utility companies, be operated as a single interconnected and coordinated system.

Q. Does the GPU Power Pooling Agreement include any provision for the purchase and sale of installed generating capacity?

A. Yes, it does, and specifically, this is set forth in Article II, Section 2. ,

This section makes the following provision:

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"SECTION 2. To equalize the future benefits and burdens related to the installation or purchase of generating capacity, it is the intent that each party hereto shall provide a share, approximately proportional to its expected size, of the planned base-load generating capability of the Integrated System. To provide such share a party may participate in a lifetime ownership of capacity hereaf ter planned and installed by another, may individually or in association with other parties hereto purchase from others not parties hereto, or may by short-term purchase from parties hereto provide for its forecast temporary need for generating capacity. The amount and duration of such short-term purchases shall be determined from time to time after the effective date of this Agreement; and the conditions of service and the rates and charges therefor shall be set forth as supplementary schedules to be attached hereto."

In general terms, capacity sales and purchases will then be necessary to equalize the generating capacity available to the several companies and to redistribute among the companies the financial burden of providing that capacity. Such routine equalizing capacity transactions are covered by the provisions of Schedule 4.01 to the GPU Power Pooling Agreement.

Q. Does the GPU Power Pooling Agreement provide for transactions other than those of generating capacity?

• A. Yes, it does. Also covered by the agreement are the energy and other transactions that permit full advantage to be taken of coordinated planning and operation within the System.

The bulk power facilities of the GPU subsidiary companies are also operated on a coordinated basis with the detailed hour-by-hour' operation supervised and accounted for by the GPU System Operations Department, located in Reading. This department is responsible for the reliable and economic operation of the System and for its performance as an integral part of the PJM systen. To this end, and subject to GPU's obligations to PJM, the System Operations Department schedules the operation of generating units, their loading for overall economy, and the scheduling of outages 1548 066

of generating units and of major transmission facilities for maintenance or other reasons. It also does the accounting for the interchange trans-actions among the GPU companies and for transactions with other utilities.

In summary, it can be said that, as to bulk power facilities, the GPU System is planned and operated as a fully integrated unit.

Q. Would you please explain in some detail what is represented by Met-Ed/Penelec Exhibit G-2?

A. Exhibit G-2 is the PJM Agreement as amended to date. As was the case with Exhibit G-1, Exhibit G-2 is a composite of the original agreement and all subsequent supplements and reflects all amended provisions in their presently ef fective form. This agreement, to which Met-Ed, along with the other GPU Subsidiaries, is a signatory, is in practical ef fect a pooling agreement among six separate entitics, of which GPU, as a group is one. This is the major agreement under which the GPU System as a group is interconnected with the other electric utilities in the area. In turn PJM is interconnected with outside power pools through inter pool agreements.

There are several inter pool agreements to which Met-Ed and the other GPU Companies are signatories, but they are basically agreements between the members of PJM and other power pools with the benefits growing out of those agreements flowing back to GPU and to Met-Ed through the medium of the PJM agreement.

Q. Are there any elements of the PJM and the GPU Agreements which affect, in a major way, the bulk power supply and operations of the Met-Ed System?

A. Yes, there are two basic elements. The first which is fundamental to both of these agreements is that there is implicit recognition of the obligation 1548 067

by each party to the agreements to provide, on balance, a proportionate share of the generating capacity and associated transmission of the overall system. The second is that, under normal conditions and subject to area load protection requirements, the bulk power supply facilities will be operated to achieve the greatest overall economy.

Maximum overall benefit can be achieved only if all available generating equipment is operated on a fully coordinated basis which may mean that one company generates in excess of its own ie.ediate requirement with the excess sold on an economy basis to other participants as interchange, while another company may operate so that it is producing only a portion of its requirements and is purchasing the balance as interchange from other members of the pool.

Q. You have spokan about interchange. Would you describe the fundamental principle or principles of the PJM Agreement and the GPU Power Pooling Agreement as they both relate to interchange?

A. The fundamental principle of both of these agreements is a sharing of all benefits and risks incident to operation of the combined bulk power system of all of the parties. Each company will make available for the use of the entire system all of its equipment available at a given time and in turn will draw on the entire system for energy and capacity needs.

Each company will retain control of its own equipment so far as determining whether the equipment can be operated without damage and further will take advantage of the output of its own generation to the extent it is needed.

Every piece of generating equipment made available to operate at a given time is operated to the maximum economy of the entire interconnected system without regard to ownership.

1548 068

Maximum economy is achieved when the incremental cost (the cost of the next unit of output from each generating unit) is equal across the entire system. The highest incremental cost operating at a given moment is referred to as the PJM " running cost" or " running rate".

After the fact, it will be found through a reconstruction of an hour's operation that the dispatch for maximum econony to the PJM running cost will identify some companies as actually generating with their own equip-ment less than their own load requirements and hence are purchasing from some other member of PJM, while other companies will be found to be generating more than their system load and hence will be selling companies.

In each case the quantities being referred to are megawatt hours integrated over an hour for generation, load and interchange. Over a given hour the total amount of energy being purchased will exactly equal the amount beit.g sold.

Q. How are the PJM interchange purchases and sales priced?

A. In general, PJM transactions are made on the basis of sharing the " savings",

which in total is the difference between the out-of pocket cost for the energy being sold by the selling companies and the " avoided" cost which would have been incurred by the purchasers in the event tha t such energy purchased were replaced from the purchasers' own sources. The final result of these transactions is to provide the buying companies with energy at a lower cost than it would have incurred if there had been no pooling operation, and will provide the selling companies with their out-of pocket costs plus a share of the total savings generated. In effect, the savings will be shared equally between the buyers and the sellers.

1548 069

Q. Would you describe how the intra-GPU transactions are made?

A. The CPU Companies as a whole are treated as one company under the PJM Agreement and as a group participate in all transactions with PJM, both buying and selling. In reconstructing interchange transactions after the fact, GPU, in total, is identified as either a buyer or seller and settles with PJM exactly as each other participant in PJM does on a split-savings basis.

However, a further accounting refinement is ef fected within GPU wherein each company's transactions are reconstructed af ter the fact to determine the transactions which would have occurred within GPU entirely apart from PJM. For example, if GPU as a whole, is selling to PJM, the sale will be frv the highest incremental cost equipment being run on the GPU System which equipment would not have been loaded *o that level in the absence af a PJM transaction. The equipment producing the sale is identified by owning company and cost and the GPU companies actually participating in that sale will be reimbursed fully for the out-of pocket fiel costs when GPU receives payment from PJM. The excess receipt from PJM, which is the savings component, will be shared among all the GPU corpanies regardless of their actual participation in the transaction.

Having identified the generation dedicated to PJM during a specific hour, the balance by the same reconstruction procedure is then treated as an intra-GPU transaction. All intra-GPU transactions are priced at " cost" and therefore split-savings are not utilized for the pricing of those transactions. During a given hour the result of this two part transaction may have the effect of having Jersey generating 100 MW less than its hourly load, in total, but being identified as the seller of 50 MW to PJM i548 070

and after the isolation of the PJM t.ansaction, purchasing 150 MW from Met-Ed. The sale of the 50 MW to P?( would be at its highest cost (let's say, $40 per MW bc,ur) and its purchase of 150 MW from Met-Ed at a much lower cost (let's say $25 per MW hour). The end result is that the lowest cost energy is being retained within CPU and the highest cost energy enters into PJM sales.

Similarly, when conditions warrant, GPU may, in total, be purchasing from PJM and the GPU company, whose generation is less than its load, is identified as the purchaser. Such energy is paid for at the full PJM rate by such purchaser. The total GPU actual generation will next be accounted for among its companies in accordance with the respective excesses or deficiencies in meeting the company loads and the resulting intra-GPU transactions paid for on a " cost" basis.

Q. Would you please summarize the cost impact, upon the several GPU Companies of the basic interchange principles you have described?

A. Although all three GPU companies participate in transactions both with PJM and intra-GPU from both a buying and selling standpoint, the trans-actions with PJM will inherently tend to involve the company with the highest cost generation to a greater extent than the other companies.

Jersey tends to have the largest amount of high-cost generation from its oil-fired units at Werner, Sayreville, and of combustion turbines.

Therefore, when transactions are caused to take place by the loss of a base load resource such as TMI, the impact from an energy loss standpoint will be proportional to the respective TMI ownerships but the cost impacts 1548 071

- 10 _

till tend to be related to the cost of the alternative resources available and will tend to impact proportionately more heavily on Jersey than it will on Met-Ed or Penelec.

Q. You earlier referred to the GPU short-term purchases from other power systems since the accident at TMI. Can you describe for us the accounting treatment for those purchases?

A. Each short-term power purchase from other utilities is divided among the three GPU companies in proportion to their ownership in TMI (Met-Ed 50%,

Penelec 25%, Jersey 25%). Each company receiving such a purchase treats it in effect as a generating unit whose output it can keep for its own use or sell as interchange in accordance with the GPU and PJM agreements. If the energy is sold to PJM, the cost is based on the energy and operating capacity cost of the purchase and the seller absorbs the associated demand charges. For intra-GPU transactions, the weekly demand charge is divided

, by the weekly energy purchased and this amount is added to the hourly energy and operating capacity cost.

Q. You referred earlier to the PJM running cost. Will you please describe the PJM running cost as shown in Appendix B, Figure 5 of Met-Ed's petition, Exhibit A-2?

A. The rates shown on Figure 5 are actual average PJM running rates for the period 1970 through 1978. The estimate of 31.7 mills /kwh for 1979 is, in my opinion, a reasonabic and appropriate estimate of the average running costs that have occurred and will occur during the 1979 operation of PJM.

1548 072

Q. Are you familiar with the interchange and purchased power components of the forecast energy costs shown on Table 3 of Appendix B, Exhibit A-2?

A. Yes, I am.

Q. Where can the interchange and purchased power components of such costs be identified?

A. The breakout of such costs can be found in Met-Ed/Penelec Exhibit A-3.

Q. What opinion, if any, do you have with respect to the forecast levels of such interchange and purchased power expenses?

A. In my opinion, such levels of expense are reasonable and appropriate estimates of what Met-Ed can expect to incur in those areas during the forecast period, given the assumptions noted in Table 3. I might add that the assumptions, as noted, which directly relate to the interchange cnd purchased power components of the energy costa shown in Table 3 include:

(a) " cost plus 10%" pricing of TMI-related purchases from PJM, reflected in the PJM proposal contained in the petition for a declaratory order filed by Met-Ed and Penclec on October 10, 1979 and approved by the Commission; (b) the continuation through 1980 of other economic TMI-related purchases; and (c) the inclusion of the demand component of the cost of purchases; and (c) the inclusion of the demand component of the cost of TMI-related purchases through 1980 (the Commission Order of June 19, 1979 would allow recovery of the demand component only until January 1, 1980).

Q. With respect to the contemplated 1980 short-term purchases to reduce the effect of the TMI outage on energy costs, please indicate the amount and cost of Met-Ed's share of such purchases and also indicate the savings expected from such purchases.

1548 073

A. Met-Ed/Penelec Exhibit C-3, Page 1, shows that Met-Ed's estimated short-term purchases in 1980 will total 1,577 GWH at a cost of $44,639,000. It also shows an estimated savings of $33,031,000 from these purchases when compared to the estimated cost of $77,670,000 if purchased from PJM on a split-savings basis. Page 2 of this exhibit shows the monthly detail of the short-term purchases, and supports the forecast purchased power component of the energy costs reflected in Table 3 of Appendix B of Exhibit A-2.

Q. What is Met-Ed's estimate of its savir.gs resulting from the various short term power purchases since the TMI accident on March 28, 1979?

A. Met-Ed/Penelec Exhibit G-4 shows the most recent monthly estimated cost of TMI replacement energy for the period of April thru October 1979. The exhibit shows the replacement cost before short-term power offset, and the estimated savings from short-term purchases.

Q. What is Met-Ed's estimate of its savings from the PJM proposal which was the subject of the Petition for Declaratory Order filed on October 10, 1979 in Docket No. I-79040308?

A. Paragraph 4 of the petition for a declaratory order states that GPU estimated a savings of $32 million from the PJM special purchase of 7 million mwh. Exhibit G-5 shows that Met-Ed's share of those savings is estimated at S5.5 million from the special purchase in 1980. This amount of savings is included in the interchange component of the energy costs shown in Table 3 of Appendix B, Exhibit A-2 at this time.

Q. Does this complete your testimony?

A. Yes, it does. In the event that additional testimony may be required concerning reserve capacity, interchange and purchased power matters in connection with a basic rate future test year period, I will furnish such testimony.

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APPENDIX A EDUCATIONAL AND PROFESSIONAL BACKGROUND EDMUND NEWTON JR.

I was graduated from Clemson University in 1952 with a degree of Bachelor of Electrical Engineering and from Massachusetts Institute of Technology in 1954 with a degree of Master of Science in Electrical Engineering. I am a member of the Institute of Electrical and Electronics Engineers and a Registered Professional Engineer in the State of Pennsylvania.

I was employed in 1954 by Metropolitan Edison Company (Met-Ed) within the General Public Utilities (GPU) system. I served as Project Engineer and later as Staff Engineer in the System Engineering Department. In June 1968 I became Manager of Contracts and Rates for Met-Ed, a position which I held until May 1, 1971, when I was transferred to the newly formed GPU Service Corporation in the same capacity. In April 1973 I became a Vice President of Planning and Economics for the CPU Service Corporation and in August 1977 I became Vice President of System Operations.

My general area of concern throughout my employment has been with the provision and operation of the bulk power supply facilities of the GPU System. Among my specific responsibilities from April 1973 until August 1977 was the entire bulk planning process including load forecasting and the capacity program to meet that load. Throughout my employment another area of my responsi-bility has been the contractual relationships governing the interconnected operations of ti:e affiliates within the CPU group and of the contractual arrange-ments between the GPU group and electric utilities external to that group. In the performance of these various assignments, I have performed and directed economic studies including cost of service analyses relating, in general, to 1548 075

contractual relations among GPU affiliates and other interconnected generating and transmission utilities, wholesale for resale customers, and large industrial customers.

From 1969 through August 1977, I was also engaged almost continuously in the preparation of filings for rate increases and in the subsequent formal hearings. In the process I have presented testimony in formal regulatory hearings by the commissions in Pennsylvania, New Jersey, New York and by the Federal Power Commission.

My general area of responsibility since August 1977 in System Opera-tions has been in the coordinating of the planning, development and implementation of policies and procedures to optimize the economics and service reliability of the GPU integrated system operation. Included in the area of my specific responsi-bilities are the total transmission and distribution functions of the CPU System.

Among these functions is the System Operations Department which includes dispatching, interchange accounting and interchange forecasting.

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7 6

• t0lec Met-Ed Exhibit No. G-1 Witness: E. Newton Jr.

COMPOSITE POWER POOLING AGREEMENT AMONG PENNSYLVANIA ELECTRIC COMPANY FETROPOLITAh' EDISON COMPANY JERSEY CENTRAL POWER & LIGHT COMPANY (GPU POWER POOLING AGRLnMENT)

This is a composite agreement made up of the Original Agreement, dated July 21, 1969, between Pennsylvania Electric Company, Metropolitan Edison Company, New Jersey Power & Light Company, and Jersey Central Power & Light, and the supplement dated June 28, 1974, between Pennsylvania Elcetric Company, Metropolitan Edison Company, and Jersey Central Power & Light. This Composite Agreement also includes all schedules revised through November 30, 1979.

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COMPOSITE POWER POOLING AGREE >ENT Among PENNSYLVANIA ELECTRIC COMPANT METROPOLITAN EDISON COMPANY JERSEY CENTRAL POWER & LIGHT COMPAhT (Includes Effective Provisions of 7/21/69 and 6/28/74 Agreements)

AGREEMENT made and entered into this twenty-first day of July 1969 (and twenty-eighth day of June, 1974), among PENNSYLVANIA ELECTRIC COMPAhT (Penelec), a corporation organized and existing under the laws of the Commonwealth of Pennsylvania; METROPOLITAN EDISON COMPANT (Met-Ed),

a corporation of organized and existing under the laws of the Commonwealth Pennsylvania; and JERSEY CENTRAL POWER & LIGHT COMPAhT (JC), a corpora-tion organized and existing under the laws of the State of New Jersey.

(PREA>BLES OMITTED) 1548 078 O

y ,

NOW, THEREFORE, THIS AGREEMENT WITNESSETH, that in considera- ,

tion of the precises and of the mutual ccvenants and conditions herein-after set forth, the parties hereto do hereby covenant and agree with each other as follows:

ARTICLE I Interconnections to be Made Available SECTION 1. The parties hereto shall continue to make avail-able the existing transmission interconnections between their respective

~~

systems and such other facilities as are required for the reliable and economic operation of the Integrated System.

SECTION 2. By mutual agreement and as required from time to time, the parties hereto shall take future additional expenditures to improve the interconnection transmission lines and facilit as, as well as to construct and to make available additional interconnection trans-mission lines and facilities.

ARTICLE II Service to be Rendered

. SECTION 1. In order to obtain the maximum benefits of inter-connected operation, the location, size and character of the installed generating facilities or the amount and source of any purchased generating capacity, shall be determined on a basis which is most economical for the systems of the individual parties as well as for the Integrated System, giving due consideration to the maintenance of proper and adequate service to the customers of each of the individual parties.

SECTION 2. To equalize the future benefits and burdens related to the installation or purchase of generating capacity, it is the intent that each party hereto shall provide a share, approxicately proportional to its expected size, of the planned base-load generatinp capability of the Integrated System. To provide such share a party may participate in the lifetime ownership of capacity hereafter planned and installed by another, cay individually or in association with other parties hereto purchase from others not parties hereto, or may by short-tern purchase from parties hereto provide for its forecast temporary need for generating capacity. The amount and duration of such short-tern purchases shall be determined from time to time after the effective date of this Agccement; and the conditions of service and the rates and charges therefor shall be set forth as supplementary schedules to be attached hereto.

g 1548 079

. e h

SECTION 3.

As a result of the provisions for installation, ownership individual and purchase parties vill atof generating capacity on a forecast basis, times be deficient in generating capacity, and payments shall be made by such party or parties to the other party or themparties to thein ec=pensation for excess genera!.ing capacity supplied by deficient parties. The methods of =cacuring the amount of such deficiency in or excess the rates and charges are set of generating capacity and of deter =ining attached hereto. forth as supple =entary schedules and SECTION h.

The parties hereto, when it is to their mutual

• advantage or when one or nere parties can provide operating capacity or produce and deliver energy at a lover cost than the other party or parties, shall sell to and purchase frem each other, or interchange operating and charges capacity orare therefor energy, set and the tethods of determining the rates attached hereto. forth as supplementary schedules and SECTION 5 A party having a deficiency in installed capacity or experiencing a breakdown of equipment, unusual load demands or unusual or abnormal conditions in its systet resulting in the need for operating capacity or energy in excess of that available fro = its normal sources, may call upon any or all of the others to supply e=ergency operating capacity or energy up to the li=its of the load carrying capacity of the interconnection facilities in existence at the tice, to the extent of, and for the duraticn of the need therefor, and the party or parties so called upon shall supply such energency operating capacity or energy to the the sameextent may besuch is available supplied without to it or them and to the extent that unduly impairing or jeopardizing service in the system or systers of the supplying party or parties. The methods of deternining the rate and charges for cperating capacity or energy supplied for the purposes described in this section are set forth as supplementary schedules and attached hereto.

SECTION 6.

Generating capacity and energy transactions =ay also occur systems. between the parties acting as a group and other interconnected from such transactions are set forth as supplementary schedu attached hereto.

SECTION T.*

To equalise the future benefits and burdens related to the pinnned installation of the bulk transmission system, which cust be eccrdinated with the planning of generating facilities provided for in SECTICN 1, it is the intent that each party hereto shall provide or be financially responsible for a share of the system, approximately proportional to its expected use of the planned bulk transmission facilitier of the Integrated System.

In the determination '

be given not only to the ownership cf such facilit t e? .of appro but n150 te (a) payments =ade er received inc-r this Agreement, (b) payments made or received under agree =ents with others, (c) relative costs for cc parable facilities as influenced by location or tire of construction , and (d) the tive use of such facilities for local supplies. I balance a=ong the rela-centributions shall be corrected by payments among the Parties as oct forth in supplementary schedules to be attached heret o,

• Ar.icnded by 6/28/74 supplement. g ))Q

. e

-h-

,, , ARTICLE III Oreration O SECTION 1. The energy to be supplied hereunder shall be in the form of three-phase, sixty-cycle alternating current at a nominal voltage at each delivery point approximately equal to the voltage rating of the particular trans=ission line interconnections mentioned in Article I hereof.

SECTION 2. Each party shall adjust, maintain and operate the portion of the interconnection facilities made available by it in accordance with good =odern practice and in such a manner as vill render, to the greatest extent practicable and reasonable, the services intended hereunder, and shall frc= time to time take such replacement and renewals as may be required to insure the good operating condition.

of such facilities. Each party shall adjust, maintain and operate the remainder of its syste= in accordance with gosd =odern practice and in such =anner as.will, to the greatest extent practicable and reasonable, protect the apparatus and circuits of the others fro: damage and interrup-tion by lightning, short circuits, potential surges, or otherwise and prevent any disturbance or condition originating in its syste from affecting service in the syste=s of the other parties.

SECTION 3 Estimates of load and generating capacity shall be provided by the parties as often as shall be required to maintain satisfacto:7 operation of the Integrated Syste=, and any and all sys-te records and accounts pertaining thereto shall be made available at reasonable times by all parties to each other.

ARTICLE IV Points of Delivery The points of delivery of electric energy supplied hereunder shall be the points of ccnnection of the transmission facilities between the parties hereto.

ARTICLE V Metering SECTION 1. All energy flow between the syste=s of the parties hereto shall be measured by means of suitable metering equip =ent as now existing or as hereafter mutually agreed upon.

SECTION 2. All metering equipment used under this Agrec=ent may be inspected or tested by qualified representatives of any of the parties hereto at such times as may be mutually agreed upon.

(3' 1548 081

r .

SECTION 3 Procedure in respect to raintenance, testing, cali-brating, correction and registration records and precision tolerances of

() all cetering equip =ent used under this Agree =ent shall be in accordance with good practice and as =ay be agreed upon a=ong the parties hereto frca ti=e to time.

ARTICLE VI Indemnity Each party hereto shall save harmless the other parties hereto of and from any and all loss and damage by reasons of any bodily injury, death, or d1= age to property caused or sustained in that part of the interconnection facilities owned, controlled or =ade available by it, notvithstanding that a judgnent may be rendered against one or all of the other parties hereto; except that each party hereto shall be re-sponsible for all claims of its own e=ployees, agents and servants groving out of any workmen's co=pensation lav.

. ARTICLE VII Oteratine Cc=nittee SECIION 1. An Operating Cc==ittee shall be established to carry out the intent and spirit of this Agree =ent , and shall consist of one representative designated by each party hereto. The represcntatives

[} designated by the parties hereto are authorized to act as agents of the parties as to operating arrangements and all matters asscciated with the transactions covered by this Agreement. In all decisions made by the Operating Cc==ittee in carrying out or operating under the provisions of this Agree =ent, the parties shall have equal voice and vote and the de-cisions thus =ade by a =ajority of the Operating Co--4 ttee shall be binding on all parties hereto.

SECTION 2. In order to permit flexibility to confor= to changing conditiens, the Operating Cc==ittee sh111 cause to be prepared, from ti=e to time, individual schedules setting forth definitions, descriptions of intercennections, rethods of determining charges for the interconnection facilities, rethods of deter =ining installed and operating capacity cbligations, formulae for determining the price and payments for energy and generating capacity, and any other natters requisite or appropriate to the carrying out of this Agreement. Upon acceptance by all of the parties hereto of any such schedule in the

=anner hereinafter provided in this section and satisfaction of all applicable replatory require =ents, said schedule shall become a part of this Agreement.

SECTION 3 By its execution of this Agreement, each of .

p*~ Lies hereto represents that its Board of Directors has conferred apon its President, or any Vice President, authority in its na=e and on its behalf to accept any and all such schedules as said officer or q officers shall approve. The initial schedules which are attached v hereto and hereby =ade a part of this Agree =ent shall be dec=ed to 1548 082

. e O

have been so accepted by each of the parties hereto, but each of such schedules shall te subject to revision er deletion by action on behalf of all of the parties hereto through the execution of a substitute schedule revising er deleting any or all of the schedules.

SECTION h.* A Vice President of the Service Co=pany is hereby authorized to file with the Federal Power Cornission on behalf of e.ll the parties hereto, this Agreement, atend ents or supplements made by then to this Agreement, and revised schedules prepared by then to re-place those attached to and made a part of this Agreement.

ARTICLE VIII Monthly Billine SECTION 1.* On or before the seventh working day of each conth the Service Company, as Agent shall prepare or cause to be prepared statements for al' +"'"sactions under this Agreement vnich occurred during the preceding conth. Payments of the net arounts due chall be made directly a:Ong the parties hereto on cr before the twentieth day of the conth.

SECTION 2. 'Be conthly arounts eved tc or due fro: PJM or

)

\* others, and which are to be allocated under the terra of this Agree-tent, shall be so allocated by the Service Company among the parties hereto. The Service Ccrpany, as Agent, shall -'ka *i-aly collection of such a= aunts and either deliver then to the Agent for PJM, or to others as appropriate, or distribute the: among the parties hereto.

ARTICLE IX Vaiver of Riehts Any vaiver at any time of any rights as to any default here-under or any other catter arising hereunder shall not be deemed a vaiver as to any default or other tatter subsequently occurring.

ARTICLE X Cancellation of Acreement -

The Agreement dated September 24, loSo, together with all supplements thereto, a cng the parties hereto, is hereby cancelled and ter=inated as of the effective date of this Agreement; provided, however, that nothing herein contained shall be construed to relieve any of the parties to ths said Agreement frc: any liability or obligation to the others arising thereunder prior to said effective date of termination thereof.

• Amended by 6/28/74 Supplement.

]}48 Q8}

ARTICLE XI*

Effective Date and Termination This Agreement shall become effective on the later of September 1, 1969 (August 1, 1974) or the first day of the month following its acceptance for filing under the Federal Power Act, and shall continue.

in full force and effect until any party hereto shall give to the others not less than three (3) years' written notice of its desire or intention to terminate the same.

ARTICLE 3,I_I Successors and Assicas This Agreement and all of the terms and conditions hereof shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns.

Executed on behalf of Pennsylvania Electric Company Metropolitan Edison Company Jersey Central Power & Light Company i .

1548 084

• Amended by 6/28/74 Supplement.

/

GPU POWER POOLING AGREE'!ENT Index of Schedules Schedule Date of -

Number Issue Subject 2.01 7/21/69 Trunsmission Line Interconnections - Penelec and "et-Ed --

2.02 6/28/74 Transmission Line Interconnections - Met-Ed and Jersey Central 2.06 6/23/74 Miscellaneous Facilities Made Available by Parties Hereto 2.07 6/28/74 Additional Transmission Facilitics Made Available By lict-Ed 2.08 7/21/69 Facilitics and Services Made Available to PJM 3.01 6/28/74 Costs of Certain Special Facilities and Related Monthly Charges 3.02 6/20/74 Investment and Chaises for Interconnection Facilitics at Voltages Below 115 kV and of Specified Transmission Facilities - Met-Ed -

Jersey Central 3/9 a/19 4.01 4f2Sf77 / Installed Capacity obligations within CPU and Related Charges 4.02 7/21/69 Operating Capacity obligations and Charges

~4.04 4/28/76 Regulating Capability Obligations and Charges -

4.11 10/08/76 Recognition of Actual Weekly Peaks 4.12 10/03/76 Recognition of Actual Unavailable Capacities 4.21 10/08/76 Annual Allocation of GPU Installed Capacity 4.211 10/08/76 Forecast Diversified Planning Period Peaks (P) 4.212 Forced Outage Rate Adjustments (F) 4.213 10/08/76 Load Drop Adjustuents (D)

) 5.01 6/28/74 Transmicsion charges 1548 085 I

Index of Schedules Schedule Date of Nunber Issue Subject 5.02 10/08/76 Transmission Charges and Loss Adjustment for Delivery of Three Mile Island Unit #1 Output 5.03 6/29/78 Charges Related to New 500 kV Transmission Facilitien

$.04 11/24/78 Allocation of PJM 500 kV System Losses 6.01 6/28/74 Metering Points 7.01 6/28/74 Interchange Energy Transactions and Charges 7.02 7/21/69 Fates and Payments - Components of Operat.ing Capacity and Energy Costs 8.01 6/28/74 Allocation of Installed Capacity Payments to OR from PJM 8.02 6/28/74 Allocation of Payments to OR from PJM for Operating Capacity and Energy Transactions 8.03 6/28/74 Allocation of Savings - GPU Group Share of Savings on Transactions Between PJM and Other Areas of Pools (external groups) - Miscellaneous Allocations 8.04 4/28/76 Allocation of Payments to OR from PJM for Regulating Capacity 9.02 6/28/74 Allocation of Expenses - PJM and Miscellaneous Items 9.03 6/28/74 Allocation of Interarca Tie Costs 10.01 6/28/74 Participation in Admin.istration of PJM Agreement 11.01 10/08/76 Definitions 1548 086 12/31/78

Pene te c-..w e l.[d V J' a y e e.e nt Schedule 2 . L' re v.

