ML18026A116

Letter Responding to the Letter of May 17, 1978 Enclosing Information for Antitrust Review of Operating License.

ML18026A116
Person / Time
Site:	Susquehanna
Issue date:	08/31/1978
From:	Curtis N Pennsylvania Power & Light Co
To:	Zelinsky W Office of Nuclear Reactor Regulation
References
Download: ML18026A116 (429)

Text

~~00gl0 SUSQUEHANNA SES INFORMATION FOR ANTITRUST REVIEW OF OPERATING LICENSE APPLICATION AUGUST, 1978 DOCKET NOS. 50-387 AND 50-388 PENNSYLVANIA POWER 5 LIGHT COMPANY

TWO NORTH NINTH STREET, ALLENTOWN, PA. 18101 PHONEs (215) 821-5151 pi,uo 31 197S Mr. William M. Zelinsky Electrical Engineer Power Supply Analysis Section Antitrust and Indemnity Group Nuclear Reactor Regulation U.S.Nuclear Regulatory Commission Washington, DC 20555 SUSQUEHANNA SES INFO%STION FOR ANTITRUST REVIEW OF OPERATING LICENSE APPLICATION ER 100450 FILE 841<<2 PLA-278

Dear Mr. Zelinsky:

Enclosed are five (5) 'copies of a document entitled "Information for Antitrust Review of Operating License Application." This information has been prepared in response to your Letter of May 17, 1978, and Regulatory Guide 9.3. The numbering of the stems included in the attached document corresponds to that used in R.G. 9.3.

If you have any questions on this material, please let me know.

Very truly yours, N. W. Curtis Vice President-Engineering 5 Construction WEB:dig PENNSYLVANIA POWER 8 LIGHT COMPANY

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW Anticipated excess or shortage in generating capacity resources not expected at the construction permit stage. Reasons for the excess or shortage along with data on how the excess will be allocated, distributed, or otherwise utilized or how the shortage will be obtained.

RESPONSE

(1) The recently filed Susquehanna SES Environmental Report - Operating License Stage (EROLS) responds to this question in Chapter 1, Section 1.1, System Demand and Reliability, Section 1.1.2, System Capacity, and Section 1.3, Consequences of Delay.

(2) For Allegheny Electric Cooperative (AE), EROLS Section l.la responds to this question.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTiTRUST REVIEW UESTION 1 b New Power Pools or Coordinating Groups or changes in structure, activities, policies, practices or membership of Power Pools or Coordinating Groups in which the Licensee was, is, or will be a participant.

RESPONSE

/

PP5L continues to be a member of the Pennsylvania-New Jersey-Maryland Interconnection (PJM), and also continues to plan and operate its system in accordance with standards accepted by the PJM Management Committee consistent with the reliability principles and practices of the Mid-Atlantic Area Council (MAAC).

Since the Susquehanna SES construction permit antitrust review, which was completed in April,,1972, a number of modifications have been made in the PJM Interconnection Agreement, interconnection Agreements between PJM and other power pools, and the MAAC Agreement. These modifications. are detailed in the documents contained in Appendix A.

(2) Allegheny Electric has experienced no changes in structure, activities, policies, practices or membership of power pools or coordinating groups in which they are a participant.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 c Changes in transmission with respect to (1) the nuclear plant, (2) interconnections, or (3) connections to wholesale customers.

RESPONSE

(1) A description of PP5L's transmission system (PPOL defines transmission voltages as 230 kV and above) was included in Section 8.2 of the FSAR.

Changes in the transmission system associated with the Susquehanna SES since the submission of the construction permit application were discussed in the Environmental Re ort Amendment No. 4 Februa 1976 and Amendment No. 5 Jul 1976 .

In January, 1978, PP5L finalized an agreement with Allegheny Electric Cooperative, Inc. (AE) for the sale of a 10't undivided interest in the Susquehanna SES. Concurrently, PPgL and AE entered into an agreement whereby AE shall solely own a specific continuous section of the Susquehanna-Sunbury 500 kV line comprising approximately 95>o of the total line and a one-third undivided interest in the right-of-way on which AE's section of the line will be constrUcted. The remainder of the line and'right-of-way will be owned by PP5L. AE's section of the line will be constructed, maintained and operated by PP6L as agent for AE.

(2) PP5L's transmission system, including the interconnections with adjoining systems, is shown in Figure 8.2-3 of the FSAR. This figure reflects changes that have occurred since the PSAR ~see PSAR Amendment 2, Response to Question 8, map entitled, "Proposed Major Transmission System, Summer-1971") was submitted. None of these changes is significant with respect to PP5L's dealings with adjoining utilities.

There have been no changes in the interconnection arrangements for AE since its purchase of the 10'4 interest in Susquehanna SES.

(3) There have been no changes with respect to transmission connections to wholesale customers for either PP5L or AE.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 d Changes in the ownership or contractual allocation. of the output of the nuclear facility. Reasons and basis for such changes should be included.

RESPONSE

In January of 1978, the Pennsylvania Power 5 Light Company (PP5L) finalized'n agreement with Allegheny Electric Cooperative, Inc. (AE) for the sale of a 10< undivided interest in the two-unit (1050 MW/unit) Susquehanna Steam Electric Station (Susquehanna SES) according to the schedule below:

Ownership Percent PPOL 90 1890 AE 10 210 Total 1~00 2100 Under the terms of the agreement, the two parties are owners as tenants in common. PPPL, however, has the sole responsibility for planning, licensing, design, construction, testing, operation and maintenance of Susquehanna SES.

Through the AE's participation in Susquehanna SES, PP5L has reduced its financing burden by about $ 200 million. Wi'thout such participation, PPOL would have to sell an additional $ 200 million of its securities when its needs for outside financing are at an all time high. For example, PP5L's 1977-1979 construction program is expected to require the expenditure of

$ 1.3 billion with about three-quarters of this expected to be obtained from outside financing. In addition, about $ 25 million of maturing long-term debt obligations and $ 14 million of preferred and preference stock sinking fund requrements are planned to be met during 1977-1979 by sales of securities. I

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 e)

List changes in design, provisions, or conditions of rate schedules and reasons for such changes. Rate increases or decreases are not necessary.

RESPONSE

(1) On December 29, 1975, in compliance with FPC Order No. 517, PP5L submitted a modification to its fuel adjustment clause applicable to its fifteen resale customers. Essentially, the change altered the clause from one which tracked fuel costs to one which tracked energy costs'y order at Docket No. ER 76-398, after a period of suspension, the FPC permitted the modification subject to refund to become effective March 15, 1976. Resale customers were permitted to intervene and hearings were held. The initial decision by the Administrative Law Judge was issued March 14, 1977, finding that PP5L's proposed modification to the clause to be just, reasonable and otherwise lawful. Briefs were filed by staff, intervenors and PP5L. To date, no further action has been taken.

There have been no other material changes in the design, provisions or conditions of PP5L rate schedules.

(2) There have been no changes in the design, provisions or conditions of AE's rate schedules since AE purchased an interest in Susquehanna SES.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 f List of all (1) new wholesale customers, (2) transfers from one rate schedule to another, including copies of schedules not previously furnished, (3) changes in licensee's service area, and (4) licensee's acquisitions or mergers.

RESPONSE

(1) On November 22, 1977, a contract was signed between PP5L and UGI Corporation to supply its Luzerne Electric Division with any needed electric requirements above that of their generating capacity. This arrangement extends to 1986 with diminishing supply thereafter to terminate in 1989.

The status of the Borough of Hatfield changed from a partial requirements to a full requirements customer on April 23, 1977.

(2) On May 26, 1978, the Borough of Mifflinburg, served=by PPOL, elected to change the delivery voltage from 12,000 volts to 66,000 volts.

At the time 66,000 volt service was established, the customer was transferred from the rate applicable to 12,000 volt service to that applicable to 66,000 volt service. Copies of PP5L's rate schedules applicable to the 12,000 and 66,000 volt service are attached.

(3) There have been no changes in PP5L's service area.

(4) On December 31, 1976, PPOL acquired all the outstanding stock of Hershey Electric Company (HEC), a wholly-owned subsidiary of Hershey Estates. The acquisition of the capital stock and the repayment of all debts owned by Hersehy Electric approximated $ 7.9 million.

Hershey Electric Company is vested with lawful authority to supply and is supplying to the public electric, light, heat and power service in a 28-square mile territory in and around Hershey, Pennsylvania. At the time of acquisition, Hershey Electric Company had about 5,000 customers and operating revenue from the calendar year 1975 of

$ 8,690,000 and net income of $ 358,000. Hershey Electric Company presently operates as a wholly-owned electric distribution subsidiary of PP4L and it is intended to be merged into PP5L when the construction of the necessary tie-lines is complete.