- s Ca t e of lisw. /-3 29 Cate fffective Sup e.Sem e d.ho. _ _

Da te of Super.5c te d. _ , _

JUdJCCT: Titilst!IS::ICII LI:.7. II.Thl:Cout:hCTic :S - PENELdC AID 11LT-ED

, Met-Ed and Penclec shall nake available the follo..'in; cxistin; trcns-nission intu cenr.ecticns between their respective systc: s,:

1. At a point on the boundarf- line of Cunberland ant! Ada :s Countics, Pennsylvania, where Penelec's 115 !G lino frcn its Carlisle Pike Substation ncets Met-Ed's 11$ KV line from its Gardners Substation.

2. At a point near Montebello in Perry County, Pennsylvania, where Penelce's 230 KV line fren its Lewistown Substation nects Met-Ed's 230 KV line fron its Middletown Junction Substation.

\

,s 1548 087 ACCEPl[De Penney],ang. [1*C.C8 h ireralitan Edisen Co. Nov .fersey P&L Co, J,,sey Ce n tr a l P8L Co, py b/ U.C.D0dson By [S[ I*CoX g7,jg/ H F,[r,*ic-37 _ / 8 / H . F .!!o v lj r

Penelee--Met-Ed--JC Agrecuent Schedule 2.02 Rev. 1 Date of Issue o/03/74

/:")'

Date Effective 0/1/74 Page 1 of 3 SUBJD:T: TRANSMISSION LINE INTERCONNECTIONS - Pfr-ED AND JC Het-Ed and JC shall cake available trancmission interconnections betveen their respective systems at the points on the boundary line betveen the Ccmmonwealth of Pennsylvania and the State of New Jern-v in the Delaware River, as follows:

1. Approximately 0.25 mile south of the Portland-Columbia Bridge where Het-Ed's 34.5 KV line from its Mt. Bethel Substation meets JC's 34.5 KV line from its Colu=bia Substation.

2. Approxi=ately 0.6 mile north of the Belvidere Brid e6 where Met-Ed's 34.5 KV line frem its Richmond Substation meets JC's 34.5 KV line from its Pequest River Substation.

3 Approximately 0.85 nile north of Gotters Island where Met-Ed's 34.5 KV line from its Lehigh Water Substation meets JC's 34.5 KV line fran its Marble Hill Substation.

4. Approxinately 1.25 miles south of the Easton-Phillipsburg Bridge where Met-Ed's 34.5 KV line from its South Easton Substation ccets JC's 3h.5 KV line from its Phillipsburg Substation.

5 Approximately 0.75 mile south of Raubsville where Met-Ed's 34.5 KV line from its Raubsville Substation meets JC's 34.5 .

KV line frcm the Gilbert Station.

a C:) 1548 088

Penelec--Met-Ed--JC Agreement Schedule 2.02

.9 e v . 1 Date of Issue 6/?3/?h Date Effective d/1/74 Pa6e 2 of 3

6. Directly couth of and adjacent to the Gilbert Station where Het-Ed's 115 KV lines frcu its Glenden Substation meet JC's 115 }N lines frcm the Gilbert Station.

7 Directly southeast of and adjacent to the Gilbert Station where JC's 34.5 KV line frca the Gilbert Station meets Met-Ed's 34 5 IN line No. 712.

8. Approxinately 1.0 mile north of the Frenchtown Bridge where Met-Ed's 34.5 KV line No. 712 =cets JC's 34.5 KV line from t

its Frenchtovn Substatien.

9 Directly east of and adjccent to the Gilbert station where JC's 3k.5 KV line frca the Gilbert Station meets Met-Ed's 34 5 IN line No. 714.

10. Approxinately 0 75 mile cou~t h of the Milford Bridge where Met-Ed's 3h.5 KV line No. 71h meets JC's 3h.5 KV line from the vicinity of !!ilford.

11. Directly coutheast of and adjacent to the Gilbert Station vhere JC's 34.5 KV line fro.m the Gilbert Station meets Met-Ed's 34 5 KV line No. 28.

12. Approxicately 2.0 miles north of Belvidere and 0.25 mile east of Boardnan's Island where Met-Ed's 115 KV line frca its Portltad Substation meets JC's 115 KV line from the vicinity of Delvidere.

1548 089

Penelec--Met-Ed--JC Agreement Schedule 2.02 Rev. 1 Date of Issue 6/29/74 Date Effective 6/01/74 PaSe 3 of 3 13.

Approximately 0.1 nile southwest of Tocks Islend and 2.25 miles

. cast of Shavnce-on-Delaware where Met-Ed's 34.5 KV line from its Bushkill Falls Substatien meets JC's 3k.5 KV line from the Kittatinny Substation at Mount Vernon, New Jersey.

14.

Directly north of and adjacent to the Porticnd Station where Het-Ed's 230 KV line from its Portland Station meets JC's 23017 line from its Greystone Substation.

15. Directly north of and adjacent to the Portland Staticn where Het-Ed's 230 KV line from ito Porticad Station meets JC's 230 FN line fro = its Kittatinny Substation.

16.

Directly south of and adjacent to JC's Gilbert Station where Het-Ed's 230 KV line frem its Hosensack Substation meets JC's 230 KV line from its Gilbert Substation.

!,~s)

~

4 ACCEPTED:

Pennsylvania Electric Co. Metropolitan Edison Co. Jersey Central PLL Co.

Dy V _ %. By_ 'Y//> By , <l .7 .* Y*

U" "

V 1548 090

Penelec--Met-Ed--JC Ar,ree=ent Schedule 2.06 Rev. 1 c' Date of Issue 6/28/7L Date Effective c/1/Th

SUBJECT:

MISCELLAliEOUS FACILITIES MADE AVAILABLE BY PARTIES lERETO

1. The parties hereto shall =ake available for une by the Integrated Syste= such tele =etering and cc==unications facilities no are required to carry out the intent and purpose of thio Agree =ent.

3. The parties hereto shall, upon request, =ake availabic to other ind'."idual parties hereto cuch telemetering and ccc=unica-tions facilities a3 may be necessary for their efficient operation.

1548 091

)

ACCEPTED:

Pennsylvanin "lectric Co. Metropolitan Edison,Co.

Jersey Central P&L po.

By Dy /k'I, By,t//Yr:

gir.A -

t n

r

Penelec--Met-Ed--JC Agrec=ent Schedule 2.07 Rev. 1 Date of Issue 6/28/7E Date Effective 6/1/74

SUBJECT:

ADDITIONAL TRA?QISSION FACILITIES MADE AVAILABLE BY MET-ED

1. By a separate Agreement, dated October 30,196h, Met-Ed has established interconnections with Pennsylvania Power & Light Company (PL) and Met-Ed and PL have each agreed to furnish certain tranc::ission service to the other, said interconnections and service being subject to change frcos ti=e to time in accordance eith the Agreement. As a result of the catablish=ent of such interconnections between Met-Ed and PL and such reciprocal transmission service, Met-Ed can ncke use of PL's facilities for the transmission of ener6y between Penelce and JC. Moreover, the facilities of Met-Ed and PL provide s

parallel naths between the facilities of Penelce and the portion cf the Met-Ed system in the vicinity of the Delavarc River, and it is impossible to control the division of flov of energy over the several parallel paths.

2. Under these circumstances, all energy delivered between the

- ~ ~

facilities of Penelee and the facilities of JC and subject to Schedule 7.01 shall be deemed to be energy delivered by Met-Ed as

. though the whole of the transmission service between the systems of Penelee and of JC vere provided by Met-Ed and, in connection with such transactions, Met-Ed shall be deemed to be a transmittin6 party within the ccaning of Schedule 7 01. .

1548 092 ACCEPTED:

Pennsylv3nia E'ectric Co. Metropolitan FJ4 Co. Jersey Central P!,L Go.

ny  % T ny edir f

ey,A IKU g

Penelee Net.Ed NJ.E agree.e.t Sc M dule ,_

Oste of 1 3.e  ?.%r__- R e v. _

e __

Date Effective Evper.Sched.No. _ __

Cole of Super.3ched.

SUBJECT:

FACILITIE3 AND SERVICES PADS AVAILABLE TO PJM 1.

So long as all the parties hereto, as the GPU Group, shall be participants in PJM, each of the parties hereto shall,'to the extent, for the purpcacs, and subject to the linitations provided"in the Agrec..cnt establishing PJM (1) r.ake its cwn facilitics available for uso in PJM, (2) furnish the services therein provided for, and (3) take the action necessary en its part to further the cooperation and achieve the coordination therein conte: plated.

1548 093

) . . . . -

~

ACCEPl[De Pennsyl=s ale Elet.co.

Jetrepo!! ten Edicos Co.

Raw Jersey Pat Co. J,reey Ce nt ro l PSL Co.

s[_s/N.C.DMson ,/s/F.Cox g/s/ R . F. Dav i or a[s/P..F.Povier

Penelec--Met-Ed--JC Agreement Schedule 3.01 Rev. 1 Date of Issue 6/28/7h Date Effective 8/1/74 Page 1 of 2

SUBJECT:

COSTS OF CERTAIN SPECIAL FACILITIES A!!D RELATED MONTHLY CIL\ ROES

1. The facilities deceribed in Schedules 2.01 to 2.06, or in additional schedules replacing or extending thece facility descriptions, are considered as special facilities for which interparty charges chould be cade, except for interconnecting lines at 115 KV or higher voltage, the uses of which are otherwise recognized by transmission charges.

2. Charges shall be made at the rate of 1% per month applied to the actual or estimated costs of the special facilities. Where the facilities are supplied for the exclusive use of any party, that party.

- chall pay the entire charge. Where the fccilities are for joint use, the users shall be considered equally responsible for costs, except that, in the case of the jointly used. facilities described in Schedule 2.06, the responsibility for =onthly costs shall be allocated among the parties hereto in proportion to their respective annual size factors (as defined in Schedule 11.01).

. 3 The costs shown in Schedules 3.02 to 3 05, or in additional achedules replacing or extending them, shall be actual costs to the extent available. Esti=ated costs of new facilities are to be replaced with actual costs when these are detenained. Costs may be based for certain facilities on the application of average unit costs to an inventory of facilities in service. Where lover voltage use of poles 1548 094

Penele --Met-Ed--JC Agree =ent Schedule 3.01 Rev. 1 Date of Issue 6/29/74 Date Effective e/1/74 Page 2 of 2 by ovning party exists, an appropriate credit to cost has been made to reflect such use.

Costa of the interconnecting facilities for joint une include meteric6, but. exclude line terminals. . -

1548 095 '

3 .

9 ACCEPI'D:

Pennsylvania E ectric Co. Metropolitan Slic Co. Jersey Central P&L Co.

By 1. .o d By ,/ I /U d 4'$ By_ 4 di r [ .*J

[ ~lO af .

If

. Penelee--Met-Ed--JC Agree =ent Schedule 3.02 Rev. 1 Date of Issue 6/24/74 Date Effective oil /74 Page 1 of 2

SUBJECT:

I5752CT A?D CHA"GES FOR INTSCCNNECTION FACILITIES AT VOLTAGES BELOW 115 KV /JO OF SPECIFIED T?JJiSMISSION FisCILITIE3 - !G7. -ED--JC Sc M ule (Dollars) (Dollars)

. 2.02 Investxntin Investsent in Itta Joint Use Exclusive Use Ko, ties Hs. lies Desimaticn KV Facilities by facilities t< Wate ret-Ed JC Met-Ed JC 1 13 r.t. Bethel, Pa. .

. Cole:bia,N.J. 34. 5 25,961 2 722 P.ichtend, Pa. - Ps: vest River Substatien, N.J. 34.5 45,370 34,4S0 3 '

6 Lehiqh kater Co., Pa. -

Earble Hill, N.J. 34.5 9,900 19,150 (a) 4 18 S. Easton, Pa. -

Phillipsburg,N.J. }4.5 33,?61 31,400 (a) 5 29 Raubsvills, Pa. -

Gilbert Station, .'i.J. 34.5 9,234 89,996 788 712 Gilbert Statien, N.J. via Pa. to Frenchtown, N.J. 34.5 91,756 9810 714 Gilbert Statien, N.J. via Pa. to Milford, N.J. 34.5 42,431 6,058 78,231 11 '28 Gilbert Station, N.J. -

forndale,Pa. 34.5 40,294 7,160

- 13 - N710 Bashkill Falls, Pa. -

Kittatinny,N.J. 34.5 176.96P 100.590 109,744 Its,m 176,063 Fonthly Paveents fer f acilities Joint Use Fa:ilities Escess J in,est:ent $133,2% - 1180,590 - 37,454 tht-Ed rays JC 57,654 x 1/2 x 1% - $38.27 Enlesive Un facilities Esciss t%t-Ed in,esteent 1145,953 - 1126,9 9 - ;18,9S0 JC pay: Pat.[d $18,980a1% -

J1F0.83 Kat Total Paisent - JC to Pat-Ed fl)l_.)]

Penelec--Met-Ed--JC Agreement Schedule 1.02 Rev. 1 Date of Issue 6/?d/74 Date Effective d /1/ '(4 Pan 2 of 2 (a) Estinated cost to to replaced by actual when available.

0 1548 097 1 -

4 6

ACCirrw:

Pennsyl nia Flectric Co. Metropolitan iron Co. Jersey Central P&L Co.

Dy .b ny -2s?! -

ny # 'M7Gj/

h'7[ { //

?ES:Y" 3GE Ei?sa.%2Gv;em .!:;, ::.; ; .: ,.;;.;; 3 ; - , , , -,. . 3,, ; , ,, ., __

Ponclec-Met-Ed-JC Agreement Schedule 4.01 Rev. 5 Date of 1ssue March 30 1979 Date Effective June 1. 1979 3

h.%

SUlJECT: INSTALLED CAPACITY OBLIGATIO::S WIT!!IN GPU AND RELATED Cl!ARCES

1. The responsibility for capacity, equal in total to the Installed Capacity of the Integrated System, shall be allocated among the parties by applica-tion of the methods specified in Schedules 2.21, 2.211, 2.212 and 2.214 of the PJti Interconnection Agreement. Modifications of those PJti Schedirles, appropriate for application within the Integrated System, are identified herein as Schedules 4.21 and 4.211 to 4.213. Computations made annually in accordance with these schedules provide the basis for the specified week-by-week capacity accounting.

Within GPU the capacity accounting shall be on a veckly basis. The 2.

Weekly Capacity Obligations (WCO)'of cach party shall be the sum of its Basic C

Capacity Obligation (BCO), as determined under Schedule 4.11(5), and its UnavMlabic Capacity Adjustment (UCA), as determined under Schedule 4.12(4).

3. The Weekly Capacity Obligation of cach party shall be ccmpared with its Installed Capacity to determine the excess or deficiency of capacity for cach party.

If the Ir. stalled Capacity of a party changes during the week, the value used here shall be the average of its capacitics actually installed on each weekday, exclud-ing holidays.

4. Those parties that arc deficient in capacity shal'1 make payments to those parties having excess capacity at a weekly rate for cach kilowatt of capacity deficicccy according to the following schedule:

Effective June 1, 1979 $0.490 per kW-week 1548 098 h ACCEPTED:

Co.

Pennsylvania Electric Co. Metropolitan Edison Co. Jersey Central Power 6 Light By _$ - l'y 6/ edigh_ By / 9hg j_/h'M .

• * ' /e ne le c P.e t. E d %L. # A y e e e n t Schedule l !. 02_.,_ n e ,,

Oste of lisua __

? 2-1 __

Oate Ef fective ,

Super.5ched.No. __

Oa te of Super.5ched. _

3bBJECT: OPUutTii.'G Cai%CffY OdL10ATluIS aMD GP. EGIS

1. The reservo operatint; capacity obligations of the GPU Group, including spinnin;;, scheduled er other classifications of reserve, are deternined undcr the PJi! Agreer.ent. These Group obligations for cach peak pericd shall be allocated anong the parties hereto during each nonth on the basis of their nenthly size factors for the in.acdiately precce"*:g month.

2. Each of the parties hereto shall provide or account for daily operating capacity obligations deternined as follows:

(a) For each peak period, its load for the hour of the CPU Group period reak, olus its allocated share of the GPU Group reserve operatirg capacity obligation; and (b) For all other periods, the actual 1 cads of its systen g plus its allocated share of the GPU Group reserve A

operating capacity obligation.

3 The obligation of each party for each period shall be compared with the operatin; capacity actually "provided by it, to detcrnine the excess er deficiency of operating capacity for each party.

h. Those parties (if any) that are deficient in operating capccity

- shall make paynents to those parties (if any) having excess operatiq:

capacity for supplies of operating capacity livited in ancunt either to that which is reo,uired, or that which is available, whichever is snaller

5. Operatirc, capacity charges shall be based on the supplier's costs; if there are more than one supplier, the per unit charge shall be the weighted average per unit cost of the several suppliers. If there is an excess of peak period operating capacity available within the GPU Group, aft.cr acccunting for supplies to or fron PJM, the cost of this excess shall be allocated among the parties on the sane basis as is applied in paragraph 1.

1 1548 099 ACCEPftDe

'ennsylva nia Elec.co. t'etropolita n Edis on Co. tiew Jersey P&L Co. Jersey Centra l PAL Co, ey /s/ N.G. D>hion a /s/ F.Cox /s/ H.F.3cvier . /s/ ' % ' < -

. .o Penelec--Met-Ed--JC Agreement Schedule 4.0h Rev.

3 Date of Ir. sue h/08/7/>

d Date Effective 6/1/76

., Page 1 of 2 SUDJECT: PIGULATIIiG CAPABILITY OBLIGATIO!iS A!iD CHARGES

1. The total regulating capability requirement of the GPU Group shall be as determined under the Pennsylvania - New Jersey -

Maryland (PJM) Interconnection Agreement. Each of the parties hereto chall provide or otherwise account for their share of the total requirement in accordance with this Schedule.

2. The total regulating capability requirement, and the amount of regulating capability provided by each party hereto, shall be cecounted for hotely.

3 The summation of hourly total regulating capability require-

. ments in each nonth shall be nilocated among the parties hereto its proportion to their ncnthly size factor for the immediately pre-

• ceding conth. Excesses or deficiencies of regulating capability of any party hereto shall be determined as the difference between their ellocated share of the total requirement and the amount actually provided by that party in the same monthly period.

h. Payments for deficiencies shall be made by those parties hereto (if any) which have provided insufficient regulating capability to those parties hereto (if any) which have provided excess capability, provided that the supplies of regulating

.ccpability shall be limited in amount to the lesser of (1) the amount required or (2) the amount available.

1548 100 m

./

.i Penelee--Met-Ed--JC Agreement Schedule L.0h Rev.

Date of Iccue 4/28/76 Date Effective 6/1/76 Page 2 of 2

.5, Rates for regulating capability settlements among the parties hereto chall be the same as those then in effect under the PJM Agreement. .

1548 101 t

)

4

. a

. ACCDTED: ,

Pennsylvania Electric Co. Metropolitan,,Edi.n$n Co. Jercey Cent.ral PLL Cc.

Dy

! ,, e By l 'I '

By [Yb/i-  %

}! J

.- e Penelec--Met-Ed--JC Agree =ent

. *

• Schedule h.11 Rev.

Date of Issue 10/8/76 Date Effective 11/0/70 Page 1 of 2

SUBJECT:

RECOGNITION OF ACWAL WEP'LY PEAKS

1. Actual veekly peaks shall be recognized in the veck-by-veek capacity cecounting in accordance with the terms of this Schedule.

2. The avera6e veekly peak loads of each party shall be estimated for each Planning Period. If a major loss or addition of firm load, such as, but not limited to, the transfer of a large load frce one supplier to another, is expected to occur during a Planning Period, but after the su==cr peak of the party or parties involved, such expected loss or addition shall be ignored in the detemination of the esti=ated avera6e veekly peak for the purposes of this paragraph and of Schedule 4.213 and for the detemination of the forecast vinter peak used in Schedule k.211. If the loss or addition is expected to occur before the cu==er peak, the forecast average veekly peak shall be determined ca though the loss,or addition existed during the entire Planning Period.

3 The ratio for each party of its Forecast Capacity Responsibility (PCR), determined as in Schedule h.21(1), to its esticated average veckly peak for the same planning period shall be determined. These ration shall be called the Annual Adjust =ent Ration ( A/J1).

h. Each veek, the actual veckly peak of each party chall be nultiplied by its Annual Adjustment Ratio. The ratio of the product for each party to the cus of the products for all parties chall be called the Veekly Allocatien Factor (WE).

1548 102

Penelec--Met-Ed--JC Agreement

, , , , Schedule L.11 Rev.

, Date of Inaue 19/9/76 Dnte Effective ))/8/76 Pose 2 of 2

• 5 The GTU innta11ed cepccity for the veck, leno the cu:s of the Uncvailable Capacity /d,justmenta opecified in Schedule h.12(h), shall be r.ultiplied by the Veckly Allocation Factor. The products are the Panic Capseity Oblicatior.n (ECO) of each party to be accounted for under Schedule h.01. If the GIU Installed Capacity changes during the vech, the value used here chall be the average of the capacitica c.c'tually installed on each veckday, excluding holidays.

1548 103

/.CCEPTD: "

. Pennsylvania E .etric Co. t'dicen Co. Jersey C

' p Metropolit[an  % tral m P'.L G- fc.

b vy  ?' try / 2 R . ' i Bylhk.-.,?hjll

(.

f ///

Penelec--Met-Ed--JC Agreement Schedule k.12 Rev.

Date of Issue 10/A/76 Date Effective ll/d/76

SUBJECT:

RECOGNITION OF AC'IUAL UNAVAILABLE CAPACITIES

1. Actual Unavailable Capacities shall be recognized in the week-by-veck capacity accounting in accordance with the ter=s of this Schedule.

2. The forecast average of each party's 52 weekly Unavailable Capacities shall be determined for each Planning Period as the algebraic cun of:

(i) its forecast average Installed Capacity during the Planning Period times its forecast average forced outage rate as used in Schedule 4.212; (ii) the forecast average of its Unavailable capacity in cach veek because of planned and maintenance outages, and .

(iii) the forecast averaga of its miscellaneous adjustments in cach veck, both as used in Schedule 4.213 3 The actual average Unnvailable capacity of each party shall be determined each veek as the average of the unavailable amounts in the 52 vecks ending with the current week for which an accounting in required.

h. Fifty percent of the excess of the above actual average over the forecast average for each party shall be assigned as the Unavailable Capacity Adjustment in that party's Weekly Capacity Obligation to be accounted for under Schedule k.01. If the actual average for the veek in less than the forecast average of any party, 50% of the difference chall be assigned as a credit to that party's Weekly Capacity Obligation.

1548 104

Penelec--Met-Ed--JC Agree =ent Schedule L.12 Rev.

Date of Issue 10/3/76

.Date Effective 11/6/76 Pace 2 of 2

5. The 50% used in 4. above correspondo to a o.5 ractor specified in Schedule 3.01 of the PJM Interconnection Agrec=ent. If this factor is changed in the PJM A 6 reement, consideration shall be 61ven by the Operating Co=::littee to a corresponding chan6e in the factor used herein.

1548 105 ACCEPTED:

4 Pennsyl c.nin Elbetric Co. Metropolitan %1 on Co. Jercey Central PLL Co.

cr -6 + ,, /w, :E ud4=E=P v

y y

• ~

Penelec--Met-Ed- ,JC A. gree =ent

• Schedule L.21 Rev.

Date of Issue 10 /A /?6 Date Effective 11/3/76

} Page 1 of 2 SUTJ'XT: A!CiUAL ALLOCATIO:i CF GIU I?i3TALLID CAP /iCITY

1. The annual allocation of the GFU Installed Capacity shall be r:r.de in May of each ytar for the succeedira Planning Period. The capacity allocated to each party under the terms of this schedule shall be called its Forecast Capacity Responsibility (FCR).

2. For any Planning Period, the FCR of a party shall be calculated as follovs:

PCR = P x 1+ \-[g*

k'here:

P = the forecast diversified Planning Period peak of the party, 3

s in negavatts, determined in accordance with Schedule h.211 hereof; R = the targin of the weighted avera6e GPU Installed Capccity for the Planning Period over the forecast Planning Period peak of the Integrated System, in percent of such Planning Period peak; F = the fcreed outage rate adjust =ent, in percent,- determined in accordance with Schedule 4.212 hereori ,

D = the load drcp adjustment in percent, deternined in accordance vith Schedule h.213 hereof.

3 It is recognized that changing conditions and improvenents in techniques r.ay require fren time to time the addition of other factors in the above equation cnd the revision or deletion of factors currently included therein. If any cuch change is =ade in the equation or factors r;pecified in the PJM Interconnection Agree ent, a corresponding change 1548 106

Penelec--Met-Ed--JC Agree::ent Schedule 14 . 2 1 Rev.

Date of Issue 10/d/f6 Date Effective 11/o/7b

} Page 2 of 2 in this Agrec=ent shall be considered by the Operating Cccmittee. If any changes are then approved, this schedule and related subschedules chall be appropriately revised and supplcnented and shall thereupon be made effective.

I I. The forecast data used for these cc=putations shall be the nost recent available prior to the beginning of a Planning Period. As to the Planning Period for which an accounting is next to be accceplished, there is no need that such data agree with those used in PJM cc=putations for the same Planning Period.

I

) 15 4-8 t&7 - -

~

LCCEPI'ED:

Pennsy].ynnia Electric Co. Metropolitan,L Mson Co. Jerney Central P&L Co.

}

Dy k' ..

Dyke{ By M f f

Penelec--Met-Ed--JC Agreement

' behedule h.211 Rev.

Date of Issue 10/3/76 Date Effective 11/d/70 Pace 1 of 3

SUBJECT:

FORECAST DIVERSIFIED PLANNIIG PERIOD PEAYS (P)

1. The forecast diversified Planning Period peaks (P) of the parties shs11 be determined in accordance with this Schedule so long as the forecast Planning Period peak of the PJM Interconnection is a su=mer peak.

2. For the purposes of this schedule, the forecast maximum one hour load of a party during the period June through September of a Planning Period shall be its su=mer peak, and the forecast maximus one

, hour load during the period December through March of the Planning Period shall be its vinter peak. - --

3 The forecast diversified :lanning Period peak of a party shall be its Planning Period peak as defined herein reduced by its Planning Period peak diversity entitlement and its su==cr peak diversity entiticnent.

h. In a Planning Period, each party shell be classified as either a cu==cr peaking systen er a vinter peaking system. In the determination of cuch classification the vinter peak of each party shall be reduced by the excess of the total capability of its Installed Capacity under vinter operating conditions over its total capability under su:=ser operating conditiens. For the purpose of this schedule, such total capabilities shall be defined as the respective net capabilities of its units planned to be in service as of December 1, adjusted for firm capacity purchases and sales in the December through March period, and reduced by the limitations specified in Schedule 11.01(5), such net 1548 108

Penelec--Met-Ed--JC Agree =ent Schedule b.211 Rev.

Date of Issue 10/8/i6 Date Effective 11/d/76 Page 2 of 3 capability adjustments and ll=itations being respectively deter =ined for vinter and su==er operating conditions. A party having a su==cr peak which exceeds its vinter peak so reduced shall be classified as a su==er peaking syste=, and its Plannira Period peak shall be equal to such cu==er peak. A party which has a vinter peak so reduced which exceeds its su==cr peak shall be classified as a vinter peaking syste=. The Planning Period peak of a vinter peaking system shall be equal to the avere.ge of (i) its reduced vinter peak for the Planning Period and (ii) the greater of its su=cer peak for the Planning Period or its reduced vinter peak for the Planning Period i==ediately preceding.

5 The Planning Period peak diversity entitle =ent of a vinter peakira cystw shall be one half the difference batveen its Planning Period peak and its su==cr peak. The Planning Period peak diversity entitlement of a su==er peaking system shall be the ratio of the difference between its su==cr peak and its reduced vinter peak to the cun of such differences for all the su==cr peaking syste=s =ultiplied by the su= of the Planning Period peak diversity entitlements of the vinter peaking syste=s. In the event that the total of the Planning Period peak diversity entitic=ents of all parties so determined exceeds the su= of the differences between the su==er peaks and reduced vinter peaks of the s==ner peaking syste=c , such entitlements shall be proportionately reduced to equal in total such lower su=.

1548 109

Penelec--Met-Ed--JC Agreement

. Schedule k.211 Rev.

Date of Issue 10/4/Y(

^

Date Effective 11/o/76 O Pace 3 of 3 6.

The cu=er peak diversity entitle =ent of a party shall be the ratio of its su=mer peak to the sus of the su=cr pecks of all parties cultiplied by the difference between such sum of su=mer peaks and the forecast Planning Period peak of the Integrated System.

1548 110 7

ACCEPTED:

) Pennsylvania $1cetricCo. Metropolitan ison Co. Jersey Central P&L Co.

y :i 'm ny or 4, . . ,. y, sr)&a .. u #

, , i

1,w.a., .a . :+ w: xn .w ~

. . u,zn ,..v~ :m:. w.a.a m .:.. ,. = .;.a m .n ..~.....: . =

Penclec--Met-Ed--IC Agreement Schedule 4.212 Rev.1 Date of' Issue March 30, 1979

-(C?i> Date Effective June 1, 1979 Page 1 of 3

SUBJECT:

FORCED OUTACC RATE ADJUSTMENTS (F)

1. Forced outage rate adjustments (F) of the parties in a Planning Period shall be determined in accordance with this schedule.

2. The forced outage rate adjustment shall be the amount, in per-centage points, by which the average forced outage rate of a party hereto ic core or less than the average forced outage rate of the Integrated System, multiplied by a factor. If more, such adjustment shall be considered plus

(+) in the equation in Schedule 4.21(2); if less, such adjustment shall be considered minus (-) in such equation. -

t.N.

3. The factor used in 2. represents the change in requirement for capacity installed on the PJM Interconnection in percent of peak load for every one percentage point change in average forced outage rate on the PJM Interconnection. If a change is made in this factor, as used in PJM Interconnection accounting, a change in GPU accounting shall be considered by the Operating Committee. Upon approval by the Operating Committee, such change shall be made effective as to future Planning Periods.

4. The average forced outage rate of a party hereto in a Plan-ning Period shall be the average of the forced outage rates, weighted for unit size and expected time in service, attributable to all of its generating units planned to be in service ~ including capacity purchased i548 iiI

Penclec--Met-Ed--JC Agrecment Schedule 4.212 Rev. 1 Date of' Issue March 30 1979

_ '7 - Date Effective June 1, 1979 Page 2 of 3 and excluding capacity sold, other than capacity purchased or sold under the PJM Interconnection Agreement. Such rate shall also include the adjust-ment. if any, for system capacity unavailabic due to energy limitations determined in accordance with definitions and criteria recognized and applied in the PJM Interconnection. For the purposes of this Schedule, the average forced outage rate of the GPU System shall be the average of the average forced outage rates of all the parties hereto weighted by their respective diversified Planning Period peaks. All rates shall be in percent.

5. TheforcedoutagerateofaunitSot yet in service or which has C. . .

been in service 1 css than one full calendar year at the time of forecast

• r. hall be the mature rate for that size and type of unit, as estimated and used in the calculation of the forecast requirements of the PJM Interconnec-tion.

6. The forced outage rate of a unit in service three or more full calendar years at the time of forecast shall be the average rate experienced by such unit during the three most recent calendar years. llistorical data chall be consistent with those data that are reported to the PJM Intercon-nection.

1548 ll2 O

Penelec--Me t-Ed--JC Agreement Schedul e 4.212 Rev. 1 Date of Issue >brch 30, 1979

~($). Date Effective Ju n c. 1_ 1979 Page 3 of 3 i

7. The forced outage rate of a unit in service at least one full' calendar year but less than three full calendar years at the time of the forecast shall be determined as follows:

Pull Calendar ~

Years of Service l One-third the rate experienced during the calendar year plus two-thirds the mature rate.

2 Two-thirds the average rate experienced during the two calendar years plus one-third the mature rate. ,

l ACCEPTED:

Pennsylvania Electric Co. Metropolitan Edison Co. Jersey Central P&L By A_ By ) .te 1av B

,/.

/,/& x2'W 1548 113 9 .

Fenelec--Met-Ed-JC Agreement

- - Schedule h.213 Rev.

Date of Issue 10/8/i6 Date Effective 11/3/76 Page 1 of 2

SUBJECT:

. LOAD DROP ADJUSI'CiTS (D) 1.

Load drop adjustments (D) of the parties in a Planning Period shall be determined in accordance with this schedule.

2.

A party shall be considered to have a need for load drop when in a Planning Period the ratio (load drop ratio) of the a1 ebraic 6 sum of (1) the forecast average of its 52 weekly peak loads, (2) the forecast avera6e of its Unavailable Capacity in each veek because of planned and maintenance outades, and (3) the forecast averase of its miscellaneous adjust =ents, to its Planning Period peak, is greater than the load drop ratio for the Integrated System.

3.

For the purposes of this schedule, the load drop ratio for the Integrated System shall be the average of the load drop ration of all the parties weighted by their respective Plannin6 Period peaks.

14 The load drop adjustment, expressed in negavatts, of a party

-having a need for load drop shall be (1) the increase in percent reserve require =ent corresponding to the load drcp ratio of such party, Icos the increase in percent reserve require =ent on the Integrated System corresponding to the load drop ratio of the Integrated Systen, multiplied by (2) the Planning Period peak of the party, and (3) 0 5, to reflect a sharing of such needs and the supplying thereof among the parties.

The relationship of increases in percent reserve requirement to various load drop ratios shall be as determined in connection with the latest cc lation of the Forecast Requirement of the PJM Interconnection.

1548 114

Penelec--Met-Ed--JC As;reement

, , Schedule L.213 Rev.

Date of Issue 10/8/76 Date Effective 11/3/76

} Page 2 of 2 5 The total of the load drop adjust =ents of parties having need for lead drop (total adjustment) shall be considered as supplied by the parties having load drop ratios equal to or less than the load drop ratio of the Integrated System.

6. The load drop adjustment of a party supplying load drop shall be the total adjustment times the ratio of (1) the product of the Planning Period peak of such party and the excess of the load drop ratio of the Integrated System over the load drop ratio of such party to (2) the sum of such products of all parties supplying load drop.

7 The load drop adjusttents, as expressed in megawatts, shall

} be converted to percentages, for use in the equation in Schedule h.21(C),

by dividing the respective megavatt cmounts by the diversified Planning Period peels of the several parties. Load drop adjustments of parties needing load drop shall be considered plus (+), and adjustcents of the parties supplying load drop shall be considered minus (-) in such equation.

1548 115 ACCEPITD:

Pennsylvania tiectric Co. Metropolitan Elicon Co. Jersey Central P&L Co.

By By [ By M4

(

/

[ //'

Penelec--Met-Ed--JC Agreement Schedule 5.01 P.ev . 1 Date of Issue 6/28/7h

} Date Effective 8/1/74

SUBJECT:

TRA iD!ISSIC?i CHARGES

.1, . For the transmission services involved in the delivery of capacity and energy, the party receiving these services shall cake conthly paynents to the supplier of these services and to any cdditional transmitting party.

2. For transmission of the interchange energy provided under Article II, Section 14 (also under Schedule 7.01), the monthly transmission charge shall be the amount deter =ined by application of the following charges to the conthly amounts of energy supplied and transmitted: ' ~ - ' " ~ '

Transmission by Penelec -

0 5 mills per K'Id by Met-Ed -

0 5 mills per K'#r!

by JC -

0.5 mills per IGTH 3 For transmission of capacity and associated enerEy, from the service area of one party to another pursuant to Article II.

Section 2, the nonthly charges shall be set forth in revisions of or supplements to this Schedule.

1548 116 ACCEPTED:

Pennaylvania E ectric Co. Metropolitan FQison Co. Jersey Central PLL Co.

By . [ d ... h By -;@. ny AN.-, . J jp- -

g , . -

Penelec--Met-Ed--JC Agreement Schedule 5.02 Rev. 1 Date of Issue 1 n/a /ve; Date Effective 11/ c/ 76

SUBJECT:

TRANSMISSION CHARGES AND LCSS ADJUST.SNT FOR DELIVERY CF THREE MILE ISUJ:D UNIT #1 OUTPUT

1. Met-Ed shall make a transmission charge for the delivery of '

the output of that 50s part of TMI Unit #1 that is the entitlement of

, Penelec and JC. The conthly arount of the charge shall be $0.55 per kilowatt tir:es 50% of the generating capacity rating of TMI Unit #1.

2. Of the total conthly transmission charge, Penelee shall pay 25t. and JC shall pay 75%, the difference being in recognition of all conditions associated with such separate deliveries.

3. As co:pensation for transmission losses incurred in the Met-Ed system and associated with the delivery of 50% of the TMI output to Penclec and JC, the =etered hourly amounts of Met-Ed load shall be reduced by 1.2% of 50% of the TMI net generation. The reduction in metered load shall be offset by an increase in the amount of net interchange delivered by Mat-Ed.

4. Of the total compensation for losses, Penelec shall provide 25s and JC shall provide 75%. Such co: pensation shall be provided by an increase in the n2tered hourly a:: cunts of load and a corresponding decrease in the at: cunt of net interchange delivered by Penclec and JC.

ACCEPTED:

Pennsylvania Electric Co. Metropolitan Ecy s a Co. Jersey Central PS,L Co.

) ny b /~ N ey

4. A ,g/ .; /

f ny28am,$d,1 1548 117

Penelec--Met-Ed -JC Agreement Schedule _ 5.03 Rev. 1 Date of Issue June M, lo,o Date Ef fective August 1, irna k

Page 1 of 2

SUBJECT:

CliARGES FOR 500 KV TRA:IS:1[SSIO:1 FACILITIES ASSOCIATED UITil Till Utili J2 Afl0 TiiE SU5QUEi!A:1::A-EASTER:1 AGREEMEili

1. tiet-Ed shall make a charce tn Penelec and to JC for 500 kV transmission facilities it has provided to deliver the output of Till Unit #2 and to provide other services. Such charge shall represent an allocation of Met-Ed's total financial responsibility for such facilities to reflect the service provided to Penelec and to JC.

2. Financial responsibility for those facilities which are related to delivery of the output of Till Unit #2, consisting of facilities installed by Met-Ed under terms of the Susquehanna-Eastern 500 kV Transmission System (S-C Systca) Agreer.:ent ("et-Ed Rate Filing in Docket ER 76-743),

{

other associated facilities installed by liet-Ed, and S-E System facilities installed by others on which !!et-Ed incurs annual charges, shall be allocated among the three GPU companies in proportion to their cwnership interests in TMI Unit #2.

3. Financial responsibility for those S-E System facilities installed by Met-Ed, or for which it makes payments to others, which replace a portion of the Juniata-Peach Bottom 500 kV line or reinforce the existing 500 kV network to provide improved regional reliability shall be allocated among the three GPU companies as follows: two-thirds in proportion to their ownership of Keystone and Conemaugh generating stations and one-third in proportion to their annual size factor as de-fined in Schedule 11.01.

(

1548 118

4. llet-Ed shall n:ake the following transmission charges, based on the costs of constructicn of the several facilities, as noted belcw:

Related to Related to KC Ownership Till 12 and Size factor Ownershio Total

- ~$'/mo. 5/mo. 5/mo.

To Penelec 3,993 129,040 133,033 To JC_ 17,837 129,040 146,377 Upon approval of the GPU Operating Committee adjustment of these charges shall be made to reflect (a) any change in the current ownership

( interests in Till Unit !!2, (b) the actual Annual Size Factor of each Planning Period, and (c) any change in Capital Investn:ent in the facilities covered by this, er the S-E System Agreen:ent.

ACCEPTED:

Pennsylvania Electric Co. Itetropolitan Edison Co. Jersey Central P2.L Co.

By fb'baaf, a . By d h'f'[g_

_ By , / N ' i / ,

emu nun. ei imm./ rras m::rr.

s 1548 119

Penelec--Met-Ed--JC Agreement Schedule 5.04 Rev.

Date of Isouc 11/24/78 Date Effective 12/30/78

SUBJECT:

Allocation of PJM 500kV System Losses

1. The losses on the 500kV transmission systems in PJM assigned to GPU under the terms of the Susquehanna-Eastern 500kV Trancmission System (S-E System) Agreement for delivery of TMI Unit #2 output shall be allocated among the GPU Companies in proportion to their capacity entitlement in TMI Unit #2.

2. The losses on the 500kV transmission systems in PJM assigned to GPU under the terms of the Extra High Voltage Transmission System (EHV)

Agreement will follow that agreement and shall be allocated among the GPU Companies 2/3 to the Keystone-Conemaugh Generating Station Function and 1/3 to the Inter-area Tie Function. The losses accigned to the Generating Station Function shall be allocated to the Keystone and Conemaugh Generating Stat' ion Owners as specified in the EHV Agreement. The losses assigned to the Inter-area Tie Function shall be allocated among the GPU Companies in proportian to their respective Annual Size Factors.

3. Each company's allocated losses shall be added to its load on an hour by hour basis, and a corresponding adjustment shall be made in its net ,

interchange.

ACCEPTED:

Jersey Central P&L Co. Metropolitan Edison Co. Pennsylvania Electric Co.

By [jpg g,q By .;-_.< ,p By $4c

, - .,c a, x ,

1548 120

Penelec--Met-Ed--JC Agreement Schedule 6.01 _

Rev. 1 Date of Issue 6/29/7L Date Effective 8/1/74

SUBJECT:

METERING POIh"TS Theinterconnection ceterin6 Points are listed and identified below in the same order as the interconnections are described in Schedules 2.01 and 2.02:

Schedule No. Item No. Line No. KV Penelee and Met-Ed 2.01 1 976 Gardners, Pa. 115.0 2.01 2 1002 Juniata, Pa. 230.0 Met-Ed and JC 2.02 1 . 13 Columbia, ti.J. h.6 2.02 2 722 Pequest River Sub., N.J. 3h.5 2.02 3 6 Marble Hill, N.J. 34.5 2.02 4 18 Phillipsburg, N.J. 3h.5 2.02 5 29 Gilbert Station, N.J. 34.5.

} 2.02 6 911 & 912 Gilbert Station, N.J. 115.0 2.02 7&8 712 Meterirg not required 2.02 9 & 10 714 Near Upper Black Eddy, Pa. h.6 2.02 11 28 Gilbert Station, N.J. 34 5

~ 2.02 12 927 Portland, Pa. 115 0 2.02 13 H-710 Mt. Vernon, N.J. 3h.5 2.02 14 1007 Portland Station, Pa. 230.0 2.02 15 1010 Portland Station, Pa. 230.0 2.02 16 1015 Hosensack, Pa. 230.0 Necessary changes in the listed meter locations shall be agreed upon frem time to time by the Operating Co=mittee.

ACCEPIED:

• Pennsylvexin El ctric Co. Metropolitan Ediso Co. Jersey Central P&L,Co.

By  % By /81 c By p ,

} l

(/ l' ~ JI //

jg4n n-

Penelec--Met-Ed--JC Agreement Schedule 7.01 Rev. 1 Date of Issue 6 /2 8 / 74 Date Effective o/1/74 Page 1 of 2

SUBJECT:

I!iTERCFA! IGE E iERGY TRAllSACTIC iS AIID CFARCES

1. The energy interchange among the parties hereto is the result of (a) overall economic operation as modified at times by transmission limita-tions, the need for emerEency supplies and area protection and (b) PJM accounting that retains for use of the GPU Group the lowest cost Group energy available for such use.

The net amount of interchange energy supplied or received by each party hereto shall be determined hourly.

These amounts are the residuals required to balance each party's hourly net load with its net generation and net receipts, af ter accounting for firm supplies to or from others, and for energy amounts associated with other capacity supplies provided under Article II, Section 2, of this Agree..ent.

2. The suppliers of interchange energy for use by other parties hereto shall be paid their respective costs, determined as provided in Schedule 7.02.

3 In all energy transmission between Penelee and JC, Met-Ed shall be considered a transmitting party and be entitled to compensation for losses and fer its transmission service. The amount of Met-Ed's trans-mission service in each hour shall be the minimwn amount consistent with the energy that is supplied by and required from GPU sources, and without regard to any different basis used for the pricing of interchange energy supplies.

. 1548 122

Penelec--Met-Ed--JC Agreement Schedule 7.01 Fev. 1 Date of Issue o/08M4

} Date Effective c/1/74 Page 2 of 2

4. For the purpose of pricing interchange, when there are more than one supplier of interchange within any hour (includirq both PJM and the parties hereto), each receipt of interchange shall be considered to be

,from all suppliers in amounts proportional to the available supplies. The resultira average charge per kilowatt-hour, exclusive of Met-Ed's charge for transmission, shall be the same to each of the parties hereto that is receiving interchange during that hour.

) .

ACCEPTED:

Pennsylvania Electric Co. Metropoli tan E on Co. Jersey Central P&L Co.

kl% m 4+ A CM.er

() ~ p 1548 123

Penelec..t'e t.Ed PlJ J: A v e.~.s t

. .. l'e v E c he Date of d u l e,,,,_j,.,Q'g'7 1:sv -R-Q , , , , _

Date Ef 8htive S upe r. 5 c he d. 'lo. ~ ~ ~ ~ [~~ ~

lis te of S uper.Sched. __ _

SilDJE';T: RA'ES AllD PAY;GTf5 - C0!IPOIE!!TS OF OPERATI!?3 cal'ACITY At:D E:TERGY CO3'IS Operating Cap.3 city In accounting for operating capacity supplied to the other particu, cach party shall include the following conponents cf cost or their equivalents:

1. Boilers *

(a) Firing-up cost (b) No-load cost (c) Peak-prepared-for maintenance cost g

(d) Increncntal labor cost 9 (c) Other increnental cperating costs 9

2. Machines (a) Starting cost frpm cold to synchronized operation (b) No-load cost for each hour or fraction thereof (c) Incremental labor cost (d) 'Other incremental operating cost:

Encrry . --

In accounting for energy supplied to the other partics, each p. arty shall include the following conponents of cost or their equivalents:

(a) Increnental' fuel cost (b) Increnental naintenance cost ,,,

. (c) Increnental labor cost (d) Other incremental operating costs (c) Incremental transmission losses - Considered to be 5,4 of the incremental energy cesis, itens (a) to (d) above, applicable t.) cach party, including P.ct-r21 as a transnitting party, except that, for energy transactions that would theoretically require an cast to west flow of energy, Met-Ed's Icsses shall be considered to be negligible.

Tho Operatird Cennittee shall from tine to tine define in detail the deternination of the costs entering into the several conponents.

3

• 1548 124 ACCEPIEDs fennsylva nte Elec.co. tit repoli ta n Edis on Co. Ne w Je r s e y P&L C o. Je r s e y Ce n t r a l Pl.t C o.

er ./IG/. fl.C. Det! son ey /s[F.Cox__ ey_ /s/ 11. F. Hovier , /s/ I;. F . "i' : '

Penelec--Met-Ed--JC Agreement Schedule 8.01 Rev. 1 Date of Issue 6/28/74 Date Effective c/1/74

SUBJECT:

ALLOCATION OP INSTALLED CAPACITY PADENTS TO OR FROM PJM

1. Payments to or from PJM in any month for installed reserve capacity shall be allocated among the parties hereto in proportion to their respective ar.nual sice factors: except that, when the a=ount of such payment is affected by the allocation to the GPU Group of a trans-mitting party's share of an installed capacity benefit accruing to PJM under contracts with other areas or pools, such transmitting party's share shall be assigned within the Group to the party (or parties) hereto that provides the transmitting service; and the allocation within the Group of the payment to or from PJM shall reflect the eff7ct of this assignment.

1548 125 ACCEPTED:

nia lectric Co. Metropolitan Edis n Co. Jersey Central P4L Co.

Pennsyl. N '

-ze.()

y-4TO -

p 3 A' O,..;1 7,.

Penelee--Met-Ed--JC Agreement Schetiule 8.02 Re v ,. 1 Date of Issue o/2884 Date Effective 6/1/74

SUBJECT:

ALILCATIO: OF PAD'E'?TS TO CR FRCM PJM FOR CPEFATI!;G CAPACITY A!!D E*iERGY TRA!iSACTIO:iS

1. For all operatira capacity or energy supplied by PJM to the GPU Group, full payments shall be made by the receiving party or parties.

When there are several receiving parties, the payments made by each shall

.be proportional to the services received by each, measured daily for operating capacity and hourly for energy.

2. For all operating capacity or energy supplied to PJM by the GPU Group, the supplying company shall be paid full costs for such supply, and any excess of PJM payment over GPU Groap costs shall be allocated among the parties hereto in proportion to their respective annual size fact. ors, t.c un offset to costs of PJM operation and of transmission services for which no direct ec=pensation is provided.

1548 126 ACCEPTED:

Pennsylvania "lectric Co. Metropolitan Edisen Co. Jersey Central P&L Co.

L Q.- 87 p ,4

_,A -:.

g

Penelec--Met-Ed--JC Agreement Schedule 8.03 Rev. 1 Date of Issue 6/28/7L

) Date Effective e/01/74 Page 1 of 2

SUBJECT:

ALLOCATION OF SAVI'IGS - GFU GROUP SHARE OF SAVINGS ON TRA?iSACTIONS IL".DIEE'l PJM AND OTHER AREAS CR PCOLS (EXTERNAL GECUPS) -

HISCELLANEGUS ALLOCATICNS

1. All savings on PJM operating capacity or ener6, transactions with External Groups allocated to the GPU Group, except savings allocated to the Group as a transmitting party, shall be allocated monthly among the parties hereto in proportion to their respective annual size factors.

2. Any payments allocated by PJM to the GPU Group for installed reserve capacity supplied to or by an External Group shall be allocated monthly a=ong the parties hereto in proportion to their respective annual size factors. -

) 3 Any chare of savings or of specific transmission charges allocated to the GPU Group as a '.ransmitting party shall be assigned within the Group to the party (or parties) hereto that provides the transmitting cervice. If the allocation to the GPU Group is based on its relative investcent in transmissicn facilities or on other appropriate factors as among the PJM member ec=panies, then a sinilar basis of allocation shall be used for the assign =ent of the savings within the CPU Group.

h. If, in addition to savings , any amounts are assigned to the CPU Group as compensation for losses, such a=ounts shall be allocated acong the parties hereto in proportion to their losses incurred in providing

, the services involved, as these losses may be determined and specified from time to time by the Operating Ccemittee.

) 1548 127

a .

Penelec--Met-Ed--JC Agrec=ent Schedule 8.03 Rev. 1 Date of Issue 6/29/7h Date Effective 6/01/7h Page 2 of 2 S.

Any additional minor savings arising out of participation in PJM, such es, but not limited to Savings frca Coordinated Hydro Operation, shall be allocated a=cni; the parties hereto in proportion to their respective ennual size factors.

1548 128 ACCEPTED:

Pennsylvt.nia Electric Co. Metropolitan Edison Co. Jersey Central P&L Co.

By (

MI. - N Ey .M2; Byj 8"7.' / d i

/ / V

. c.

Penelec--Met-Fd--JC Ag r mn.*nt Schedule 8.0h Re v.

Date of Issue  !: /N1/7t; Date Effective b/1/ /6 SUDJL;T: ALLOCATICN OF PAYEITS TO OR FROM PJM MR REGULATING CAPldlILITY

1. For all regulating capability supplied by PJM to the GPU Group, payment shall be made by the receiving party or parties at the rates then in effect under the PJM Agreement.

2. For all' regulating capability supplied to PJM by the GPU Group, the' supplying ecmpany or ccmpanies shall be paid for such supply at the rates then in effect under the PJM Agreement.

)hkh l2h .

~~

ACCEITED:

Pennsylvania lectric Co. Metropolitan Edison' Co Jersey Central l.i. ro.

w S+L.ks .

oy. Xn2:< ny (fwS- ,

() ~ ay

Penelec--Met-Ed--JC 4 reecent Schedule _ 9.02 Rev. 1 Date of Issue 6/28/74 Date Effective d/01/74 SUDJECT:

ALLOCATICN OF EXPENSES - PJM A'TD MISCELLA'iEOUS ITE.S 1.

The GPU Group share of monthly expense for operation of PJM and for planning and other activities associated therevith shall be allocated cr.on6 the parties hereto in proportion to their respective annual size factors.

2.

The GPU Group share of conthiy expense for participation in various area, regional or national groups that are concerned with relia-bility or other aspects of coordinated planning and operation, such as but not limited to the Mid-Atlantic Area Coordination Group (MAAC), shall be allocated accas the parties hereto in proportion to their respective annual size factors.

-3

/ ,

1548 130 ACCEPIED:

Pennsylvania Electric Co. Metropolitan Edicen Co. Jersey Central Pt.L Co.

ny 7

2 -]'r er A-.auit.

cy /x.g. m :Y

. :. ."..i '

Penelec--Met-Ed--JC Agree =ent 7 Schedule 0.01 Rev. 1 Date of Issue 6/23/7L Date Errective 6/01/74

_ SUBJECr: ALLOCATIO:I OF I?iTEPAREA TIE COSTS The taonthly GPU Group share of transmission costs allocated to the Interarca Tie Function under the Extrc High Voltage Transmission System Agreement , dated April 27, 1967, as supplemented or amended, shall be allocated among the parties hereto in proporticn to their respective annual sise factors.

1548 131 3 -

-- ~ ^ '

MGMD:

Pennsylvania Electric Co. Metropolitan Edisen Co. Jersey Central PLL Co.

Dy '* h

, +2 , n. By &'C't Dy 6 tt'/

Penelee--Met-Ed--JC Schedule _ 10.01 ><reeze-Date of Issue

?.ev. 1 6/29/74 Date Effective _ d/01/74 SUBJECP:

PARTICIPATION IN ADMINISTRATION OF PJM AGRED 1.

The parties hereto, as the GPU Group, have the right t o desi6nate,

- on behalf of the GPU Group, a representative to serve on th e Manese=ent Cornittee established pursuant to the tems of the PJM A greement and to chcnge its representative from time to time.

This representative shall to desiganted by the unanimous action of the President s of the parties here-to, and Met-Ed chall thereupon serve notice of any such designation upon the other parties to the PJM Agreement

2. in accordance with the terms thereof.

Representatives of the GPU Group cn other PJM Cot:

11ttees shall be designated from time to time by the GPU Operatin6 o::::sitt ee.

C 3.-

The System Operation Departtent of the Service Coc pany is author-ized, en behalf of the parties hereto, to furnish th e office of PJM vith the infor=ation and data that may be required fr om time to time in con-nection with the administration of the PJM Agreement and o under. perations there-1548 132 ACCEPIED:

Pennsylvania Electric Co.

Metropolitan Edison Co.

Jersey Central F&L Co.

OA ] '

ny _ DM ay A &~/,2.c ..!

t

'~ eyj- m/u .m w '1.

./f

e .

Penelec--Met-Ed--JC Agreement Schedule 11.01 Rev. 3

--Date of Issue 10/8/76 Date Effective 11/8/76 Q Page 1 of 3 pages

SUBJECT:

DEFINITIONS An used in this Ae;reement:

1.

Synten shall mean the interconnected electric supply system of a party hereto and its interconnected subsidiaries, and each party hereto may include in its system the electric supply systems of other than parties hereto vith which it is operating in parallel, provided its interconnection agrec=ents with such other party or parties do not conflict with this Agreement.

2.

. Integrated System shall mean the combined systems of the parties hereto.

3 Loca shall mean an amount of kilowatt-hours integrated during a clock-hour, and when uced as a measure of a system's energy require-nents shall mean net load, exclusive of generatin6 station auxiliaries and lighting.

h. Generating Canacity shall mean the net load which an electric Cenerating unit can supply under summer conditions to be specified from time to time by the Operating Cccaittee.

When used in a collective sence, it shall mean the sum of the generating capacities of all of the electric generating units in a system.

5 Installed Carncity shall mean the generating capacity adjusted for capacity sales or purchases other than planned purchases or sales

]) under Schedule 2.01(c) of the PJM Agreement, limitations imposed by transmission facilities, reactive kilovolt amperes and any other cause

. 1548 133

d w

' Penelec--Met-Ed--JC Agreement

' Schedule 11.01 Rev. ,

Date of Issue in/9/I6 ___

Date Effective 11/8/76,__

~

f , Page 2 of 3 which prevents the simultaneous full utilization of such generating capacity under conditions to be specified by the Operating Co=mittee.

6. operatinc Cacacity shall mean the amount of power which can be delivered to the system by electric generating facilities either cynchrcnited with the system or scheduled and available to operate upon short notice. The notification period shall be determined from time to time by the Operating Committee.

T. Unavailable Capacity shall mean the algebraic difference at any time between Installed Capacity and available capacity at that time.

Available capacity shall be determined in accord with definitions and criteria currently applicable to the reporting of available capability in PJM. As cred in Schedule 4.12, actual Unavaila' ole Capacity for each veck shall be determined as the average of the unavailable amounts at the GPU peak hour on each weekday, excluding holidays.

8. Annual Size Facter shall be determined in May of each year for the succeeding Planning Period and shall be for each party the

~~ ratio its Forecast Capacity Responsibility, bears to the veichted average GPU Installed Capacity in the same period.

In the event of major loss or addition of load by any party foreseen to occur or occurring during a Planning Period the Annual Site Factor shall also be determined for load conditions existing both before and after the loss or addition. For each determination, the forecast summer and vinter peak loads and the forecast average weekly peaks shall be mutually consistent for each party and be representative of the loads that vould be forecast either without or with the major loss or addition of Icad. The :espective Annual Size Factors, so 1548 134

Penelec-4fet-Ed--JC / gree =ent Schedule 11.01 Rev. 3 Date of Issue 10/8/?o Date Effective 11/M/79 __

(]* Pase 3 of 3 deternined, shall apply to the portions of the Planning Period before cnd after the change in load.

~

9. Monthly Size Feetor shall cean a ratio determined monthly on n eclendar conth basis as the average for each party of the four or five veckly ratios for each party. The veekly ratio for each party in the ratio of its weekly taxi =um hourly load to the weekly sum of such naxi=um loads of each party. The number of veeks used within each calendar month are determined for this purpose by the number of Fridays within the month.

10. P lanning Period shall initially mean the twelve conths

} beginning June 1 and extending through Ma;' 31 of the following year, but shall be modified as necessary to conform to changes subsequently

, introduced in the PJM Agreement.

1548 135 ACClyrw:

Pennsyvania[lectricCo. Metropolitan D11 son Co. Jersey Central PLL Co.

ny /Mf syISvb.h ny p,

u2 -}M 7 /r

o' lPENGLCC g jf, Met-Ed3 Exhibit No. G-2 Witness: E. Newton Jr.

PENNSYLVANIA-NEW JERSEY-MARYLAND INTERCONNECTION COMPOSITE (PJM AGREEMENT)

This is a Composite Agreement made up of the original agreement, dated September 26, 1956 and supplemental agree-ments dated January 28, 1965, April 1, 1974 and June 15, 1977, between Public Service Electric and Gas Company, Philadelphia Electric Company, Pennsylvania Power & Light Company, Baltimore Gas and Electric Company, Pennsylvania Elcetric Company, Metropolitan Edison Company, Jersey Central Pover & Light Company and Potomac Electric Power Company. A list of all schedules revised through November 30, 1979 have also been provided.

1548 136

l, < ;,

• , /.

COSIPOSITE PENNSYLVANIA-NE'd JERSEY-MARYLAND INTERCO:;;ECTION AGRED:E.g (INCLUDES ALL EFFECTIVE PROVISIONS OF JANUARY 28, 1965, APRIL 1, 1974 AND JUNE 15, 1977)

TlllS AGREEMENT, made and entered into this 26th day of September 1956 (and January 28, 1965, April 1, 1974 and June 15, 1977), by and between PUBLIC SERVICE ELECTRIC AND GAS COSPANY, a New Jersey corporation (herein called PS); PilILADELPilIA ELECTRIC ColiPANY, a Pennsylvania corporation (herein called PE); PENNSYLVANI A PO' DER & LIGilT COMPANY, a Pennsylvania corpor.. ion (herein called PL); liALTIMORE GAS AND ELECTitIC COMPA:;Y, a Maryland corporation (herein called UC); P010MAC ELECTRIC PO' DER COMPANY, a District of Columbia and Virginia corporation (hercin called PEPCO);

PENNSYLVANIA ELECTRIC CO:IPANY, a Pennsylvania corporation (herein called PN); METROPOLITAN EDISON COMPANY, a Pennsylvania corporation (hercin called ME); and JERSEY CENTRAL PO'JER & LIGHT COMPANY, a New Jersey corpor-ation (herein called JC), the latter three companies (herein called collectively GPU Group) all being subsidiaries of General Public Utilities Corporation.

(OBSOLETE PREAMBLES O!!ITTED) 1548 137

l, ,  ;.,

' 6

• All signatories agree that except as hereby expressly amended the PJM Interconnection Agreement, as heretofore amended and supplemented, sha)) remain in full force and effect.

• All signatories hereby authorize the Manager of the Office of the Interconnection to file with the Federal Power Co=ilssion, on their behalf, this .and all future supplements to the PJM Interconnection Agreement requiring such filing. The similar authorization by all the signatories except PEPCO, contained in Letter Agreement dated September 24, 1962, is hereby cancelled.

UlTNESSETil THAT:

• • UllEREAS, the signatories hereto are signatories to an agreemenr, dated September 26, 1956, as amended and supplementc d, known as the Penn-sylvania--Neu Jersey-Maryland Interconnection Agreement (ACREEMENT): and

• • UllEREAS, the signatories hereto own and operate fully-interconnected electric supply systems, and the planning and operations of the bulk power supply facilities of such systems are coordinated pursuant to the AGREEMENT and various other agreements including the Mid-Atlantic Area Coordination Agreement (MAAC), dated April 23, 1971; and

• • UllEREAS, each signatory hereto re]ies on the bulk power supply systems of the other signatories hereto in providing reliable service to its customers; and

• UllEREAS , the signatories hereto are coordinating the installa-tion of generating capacity additions and major transmission facilities; and'

• • UllEREAS, it is desired to amend the Agreement to set forth the respective rights and obligations:of the Parties IIereto with respect to such coordination.

UOW TilEREFORE, the signatories hereto, each in consideration of the agreements of the others herein set forth, hereby mutually at; rec as follows:

1548 138

• Added by 1/2S/65 Supplement.

• • Added by 4/1/74 Supplement.

l.+ ,' a t i

_g ARTICLE 1 Definitions 1.1 As used in this ACREE!fENT:

• • a) " Party liereto" shall mean each of the following: PS, PE, PL, liC , PEPCO and CPU Croup; b) "Systen" shall nean the interconnected electric supply system of a Party Hereto and its interconnected subsidiaries, and each Party Hereto may include in its systen the electric supply sys-tens of any party or parties other than Parties Hereto with which it normally operates in parallel, provided its intercon-ncction agreements with such other party or parties do not conflict with such inclusion;

• c) "Het Capability" shall mean the number of megawatts of electric power which can be delivered by an electric generating unit of a Systen under conditions and criteria specified by the OPERATING COMei1TTEE and approved by the MANAGE!!EMT CO?DtITTEE. Net Capabili-ties for all units shall be detcrained for both summer and winter operating conditions;

• d) "Systen Capacity" shall mean the sum of the Net Capabilities, based on specified summer operating conditions, of all electric generating units of a Systen, with proper adjustments for firm capacity commitnents of such Systen independent of this AGREEIENT, and decreased by the amount of the limitations imposed by trans-mission facilities, reactive kilovolt-ampercs or any other limita-tions which prevent the sinultaneous utilization of said firn capacity commitments or Uct Capabilities of said units, such limitations to be determined under conditions and criteria speci-fied by the OPERATING COMM11 TEE and approved by the MANAGEMENT

- COMMITTEE;

• c) " Contract Capacity" chall mean the nunber of negawatts of electric pouer which a Party Hereto has provided to ccet its obligations hereunder for electric generating capacity and shall be equal to the Systen Capacity of a System with proper adjustments for firm commitments under Schedule 2.01 (d)(3) and 2.01 (c), (f), (g),

and (h);

• f) " Planning Period" initially shall nean the twelve months beginning June 1 and extending through May 31 of the following. year, pro-vided as changing conditions may require, the MANAGEMENT COMMITTEE

. shall specify other planning periods; 1548 139

• Added by 4 ./ /4 Supplement. O  % -.,

• • Underlined anended by 1/28/65 Supplenent. -

b $

d,s 3.o

• g) Unless otherwise qualified, " load" and " capacity" shall inean megawatts of load and negawatts of capacity;

• b) "Unavailabic Capability" shall mean the algebraic dif ference at any time between System capacity and the availabic capability at that tine. Available capability shal1 be determined according to definitions and criteria speci fied by the OPEPATII;G C0:01ITTEE and approved by the !!/.!:AGDIE!iT CO:OilTTEE. The several component causes of unit unavailability, namely: (1) forced outages, (2) planned and naintenance outages and (3) niscellaneous adjustments, shall be deternined according to definitions and criteria speci-fled by the OPERAT1!;G CO:OlITTEC and ptA!;Nll:C A:iD EliGll:EERII;G C0:0!ITTEE and approved by the !!AllAGOiEliT COMMITTEE.

ARTICLE 2 CPU Group 2.1 The allocation among ?!!, ME, and JC of their collective obliga-tions hereuader as the GPU Group shall be the sole responsibility of said companics, but they undertake that they will, during the period that this Agreemer.t shall be ef fective, have in forco one or more arrangements for the allocation of the whole of such collective obligations and wil1, from tiac to time, upon the request of any of the other signatories hereto, furnish said rcques tint; other signatory with a copy of their tnen effective arrangements reinting to such allocation.

ARTICLE 3 O_rganization 3.1 The supply systems of the signatories hereto, functioning as a coordinated electrically interconnected supply system, shall be known as the PE!;I;SYLVA I A-NEW JERSEY-MARYLA: D I!!TERCO:;l;ECT10:2 (herein called Tile INTERCO ::ECIl0:1) .

3.2 Each Party l!creto, by written notice signed by an officer legally authorized to commit such Party llereto, and served upon the other Parties llc re t o , shall appoint one representative to serve on a liANAGEliE.T COMMITTEE, with authority to act for it in the administration of all catters pertainino, to Tile II;TERCO:;;;ECTIO:: and to perform such other duties as are hereinafter specified. In the case of the CPU Group, which shall be entitled to but one representative, such notices shall be given by or served on ME. The initial menbers of the MA!N.GEMDiT COM:11TTEE shall be so appointed within thirty (30) days af ter executien of this AGREEME::T, and by similar notice, any Party llereto may, at any time, change its representative on the MA:: ACE-ME!;T COMMITTEE.

• Added by 4/1/74 Supplement, g o o' A'g'3~T g

• • Amended by 4/1/74 Supp1mmnt. 9

, be o, . ci -

1548 140

,' . 5 ,.6

~5-Each neuber of the !!ANAGE!!E!!T CO:<:!ITTEE nay, at any time, by written notice to the other n.enbers, designate a substitute to act for him with respect to any untter specified in such notice. The members of the fiANAGE-ME!;T COMMITTEE shall have equal authority, and all decisions nade or direc-tiens given by the !!A!!ACEMENT COMMITTEE shall be unanimous and binding upon the Parties llereto.

3.3 The !!ANAGEME:iT C0"MITTEE shall establish an Of fice of Tl!E INTERCOM-HECTION, initially to be located near Philadelphia, Pennsylvania, and shall appoint a ?!an:cer, who, pursuant to policies established by the MANAGE" INT CO"MITTEE, with other necessary personnel under his supervision, shall have the following dutics and responsibilities: ,

• (i) to perform such functions as nay be directed by the MANAGEMEt;T COM:!ITTEE;

• (ii) to coordinate the operation and maintenance of the bulk power cupply f acilities of Tile INTERCONNECTION used for both load and reactive supply, subject to the provisions of 4.1, so as to main-tain reliability of service and obtain the maximum overall econo-nies consistent therewith;

• (iii) to coordinate the operation and maintenance of the bulk power supply facilitics of Tile I!;TERCON::ECTION with such facilities of the systems of others not party to this ACREEME!;T in accordance with agreements between the signatories hereto and such other systems to secure reliability and continuity of service and other advantages of pooling on a regional basis; ,

• (iv) to coordinate interchange accounting and maintain records pertain-ing to the operation of Ti!E INTERC0!;NECTIO:,;

• (v) to furnish such information and reports as are required to keep the Parties lieteto fully informed of the outlook for, the function-ing of, and results achieved by THE INTERCONNECTION;

• (vi) to file with the Federal Power Commission on behalf of the signa-tories hereto, this AGREE"ENT, amendments or supplements hereto, and revised schedules to replace those attached to and made a part of this ACLEE"EST;

• (vii) to consult with tne OPERATII:C CCMMITTEE, provided for in 3.4, regarding operating principles, practices and procedures as they relate to the achieven.ent of overall reliability and economy of operation of TPE INTERCO:J:ECTION;

• (viii) to consult wit h the PLA!;NING /d:D ENCL"EERISC COMMITTEE, provided for in 3.5, regarding the plans o. the Parties llereto as they relate to the reliable and economic operation of T!!E INTERCONNECTION;

• Added by 4/1/74 Supplement.

. s  ;., '

_c, _

• (ix) to initiate and t-ake operating studies of the bulk power supply f acilitics of Tl!E INTERCC::SECTION and uake such recommendations and initiate such actions as may be necessary to naintain re-liable operation on TliE IN'IERCO::NECTION; Initial 1), alI regular personnel of the Of fice of Tile INTERCC::::ECT10N shalI be employees of PE. During the continuance of such arranaccent, the

!!anancr shall report to the PE :'euber of the l'A"ACEME!;T CO:;MITTEE in snatters pertaining to personnel administration. In all other natters he shall report t o the MA' aGi ME:;T CO3"!IT1EE. The cost of the Office of THE INTERCONNECTIGN and expenses associated therewith, includit,g salaria and expenses of said personnel, space and any necessary facilitics, shall be shared by the Parties llereto in _accorance vith Schedule h.01.**

3.4 Each r ember of the !!ANAGEMr.UT COM'!ITTEE shall appoint, by writ-ten notice to the other nembers, a representative to serve on an OPERATING COM:!ITTEE. 1he Manar.cr shall be a non-votine re ber of the OPERATING ^

COMMITTEE. The EUAGOff:;T CG:"!ITTIJ. chall desilante the Chairman,_piw shall arranne isetines as recuired andtreport ce nittee Lind ipo s to thn MA!'AGEMENT CO:P:1TTR. Except as otherwise provided, recoraendations and decisions of the OPERATING COM:!!TTEE chall be by najority vote of its menbers. Minority recenmendations nay,be rebnitted, and upon request of any Party l!creto, any decision shall be subject to approval by the mat:AGEMENT COP"lTTEE.

The OPERATING COMMITTEE chall: .

• (i) establish and revise as necessary operating principles, prac-tices and procedures for Tl!E INTERCON;;ECTION consistent with this AGREEMENT and the policies cetablished by the MANAGEMENT COMMITTEE;

• (ii) cooperate with the !!anager in conducting the operation of Tl!E INTERCONNECTIO:: to achieve a high overall 1cvel of reliability and economy of service in accordance with established operating principles, practices and procedures, recogniaing individual systen operating requirements for load and for reactive supply, contractual obligations and other pcrtinent factors;

• (iii) in conjunction with each Party !!creto, revicu and evaluate the operating practices and preceduret of ruch Party !!ereto relating to the overall operating relivbility of the bulk power supply f acili ties of Tile INTE"C0hhECTION including locat ion, character and amounts of spinning reserve and regulating capacity, adequacy of automatic cont rol, sour ces and nee.1 for reactive capacity, voltage schedules and other pertinent conditions, and nake recon-inend a t i ons to such Party liereto with respect thereto; r

• Added by 4/1/74 Supp1xment. .

TD ~3

• • Underlined a: rended by 6/15/77 Supplement. D ' 8 6

j C; jj n *A7

.', s .' , $

y.

• (iv) cooperate with the Manager uith regard to studies and investigations concerning overall reliability of the bulk power supply facilities of Ti!E INTEP. CONNECTION nade in accordance with 3.3 (ix) and in carrying out such actions as nay be initiated as a result of such studies and investigations;

• (v) advice the PLANNII:G AND ENGINEERING COM::ITTEE, provided for in 3.5, regarding the plans of the Parties Hereto as they relate to the reliable and econo:aic operation of Tile INTI:RCO:,NECTION;

• (vi) establish practices for accounting in accordance with this AGREEMENT for electric generating capacity obligations and interchange of cuergy and operating capacity;

• (vii) perform such other studies and investigations as taay be directed by the !!ANAGEMENT CC:!MITTEE or hereinaf ter specified in this AGREEMENT; Mviii) appoint subcocnittmes and task forces when needed to assist it in carrying out its duties and responsibilitien hereuncer.

3.5 Each member of the !!ANAGEMENT C0:1:llTTEE shall appoint, by written notice to other members, a representative to serve on a PLA:;NING AND ENGINEERING CO:S!ITTE:. The MANAGE"ENT COMMITTEE shall designate the Chairman, who shall arrange acetings as required and report ccaaittee findings to the MANACD!ENT COMMlITES. Except as otherwise provided, recermendations and decisions of the PLANNING AND ENGINEERING CO:D lTTEE shall be by najority vote of its members. Minority recommendations may be submitted, and upon request of any Party llereto, any decision shall be subject to approval by the MANAGEMENT COMMITTEE.

The PLANNING AND ENGINEERING COM:!ITTEE t. hall:

• (i) on a continuing basic review the planning principles, procedures and standards established or subsequently established in accordance with 4.2 relating to natters affecting the overall design and reliability of the bulk power supply facilities of T!!E INTERCONNEC-TION and uake rccommendations to the MANAGEMENT COMMITTEE with respect thereto;

• (ii) in conjunction with each Party Hereto, review, evaluate and coordinate the plannin; for generating capacity, reactive capability and voltage control, and t ran, aission facilitier of such Party IIereto and other nat ters relesant to the reliability of such bulk power su;rply facilities of the Part ics Hereto and naintain a continuing cemposite long-range plan to provide adequate and

. reliable service oa Tile INTERCON:.ECTION;

• Added by 4/1/74 Supplenent. , .

1548 143

,,5 '

,.i g

• (iii) periodically recommend to the MANAGEMENT COMMITTEE the Forecast Requirenents for elect.ric generating capacity of Tile INTERCON-1;ECTION, and prepare and subnit to the MANAGEME!;T C0"MITTEE the allocation of such Forecast Requiretaents t o each Party llcreto as provided in schedules attached and made a part hereof;

• (iv) perform such other studies and investigations as may be directed by the !!ANAGE!!ENT COM:11TTEE or hereinaf ter specified in this AGREEMENT; (v) appoint subcom:aittees and task forces when needed to assist in carrying out its duties and responsibilit.ics hereunder.

• 3.6 The MANAGEMENT COMMITTEE shall establish from tirac to time such other ccrr.mittec.s as it deens necessary.

• 3.7 To facilitate cnd provide for the work of the Office of Tile Il!TERCO:,NECTION and of the several committees appointed by the MANAGEME!!T COMMITTEE, cach Party llereto shall:

• (i) naintain adequate records and provide data required for (a) the coordination of operations, (b) the accounting for all interchange transactions, (c) the preparation of required reports, (d) the coordinatien of planning, including those data required 3 for capacity accounting, (c) the preparation of maintenance cchedules, (f) the analysis of system disturbances, and (g) such other purposes as vill contribute to the reliable and econcmic operation of THE INTERCONNECTION; .

• (ii) provide such recording, telenctering, communication and control facilitics as are required for the coordination of its operations with those cf the other Parties llereto, including equipnent required both in nornl operation and for the recording and analysis of system disturbances;

• (iii) provide adequate and properly trained manpower to (a) permit participation in the coordinated operation of TiiE INTERCON?ECTION, (b) ncet its obligation on a timely basis for supply of records and data, (c) serve on conmittees and participate in their required investigations, and (d) share in the representation of

'Illi: INTEPCONNECTION in inter-regional and national and national reliability activit ics;

• (iv) chare in the costs of committee activities and investigations (including costs for censultants, computer time and other appro-priate items), ecmmunication facilities used by all the Parties liereto (in addit ion to those provided in the Office of THE INTERCO:WECT10N), .nnd such other e::penses of THE INTEECONNECTION as are appteved for payr.ent by the MANACC" NT COMMITTEE. _1:n l e s s *>

otherwise ar, reed by the MANAG1 MF':r CD:'MIT TEE , the share of _

~

such cests assigned tu cach l.ir d U/r7toS h[Il be preportional to its allocate i cost for the Of fice of T!!E INTERC0hNECT105, as provided in 3.3. 3

[D D $

• Aihied by 4/1/74 Sul.pler'en: LU w '

• • linderline arended by o/15/// NupplemenL.

1548 144

, ' ,* . ,' s '

9_

i ARTICLE 4<

_ Coordinated Plannin? and Operation

• 4.1 1:ach Party llereto shall cooperate with the other Parties !!creto in the coordinated planning and operation of the bulk pouer supply facilities of its Systen so as to obtain the greatest practicable degree of reliability, compatible economy and ot her advantages fren the pooling of the respective clietric synten loads, electric generating capacities and electric trans-nis'sion facilities, and each shall render to the others the services provided to be rendered hereunder, and nay render such other servicco as the interconnection of their Systeas nakes pos;ible and vill be of natual advantage to them and to the public served by them; provided, that each Party 1:ercLo shall retain sole control over its wholly-owned facilities for uce in Tile II;TERCO ;:,ECTIO:!, and that such facilitics shall always be first available to the owner for its own use, except as otherwise agreed to.

In furtherence of such cooperation each Party IIereto shall:

• (i) consult with the other Parties Hereto and coordinate the instal-lation of its electric generation and transmit.cion facilities uith those of such other Parties liereto so as to naintain reliabic cervice to its own electric custorers and those of the other Parties llereto and to obtain the naxioun overall economics consistent. therewith;

• (ii) cooperate with the signatories of MAAC to augment the reliability of the bulk power supply facilities of the region; (iii) nake available to TIIE II TERCO::::ECT!O:: the electric generating capacity available for operation in excess of it.s Systen require-nents; (iv) nahe available to THE I :TERCO::;ECTIO!! its elect ric transmission facilities available in excess of its Systen requircuents; (v) provide or copt ra_ctual_1y. arrange for suf ficient transnission "

line and transforter capacity between its electric generat ing plants and its connections with the bulk power transmission facilitics of any otner Party or Parties llereto, for delivery of a capacit y cmouat equal to the run of its equitable share of the Forecast Requirement of Tl!E 1:;TERCO:;;;ECT10:!, as provided in 6.1, plus any System Capacity which it su;>pl i e s to another Party liereto, lest the sum of its own weekly peak load plus Unavailable Capacity at the time of such load plus any Systen Capacity which it receives frca another Party 1:ereto.

For the purposec of this subsect ion a transminnion connection between any Pats. .. . .t a and any other Party or Parties IIereto may be considered also to include:

• Added by 4 /1/74 Surpl< r:ent . o g "q'

• • 1:nder))ne amended by 6/15/77 Supplement.

1548 145

,' . s

• (c) transmission f acilit les thich may be used by a Party llercto to the extent of its capacity located in jointly owned plants, for which such f acilities were provided, plus any additional capacity therein that nay be available for power transfer between it and other Parties !!creto; and

• (b) parallel transnission lines external to any Party llcreto and to Tl!E I ;TERCO::::ECTIC:!, through which power transfers to other Parties !!creto r.av be arranp.ed;

• • (vi) provide or contractually arrange for sufficient transmission line and transforner capacity, so that vi.th all such facilities in rervice, the output of its elect ric generating plants can be delivered to its customers without relying on the transmission facilities of any Party !!cret o, other than the Party or Parties llcreto with which such contractual arrangements have been r,ade.

Electric generating plants :.hal l include stations for which a Party llcreto har full or partial ouncrohip or a contractual entitlenent to all or part or the output of the plant, regard 1cus of the location of such facility;

• • (vii) include in any contractual arrangements for the sale or purchase of generatin; capacity and encrgy, independent of this AGREE:!E:17, from a Party llereto or others not p a r t.y I o this AGRif:fE!iT, adequate provisions to meet the transuusion obliga tions as herein set forth;

• A(viii) bear its equitable chare of the annual costs assigned to the inter-area Lie function under the Extra !!igh "oltage Transuission

• Systen Agreement dated April 27, 1967, as supplemented f rom time-to-Line. Such share shall be deternined by methods consist.cnt with the said AGREE!!C iT;

• • • (ix) provide sufficient reactiva capability and voltage control facilities to (1) teet the reactive requircments of its systcu and (2) adequately maintain voltage levels and stability required by the bulk power supply facilities of TliE II:TERCO:::iECTIO: ;

(x) ccordinate the operating schedules of its generating facilitics with those of the other Parties !!ereto so as to maintain reliable service to its own customers and those of the other Parties IIereto and to obtain the na::imuu operating economics consistcnt thercuith;

• (xi) coordinate its schedules of planned outages of generation and transuission facilities with thore of the other Part ies lieret o so as t o maintain reliable and econonic operation on Tilf I ;TERCOS::LC-

• • 1548 146

• • (xii) cooperate with the other Parties llcreto in the analysis, fotrula-t ion an<l imple: ontation of plann to preecnt er eliminate conditions which iu;'a i r the reliability or the ccenomic development of 1HC I! TERCOSN!:CTIC::;

AAthh d by 4/1/7'6 Suppleneet.

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• • coeleted t y (,/13/ 77 suppli ment . O ] ' E1 N $

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- . * (xiii) engage in coordination with the other Parties llereto and uith others in the planning and operation of the regional bulk power supply facilities to secure a high level of reliability and continuity of service and other advantages of pooling on a regional basis;

• (xiv) adopt and apply Tile I!;TERC0!;;;ECTIO:7 standards ns accepted by the !!A!;AGEME ;T CC::MI'ITEE ui t h respec t to system design, equipment ratings, operating practices and maintenance practices;

• • (xv) cooperate with the other Parties !!cret o in the inplementation of all emergency procedurer, of THE 1 ;TERCO::::ECTIO ; in recognition of the need to pursue a uniform operating policy in all service areas and to meet its obligations under this AGREEME!;T;

• • (xvi) tr.aintain a proportion of its load subject to control by automatic underfrequency load-shedding devices at least equal to that approved from tiuc-to-t ice by the !!A::AGEME :T CO:!;1ITTEC;

• 4. 2 The MA!; AGE!!E!;T CO:"!ITTEE shall review the recommendations of the Pl.A!;::I :C A!;D E!;GIhEERI!;G COMMITTEE provided for in 3.5 (i) and shall establish planning principles, procedures and standards relating to the adequacy and reliability of the bulk power supply facilities of THE I:;TEECD:;-

!!ECT10:: which shall not be inconsistent with the principles, procedures and standards of MAAC.

• 4.3 Each Party !!creto shall submit periodically to the PLA!;;;11;G A!;D ENG11;EERI::G C0":!ITTEE t.hrough its representat ive on that committee its plans for the addition, modification and removal of generat ion and bulk power transnission facilities. Such submittals shall cover a period of years specificJ by the MANAGE"E:;T CC:!:11TIEE from time to time. Deviations fron previously submitted plane, shall be brought promptly to the attention of the PLA":ll ;G A!;D E::GI:;fERING CO:IMITTEE by the same racans.

• 4.4 The continuing conposite long-range plan to provide adequate and reliabic service on Ti!E It;TERCON:;ECTIC::, naintained by the PLANNING A::D E!!GI!;EERING CC"MITTEE in accordance with 3.5 (ii), shall be based on the plans subnitted under 4.3. Such plan shall adequately meet individual requirements and obligations of the Part ies flereto under t his AGREEME!;r, and shall reficct (i) benefits of inter-area ties and obligations under agreenents with others not party to this AGREEMENT, (ii) the need for inter- and intra-regional transnission and (iii) any other forecast condi-tions and facility additions that could contribute to overall reliability and conpatibic econony of service in 'llin INTERCONNECTION.

~

• 4.5 If, af ter revicu of the plans of any Party licret o under 3.5 (ii), rcembers of the Pl.ANNING AND 1: ngl: EERING CO:SilTTEE helieve that such plans are not in accord with the plannin;, principler., precedures and standards established under 4.2, and :ay adversely affeet T!!E IN TERCO:WECTION and regional reliability, they shall f.o inforn such Party llereto throuph its r epresent at ive on t he Pl.A!;NING AND ENCIhr:ERING CO!:ITTEC and request that the proposal be nodified to confore to such planning principles, procedures and standards.

• Added by 4/1/74 Supple: cut. 1548 147 P " _o

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• • Added by 6/15/ 77 Supplement. [~*

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• 4.6 Each Party !!creto shall report to the OPEPATII:G CO:P!ITTEC through it s representat ive on that Co=aittee as pronptly ar. possible changes in its operating practices and procedures relating to the reliability of the bulk power supply f acilitie:, of Tl!E 1 ;TERC0f.:;ECTIO . The OPERATI::G CD:1:llTTEE shall review such reports in accordance with 3.4 (iii), and i f any change in operating practice or procedure of the Party licreto is not in accord with the established operatin;; principles, practices and procedures for Tile lirlERCO:U.LC'110:1 and such change adversely af fects Tile I :TERCO ::;ECT10:1 and regional reliability, it shall so inforn such Party liereto through its representative on t he OPERATI::G CO:::!ITTEE and reques t that such change be nodi f icd to conf o4 n to such operatin; principles, practices and procedures.

ARTICIE 5 Planniun Period 1.oad Diversity Entitlements

• $ .1 Planning Period load diversit ies on Ti!E II;TERCO:M;ECTIO'!, for the purposes of this AGREE!!EMT, and the entitlements and obligations of each Pa rt y llcret o wi th respect thereto, shall be defined and determined in accordance with a schedule attached and made a part hereof.

ARTICLE 6 Electric Generating Cagapv Requiretant s and Oblinations

• 6.1 The electric gcnerating capacity requirement of Tile I!;TERCO::!;ECTIO i chall be an amount of capacity sufficient to carry the load, permit main- '

tenance and provide rc serve adequate to achieve a high degree of reliability.

The liA!;AGP?!E iT COZilTTEE, af ter consideration of the recommendations of the PLAT;;;I!;0 A :D E ;GI ;EERI!!G COM'llTTEE providell for in 3.5 (iii), shall deternine the Porecast Rcquirements for electric generating capacity of Ti!E ItrIERCO:M;ECT10:! for specified Planning Periods and ratify the allocation of equitable shares thereof to cach Party llereto.

• 6. 2 Prior to a specified Planning Period each Party llereto shall plan to install or shall othetwise arrange for sufficient Contract Capacity and associated transmission facilities to carry its equitable share of the Forceast Requirenent of Tile I ;TERCO::',ECTIO:? for such period. Each Party

!!c re t o shall subait to the MANAGEME iT CO:1MITTEE i ts plans for fulfillment of it s obligations under this Section as provided in a schedule attached and nade a part hereof.

• 6. 3 The Accounted-For Requirement for electric generating capacity of Tile I!!TERC0:? ECT10:: shall be determined for each Planning, Period and each Part y !!cret o shall account for it s equit share thereof in accordance with a schedule attached and nade a part hereof.

1548 148

• 6.4 A Party IIereto that has less Contract Capacity than its equitable chare of the Accounted-For Lequirement of THE INTERCO J:ECT IO:i shall be considered deficient by the auount of the difference.

• Added by 4/1/74 Suppleuent .

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• 6. 5 In the planning of its capacity installations and purchases, each Party liereto shall provide generating capacity of such character that, under nornal operating conditions, it can supply, if needed, the energy requirenents of its own load and its allocated share of spinning reserve and regulating capacity, provided, however, that any Party llereto nay install ot participate in ownership of units of any size that it finds appropriate to its needs, subject only to the responsibility for possible additional reserve in accordance with schedules attached and rade a part hereof.

ARTICI.E 7

_Operatin LC apacity Renoire:ent and oblications

• 7 .1 The Operating Capacity Requirement of T!!E INTERCON';ECT10N shall be an amount of capacity in operation, or capable of operation within a specified tire, ruflicient to carry the load on any day and to provide reserve adequate to achieve a level of reliability connistent with the policies established by the MANACE:r:NT CD:M!ITTEE. Operating capacity shall include specific amounts of synchronind capacity under aut.omatic response as regulating capability for control of tie line loading and frequency of

'IllE Ma ERCO:..;ECTl eN. The OPERAT11;G COM':ITTEE shall determine the daily Operating Reserve Requirenent o f Tile INTEL'. CONNECTION in accordance with Schedule 6.02. The OPERATING C0""ITTEF shall deternine the Repulating Capability Recuitencnt of Tl:E INTERCON',"CTION in accordance with the o, crating practices of Tile INiERCONNECTION as accepted by the liANAGEMENT COMMITTEE.

• 7. 2 The Operating Capacity Obligation of each Party llereto shall be its equitable share of the Operating Capacity Requirement of TllE INTERCONNEC-TION. Such shares shall be determined in accordance with Schedule 6.03.

• 7. 3 A Party Hereto whose operating capacity in any period of a day is less than its Operating Capacity Obligation chall be considered deficient by the anount of the difference and shall make paycents for such deficiency in accordance with Schedule 6.03.

• 7.4 The Regulating Capability Obligation of each party l!ereto shall be its equitabic share of the total regulating capability provided by all Partien !!creto to neet the Regulating Capability Requirement of 111E INTERCCN-NECTION. Such shares shall be deternined in accordance with Schedule 6.01.

• 7. 5 A Party Hereto whose regulating capability in any hour is less than its Regulatin; Capability Obligation shall be considered deficient by the enount of the dif ference and shall nake payi.:ents for such deficiency in accordance with Schedule 6.01.

• Added by 4/1/74 Supplenent. b h

• • Added by 6/15/77 Supplement.

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ARTICLE 8, Accounting

• 8.1 CAPACITY ACCOU::T. The payments for adjusted planned purchases of capacity and for deficiencies in Contract Capacity payable or receivable by Parties !!creto shall be determined in accordance with schedules attached and rade a part hereof.

• • 8.2 OPERATI!;C CAPACITY ACCOU::T. The payments for deficiencies in operating capacity payable or receivable by Parties licreto shall be deter-mined in accordance with Schedule 6.03.

• • 8.3 REGULATI!!G CAPABILITY ACCOUNT. The payments for deficiencies in regulating capability payable or receivable by Parties llereto shall be determined in accordance with Schedule 6.01.

h* 8.4 ENERGY ACCOUNT. The payments for interchange of energy payable or receivable by Parties IIereto shall be determined in accordance with schedules attached.

8.5 COMPONENTS OF COST OR REPLACD'ENT VALUE. Each Party Hereto in accounting for daily operating capacity and cnergy supplied to cr received from ']I!E INTERCONNECTION t hall include the components of cost or replacement value in accordance with Schedule 8.01.

• ^ 8.6 TRANSMISSION LOSSES. Compensation to Parties Hereto for their out-of pocket cost of supplying losses incurred in transmission of energy through their own facilities for others shall be accounted for by a method acceptable to the OPERATING COMMITTEE.

l' S.7 ADJUST!!ENT FOR LOSSES. For the purpose of accounting under this

. AGREEMENT cach Party llereto may adjust its notered loads to reflect the incremental changes in transnission lesses incurred by its System as a result of transactions with others. All such adjustments of load shall be determined by nethods acceptable to the OPERAT1NG Com!ITTEE.

ARTICLE 9 Interchance with Others 9.1 Any Party llcreto may enter into interchange arrangements with others who are not Parties Horeto with respect to the delivery or receipt of capacity and energy to fulfill its obligations hereunder cr for any other purpose. .

• • 9.2 The Parties lieteto collectively may enter into ar,reements uith others not par ty to this .\CREDiENT to secure the advantages of poolinn on a regional basis. The allocat ion and accountirig anong Parties liereto of paynents and charges r.halI be in accordanceforservicesandtransactionsundersucha4,reements15 vith schedules attached. 150 8 oo o - -

• Added by 4/1/74 Supplewnt . O O D 3-

• • A!ded by 6/I5/17 Supplc: ant. oy o 1, ,

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• t ARTICLE 10 Metering 10.1 The quantities of electric energy involved in determination of the amounts of the billing rendered hereunder shall be ascertained by the neans of neters installed, maintained and read either at the expense of the Party on whose premises the ceters are located or as otherwise provided for by agrecuent betueen the Parties concerned.

10.2 Procedures with respect to naintenance, testing, calibrating, correction and registration records, and precision tolerance of all netering,equipaent shall be in accordance with good operating practices.

The expense of testing any neter shall be borne by the party owning such ceter, except that when a neter tested upon request of another party is found to register within the established tolerance the party naking the request shall bear the expense of such test.

10.3 All cetering of energy required herein shall be the integration of kilowatthours in the clock hour, and the quantities thus obtained shall constitute the kilowatt load for such clock hour, provided however that adjustuent shall be nade for other contractual obligations of any Party llereto as nay be required to deteruine the quantity to be accounted for hereunder, and for transmission losses as provided in 8.7_. _

• 10.4 The acter locations to be used by the Parties 11ereto in deter-nining their energy transactions on Tile INTERCO:.!!ECTION shall be as agreed upon from Line to time by the OPERATI!;C COM?i1TTEE.

ARTICI.E 11 Billinq

• ** 11.1 At the end of each nonth and by the fifth working day of the following uanth, the Of fice of TiiE INTERCO::NECTION shall prepare a statenent showing the debits and credits to each Party !!ereto for adjusted planned purchases and sales of capacity, for Accounted-For Deficiencies and Excesses of Contract Capacity, for interchange of Operating Capacity, Regulat ing Capability, and Energy, and for any allocated share of transactions uith others not party to this AGREEMENT. Fron the net party balances so deter-mined, the Ot fice of 'lllE INTERCONNECTION shall prepare billing statements for all"trannactions which occurred during the nonth, and PE, as agent for Tile INTERCO:.SECTION, shall rake collection and disbursenents pursuant to such statements on or before the first banking day comnon to all the Parties Itereto following the nineteenth day of the month in which the billing statenents are prepared. Interest on uncollected amounts shall accrue daily fron the date due until the day upon which collection is made at a rate equal to 1301 of the prine rate per annun as established from tine-to-time during such period of delinquenc, by the Chase Manhattan Bank (National Association) or i.ts successor. g 9g o g- y b

• Added by 4/1/74 f.upplement.

• • UnderlInc amended by 6/15/77 f:upplenent.

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• • • Added by 6/IS/77 Suppl ment. 1548 151 ^'"ZL "'

S F PTEM B F.R 1 1977

• 11.2 PE shall pay the costs of the Of fice of Ti!E I :TERCO :::ECTIO:1 as provided for in 3.3 and shall issue conthly bills to the other Parties llc re t o for their chare of such costs and the costs associated with those other facilities and activities which are to be shared under 3.7 (iv).

Such bills shall be paid conthly.

ARTICLE 12 Uaiver of hichts 12.1 Any vaiver of the rights of any signatory or Party llereto as to any default of any other signatory or Party !!cret o or any other r;atter arising hereunder shall not be deemed a vaiver as to any default or other natt er subsequently occurring.

ARTICLE 13 Liability, 13.1 As between the signatories hereto, except au may be otherwise agreed upon between individual signatories uith respect to spccific inter-connections, each signatory vill save the others haraless of and fron any and all loss and dauage by reason of bodily injury, death or danage to prcperty caused or sustained on the port ion of the transmission systen employed in THE I;;IERCO:,::ECT10: and controlled and nade available by it , notui thstanding t hat a judgement may be rendered af,ainst tuo or norc of the signatories or ap,ainst a single signatory, othw than the nignatory controlling the portion of such transnission system upon which such injury, death or drunge occurred, except that each signatory chall be responsibic for all clains of its own euployces, agents and servants growing out of any Uorhmen's Compensation Law.

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D""D *D 3'l $

ARTICLE 14 ed ed.S.N -'

Effective Date, Termination and Assinnment 14.1 This AGREEME!;T shall become ef fective as of I ovember 4, 1956, and, subject to action of any regulatory authority having jurisdiction, shall continue in effect for an initial peried of three (3) years, and thereafter frun year to year until terminated by consent of all signatories hereto; provided, hotever, that any signatory hereto at any time may withdrav.fren this AGREEME:;T upon three (3) years' written notice to the other signatories; all subject to the provisions of Schedule 1.11 attached and rade a part hereof.

14.2 The rip, hts and oblia,ations created by this AGREEME;T and all supplenente thereto shall enure to and binl the suc c t. cor: and a, signs of the respective signatoriet hereto, provided, however, that they shall not be as;igned by any signatory viti,out the written censent of the other signatories unless the assignee concurrently acquires r,ubstantially all of the electric oper at ing propert ies of the as ;igner. 1548 152 Except as hereinahove provided, the termn and conditions of the AGREF!U:!;T : hall ret :ain in full force and effect.

• Added hv 6 '15/ / 7 So > iienent .

Page 1 of 1 3 SCllEDULE 1.I1

%)

losued: April 1, 1974 Effective: June 1, 1974 TER:!IIIATIO:. '.ND WITl!DR.WAL (a) Upon termination of this AGREEMENT, final settlement for obligations under Article 6 shall include the accounting for the period ending with Friday of the last calendar week for which the AGREEMENT is effective.

(b) Obligationc uader Article 6 of a signatory hereto withdrawing fro:a this AGREEMENT in accordance with Section 14.1 shall continue through the period ending with Friday of the last calendar ucek of the Plan-ning Period in which such withdrawal is effective.

D 1548 153 "0 3 [f&%Q

Page 1 of 4 SCHEDULE 2.01 Issued: April 1, 1974 Effective: June 1, 1974 FORECAST REQUIEE!!ENTS OF THE INTERCON' ECTIO!!

(a) Section 6.1 of this AGREEMENT provides that Forecast Requirements for cicctric generating capacity of THE II;TERCON::ECTION nhall be determined for specified Planning Periods and be equitably shared anong the Parties liereto. The Forecast Requirements of THE INTER-CONNECTION and the equitable shares thereof shall be expressed in cegawatts.

(b) The MANAGEMENT CC?i1TTEE shall take determinations of the Forecast Requirements of THE I!!TERCO:,NECTION for all of the Plannng Periods included in the composite long-range plan of THE INTERCO,NECTION caintained by the PLANNING AND E::GII:EERII:C COMMITTEE in accordance with Section 4.4 of this AGREEMENT. The reco nendations of the PLANNING AND ENGINEERING COMMITTEE submitted for consideration of the liANAGE!!E ;T CO.t!ITTEE in connection with such determinations shall be cade in accordance with the guidelines set forth in Schedule 2.11 or revision thereof.

Forecast Requiretants shall be determined annually before April 30.

Any o f such Forecast ncquirements nay be revised froa: time to time by the ItAMAGEMENT COMhlTIZE, except that, unless otherwise agreed by the IfANAGEMENT C0:!MITTEE, the Forecast Requirenents of Tl!E INTERCC: NECTION covering the next three full Planning Periods follcwing suc- annual determination shall be considered fira and not subject to redetc.rnina-

) tion thereafter.

1548 154

Page 2 of 4 SCIIEDULE 2.01 (c) Each Forecast Requirement of Tile I!iTERCON:lECTIO!i determined under paragraph (b) hereof shall 'oe allocated in equitabic shares among the Parties Hereto in accordance with Schedule 2.21 or revision thereof.

(d) Each Party llereto shall submit to the MA!!ACEMEllT C0iMITTEE its plans for carrying the share (hcreinaf ter called Forecast Obligation) of the Forecast Requirement allocated to it for each Planning Period under paragraph (c) hereof, through:

(1) installation of generating capacity; and (2) purchases of generating capacity and energy, independent of this ACstEEME!!T, from a Party llereto or others not party of this AGREE-lie!T; and (3) purchases of additional required capacity from other Parties IIereto in accordance with paragraph (e) hereof at the rates specified in Schedule 4.01 or revisions thereof in ef fect at the tirae the service is supplied.

Capacity planned to be installed by a Party llereto af ter the Leginning

-~

~ of in Planning Period may be used to satisfy its Forecast Obligation in the portion of the Planning Period during which such capacity is scheduled to be in service. The plans of each Party l!creto shall also indicate the nature and current status of connitments with respect to etich addition, retirement and sale or purchase of capacity included in its plans. The !!A::AGEMEliT COMMITTEE shall reviev the adequacy of the submittals hereunder both as to timing and nagnitude.

O 1548 155

',. *l, .

Page 3 of 4 O SCl{EDULE 2.01 (c) Unless otherwise agreed by the !L\NAGEMENT COMMITTEE, the plans cubmitted by each Party liereto under parac,raph (d) for a Planning Period shall be considered a firn commitment as of a date two years prior to the beginning of such Planning Period. Planned purchases of capacity provided under subparagraph (3) thereof shall he from Parties

!!creto which have planned Systen Capacities in excess of their respec-tive Forecast Obligations. The planned sale by each such supplying Party llereto shall be deterrained by allocation in direct proportion to the anounts of such forecast in excess as of the time such commitments are nade by the purchasing Party llereto.

Such planned sales shall thereupon likewi.se be considered fitu committents of the supplyi.ng Parties !!creto, provided, however, that when the actual Systea Capacity of a Party llereto during any portion of the Plannin;; Period is less than its planned System Capacity for the same portion of the Planning Period, planned sales and purchases for such portion of the Planning Period shall be linited or increased as provided in (f), (g) and (h) below. Such adjusted planned sales and purchases shall thereupon be used in the determination of Contract Capacities.

(f) The adjusted planned purchase of any Party llereto shall be the amount by which the smaller of its planned or actual System Capacity ir de-ficient in cerparison eith its Forecast Obligation.

(g) Idjusted planned purchases of capacity as provided in ( f) shall be ap-portioned to and supplied by other Parties !!e re t o to the extent that the smaller of their planned or actual Systen Capacity exceeds their respective Forecast Obligations.

...u,..s,. -

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Page 4 of 4 SCliEDULE 2.01 (h) If the sum of the excesses determined in (g) is less than the sua of the deficiencies determined in (fi, then the adjusted planned sales shall be the respective excesses of the supplying Parties tiereto and the adjusted planned purchases shall be the sua of the excesses determined in (g) al-located in proportion to the deficiencies determined in (f).

1548 157 D

Page 1 of 2 SCllEDULE 2.11 Issued: April 1, 1974 Effective: June 1, 1974 CUIDELINES FOR CALCLATION OF FO: ECAST REQUIR0!ENTS OF Tite INTE!:CO:;';ECTIO:.

(a) By application of suitable probability tethods to appropriate data and forecasts for TliC INTERCONNECTION, the Forecast Requirements for elec-tric generating capacity of Tl!E I::TERCON::ECTION shall be calculated for specified Planning Perieds as the amounts of capacity which provide an acceptable level of reliability.

(b) The calculations of Forecast Requirements by the PLANNING AND E!;GINEER-ING CO iMITTEE, as called for in Section 3.5 (iii) and referred to in Section 6.1 of this AGREEMENT, shall consider the following data and

-' forecasts for T!!E INTERCONNECTION and such additional data and forecasts as are found necessary to meet changes in method of computation or in cystem conditions:

(1) Estimates of scener and winter peak loads for each Plannit.g Period as specified in Schedule 2.211, based on estimates for each Systen prepared by the respective Parties IIereto reficcting a 50P. proba-bility of occurrence and on succer peak diversities determined by the PLANNING AND ENGINEERING CO:!:!ITTEE from recent experience, (2) Es tinates of se n:;cnal load shape which are consistent with forecast averages of 52 weekly peak loads prepared by the Parties !!creto for their respective Systems.

(3) Variability of loads within each week, due to weather and other re-curring and random factors, as derernined by the FLANNING AND ENCI-IIEERING COM:llT1EE.

Page 2 of 2 SC11EDULE 2.11 r]s

(

(4) Unit sizes and types for both existing and proposed units.

(5) Forced outage rates for existing nature units, as deternined by the PLANNING AND ESCINEERISC C0:0:ITTEE from recent experience, and for iemature and proposed units based upon forecast rates rclated to

~

unit type, size and other pertinent characteristics.

(6) Planned and eaintenance outages of generating units as determined by the PLANNING AND ENGINEERING COMMITTEE, based on forecasts sub-nitted by the Parties !!creto for their respective Systees.

(7) liiscellaneous adjustments to Systcm Capacity due to all causes, as determined by the OPERATING COMMITTEE, based on forecasts submitted by the Parties !!creto for their respective Systens.

(8) Intercennections with other areas and the capacity available as the

(} result of such interconnections, as limited by transmission and the probable availability of generation in excess of load requirements in cuch areas.

1548 159

)

. ,' . s -

Page 1 of 2

] SCl!EDULE 2.21

~J Issued: April 1. 1974 Effective: June 1, 1974 ALLOCATION OF FO!,'ECAST REOUIREMENTS TO PARTIES IIEEER (n) The Forecast Requirenent of Tl!E INTERCONNECTION shall be allocated to the Parties !!ereto in accordance with this schedule.

(b) For cny Planning Period, the Forecast Obligation of a Party !!creto shall be calculated as follows:

. . r Forecast Obligation = P x (1 + R+F+U+DT100 /

Where:

P = the forecast diversified Planning Period peak of the Party

!!creto, in negawatts, determined in accordance with Schedule 2.211 hereof;

]

R = the cargin of the Forecast Requirccent for the Planning Period over the forecast Planning Period peak of TliE INTERCONNECTION, in percent of such Planning Period peak; F = the forced outage rate adjustment, in percent, determined in accord.?nce with Schedule 2.212 hereof; U = the large unit adjustment, in percent, determined in accordance with Schedule 2.213 hereof; D = the load drop adjustment, in percent, detencined in accordance with Schedule 2.214 hereof.

(c) It is recogni.ed that changing conditions and improvements in techniques may require fron tine to tice the addition of other factors in the abcve equation and the revision or deletion of factors currently included there-

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.., in. If, in the opinion of a Party itereto, any such chanc,e is r e'lu i re d , such 1548 160

Page 2 of 2 SCliEDUI.E 2.21 Party llereto shall request that the MANAGEMENT COMMITTEE have the matter studied and a recomm ndation made. Upon approval of a change by the MANAGEMENT COMMITTEE, this schedule and related subschedules shall be appropriately revised and supplemented and chall thereupon be made effective.

(d) If, during any portion of a Planning Period for which capacity commit-cents have been nade in accordance with Schedule 2.01 (c), the Forecast Rcquirement of IllE INTERCONNECTION exceeds the sun of the System Capa-citics expected to be available on THE INTERC01:NECTION, the Forecast Requircaent of Ti!E INTEECONNECTION as determined in Schedule 2.01 (b) shall ba reduced for that portion of the Planning Period to such sun.

The Forecast Obligation of cach Party licreto shall be reduced to equal (1) its forecast diversified Planning Period peak plun (2) the product of a reduction ratio and the difference between its Forecast Obligation as deternined under paragraph (b) hereof and its forecast diversified Planning Period peak. Such reduction ratio shall be (1) the difference between tbc sun of the System Capacities expected to be availabic en Tile INTERCONNECTION and the forecast Planning Period peak of Tile INTER-CONNECTION divided by (2) the difference between the Forecast Require-ment of Tile INTERCONNECTION as determined in Schedule 2.01 (b) and such Planning Period peak.

(c) If the loads of any Party liereto contain elements for which such Party IIe re to is not required to furnish reserve capacity, suitable adjustment shall be nade with respect to the capacity obligations of such Party llcreto as approved by the MANAGEMENT COMMITTEE.

) 1548 161

.[. - ,' -

Page 1 of 2 SCliEDUI.E 2.211 O

Issued: April 1, 1974 Effective- June 1, 1974 FORECAST Di .'E 'SITIED PI 's :;I :G PERIOD PEAES (P)

(a) The forecast diversified Planning Period peaks of the Parties !!ereto (P) chall be determined in accordance with this schedule so long as the fore-cast Planning Period peak of Tl!E lilTERCO::5ECTIO:: is a summer - ak.

(b) For the purposes of this schedule, the forecast naximum one hour load of a System during the period June through September of a Planning Period shall be its summer peak, and the forecast anximum one hour load during the period Deccaber through March of the Planning Period shall be its winter peak.

(c) The forecast diversified Planning Period peak of a Party !!creto shall be itn Planning Period peak as defined herein reduced by its Planning Period pech diversity entitler.ent and its sume.er peak diversity entitlement.

(d) In a Planning Period each Party llcreto shall be classified as either a sur.mer peaking System or a winter peaking System. In the deteruination of such classification the winter peck of each Party llcreto shall be re-duced by the excess of its total capability under winter operating condi-tions. For the purpose of this schedule, such total capahilities shall be defined as the respective !;ct Capabilities of its units planned to be in service as of December 1, adjusted for fina capacity purchases and cales in the Decenher through March period, independent of this AGREE".E;T, and reduced by the limitations specified in 1.1 (d), such :et Capability adjustments and limitations being respectively deternined for winter and

, sur.mer operating contiitions. A Party liereto having a summer peak which

)

excceds itr winter peak so reduced :, hall be classified as a summer peaking 1548 162

Page 2 of 2 SCHEDULE 2.211 System, and its Planning Period peak shall be equal to such suuner peak. A Party !!creto which has a winter peak so reduced which exceeds its sur:mer peak shall be classified as a winter peaking Systen. The Planning Period peak of a vinter peaking System shall be equal to the average of (i) its reduced vinter peak for the Planning Period and (ii) the greater of its sunner peak for the Planning Period or its reduced winter peak for the Planning Period inatediately precediaa.

(c) The Planning Period peak diversity entitle:.cnt of a winter peaking Systen shall be one half the difference between its Planning Period peak and its sunner peak. The Planning Period peak diversity entitle-cent of a sumuer peaking Systen shall be the ratio of the dif ference between its sure.er peak and its reduced winter peak to the sun of such

')

~,

differenceu for all the suener peaking Systems nultiplied by the sua of the Planning Period peak diversity entitlements of the winter peaking Systems. In the event that the total of the Planning Period peak diversity entitlements of all Parties Hereto so determincd exceeds the sun of the dif ferences between the suener peaks and rc.duced winter peaks of the sumner peaking Systems, such entiticments shall be proportionately reduced to equal in total such lower sum.

(f) The sunmer peak diversity encitlenent of a Party Hereto shall be the ratio of it s suturer peak to the sum of the suuter pear:s of all Parties

!!creto cultiplied by the dif ference between such sun of u mer peakr and the forecast Planning Period peak of Tilt 1::TEliCO:;;,ECTIO:4 1548 163 3

Page 1 of 3 SCllEDULE 2.212 P.EVISION NO. 1 (Supersedes Initial Schedule Issued April 1, 1974)

Incued: June 15, 1977 Effective: August 1, 1977 TORCED OUTAGE RATF ADJUSTM9;TS (F)

(a) Forced outage rate adjustments of the Parties !!cretc (F) in a Planning Period shall be deternined in accordance with this schedule.

(b) The forced outage rate adjusteent shall be the amount, in percent, by which the average forced outage rate of a Party llereto is more or lecc than the averar,e forced cutage race of Tl!E INTERCONNECTION, raultiplied by a factor. If rare, such adjustnent shall be considered

/ plus (+) in the equation in Schedule 2.21 (b); if less, such adjustnent shall be considered ninus (-) in such equation.

(c) The factor in (b) represents the change in requirement for capacity installed on Tile I!;TERCONNECTIO:1 in percent of peak load for every one percent change in averaEe forced outage rate on Tile INTERCONNECTICN.

Such relationship shall be regularly reviewed (initially annually) by the PLA!;NING AND ENGI::EERING Com!ITTEE in connection with its calcula-tions of Forecast Requirements et Tile INTERCONNECTION, usin;; cethods and data ecnsistent with those utilir.ed therein. If such review indicates a change in the relationship, the PLANNING AND ENGINEERING COMMITTEE shall report its finding and recon =endation to the !!ANAGE!!ENT COEtITTEE. Upon approval by the MANAGE:!ENT CO:NITTEE, changes in 1548 164 0

ACCEPTED BY FPC EITEC 1 IVE SEPTF?ttER 1, 1977

Page 2 of 3 SCIIEDULE 2.212 the factor shall be made ef fective only as to Planning Perieds for which capacity cor:mitments have not yet been made in ac ordance with Schedule 2.01 (c).

(d) The average forced outage rate of a Party llereto in a Planning Period chall be the average of the forced outage rates, weighted for unit size and expected time in service, attributabic to all of its generating units planned to be in service including capacity purchased and excluding capacity sold independent of this AGREEMENT. Such rate shall also include the adjur,tcent, if any, for systen capacity unavailable due to energy liuitations deten,ined in accordance with definitions and criteria speci fied by the OPEPATING CO '11TTEE J and approved by the MANAGEMENT COMMITTEE. For the purposes of this Schedule, the average forced 3 outagc rate of Ti!E INTERCO:;NECTION shall be the average of the average J

forced outage rates of all the Parties !!creto weighted by their respective diversified Planning Period peaks. All rates shall be in percent.

(c) The forced outage rate of a unit not yet in service or which has been in service less than ene full calendar year at the tine of forecast shall be the mature rate for that size and type of unit, as estimated and used by the PLANNING AND ENGINEERING COMMITTEE in the calculation of the Fortcast Requirer.ent of TllE INTERCONNECTION.

(f) The forced outage rate of a unit in service three or more full calendar years at the tire of fcrecast shall be the average rate experienced by such unit during the three nost recent calendar years, llistorical data t. hall 1e based on official reports of the Parties licreto under rules and practices approved by both the OPERATING C0!P1ITTEE and the

) Pl.ANNING AND ENGINEERING COMMITTEE.

1548 163

Page 3 of 3 SCl!EDULE 2.212

}

(g) The forced outage rate of a unit in service at least one full calendar year but less than three full calendar years at the time of the forecast shall be determined as follows:

Full Calendar Years of Service 1 One-third the rate experienced during the calendar year, plus two-thirds the nature rate.

2 Two-thirds the average rate expericaced during the two calendar years, plus one-third the mature rate.

I548 166

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f. '

Page 1 of 2 SCl!EDULE 2.213

{a) s-REVISION NO. 1 (Supersedes Initial Schedule Issued April 1, 1974)

Issued: June 15, 1977 Effective: August 1, 1977

_LARCE UNIT ADJUST"ENTS ( l' )

(a) Large unit adjustments of the Parties tiereto (U) in a Planning Period shall be determined in accordance with this schedule whenever the Net Capability of units included in the planned System Capacity of a Party

!!creto as of Septe=ber 30 of the Planning Period is in excess of the specified size of unit defined herein.

(b) The large unit adjustment shall be a specified percent of the amount,

,- in r.cgcuatto, by which such excess of a Party IIereto is more or less than a proportionate part of the total of such excesses of all Parties lercto, allocated to cach Party llereto in accordance with the ratio of its forecast diversified Planning Period peak to the Planning Period peak of Tile INTERCONNECTION. If more, such adjustnent shall be considered plus (+) in the equatien in Schedule 2.21 (b); if Icss, such adjustment shall be considered minus (-) in such equation. For use in such equation, the adjustncnt of a Party !!ereto shall be expresscd in percent of its forecast diversified Planning Period peak.

The specified size of unit initally shall be 900 Mk'.

(c) Vhenever through ownership or purchase the System Capacity of a Party !!creto includes a portion of the capability of a unit larger than the specified si:c, the cegawatts assigned to the Party llereto

~S

s. 1548 167 ACCEPTED BY FPC EFFECTI"E SEPTEMBER 1, 1977

Page 2 of 2 SCllEDULE 2.213 0

with respect to the capability of such unit in execcs of the specified size shall be in proportion to the ownership or purchase by the Party lle re to .

(d) The percentage factor in ite:a (b) represents the effect on the re-quirenent for capacity to be installed on Tile II;TERC0!!:;ECTIO:I of the operation of units larger than the specified size, as planned at the time this Schedule initially beco:aus effective. Such factor, and the specified size of unit, chall be regularly reviewed (initially annually) by the l'LA!;:ill;G A:;D E!;CI!;EERI!;G COMMITTEE in connection with its calculctions of Fotecast ikquirements of Tile I!;TERCC::!iECTIO:1, using methods and data consistent with those utilized therein. If such review indicates a change in the effect on capacity requirements, or that the specified size of unit should be increased, the PLA :: I!!C AND E!!GI!?EERI:C CO:'MITTEF, shall report its findin;; and reco:r.mendation to the MA:;ACEME!!T COMMITTEE. Upon approval by the MA!;AGEMEt;T COMMITTEE, changes in the factor, the specified size of unit, or both shall be made offective only as to Planning Periods for which capacity co:amit-ments have not yet been nade in accordance with Schedule 2.01 (c).

1548 168 O

. . Page 1 of 2 SCIIEDULE 2.214 REVISIO:i NO. 1 (Supersedes Initial Schedule Issued. April 1, 1974)

Iscued: June 15, 1977 Ef fective: August 1, 1977 LOAD DROP ADJUSTMENTS (D)

(a) Load drop adjusteents (D) of the parties liereto in a Planning Period shall be deternined in accordance with this schedule.

(b) A Party llereto shall be considered to have a need for load drop when in a Planning Period the ratio (load drop ratio) of the algebraic sum of (1) the forecast average of its 52 weekly peak loads, (2) the forecast average of its Unavailable Capability in each week because of planned m

and maintenance outages, and (3) the forecast average of its aiscella-neous cdjustments, to its Planning Period peak, is greater than the load drop ratio for T!!E INTERCONNECTION.

(c) For the purposes of this schedule, the load drop ratio for TliE INTER-CONNECT 10:1 shall be the average of the load drop ratios of all the Parties Ifereto weighed by their respective Planning Peried peaks.

(d) The load drop adjustment, expressed in megawatts, of a Party llereto having a need for load drcp shall be (1) the increase in percert recerve requirement on Tl!E INTERCONNECTION corresponding to the load drop ratio of such Party Hereto, less the increase in percent reserve requirement on Tile INTERCONNECTION corresponding to the load drop ratio of Tile INTERCONNECTION, cultiplied by (fT l t. , Planning Period peak of the Party IIereto, and (3) 0.5, tr -.ti. t a sharing of such x needs and the supplying thereof auong t>e P wt o; !!e ret o. For each

.)

1548 169 AccePr,:D m Pee EFFECTIVE SEPTEMB!:R 1, 1977

,..,s .

Page 2 of 2 SCllEDULE 2.214 J

Planning Period, the relationship of increases in percent reserve requirement 01 TliE INTERCONNECTION to various load drop ratios of Tile INTERCO:CiECTION shall be determined by the PLANNING AND ENGINFFRING COMMITTEE in connection with its calculation of the Forecast Requirecient of T!!E INTERCONNECTION for the Planning Period, using methods and data consistent with those utilized therein. The PLANNING AND ENGINEERING CONMITTEE shall report such determination and its recommendation to the MAN /. CEMENT COF'1ITTEE. Upon approval by the MANAGEMENT COMMITTEE, ch,anges in the relationship shall be made ef fective only cs to Planning Periods for which capacity commitnents have not been nade in accordance with Schedule 2.01(c).

(c) The total of the load drop adjustt:ents of Par;les llcreto have need for

) loac' drop (total adjustment) shc11 be considered as supplied by the Parties licreto having load drop ratios equal to or less than the load drop ratio of Tile INTERCO:d.ECTION.

(f) The load drop adjustcent of a Party llereto supplying load drop shall be the total adjustment times the ratio of (1) the product of the Planning

~

Period peak of such Party l!creto and the excess of the load drop ratio of Tile INTERC0:U.ECTION over the load drop ratio of such Party llereto, to (2) the sun of such products of all Parties Hereto supplying load drop.

(g) The load drop adjustments, as expressed in megawatts, whall be converted to percentages, for use in the equation in Schedula 2.21(b), by dividing the respect ive negawat t amounts by the diversified Planning Period peaks of the several Parties llereto. Load drop adjuu t te.ent s o f Parties !!creto needing load drop shall be considered plus (+), and adjustrent s o f the Par tie ,1:ereto supplying load drop shall be con-sidered ninus (~) in such equatice. 1548 170

Page 1 of 3 SCllEDULE 3.01 lesued: April 1, 1974 Ef fective: June 1,1974 ACCOU:;TED-FOR REQUIRE!!E:iTS

/.1:D OBLIGATIO::S (a) Section 6.3'of this AGREE:-:E::T provides that an Accounted-For Requirement for electric generating capacity of T!!E I!!TERCO::';ECTIO!? shall be deter-nined for each Planning Period and be equitably shared among the Parties liereto. The Accounted-For Requirement of Tile I!JTERCO:;!!ECTIO!! as deter-nined in paragraph (c) hereof and the equitable shares thereof shall be expressed in negawatts.

(b) The equitable share (herein called Accounted-For Obligation) for each Party !!ereto of the Accounted-For Requirement of Tile INTERCO'.;;;ECTION shall be equal to its Forecast Obligation for a Planning Period, plus an c.djuatment equal to the algebraic sura of the following for such Planning Period:

('l ) The actual average of its 52 weekly peak loads during the Planning Period ninus the forecast average of its 52 ueekly peak loads; and (2) The acutal average of its 52 weekly Unavailable Capabilities during the Planning Period minus the forecast average of its 52 weekly Unavailable Capabilities, all cultiplied by 0.5. The forecast averrge of its 52 weekly Unavailable Capabilities shall be deter-nined as the algebraic sum of:

(i) forecast average System Capacity during the Planning Period times its forecast averare forced outage rate, (ii) the forecast average of its Unavailable Capability in each

)

./ veek because of planned and maintenance outages, and 1548 17'

Page 2 of 3 SCllEDULE 3.01 O

(iii) the forecast average of its t:iscellaneous adjustments in each week.

The factor 0.5 cay be changed from time to ti=c by the MANACEMENT C010!ITTEE to reflect current conditions.

(c) The Accounted-For Requirement for electric generating capacity of Tile INTERCONNECTION shall be the sum of the Accounted-For Obligations of the Parties licreto.

(d) In the event that the Accounted-For Requirement of TIIE INTERCONNECTION as detertined in paragraph (c) hereof is greater than the suc of the cetual Contract Capacities of the Parties liereto during any portion of a Planning Period, the Accounted-For-Requircaent of Tile INTERCONNECTION shall be reduced to equal such sum for that portion. The Accounted-For Obligation of each Party liereto shall be reduced to equal (1) its forecast diversified Planning Period peak plus (2) the product of a reduction ratio and the dif ference between its Accounted-For Obligation as deteruined under paragraph (b) hereof and its forecast diversified Planning Period peak. Such reduction ratio shall be (1) the dif ference between the sum of the actual Contract Capacities of the Parties llercto and the forecast Planning Period peak of Tile INTERCONNECTION divided by (2) the difference between the Accounted-For Requirement of

, Tile INTERCO:4,ECTION as determined in paragraph (c) hereof and such Planning Period peak.

(e) The Accounted-For Excess of a Party IIereto shall be the amount by which its actual Contract Capacity exceeds its Accounted-For Obligation.

The Accounted-For Deficiency of a Party !!ereto shall be the anount by which its Accounted-For Obligation exceeds its actual Contract Capacity.

jCA^ , a

Page 3 of 3 SC11EDULE 3.01 (f) Those Parties licreto that have Accounted-For Deficiencies during any portion of a Planning Period shall make payments to those that have Accounted-For Excesses during that portion in proportion to the re-spective Accounted-For Excesses, at the rate provided for in Schedule 4.01.

1548 173 e

e O -

e e

O O

Penanylv. ail : th u .h rney-Ma ylanel Page 1 of 2

- Intacuiunetiuo (r.fM) Agreta.nt.

SClll'ht!I.l. 4.01 i

i IW.V l '; ) ON lm . 2 (Supersedes 1:ev i .sion !!o. 1 1ssued April 11, 1977)

Issued:  !! arch 15, 1979 Ef fective: June 1,1979 llATES AND P.W!!MTS FOP. COMTilACT CAPACITY

' ' Payment by a Party !!cret o for planned purchases of capacity under Schedule 2.01 and for Accounted-Por Doficiencies under Schedule 3.01 shall be based on a rate deteruincd annually by the I!AMAGU!Et;T CO:CU'ITEE. The annual rate effect.ive June 1, 1979 chall be $25.55 per kilowatt .

(b) Planned purchases shall be determined for each portion of a Planning Period, measured in days, as required by changes in planned and actual Syst.em 1

Capacities. ' Payments shall be made by Parties IIereto that have adjusted planned purchases t.o those supplying Parties llereto that have adjusted planned sales in that portion at a daily rate equal to 1/365 of the rate s,pecified in (a).

(c) Accounted-Por Deficiencies and Excesses shall be determined for each portion of a Planning Period, measured in days, as required by changes in Accounted-For Obligations or actual Contract Capacities. Payments shall be made by the Parties !!creto that have Accounted-For Deficicncies to those that have Accounted-For Excesses in that portion at a daily rate equal to 1/365 of the rate speci fied in (a) .

(d) Billings under (b) and (c), and under Schedules 5.01 (c) and (d) and 5.02 (c) and (d), shalI be monthly with respect to the portion or portions of the Planning Period in a moath. Such bil1ings shalI be kept. current through estimat.es made during the Planning Peried, frw Liue to t.iine as required by

@ changes in actual System and contract capacitier,, or quarterly as required by

s 1548 174

, , Par,c 2 uf 2 -

SCll :! Poll.1: 4.01.

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Account ed' For Ohl ir.a t ionr..

A11 c:;t Ji.iat r d comput at ions and payments shall be revi.: cd as resjui red at the end of Llir- l'l annint', l'er.iod to reflec t ac tual conditions.

1548 175 y

4 dd w .!

D m '1 ' b '3'l 1 D A uU c .S.N =

Page 1 of 2

() SCHEDULE 5.01 REVISION NO. 1 (Supercedes Initial Schedule Issued April 1, 1974)

Issued: June 15, 1977 Ef fec t ive: August 1, 1977 ALLOCATION AMONG PARTIES IIERETO OF SHORT-TERM PO*iER RESERVATIONS (a) Allocation among Parties IIereto of Short-Term Power reservations under agreenents between the Parties Hereto and others not party to the AGREEMENT, and the accounting and billing within THE INTERC0"NECTION in connection with such reservations, shall be made in accordance with this schedule.

(b) Operating capacity and energy transactions associated with such reserva-tions shall be acccunted for and billed within T!!E INTERCONNECTIOS in accordance with other schedules of this AGREEMENT.

(c) When the Parties Hereto reserve power from others during a Planning Period, each Party Hereto shall pay to the billing agent its share of the charges with respect to such reservation (exclusive of charges covered by (b) hereof) in proportion to its Accounted-For Obligation (as the same may be adjusted in accordance with Schedule 2.21(c)) in that portion of the Planning Period.

(d) Uhen others reserve power froa the Parties Hereto during a Planning Period, such reservation shall be allocated among those Parties !!creto liaving Accounted-l'or Excesses not sold to meet Accounted-For Deficiencies in that portion of the Planning Period in proportion to such unsold Accounted-Far Excesses; provided, however, that the portion of such reservation, if any, which cannot be so allocated shall be allocated 1548 176 ACCEPTED BY FPC l EFFECTIVE SEPTEMBER 1, 1977 .

Page 2 of 2 SCIIEDULE 5.01 among all Parties licreto in proportion to their respective actual Contract Capacities, after adjusteents for sales already allocated under this paragraph and for sales and purchases under Schedule 3.01.

(c) k' hen others reserve power from the parties llereto during a Planning Period, payments received with respect to such reservation (exclusive of payments covered by (b) hereof) shall be devided into tuo parts; (i) the part representing payment for generating capac-ity, and (ii) the part representing paynent for transmission services, the division being 70% for generating capacicy .ud 30% for transmission services, subject to review from tire-to-time as the !!A!? ACE!{E!;T Com!ITTEE shall direct. Part (i) of the paynents shall be allocated among the Parties licreto in the sate proportions as determined in (d). Part (ii) of the paycents shall be allocated among the Parties Hereto as provided in Schedule 5.03. Each Party llcreto shall receive from the billing agent, its share of the payments as so allocated.

.1548 177 O

Page 1 of 2 SCl!EDULE 5.02 REVISION NO. 1 (Supersedes Initial Schedule Issued June 26, 1974)

Issued: June 15, 1977 E f fec t ive: August 1, 1977 ALLOCATION AMONC PARTIES IIERETO OF EXTENDED EMERCENCY AND SUPPLEMENTAL OPERATING CAPACITY PAYME'!TS AND CIL\RCES (a) Allocation among Parties liereto of those portions of the payments and charges for Extended Emergency and Supplimental operating capacity, as defined in agreecents between the Parties Hereto and others, which are determined at specified rates under such agreenents, and the billing within THE INTERCONNECTION in connection therewich, shall be made in accordance with this schedule.

(b) Those portions of such payments and charges which are for operating O capacity and energy shall be accounted for and billed within I!!E INTERCONNECTION in accordance with other schedules of this AGREEMENT.

(c) When the Parties Hereto purchase Extended Emergency and Supplemental operating capacity from others during a Planning Period, each Party Hereto shall pay to the billing agent a share of the portions described in (a) of the charges with respect to such transactions in proportion to its Accounted-For Obligation (as the same may be adjusted in accor-dance with Schedule 2.21(c)) in that portion of the Planning Period in which the services were purchased.

(d) When others purchase Extended Energency and Supplemental operating capacity from the Parties liereto during a Planning Period, the portion described in (a) of the payments with respect to such transactions shall be divided into two parts: (i) the part representing payment 1548 178

,.,s ,

Page 2 of 2 SCllEDULE 5.02 for generating capacity and (ii) the part representing payment for transmission services, the division being 70% for generating capacity and 30% for transmission services, subject to review from tine to time as the MANAGEME:;T COMMITTEE shall direct. Part (i) of the payments shall be allocated among the Parties flereto in proportion to their respective actual Contract Capacities in that portion of the Planning Period in which the services were provided, after adjustments fo r sales and purchases under Schedules 3.01 and 5.01. Part (ii) of the payments shall be allocated among the Parties liereto as provided in Schedule 5.03. Each Party !!ereto shall receive from the billing agent its share of the payments as so allocated.

O 1548 179 O

Page 1 of 4 SCHEDULE 5.03 Iscued: June 26, 1974 Ef fec tive: August 1, 1974 ALLOCATION AMONG PARTIES HERETO OF TRANSMISSION SERVICE CHARCES FOR CAPAICTY TRANSACTIONS (a) Allocation among Parties Hereto of transmission service charges related to, or part of capacity transactions under agreements between the Parties Hereto and others not party to the AGREEMENT, and the billing within THE INTERCONNECTION in connection therewith, shall be made in accordance with this schedule..

_-_ (b) When others provide transmission services to the Parties Hereto, each Party Hereto shall pay to the billing agent a share of the charges for such service in proportion to its Accounted-For Obligation in that por-(} tion of the Planning Period in which the services were provided.

(c) When the Parties Hereto provide transmission services to others, each Party Hereto shall receive from the billing agent a share of payments received with respect to such transmission service charges. The share allocated to each Party Hereto shall be proportioned to the investment of each in specified bulk power transmission facilities, appropriately adjusted for other arrangenents it may have involving its responsibili-ties for investment in any of such facilities. The determination of such shares shall be made in accordance with the procedures set forth

.in Exhibit A, attached hereto. Such procedures shall be reviewed fron time to time and shall be revised, if required, as agreed by the IMNAGEMENT COMMITTEE.

(d) For the purpose of this schedule, the investment of each Party !!creto (O

_/ in specified bulk power transmission facilities shall be that classified 1548 180

Page 2 of 4 SCl!EDULE 5.03 as plant in service on its books of account, initially as of Deceeber 31, 1973; and the transmission charge allocation ratio be re-vised annually on June 1 each year to reflect such investments as of the previous December 31.

1548 181 O

S

Page 3 of 4 SCllEDULE 5.03 EXIIIBIT A DETER!fINATION OF IN'/EST!!ENTS IN BULK POWER TRANS!!1SSION FACILITIES OF PARTIES IIERETO AND OF TRANS!!ISSION ALLOCATION RATIOS For purposes of this Schedule, the bulk power transmission facilities of the Parties llereto shall be all facilities operated at 110 kv or higher voltage levels, but not including facilitics used for, or related to step-down transformation to voltages below 110 kv. The extent of the investment in such specified bulk power transmission facilitics shall be determined from the transmission investments recorded in the annual Form 1 reports to the Federal Power Commission and other appropriate company records, in accordance vi~th the following procedure:

1. Tabulate for each Party IIcreto:

(a) Allocate investment responsibilitics in the jointly planned systems 500 kv and above, such as the Keystone-Conemaugh transmission system, as determined by the participation percentages under the relevant agreements.

(b) Other investments in facilitics 500 kv and above not subject to allocation as part of a system included in (a).

(c) Investment in transmission lines operated at 110 to 345 kv.

(d) Total reported investment in transmission lines, exclusive of 500 kv and above.

~

(c) Investnent in balance of reported transmission plant (equal to total reported transmission plant investment less item (d) and less investment in all owned facilities 500 kv and above).

1548 182

Page 4 of 4

() SCHEDULE 5.03 EXHIBIT A

( f) Adjustments (plus or minus) of'.investaant responsibility on a multi party basis as agreed and reported to PJM by the in-volved Parties Hereto.

2. Determine the portion of iten 1(e) that is applicable to 110 kv or higher voltages, by nultiplying 1(c) by 75* times the ratio of item 1(c) to iten 1(d).

3. Deternine the bulk power transmission investment for each Party Hereto by adding items 1(a), (b), (c), (f) and 2.

4. Determine the transmission charge allocation ratio for each Party Hereto by dividing its item 3 by the rum of the corresponding amounts for all Parties I!ereto.

J l548 183 O

O

Page 1 of 2 SCHEDUI.E 5.04 '

EN TO Tile PJM AGREEMENT n

Issued: December 12, 1977 Effective: January 1,1978 ALLOCATION DIONG PARTIES HERETO OF PAYMENTS AND CHARGES FOR CONSERVATION ENERGY (a) Agreements between the Parties !!creto, acting as a group, and others not party to the AGREEMENT, provide for the generation and delivery of 4

Conservation Energy as defined in such agreements. Allocation among Parties IIereto of those portions of the payments and charges for Conservation Energy which are determined at specified rates under such agreements, and the billing within THE INTERCONNECTION in connection therewith, shall be made in accordance with this schedule.

- (b) Those portions of such charges by others for the generation of Conserva-h,'.

tion Energy and those portions of such payments to the Parties Hereto fcr the generatif t of Conservation Energy shall be accounted for and billed within Tile INTERCONNECTION in accordance with Schedule 7.03 of this AGREEMENT.

(c) When the Parties Hereto purchase Conservation Energy from others, each Party Hereto shall pay to the billing agent a share of the charges described in (a) in proportion to its Accounted-For Obligation (as the

, same may be adjusted in accordance with Schedule 2.21 (e)) in that portion of the Planning Period in which the energy was purchased.

(d) When others purchase Conservation Energy from the Parties IIereto, the portion of the payments described in (a) shall be divided as follows:

(1) 707. representing payment for generating capacity shall be a'llocated h) among the' Parties itereto in proportion to their respective actual Contract Capacities in that portion of the Planning Period in which the services were provided, after adjustments for sales and purchases 1548 184

Page 2 of 2

. under Schedules 3.01 and 5.01 '

(2) 307. representing payment for transmission services shall be

.s allocated as provided in Schedule 5.03.

The foregoing division of papacnts shall be reviewed from time to time and shall be revised upon approval by the MANAGEMENT COMMITTEE. Each Party Hereto shall receive from the billing agent its share of the payments as so allocated.

(c) When the Parties Hereto transmit Co'nservation Energy for others, the por-tion of the payments described in (a) shall be divided as follows:

(1) 57% representing payment for transmission services shall be allocated as provided in Schedule 5.03; (2) 127. representing payment for administrative expenses shall be allocated as provided in Schedule 9.01; e72 (3) 317. representing payment for transmission losses shall be allocated Qy; in two arts:

(A) One-third representing payment for additional losses on the 500 KV systems shall be allocated in accordance with Schedule 12.03 or revision thereof of the Extra High Voltage Transmission System (EHV) Agreement.

(B) Two-thirds representing payment for additional losses on the lower voltage transmission lines shall be allocated in proportion

' to the additional losses incurred by each Party Hereto as deter-mined by computer load flow analysis for typical transactions.

The foregoing division of payments shall be reviewed from time to time and shall be revised upon approval by the MANAGEMENT COMMITTEE. Each Party Hereto shall receive from the billing agent its share of the payments as so allocated, g}

SCHEDULE 5.05 Issued: January 19, 1979 s

72?2 Effective: April 1, 1979 Q:.1

. ALLOCATION AMONC PARTIES HERETO OF SAVINGS AND PAYMENTS RESULTINC FROM TRANSMISSION OF ECCNOMY ENERGY FOR OTHERS (a) Allocation among Parties Hereto of savings and payments accruing to PJM under agreements between the Parties Hereto and others not party to this AGREEMENT, as compensation for transmission of economy energy for others, and the accounting within THE INTERCONNECTION in connection therewith, shall be made in accordance with this schedule.

.(b) The savings accruing to PJM shall be allocated snong the Parties Hereto in proportion to their transmission investment effective for the then current revision of Schedule 5.03.

(c) Payments received by PJM for additional transmission losses incurred in transmitting economy energy for others shall be divided into two parts:

/ (1) One-third representing payment for additional losses on the (s../3.;,

500 KV systems shall be allocated in accordance with Schedule 12.03 or revision thereof cf the Extra High Voltage Trans-mission System (EHV) Agreement.

(2) Two-thirds representing payment for additional losses on the lower voltage transmission lines shall be allocated in proportion to the additional losses incurred by each Party Hereto as determined by canputer load flow analysis for typical transactions.

The foregoing division of payments shall be reviewed f raa time to time and shall be revised upon approval by the MANAGEMENT COMMITTEE.

(d) Each Party Hereto shall receive fran the billing agent its allocated

, share of savings for transmitting economy energy for others as determined in (b) and its allocated share of payments by others for transmission losses as determined in (c).

1548 186

Page 1 of 1 SCllEDULE 6.01 REVISION NO. 1 (Supersedes Initial Schedule Issued' April 15, 1976)

Issued: June 15,1977 Ef fec tive: August 1, 1977 ACCOUNTI!!C FOR REGULATING CAPABILITY (a) Section 7.1 of this ACREDIENT provides for the determination of a Regulating Capability Requirement for THE INTERCONNECTION.

(b) The total regulating capability provided by all Parties llereto to meet the Regulating Capability Requirement of THE INTERCONNECTION shall be accounted for each hour.

(c) The proportional share of such total regulating capability allocated to each Party llereto shall be determined by the ratio of (1) its concurrent Operating Capacity Obligation determined in accordance with Schedule 6.03 hereof to (2) the cum of such obligations for all Parties Hereto.

(d) A Party licreto whose regulating capability in any hour is more or less than its proportional share as determined under (c) shall be considered to have an excess or deficiency, respectively, by the amount of rwh difference.

(e) Each Party llereto that has a deficiency in any hour shall be debited and each Party !!creto that has an excess shall be credited in the Regulating Capability Account at rates deternined from time-to-time

~

by the OPERATING C0!!>!ITTEE, subject to the approval of the !!ANAGE!!ENT C01:111TTEE. Such rates shall be representative of the energy replace-c'ent costs and other variable operating costs on T!!E INTEP. CONNECTION for the particular type of equipnent operaced to provide such excess.

ACCEPTED BY FPC 3

I J EFFECTIVF SEPTDiBER 1, 1977

. .... _ _ .. ... ~ .- _

.'=

Page 1 of 1

() SCIIEDULE 6.02 Issued: June 15, 1977 E f fec tive: August 1, 1977 OPERATI!!C RESERVE RE0"IREMENT AND ALLOCATION (a) Section 7.1 of this AGREEMENT provides for the determination of an Operating Reserve Requirement for Tile INTERCONNECTION.

(b) By application of suitable probability methods to appropriate data for Tl!E INTERCO:NECTION, the operating reserve required for Tl!E INTERCONNEC-TION shall be determined by the OPERATING COMMITTEE for specified periods of a day to maintain reliability of service. Such determinations shall consider the probability of load deviations from forecast, the prob-ability of equipment malfunction or failure, the load IcVel on PJM, the time of day, and the season of the year.

(c) The OPERATING COMMITTEE shall specify from time-to-time the portion of the Operating Reserve Requirement which r.ust be synchronized to provide spinning reserve (Spinning Reserve Requirement) and the remaining portion which shall be capable of operation within specified times. - --

~~

(d) The proportional share of the Spinning Reserve Requirement of Tile INTER-CONNECTION allocated to each Party llcreto shall be determined by the ration of (1) the average of its loads at the time of TIIE INTERCON:,EC-TION PEAK LOAD EACll WEEK T0 (2) the average of Tile INTERCONNECTION peak loads cach week, all as measured during the weeks of the correspond-ing seasonal period of the preceding year. The seasonal periods shall be specified from time-to-time by the OPERATING COMMITTEE.

) 1548 188 ACCEPTED BY FPC EFFECTIVE SEPTE!!BER 1, 1977

,_.. ,. s -

Page 1 of 3 SCHEDULE 6.03 Issued: June 15, 1977 E f fec tive : August 1, 1977 ACCOUNTI!:C TOR OPERATING CAPACITY (a) For the purpose of accounting under this AGREEMENT, the Operating Capacity Obligation of each Party liereto shall be an amount of synchronized capacity equal to:

(1) During a peak period, its estimated peak load for that period, adjusted for its share of estimated load diversity ap;. lied in the determination of the estimated peak load for THE INTERCONNECTION, plus its share of the Spinning Reserve Re-quirement allocated in accordance with Schedule 6.02.

(2) During all other hours, its actual load plus its share of the Spinning Reserve Requirenent allocated in accordance with Schedule 6.02.

The time and duration of the peak periods each day shall be specified by the Of fice of THE INTERCO:JECTION.

(b) Load diversity en THE INTERCONNECTIOi, for the purpose of this schedule, chall be the remainder obtained by subtracting the estiuated peak load of Tl!E INTERCONNECTION for any period from the sum of the estimated individual System peak loads of the Parties Hereto for such period.

The preoprtional share of the estinaed load diversity on TiiE INTER-CONNECTION in any peak period allocated to each Party 11ereto shall be deternined by the same ratio as in Schedule 6.02(d).

(c) A Party Hereto whose synchronized capacity during a peak period is more or less than its obli;ation t as deternined under (a) shall be 1548 189 ACCEPTED liY FPC EFFECTIVE SEPTEMBER 1, 1977

Page 2 of 3 SCllEDULE 6.03 considered to have an excess or deficiency, respectively, by the amount of such dif ference.

(d) Each Party liereto that has a deficiency of synchronized capacity shall determine its replacement value as the avoided cost to operate availabic equipuent in amount equal to its deficiency. In the event that the capacity of available equipr.ent of a Party liereto is less than its deficiency, it shall use as the replacement value for such dif ference the ucighted average cost per kilowatt, increased by 20%, of the high-est coct capacity operated on Tile INTERCONNECTION by Parties Hereto, equal in amount of capacity to the total synchronized capacity deficien-cies of all Parties licreto for which equipment is not available to determine replacement values.

] (c) Each Party Hereto that supplies excess synchronized capacity by operat-ing cquipment for TilF INTERCONNECTION which is excess to its own re-quirecents shall determine its cost to operate such equipment and shall charge such cost in the Operating Capacity Account. In the event the total capacity of such equipment exceeds the sura of the deficiencies

-~ of the Parties !!creto, the costs for the highest cost equipnent in amount of capacity equivalent to such sum shall be charged in the Operating Capacity Account and the costs for the remaining equipment shall be charged in the Energy /.ccount.

(f) Each Party IIereto that rupplies excess synchronized capacity by operat-ing equipment for Tile INTERCONNECIJON but uses any part of such equip-ment to meet its own requirerents (incidental excess) shall charge for such excess in the Operating Capacity Account either at zero cost or in a manner crecified by the OPERATING C0"!!!TTEE. In the event the total of the deficiencies of the Parties llereto is greater than the total 1548 190

. * ' / ' *

. . Page 3 of 3 O SCllEDULE 6.03 amount of capacity operated for Tile INTERCCNNECTION by Parties licreto having excesses for which costs are charged in the Operating Capacity Account, the difference shall be allocated equally to the extent possible to the Parties licreto having incidental excesses except that the amount allocated to any Party llereto shall not exceed the amount of its incidental excess.

(g) The daily savings accruing to the Parties Hereto for the supply and receipt of operating capacity during peak periods shall be computed as the difference between (1) the total costs charged in the Operating Capacity Account for all peak periods of a day of Parties liereto having excesses and (2) the total replacement values for all peak periods of a day of the Parties licreto having deficiencies. One-half of the daily savings shall be allocated to those Parties llereto supply operating capacity in proportion to the amount of capacity so supplied, and the other half shall be allocated to those Parties liereto receiving operating capacity in proportion to the' total replacenent values of cach such Party llcreto.

(h) Each Party IIereto that has a deficiency in operating capacity during peak periods shall be debited in the Operating Capacity Account its total replacement value for all peak periods of the day less its allo-cated share of the daily savings. Each Party llereto that supplies operating capacity during peak periods shall be credited in the Operating Capacity Account for its total cost for all peak periods of the day plus its allocated share of the daily savings.

(i) All debits and credits arising from a deficiency in the Operating d Capacity Obligation of any Party liereto in hours other than during peak periods shall be entered in the Energy Account.

1548 191

. , Page 1 of 4 SCl!EDULE 6.04 Issued: June 15, 1977 Ef fective: August 1, 1977 ACCOUNTI!!G FOR INTERCl!ANCE OF OPERATING CAPACITY ',11TH OTHERS (a) Accounting among the Parties !!creto for the interchange of operating capacity between TliE INTERCON::ECTimi and others not party to the AGREEMENT shall be made in accordance with this cchedule.

(b) When economy operating capacity is roccivcd by THE INTERCONNECTION from others, the anount and value of avoided operation of each Party licreto each day shall be determined by the Of fice of THE INTERCONNECTION based on unit operating costs provided by the Parties Hereto. Each Party IIereto who avoided operating its generating equipment shall be debited an amount halfway between its value of avoided operation and the billing aucunt paid by THE INTERCONNECTION to others for an equivalent acount of operating capacity received, but in no event shall such debit exceed its value. The amount of operating capacity fron others received by each Party IIereto shall be considered as synchronized capacity' for purposes of accounting under Schedule 6.03.

(c) When Eccrgency, Supplemental or Short Term operating capacity, as defined in agrcecents between the Parties !!creto and others, is received without cncrgy by Tile INTERCONNECTION from others during peak periods of a day, it shall be allocated each peak period by the Office of Tile INTERCON:.ECTION among the Parties licreto in proportion to their deficiencies, as determined in Schedule 6.03(c), for which they cannot ACCEPTED 11Y FPC C) EFFECTIVE SEPTEHliER 1, 1977 1548 192

. . Page 2 of 4 SCllEDULE 6.04 provide replacement values on their own equipment. The corresponding value of such operating capacity to each Party 11ereto shall be deter-nined by the Office of Ti!E INTERCONNECTION as the average cost of the operating capacity supplied by others, increased by 20%. Each Party IIereto who received an allocated share shall be debited an nount halfway between its assigned value and its allocated share of the total Filling amount paid by Tile INTERCONNECTION for the operating capacity received. The amount of operating capacity from others allocated to each Party !!creto shall be considered as synchronized capacity for purposes of accounting under Schedule 6.03.

(d) When Emergency, Supplemental or Short Term operating capacity is received with energy by T!!E INTERCONNECTION from others during peak O

V periods of a day, and when Emergency, Supplemental or Short Term operating capacity is received by Tile INTERCONNECTION from others in hours other than during peak periods, the operating capacity costs charged by others will be included in the allocation and accounting for Emergency, Supplecental or Short Term energy under Schcudle 7.03(d).

(e) When operating capacity is supplied without energy by Tile INTER-CON"ECTION to others during peak periods of a day, on equipment specifically operated by Tile INTERCONNECTION for such supply, the cost of supply in each peak period shall be determined by the Of fice of TIIE INTERCONNECTION based on unit operating costs provided by the Parties licreto. Each Party llereto whose generating equipment was operated for such supply shall be credited an amount halfway between its cost and the billing amount paid by others to Ti!E INTERCONNECTION 1548 193

,. s Page 3 of 4 SCilEDULE 6.04 for the operating capacity supplied from its equipment, but in no event shall such credit be less tha1 its cost.

(f) When operating capacity is supplied without energy by Tile INTER-CONNECTION to others during peak periods of a day from excess synchronized capacity operating for THE INTERCONNECTION, the cost of supply in each peak period shall be determined by the Office of Tl!E INTERCONNECTION based on unit operating costs provided by the Parties I!a rc to. Each Party Hereto shall be credited a share of the billing amount paid by others for the operating capacity supplied in propor-tion to its share of the Spinning P,cserve Requirement determined in accordance with Schedule 6.02(d).

(g) When Emergency, Suppleracntal or Short Term operating capacity is supplied with energy by THE INTERCONNECTION to others during peak periods of a day, and when Emergency, Supplemental or Short Term operating capacity is supplied by Tile INTERCONNECTION to others in hours other than during peak periods, the cost of generation increased by each Party llereto as determined under Schedule 7.03(c) shall include the operating capacity costs and all debits and credits shall be entered in the Energy Account.

(h) The difference between the sum of the amounts debited or credited to the Parties !!creto under (b), (c) and (c) and the amounts paid to or received froa others by THE INTERCONNECTION shall be allocated as a credit to all Parties Hereto as follows:

(1) One-third in proportion to the Sys ten Capacity of each party IIereto at the tine of the transaction.

1548 194

,,.*s Page 4 of 4 SCl!EDULE 6.04

, (2) Two-thirds in proportion to the transmission investment of ecch Party !!creto ef fectiva for the then current revision of Schedule 5.03.

(i) When the interchange of operating capacity with others during a peak period is such that all or part of the econcay operating capacity re-ceived by TifE I!;TERCO::::ECTIO i is equal in amount to all or part of the economy operating capacity supplied by TIIC I ;TERCO::: ECTIO:i (or similarly for Emergency operating capacity), the difference between the billing amounts paid and received by TIIE IliTERCO:;;;ECTIO!i for that equal amount of operating capacity shall be determined and each Party llereto shall be credited for a share of such dif ference allocated as provided in (h).

O 1548 195

~

• s Page 1 of 2 SCl!EDULE 7.01 Issued: June 15, 1977 Ef fec tive: August 1, 1977 ACCOUNTING FOR INTERCllANCE OF ENERGY (a) Each Party Hereto shall inform the Office of THE INTERCONNECTION of the net amount and cost of energy supplied by it to THE INTERCONNECTION or the net amount and replacement value of energy received by it from Tl!E INTERCO:iNECTION for each hour of the day.

(b) The Office of Tile INTERCO:iNECTION shall determine the net amount and cost of energy supplied by THE INTERCONNEC1 TON to others not party to this AGREEMENT and the net amount and replacc eent value of energy re-ceived by THE INTERCON:iECTION from others for each hour of the day.

em (c) The total amounts of energy supplied in (a) and (b) in each hour shall J be checked against and reconciled with the total amounts of energy re-ceived in (a) and (b) in that hour.

(d) The accounting among the Parties licreto for energy supplied by Tile INTER-CONNECTION to others not party to this AGREEMENT and for energy received by THE INTERCONNECTION from others shall be determined by the Office of Tile INTERCONNECTION in accordance with Schedule 7.03.

(c) The accounting for energy interchange among the Parties llcreto, after adjustment by the Of fice of Tile INTERCONNECTION for interchange with others in accordance with Schedule 7.03, shall be deternined by the Office of Tile INTERCONNECTION for each hour as follows:

(1) Each Party IIereto receiving energy fren Tile INTERCONNECTION shall be debited for energy received at a rate per kilowat thour hal f-w) way between its replacement value per kilowatt and the weighted ACCEPTED BY FPC EFFECTIVE SEPTEMBER 1, 1977 1548 196

Page 2 of 2 SCllEDULE 7.01 average cost per kilowatthour of all Parties licreto supplying energy to Tile INTERCONNECTION during that hour.

(2) Each Party licreto supplying energy to Tile IliTERCONNELTION shall be credited for energy supplied at a rate per kilowatthour halfway between its cost per kilowatthour and the weighted average re-placement value per kilowatthour of all Parties !!creto receiving energy from Ti!E I! TERCONNECTION during that hour.

(3) When a Party llereto operates or would have operated boiler capacity and/or eachine capacity solely for economical energy generation, the cost or replacement value of such operating capacity shall be considered as a part of the total cost or replacement value of its energy interchanged during that hour.

(4) When a Party l!creto receives energy from Tile INTERCONNECTION to supply pumping energy for its pumped storage hydro capacity, it chall use as the replacceent value of such energy, the weighed average cost per kilowatthour, increased by 20%, of the highest coat block of energy generated on Tile INTERCONNECTION in the sane h, r, equal in amount to the total pumping energy received from TIIE INTERCONNECTION by all Parties licreto in that hour.

(5) When a Party llcreto receives energy from THE II;TERCONNECTION for which it has no replacement value, it shall use as the replacement value of such energy the weighed average cost per kilowatthour, increased by 20%, of the ne::t highest cost block, below the block determined in (4), of energy generated on Tile INTERCONNECTION in the same hour equal in aucunt to the total etergy of all Partica llereto for which there is no replacement value.

1548 197

(

• Page 1 of 1 SCHEDULE 7.02 f.~

v Issued: June 15, 1977 Effective: August 1, 1977 s

ACCOUNTING FOR CONVENTIONAL HYDRO ENERGY (a) Any Party Hereto whose Systen includes hydro capacity shall have the right to determine whether or not such capacity is to be operated for THE INTERCONNECTION.

(b) . Each Party Hereto whose hydro capacity is operated for THE INTERCONNECTION shall determine each hour the difference between the hydro kilowatthours actually generated and the hydro kilowatthours needed for most economical use on its own load curve. The net saving in operating cost of such Party Hereto by operation of its hydro capacity on the load curve of THE INTERCONNECTION shall be allocated 50% to such Party Hereto and'

,, the other 507. among the other Parties Hereto in proportion to their respective shares as determined in accordance with Schedule 6.02(d).

The method of determining such net savings shall be prescribed from time-to-time by the OPERATING COMM. " EE.

(c) Each Party Hereto whose hydro capacity is operated as a synchroneus condenser for spinning reserve by the Office of THE INTERCONNECTION and is excess to the Party Hereto in meeting its oporating capacity obligation, shall be credited at a rate determined from time-to-tine by the OPERATING COMMITTEE. The cost of condenser operation on THE INTERCONNECTION shall be allocated as a debit to all Parties Hereto

, in proportion to their respective shares as determined in accordance with Schedule 6.02(d).

1548 198 ACCEPTED BY FPC G -

EFFECTIVE SEPTEMBER 1,1977 4

Page 1 of 6 SCilEDULE 7.03 i

' j2j REVISION NO. 1 T'

TO Tile PJM AGREEMENT (Supersedes Initial Schcdule Issued June 15, 1977)

Issued: December 12, 1977 Effective: January 1, 1978 ACCOUNTING FOR INTERCHANCE OF ENERGY WITl! OTilERS (a) Accounting among the Parties licreto for the interchange of scheduled and 4

inadvertent energy between THE INTERCONNECTION and others not party to the AGREEMENT shall be made in accordance with this schedule.

SCHEDULED INTERCl!ANCE (b) Except as provided in (c), (d), and (e), when scheduled energy is received by TIIE ItTTERCONNECTION from others, the amount and value of avoided generation of each Party ifereto shall Le determined cach hour by the Office of Tile

( ', INTERCONNECTION based on the ascending order of unit operating costs provided by the Parties licreto. Each Party liereto whose generation was avoided shall be debited for the amount of such avoided generation at a rate per kilowatthour halfway between its value of avoided generation per kilowatthour and the average billing rate paid by Tile INTERCONNECTION for the energy scheduled to be received during that hottr, but in no event shall such debit exceed its value. The information provided under Schedule 7.01(a) by cach Party llereto whose gencration was avoided shall be adjusted by the aracunt and value of its avoided generation, to reflect the receipt of such energy from others.

(c) Prior to the pumping cycle in the operation of pumped storage hydro plants of the Parties !!creto, the Office of Tl!E INTERCONNECTION shall determine for cach plant a pumping cutoff rate defined as the generation rate per kilowatt-hour on Tile INTERCCNNECTION at which pumping shall be reduced or discontinued because energy generated above that rate for pumping would provide uneconomical j >fG 1nO

/

s

.- ,- . Page 2 of 6 energy during the generating cycle. During any hour in which economy

n energy is received by Tile IhTERCONNECTION f rom others and the amount of (2 .

enI!rgy utilized by the Parties l{creto for pumping cxceeds the amount that could have been generated on TIIE lhTi'RCONNECTION at or below the pumping cutoff rate, such amount of excess shall be considered avoidcd generation valued at the pumping cutoff rate in determining the value of avoided generation in (b).

(d) When scheduled energy is received by Tile INTERCONNECTION from others, any part of which is Emergency, Supplemental or Short Tern energy, as defined in agreements between the Parties licreto and others, the amount of such part shall be allocated each hour by the Office of Tile INTER-CONNECTION amcag the Parties flereto in proportion to their respective energy receipts as reported under Schedule 7.01(a) for which they cannot provide replaccment values (including pumping energy receipts, if any).

h The cortcsponding value of such energy to each Party Hereto shall be determined by the Office of Tile INTERCONNECTION as the average cost to generate such energy by others, increased by 207.. Each Party llereto who received an allocated share of such energy shall be debited for the amount of its share at a rate per kilowatthour halfway between its assigned value per kilowatthour and the average billing rate paid by TIIE INTERCONNECTION for Emergency, Supplemental or Short Term energy received during that hour.

The information provided under Schedule 7.01(a) by each Party IIcreto who received a share of such energy shall be adjusted by the amount allocated to cach, to reflect the receipt of such energy from others.

(c) When scheduled energy is rcccived by Tile INTERCONNECTION from others, any part of which is Conservation Energy, as defined in agreements between the Parties Itereto and others, the amount of such part shall be allocated cach hour by the Of fice of Tile INTERCONNECTION among the Parties tiercto in the following sequential steps:

1548 200

Page 3 of 6 i

.i -

g (1) To those Parties !!creto whose generation was curtailed and who report energy receipts under Schedule 7.01(a) in pro-portion to their respective amounts of curtailed generation but not in excess of their energy receipts, and (2) Any remaining amount after step (1) to all Parties lfcreto who report cncrgy reccIpts under Schedule 7.01(a) in proportion to 4

such receipts after adjustment for the allocation in step (1).

The corresponding value of such energy to each Party licreto shall be deter-mined by the Office of TifE INTERCONNECTION as the average cost to supply such energy by others, increased by.207.. Each Party ifereto who received an allocated share of such cncrgy shall be debited for the amount of its share at a rate per kilowatthour halfway between its assigned value per kilowatthour and the average billing rate paid by Tile INTERCONNECTION for

( Conservation Energy received during that hour. The information provided under Schedule 7.01(a) by each Party licreto who received a share of such energy shall be adjusted by the amount allocated to each, to reficct the receipt of such cnergy from others. Each Party !!creto who received a share of such energy shall be debited or credited, as the case may be, for its share of any supplemental bill from others to adjust for the suppliers' out-of-pocket cost of replacement fuel, as provided for in the agreements with others, in proportion to its allocation of Conservation Energy.

(f) When scheduled energy is supplied by TIIE INTERCONNECTION to others, the amount and cost of generation increased by each Party IIcreto to supply the energy shall be determined each hour by the Office of TliE INTERCONNECTION based on unit operating costs provided by the Parties itereto. When such scheduled energy is Emergency, Conservation, Supplemental or Short Term 1548 201

• - Page 4 of 6 the, cost of generation increased by cach Party itereto shall include the opqtating capacity costs. Each Party licreto whose generation was increased shall be credited for the energy supplied at a rate per kilo-watthour halfway between its cost per kilowatthour and the average billing rate paid by others to TiiE IllTERCONNECTION for the scheduled energy supplied during that hour, but in no event shall such credit by less than its cost.

The information provided under Schedule 7.01(a) by cach Party !!crcto who ,

4 supplied energy to others shall he adjusted by the amount and cost of the energy supplied, to reficct the delivery of such energy to othcrs. Whenever Tile 1hTERCONNECT10N renders a supplemental bill to others for the supply of Conservation Energy, as provided for in agreements with others, each Party licreto with billing adjustments shall be debited or credited, as the case may be, its respective amounts of such supplemental bill.

h,) (g) The difference between the sum of the amounts debited or credited to the Parties llereto under (b), (d), (c), and (f) and the amounts paid to or received f rom others by Tile INTERCONNECTION shall be allocated as a credit to all Parties licreto as follows:

(1) Onc-third in proportion to the System Capacity of each Party llereto at the time of the transaction.

(2) Two-thirds in proportion to the transmission investment of each Party licreto ef fective for the then current revision of Schedule 5.03.

(h) When the scheduled interchange with others in an hour is such that all or part of the energy received by TifE INTERCONNECTION is equal in amount to all or part of the energy supplied by Tile INTERCONNECTION, the differ-nce between the billing araounts paid and received by Ti!E 1hTERCONNECTION for the equal amount of energy shall be determined and each Party itereto shall be credited for a share of such difference allocated as provided in (g).

lUn a rv 7nv

Page 5 of 6 INADVERTENT INTERCIIANGE (ih Inadvettent interchange shall be determined by the Of fice of THE ItiTERCONNECTION as the net dif ference cach hour between the metered and the scheduled interchange with others.

(j) Inadvertent interchange shell be accounted for each hour by the Office of THE INTERCO';NECTION as follows:

(1) When the metered interchange exceeds the scheduled 4

interchange, the inadvertent interchange shall.he accounted for at the average rate per kilowatthour of all generation avoided or supplied by the Parties IIe re to , depending on the direction of inadvertent flow.

(2) When the scheduled interchange exceeds the metered h) interchange, the inadvertent interchange shall be y accounted for at the average billing rate paid to or received from others, depending on the direction of inadvertent flow.

(3) When the metered interchange is opposite in dircction to the scheduled interchange, the inadvertent inter-change shall be accounted for in two parts:

(A) The energy actually recieved or supplied shall be accounted for at the average rate per kilowatthour of all generation avoided or supplied by the Parties !!ereto, depending on the direction of inadvertent flow;

'{*j~

1548 203

.- Page 6 of 6

(:}l.'j (B) The balancc of the inadvertent interchange n shall be accounted for at the billing rate paid to or received from others, depending on the direction of inadvertent flow.

(k) Each party !!creto shall be debited or credited, as appropriate, for its share of the cost or value of inadvertent interchange determined in (j) and allocated as providc(1 in (g).

1548 204 w*

I

/dh

% e;

Page 1 of 2 SCl!EDULE 8.01 Issued: June 15, 1977 Effcctive: August 1, 1977 COMPO!:ENTS OF COST OR REPIACE"ENT VAI.UE (a) Each Party Hereto shall include the following components or their equivalent in the determination of costs or replacement values for operating capacity supplied or received from THE ItiTERCO :::ECTION:

(1) Boilers Firing up cost; lio-load cost during period of operation; Peak prepared-for maintenance cost; Incremental labor cost; Other incremental costs.

()

(*

(2) hehines -

Startir.g cost from cold to synchronized operation; No-locd cost during period of operation; Incremental labor cost; 0ther incremental operating costs.

(b) Each Party Hereto shall include the following components or their equivalent in the deternination of costs or replacement values for energy supplied ot received from THE INTERCONNECTION:

Incremental fuel cost; Incremental naintenance cost; Incremental labor cost; 1548 205 Other invremental operating costs.

O ACCEPTED liY ITC EFFECTIVE SEPTEMBER 1, 1977

• . s Page 2 of 2 SCl!EDULE 8.01 (c) Replacenent values shall be quoted only for capacity availab!c for operation, as deternined from tine-to-time by the OPERATING COMMITTEE.

(d) All fuel cost or replacenent value components shall employ the marginal fuel price experienced by the Party !!creto.

(c) The OPERATING COMMITTEE chall from tine-to-time define in detail the nethod of determining the costs entering into the said components, and the Parties llcreto shall adhere to such definitions in the preparation of incremental costs used on Tile INTERCONNECTION.

1548 206

.a

Pennsylvania-New Jersey-Maryland

. - Interconnection (PJM) Agreement Page 1 of 1

, SCllEDUI.E 9.01 7 REVISION NO. 1 '

l,$;

• " (Supersedes Initial Schedule Issued June 15, 1977)

Issued: March 15, 1979 Effective: June 1, 1979 ALLOCATION OF THE COST AND EXPENSES OF THr OFFICE OF THE INTF.RCONNECTION (a) The cost of the Office of THE INTERCONJECTION and the expenses associated therewith as provided in Sections 3.3 and 3.7(iv) of this AGREEMENT shall be allocated to the Parties !!creto in accordance with this schedule.

(b) The respective share for cach Party IIereto applicable to monthly bills issued by PE in accordance with Section 11.2 for expenses incurred during a Planning Period shall be the sum of the following:

(1) One-third of the total cost and expenses divided equally among the

-- Parties llcreto; (2) One-third of the total cost and expenses multiplied by the ratio of the actual diversified peak load for each Party Ifereto to the sum of the actual diversified peak loads for all Parties !!creto as determined for the preceding Planning Period in accordance with the procedure used for the determination of Forecast Diversified Planning Period Peaks and described in Schedule 2.211; and (3) One-third of the total cost and expenses multiplied by the ratio of the Accounted-For Interchange of each Party llereto to the sum of the Accounted-For Interchange for all Parties licreto as determined for the preceding Planning Period.

(c) The Accounted-For Interchange of each Party IIereto for a Planning Period shall be the absolute sum of its Accounted-For Energy Interchange with other Parties

(.h  !!creto as determined under Schedule 7.01(c) and its Accounted-For Energy Interchange with others as determined under Schedule 7.03 for each hour of the said Planning Period. 1548 207

N Met-Ed/Penelec Exhibit No C-3 Witness: E. Newton Jr.

Page 1 of 2 METROPOLITAN EDISON COMPANY Forecast Short Term Purchases from Other Utilities Year 1980 Amount Total Cost Rate CWH (S000) S/MWH Total Short Term Purchases 1,577 44,639 28.3 Estimated Savings (l) f rom Short Te rm Purchases -

33,031 20.9 Estinated Alternative Cost -

77,670 49.2 (1) Savings based on alternative purchases from PJM at cost plus split savings.

1548 208

e PETROPOLITAN EDISON COMPANY FORECAST SHORT TERM PURCHASES FROM OTilER 1lTILITIES #'

PERIOD: November, 1979 thru December, 1980 Energy & D.C. Demand Total , Energy & 0.C. Demand Ancunt Cost Total Ener g & O C Demand Total Cost Cost Amount Cost Cost Cost Amount Cost Cost COMPANY CHW ($000) ($000) Cost

($000) CWH (S000) ($000) ($000) CWH ($000) ($000) ($000)

Novembei. 1979 December, 1979 Ontario 49.8 1,324.7 249.0 1,573.7 49.8 1,316.2 257.5 1,573.7 Jamestown 12.6 286.0 0 286.0 12.6 286.0 0 286.0 APS 61.5 1,028.4 300.0 1,328.4 61.5 1, M 8.4 310.0 1,328.4 AEP 190.2 42 257.7 1,125.0 1 382.7 190.2 4,220.2 12 162.5 52 382.7 Total 314.1 6,696.8 1,674.0 8,570.8 314.1 6,h40.8 1,730 0 8,570.8 January, 1980 February, 1980 March, 1980 ontario 56.5 1,686.1 257.5 1,943.6 56.5 1,703.1 240.5 1,943.6 56.5 1,686.1 J ame s town 12.4 307.5 257.5 1,943.6 0 307.5 12.4 307.5 0 307.5 12.4 307.5 0 APS 62.5 310.0 307.5

_l,158.8 It 468.8 62.5 12 178.8 290.0 11 4_68.8 62.5 11 158.8 310.0 11 468.8 Total 131.4 3,152.4 567.5 3,719,9 131.4 3,189.4 530.5 3,719.9 131.4 3,152.4 567 5 3,719.9 April, 1980 _ May, 1980__ June, 1980 On ta rio 56.5 1,694.6 249.0 1,943.6 56.5 1,686.1 257.5 1,943.6__ 56.5 Jame s town 12.4 1,694.6 249.0 1,943.6 307.5 0 307.5 12.4 307.5 0 307.5 12.4 307 5 0 62.5 307 5 APS 1 168.8 300.0 11 468.8 62.5 1j 58.8 310.0 1,468.8 62.5 11 168.8 300.0 1, 4_6_8 ._8, Total 131.4 3,170.9 549.0 3,719.9 131.4 3,152.4 567.5 3,719.9 131.4 3,170.9 549.0 3,719.9 July, 1980 _ August, 1960 Ontario $6.5 September, 19e0 1,686.1 257.5 1,943.6 56.5 1.686.1 257.5 1,943.6 56.5 1,694.6 249.0 1,943.6 J ame s tovn 12.4 307.5 0 307.5 12.4 307.5 0 307.5 12.4 307.5 0 307.5 APS 62.5 12 158.h 310.0 12 468.8 62.5 1.158.8 310.0 1 468.8 62.5 I t l68.8 300.0 1,468.8 Total 131.4 3,152.4 567.5 3,719.9 131.4 3.152.4 567.5 3,719.9 131.4 3.170.9 549.0 3,719.9 October, 1980 November, 1980 December u l9e0 Ontario 56.5 1,686.1 257.5 1,943.6 56.5 1,694.6 249.0 1,943.6 56.5 1,686.1 Jame s t own 12.4 257.5 1,943.6 307.5 0 307.5 12.4 307.5 0 307.5 12.4 307.5 0 APS 62.5 _l,t,58.8 i 307 5 310.0 Id68.8, 62.5 12 168.8 300.0 62.5 12 158.8 1 Total 131.4 12 468._8 310.0 2 468.8 3,152.4 567.5 3,719.9 131.4 3,170.9 549.0 3,719.9 131.4 3,152.4 567.5 3,719.9 Total Yearu l980 Ontario 678,0 20,284.2 3,039.0 23,323.2 Jan:e s town 148.8 3,690.0 0 3,690.0 ADS 750.0 13.965.6 3,660.0 17,625.6 Total 1,576.8 37.939.8 6,699.0 44,638.8

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Met-Ed/Penelec Exhibit No C-4 Witness: E. Newton Jr.

FITROPOLITAN EDISON COMPANY Estimate of Savings Resulting From Short Term Power Purchases April-October, 1979

($ millions)

Estimated TMI Es timated TMI Replacement Cost Replacement Cost Estimated Savings Before Short Term After Short Term from Short Te rm Month Purchase Offset Purchase Offset Power Purchases April 10.7 10.7 0 May 10.4 9.8 (0.6)

June 10.5 9.9 (0.6)

July 14.4 11.3 (3.1)

August 15.7 11.2 (4.5)

Septenber 16.1 12.4 (3.7)

October 19.6 15.9 (3.7) (P)

Average Amount Contemplated By 10.0 7.5 (2.5)

Commission's June 19, 1979 Order (P) Preliminary presumed the same as September. 1548 210

Met-Ed/Penelec Exhibit No ~G-5 Witness: E. Newton Jr.

METROPOLITAN EDISON COMPANY Estimate of Savings from PJM Special Purchase Year 1980 Estimated Unit Savings from PJM Special Purchase:

$32,000,000 estimated CPU total savings =

7,000,000 mwh GPU purchase $4.6/mwh Met-Ed Es timated 1980 savings from PJM Special Purchase:

1,200,000 mwh PJM purchase x $4.6/mwh = SS.5 million 1548 211

Met-Ed/Penelec Statement H Met-Ed Witness: E. W. Schleicher

.e . _ .,

Q. Please state your name and address.

A. My name and address are E. W. Schleicher, 2800 Pottsville Pike, Reading, Pa.

Q. By whom are you employed and in what capacity?

A. I am employed by Metropolitan Edison Company (to which I shall from time to time refer to as " Met-Ed" or the

" Company") in the capacity of Vice President-Consumer

..ffairs.

Q. Describe briefly the nature and scope of your responsi-bilities in that position.

A. As Vice President of Consumer Affairs, I have responsi-bility for most of the Company's customer-related activities, including billing and collection, coordinating applications for service and requests for information, development and implementation of load management programs, public and employee communications, rate administration and load and sales forecasts.

Q. Please state your educational background and experience.

A. I have set them forth in the attached Appendix A.

Q. Have you previously presented testimony before this Commission?

A. Yes, I have. I testified in Met-Ed's Pennsylvania retail rate cases docketed at RID 64, RID 170 and 171, RID 4 34 and RID 626.

Q. What is the purpose of your testimony in this proceeding?

A. The initial purpose of my testimony is to support the basis for the 1980 sales forecast as it appears in Columns 2 and 4 on Table 3 of Appendix B to the petition Met-Ed filed seeking a modification of the provision of 1548 212

Page 2 of 3 the Commission Order entered June 19, 1979 with respect to the Company's net energy clause.

Q. Would you briefly describe how you determined the 1980 sales forecast?

A. The starting point was to analyze historical annual kWh sales within each rate group. These sales were adjusted for weather conditions to provide a normalized base from which abnormalities due to temperature variations had been removed. Sales resulting from factors such as increased number of customers and major expansions planned by large industrial customers were added to the base. Data on these factors was obtained via surveys of major commerical and industrial customers, and from area contractors and developers. Industrial sales were adjusted to reflect an expected mild recession beginning in latter 1979 and continuing into 1980.

Q. Would you please identify what is represented by Met-Ed Exhibit H-1 which is attached to your direct testimony.

A. Yes. This exhibit, which was prepared under my direct supervision, provides a breakdown of our present forecast of sales by customer class by month for 1980.

Q. Explain the distinction in the development of total sales and retail sales as shown in Table 3.

A. After retail sales were determined by the method just described, a sales forecast for the seven resale customers we serve was prepared. Each municipality or company is projected individually, based on personal contacts with the customers. These non-jurisdictional sales as forecast for 1548 213

Page 3 of 3 1980 will show a marked decline because Hershey Electric, our largest resale customer, has been acquired by Pennsyl-vania Power and Light Company and will stop receiving service from Met-Ed in March of 1980.

Q. What is the forecasted percentage increase in total sales for 1980 over 1979?

A. 1 per cent.

Q. What has been your historical growth rate for the past few years?

A. About 6 per cent.

Q. Does this complete your testimony at this time?

A. Yes. In the event that testimony will be required with respect to business office and consumer service expenses in a base rate test year period, I will furnish such testimony.

1548 214

~

Appendix A to'MetaEd/Penelec Statement H Educational Background and Experience of E. W. Schleicher Graduated from Penn State University in 1949 with BSEE. Graduate of University of Michigan Public Utility Executive Program in 1956, and EEI Graduate Management Course in 1976.

Career uith Met-Ed began in the summers of 1947 and 1948 as a trainee in the Transmission Engineering Department. In 1949, became a pennanent employee as a Cadet Engineer in the Substation Department in Reading, Pennsylvania. In 1950, uas transferred to York as Industrial Encinaer.

In 1954, returned to Reading as Supervisor of Residential sales. In 1956, uas appointed District Sales Manager in Lebanon. In 1956, returned to York as Director-Cammercial and Residential Sales. In 1963, became Division Sales Man,gr.r. In 1968, returned to Reading as Corporate Sales I/.unager.

Elected Vice President-Marketing in 1970. Was assigned responsibility for Consumer Services, Communication Services, Rate Administration and Govern-mental Affairs, and in 1971 was elected to the Board of Directors and the Executive Committee. In November 1974, became Vice President-Consumer Affairs and was additionally assigned the responsibili ty for Business Office Operations.

Utility industry experience includes participation as a member of Edison Electric Institute (EEI) and Pennsylvania Electric Association (PEA) committees.

Presently serving oc vice chairman of the PEA Executive Committee.

1548 215

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, Met-Ed/Penclec Statement I Witness: R . 11. Sim s s

Q. Would you please state your name and address?

A. Robert H. Sims, my business address is 100 Interpace Parkway, Parsippany, New Jersey.

Q. By whom are you employed and in what capacity?

A. I an employed by CPU Service Corporation as Vice President - Power Supply.

Q. What is your educational and professional background?

A. I was graduated from Ohio State University with the degree of Bachelor of Industrial Engineering in 1942 and am a registered professional engi-neer. Af ter service in the United States Army, during which I attained the rank of Captain, I worked for several years with the American Telephone and Telegraph Company. I joined Jersey Central Power & Light Ccapany (JCP&L) in 1948 as an enginect at its Allenhurst Engineering Headquarters. I later became Operating Superintendent and then Division Manager for JCP6L's Coast Division with headquarters in Asbury Park. In 1959, I was promoted to Superintendent of Transmission and Meters for both JCP6L and New Jersey Power & Light Company. In 1960, I became Superintendent of Operations for both companies. In 1965, I was made Vice President of both companics, and in 1970 a Lirector of both companies.

With formation of GPU Service Corporation in 1971, I was elected Vice President - Operations in that Company, and in 1975 Vice President - Power Supply, a position I presently hold.

Q. What are your duties and responsibilities with GPU Service Corporation?

A. I am responsibic f or bulk po.er supply pooling agreements both between the CPU Ccupanies thimelves and between the GPU systua and aternal power cyctems, and for feasibility oad coordinating supplies and negotiations 1548 217

with respect to, and utilization of, transmission systems, both internal and external to the CPU system. I also serve as the GPU representative on the Management Committee of the Pennsylvania New Jersey Maryland Interconnection ("PJM"), the Executive Board of the Middle Atlantic Area Council, Administrative Committees under various transmission agreements, and as Chairman of the CPU Operating Committee which administers the CPU power pooling agreements.

Q. k'h a t is the purpose and subject area of your testimony?

A. To describe the efforts made during the period following the Three Mile Island (TMI) accident to search for lower cost energy supplies for the CPU System.

Q. k'hy was the search for lower cost energy supplies necessary af ter the TMI accident and not before?

A. Prior to the TMI accident the GPU System's base load energy requirements were being met as economically as any system in the surrounding region, with incidental purchases and sales from outside sources being conducted under the existing PJM Agreement on a split savings basis. Any short term power purchases would have resulted in increasing GPU's average enerrgy cost.

As a result of the accident, CPU lost the use of two major low cost base load energy sources (TMI 1 and 2) whose energy output was immed i a t ely replaced by purchases under the existing PJM Agreement on a split savings basis. Since within PJM almost all of this energy was supplied frcu other PJM member cuapanies' oil-fired steam generating units, end GPU's only immediate alternative to such purchases was its even higher-cost oil-fired combustion turbines, these two items (which detennined the price of such 1548 218

purchases under the split savings fomula) combined to drive CPU's total energy costs up by very substantial amounts.

Q. Will you please summarize the ef forts that were made by you or those under your supervision to search for alternative sources of power?

A. In response to such a question it is probably most convenient to break the situation down into two segments, nam e ly , that which took place within PJM and that which took place external to PJM. As to within PJM, as indicated earlier the added cost of energy from PJM af ter the TMI accident arose for two reasons. First, the PJM energy being supplied to GPU came from high-cost oil-fired units and second, the pricing of that energy on a split savings basis escalated that already high cost by amounts approxi-mating 30 to 50%. The large unanticipated sales by other PJM Companies to CPU, at a price determined under split savings, resulted in substantial revenues to them in excess of their cost. While GPU could not expect the other PJM Corpanies to sell below their cost, it did immediately open discussions with the other PJM Companies in an ef fort to reduce or eliminate the unanticipated added revenues accruing to them because of split savings.

CPU's position in such negotiations was further reinforced by your Order of June 15, 1979 which specifically stated in its findings that:

" Metropolitan Edison Company and Pennsylvania Electric Company will incur higher purchase power costs while the selling com-panics will generate unexpected revenues.

The Commission is of the opinion that the split savings pricing of interchange sales during emergency conditions is not in the public interest. We will direct Met-Ed and Penelec to petition FERC and to negotiate with the other members of the PJM Power 1548 219

Pool to eliminate split savings during emergency conditions and to price such power at cos t."

Ef forts within PJM first began to bear fruit when on June 7,1979 your Commission granted a Pennsylvania Power & Light Company (PP&L) petition for a Declaratory Order permitting PP&L to sell 200 MW of output from its Martins Creek oil-fired generating station to the GPU Companies at cost. This agreement was immediately filed with the Federal Energy Regulatory Commission ("FERC") on June 9,1979. Supply commenced on June 11, 1979, although it was subsequently suspended on June 22, 1979 at PP&L's request until formal FERC acceptance was received. FERC accepted the filing on July 9, 1979 and energy has been supplied since that date.

In this connection, it might be noted that the PP&L agreement will tenminate when the proposed revision of the PJM agreement becomes ef fective.

In furtherance of additional relief from normal PJM split sevings accounr.-

ing, GPU continued negotiations with the other PJM member companies, which ef forts culminated in a petition for declaratory order to your Commission dated October 10, 1979 requesting that a determination be made that a proposed revision of the PJM agreement satisfied the intent of the above quoted directive of your June 15,1979 Order. The PJM proposal would pennit CPU to purchase up to 1100 MWhr per hour and up to 7,000,000 MWhr in 1980 at cost plus 10%, in lieu of purchase on a split savings basis.

Your Commission approved this petition on November 8,1979. The PJM proposal is now in process of being filed with the Maryland and District of Columbia Commissions by certain of the PJM selling companies and af ter their acceptance will be filed with FERC, af ter which benefits can finally start accruing to the customers of the GPU companies.

Q. Mr. Sims, will you please now discuss your ef forts in obtaining lower cost power from outside PJM7 A. Our efforts to obtain lower cost energy from sources outside PJM have obviously been directed to those areas where low cost energy might be available, namely, areas having available coal, hydro or nuclear capacity.

Our survey determined that to the south of PJM in the Virginia Electric and Power Company area, such capacity was short and no economic power available. To the north and northeast of PJM in the New York Power Pool and up into New England, some capacity was available but was oil-fired and, therefore, uneconomical since transmission cos ts would also have to be reflected as an additional expense. GPU was aware that some capacity might be available in Canada from the Ontario Hydro Power Commission

(" Ontario Hyd ro") , but there were some problems since GPU had no direct transmission ties with Ontario Hydro. The remaining area was to the west of PJM through the Allegheny Power System ("APS") to which GPU had direct ties and as a member of PJM had stand-by interchange agreements. Therefore, immediately af ter the accident, GPU directed its ef forts to the west with APS and to the north with Ontario Hydro and with the Niagara Mohawk Power Corporation (" Niagara Mohawk") (with whom both Ontario Hydro and GPU had transmission interconnection facilities) . CPU's negotiations with APS about possible energy purchases from it and our request that it survey systems interconnecting with it and located in coal supplying areas to the west of APS resulted in GPU's receiving energy starting May 7,1979 on an as available basis f rom companies such as the American Electric Power System, Central Illinois Public Service, Columbus and Southern Ohio Power Company, Illinois Power Company and Indianapolis Power and Light Company, in addition to receiving energy directly from the APS Companies. These purchases have been a major lower cost alternative to PJM's split savings 1548 221

energy, have supplied amounts up to 1000 MWhr per hour and were the major elanent in making the CPU System a naninal net seller of energy within PJM during the months of July, August and September of 1979.

Our negotiations with Ontario ifydro determined that a reasonable amount of coal-fired energy was available at a price beneficial to GPU's custo-mers, but our discussions with Niagara Mohawk brought to lis a t the fact that a transmission Ibnitation existed and that therefore this Ontario To obtain, this supply, llydro supply would have to be limited to 200 MW.

CPU relied on an existing international agreement between Ontario flydro and Niagara Mohawk for power purchased frun Ontario Ilydro by Niagara Mohawk, which in turn delivered the power to the CPU companies through a wheeling agreement which Niagara Mohawk filed with FERC on July 9,1979.

In our discussions with Niagara Mohawk, it of fered energy to CPU f rom its Oswego Station which, although oil-fired, burned high sulphur fuci and was competitively priced. This agreement was never consummated because shortly thereaf ter Niagara Mohawk's oil suppliers informed it of a supply disruption and as a result that offer was withdrawn.

One small, but very at tractive, short term capacity purchase frun the north of PJM was an of fer obtained fraa the Jamestown, New York Municipal System for coal-fired energy from capacity they had in cold standby since it received the major portion of its supply from the Power Authority of the State of New York ("PASNY"). Since Jamestown was fed by PASNY through the Niagara Mohawk system, a purchase and wheeling agreenent similar to the Ontario liydro agreement was developed and filed with the FERC on July 16, 1979. This of fer of 40 MW of coal-fired energy located approximately 1548 222 10 miles north of CPU's service area has been a firm and beneficial supply to CPU's customers.

It should be noted in all of the power purchases from outside PJM each of the major suppliers has required payment of a capacity charge. In addition, all of the supplies from outside PJM have a transmission or wheeling charge associated with the purchase. Even with the two aforementioned charges which do not appear in a CPU purchase from within PJM, the total cost of obtaining the energy delivered from all of the suppliers outside PJM was lower than the cost of alternative PJM interchange energy available.

All attempts by GPU to purchase major amounts of energy lower in cost than within PJM, from suppliers outside PJM, without any capacity or wheeling charge were unacceptable to the suppliers.

Q. Were there any possible sources of economic power which you did not investigate and utilize since the accident at TMI?

A. On the basis of our exhaustive search, we conclude that there were no sources of economic power which we did not investigate, and there were no sources of power which were evaluated as being economic (as compared with the cost of power purchased on a split savings basis from PJM) which we did not utilize, when available, since the accident at TMI.

Q. Are you prepared to quantify the results of the various power purchase agreements you helped to negotiate?

A. No. The day to day operations under the various agreements are the responsibility of the GPU System Operations Department under Mr. E.

Newton Jr. , who will present testimony as to the benefits that have accrued under these agreements.

1548 223

' ' Met-Ed/Penelec Statement J Witness: E. F. Carter Q. Would you please state your name and address?

A. My name is Eugene F. Carter and my business address is P. O. Box 1018, Reading, Pennsylvania.

Q. By whom are you employed and what is your present position?

A. I am employed by the GPU Service Corporation (" Service Corporation") as Assistant Vice President-Rates.

Q. Please state your educational and professional qualifications.

A. A resume of my educational and professional qualifications is attached as Appendix A.

Q. What is the purpose of your testimony in this proceeding?

A. The purpose of this testimony is to support the averments in Paragraph 13 of the petition of Metropolitan Edison Company (" Met-Ed") for modification of the Commission order entered June 19, 1979 (" Petition") and Figure 6 and Tables 9 and 10 which are included in Appendix B which was attached to the Petition.

Q. What is your testimony with respect to Paragraph 13 of the Petition?

A. I supplied the factual data which supports the averments contained in Paragraph 13. Those averments (a) summarize the overall impact that the proposed 6.9 mill increase in the levelized energy clause charge will have upon the overall charges to Met-Ed's retail customers and upon the charges to its typical residential customer using 500 kWh por month; and (b) indicate the additional retail revenue that Met-Ed estimates will be realized as a result of the requested increase. The detailed 1548 224

Page 2 of 4 support for the percentage and overall revenue impact of the proposed increase to the levelized energy adjustment charge are contained on Table 10, Table 9, and Figure 6 in Appendix B to the Petition.

Q. Please explain the contents of Table 10.

A. Table 10 demonstrates the total charges to retail cus-tomers after giving effect to the 6.9 mill proposed in-crease in the level energy adjustment charge. The reference point for Table 10 is RID 434, the proceeding in which the current base rates of Met-Ed were established by Commission Order adopted in May of 1978. To the average base rate charge of 34.590 mills per kWh allowed in that case, was added (a) a tax surcharge of 0.249 (i.e.,

.0072 of the base charge) and (b) the presently effective 8.8 mill levelized energy cost adjustment charge to show the currently effective average annual charge to retail customers of 43.639 mills per kWh. The proposed 6.9 mill per kWh increase in the levelized energy cost adjustment charge represents a 15.7% increase in the total charges to retail customers. The total. revenue impact of the 6.9 mill increase in the levelized energy cost adjustment is developed near the bottom of Table 10 where the projected increase is applied to 7,972 gWh of sales (the projected retail sales for 12 months ended December 31, 1980) to produce an overall revenue increase of $54.6 million. Of that $54.6 million, 1548 225

Page 3 of 4

$52.2 million is associated with the recovery of energy costs and the additional $2.4 million is associated with the recovery of gross receipts taxes.

Q. Please explain the contents of Table 9 of Appendix B of the Petition.

A. Table 9 demonstrates the dollar and percent impact on the total charges for various monthly usage levels of a residential (Rate RS) customer. For the typical residential customer using 500 kWh per month, the projected increase is $3.43 per month, or 12.5%.

Q. Please explain the contents of Figure 6 of Appendix B of the Petition.

A. Figure 6 has been excerpted from the review by Met-Ed/

Penelec before this Commission on September 21, 1979.

The chart was used to support one of the significant con-clusions that " Currently and historically, Met-Ed and Penelee rates compare favorably with other Pennsylvania utilities". Figure 6 (as so excerpted from Page 7 of the Met-Ed/Penelec review presentation) has been modified to reflect the impact of the proposed 6.9 mill increase on the total charges to a typical Met-Ed retail customer and the relationship of the total charges (after such increase) to the total charges of similar residential customers of other Pennsylvania electric utilities (as of September 1, 1979).

Q. Do the results shown on Tables 10, 9 and Figure 6 also 1548 226

Page 4 of 4 reflect today's conditions or have changes occurred which would necessitate their update?

A. To reflect current conditions, each of the tables would have to be modified. For example, effective for service rendered on and after November 2, 1979, Met-Ed's tax adjustment curcharge, Rider A, was increased from .72%

to 6.92% pursuant to the Commission's direction, as a result of the passage of Act No. 1979-27. Tables 10 and 9 reflect the previous lower tax surcharge percentage.

Figure 6 likewise is out of date to the extent that all computations were based on rates in effect on September 1, 1979; utilities other than Met-Ed have likewise increased tax surcharge percentages in the interim; more-over, changes have occurred in the energy adjustment clause charges of various utilities; in addition, changes have also occurred due to summer / winter differentials in the base rates of the various utilities. Met-Ed/

Penelec Exhibit J-l is an update of Figure 6 and shows the comparative bills for a typical retail custome r of the various Pennsylvania electric utiltiies during December of 1979. We propose to update these tables and figures periodically in order to reflect currently effective total charges.

Q. Does that conclude your direct testimony at this time?

A. Yes.

1548 227

, APPENDIX A Eugene F. Carter Resume of Educational and Professional Qualifications.

I was graduated from Pennsylvania State University with a degree of Bachelor of Science in Electrical Engineering in 1958. I have completed postgraduate extension courses in higher mathematics, computer programming and applications and have attended various utility conferences and seminars relative to my field of endeavor. I recently completed the PUEP Course at the University of Michigan.

I am employed by the Service Corporation as Assistant Vice President -

Rates, responsible for the development of rat ; and rate structure recommenda-tions for the General Public Utilities Corporation ("GPU") operating companies; for coordinating the rate activities of all the GPU operating subsidiaries with regard to rate administration and application; f or coordinating the cost study activity of the Service Corporation and evaluating the rate design recommendations being advanced by the rate departments of the operating companies and outside consultants; for preparation, revision and direction of sales revenue forecasts as related to the energy sales forecasts of the operating coepanies; and for application and evaluaticn of load research data acquired throughout the CPU operating companics.

I hnvc been ecployed by the Service Corporation since its organiza-tion on May 1, 1971, first as Assistant ! Onager - Rates, since April, 1973 as Manager - Rates and, since October 1977, as Assistant Vice President - Rates.

Eetween February 1, 1971 and May 1, 1971, I f unctioned in the capacity of a 1548 228

Eugene F. Carter Staff Engineer for the GPU Service Corp. Previously, I was employed by Pennsyl-vania Electric Company ("Penelec"), one of the three operating subsidiaries of the GPU System, as System Engineer - Rate. From October 19, 1964 to 1971, my main experience with Penelec was in the Rate and Property Valuations Department.

Prior to that, I was employed by the Cory Corporation in Richmond, Virginia, in the capacity of Sales and Office Manager. From 1958 until my employment with Cory, I worked for Sylvania Electric Products, Inc., at Brookville, Pennsylvania, as a Product Engineer.

I have testified as a rate witness since 1969 in all Penelec retail rate proceedings, since 1970 as a rate witness for all Metropolitan Edison Company (" Met-Ed") retail rate proceedings and as a rate uitness for Jersey Central Power & Light including the former New Jersey Power & Light since 1970. I have also testified in rate matters in New York State. I have

~

submitted testimony in various FERC wholesale for resale rate caces relative to rate design. Finally, I testified in the recent Pennsylvania Generic Rate Structure Investigation Docket NO. 76-PRMD-7. The above companies are all operating companies of the parent corporation, GPU.

1548 229 Typical P.ill Comparisons Pennsylvania Utilities Rates in Effect December, 1979 RESIDENTIAL NO UATER HEATING 500 KUH/ MONTH 45 45 40 -

32.27 with 6.9 40

$36.41 mill increase 35 -

$33.53 -

35 I $$8'.84 T O 30 -

f/, -

30 0

$27.99 T

A A L E5 -

E3

$23.29 $22.80 B B I I L 20 -

20 L c L

C L $*

$ ci 15 -

15 fn m

.-s

"" e LJ1 10 -

10 ms 4 -

O Mb 5 -

- 5 N

V ox D

CD 3" O ,

O er 3& E u m' o a a c *

a a a E8 T 3 2 55 am ,

2. ca g, gg u g m

& K