Hershey Electric Company, having no generation capacity of its own, continues to purchase all of its requirements for electric power from Metropolitan Edison Company, a subsidiary company of General Public Utilities Corporation.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW (5) With respect to items (I) through (4), there have been no changes for AE.

PRNNHYI.Vhi";IA PAWi.'8 & J..I(ilIT COMPANY C

SUPPI'".i I'N'I'O 1 s.

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I'.PC J~~.TI: SCIII.'Ii:JI.E Vo. 55 I" I'ICTIVL'2" G-V2 APPLICATION Ol'CIIHDULE Service for r< sale purposes to th< Borough of MifQinburg Pcnnsylva>>ia, under cont,rac:t for supply hy Company exclusively, from available lines of 1,000 volts or higher. Customer furnishes and maintains all equipment necessary to transform the energy from line voltage.

NI' MONTHLY P.A,'I'I

$ 2.80 per kilowatt:for the first 150 kilowatts of the Billing KW.

1.95 pcr lcilowatt for all additional kilowatts of the Billing KW.

The "hove charges entitle customer to use 50 KWH for each kilowatt of the Billing KW.

2.20 cts. per KWH for thc next 50 I<V'H per kilowatt of the Billing IQU.

1.42 cts. pcr 1<EVII for the next 150 KWH per lcilowatt of the Billing KW, but not more than 150, 000 KWI1.

0. 83 cts. per KWH for the next 200 IDVH per kilowatt of the Billing KW.

0. V2 cts. per KWH for all additional KWH.

t The attached ILLT.ixCi IOU 1 ucl Mjustment Clause applies to all KWH supplied under this rate.

The Billing K%V is the sum of (A) and (B) as follows:

(A) The average kilowatts supplied during the fou'i 15 minute periods of maximum use during (he on-peak hours of the current month.

(B) The average kilowatts similarly determined during the remaining hours, less item (A), and the remainder divided by 2. Item (B) shall not be less than zero.

The minimum Billing KW is 150 kilowatts.

ON"PEAK HOUR'S Mondays to Fridays Inclusive (Excluding Holidays): 7 A. M. to 7. P. M.

": Holidays arc Ncw Year's Day, Memorial Day, Indepehdence Day, Labor Day, Thanks-giving'Day and Christmas Day.

Company rese> ves the right to change from time to time the hours specified above in accorclance with the operating conditions on Company's system.

I PAYMl;,NT The above nct rate applies when bills are paid on or'before the due date specified

~on thc bill, which is not loss than 30 days fi om the date bill is mailed. When not so paid th>> gross rate applies which is the above net rate plus 5'jo on the first $ 200. 00 of the then unpaid balance of the. monthly bill and 2'j> on tlute remainder. Hicreof.

CONTRA C'I'I"BIOP Not.!css than I vear.

l"PC IRATE S<'IIEDULI- "ÃO. ZO L'I')'L'C'1'IVI": Nay 26, 1978 AVPLICA'I'ION OF SCIIEDULE Service for resale purposes to thc gorouh of M~f .b Pennsylvania, u>>dcr contract for supply by Company exclusively, from available lines of 66,000 higher. Customer furmshes and maintains all equipment to transfo th voltage ~

'.bFT NONTEILY RATE 52.ZO 'cr kilowatt for thc first &,000 kilowatts of the Billing KN.

S2,35 per kilowatt for all additional kilowatts of the Billing KN.

The above charges entitle customer to use 50 KNH for each kilowatt of the Billing EN.

2.2 cts. per KNEI for the next 100 KNH per kilowatt of the Billing KW, but not more than 500,000 KNH.

1.0 cts. per KNH for the next.100 IOUH per kilowatt of the Billing,IOU.

.7 cts. per IOUH for all additional KNH.

The attached tuel Adjustment Clause applies to all EWH supplied under this rate.

BILLING IOU The Billing IOU is the sum of (A) and (B) as follows:,

(A)'The average kilowatts supplied during the four 15 minute periods of maximum use during the on-peak hours of the current month.

(B) The average kilowatts similarly determined during the remaining hours, less item (A), and the remainder divided by 2. Item (B) shall not be less than. zero.

r~

The minimum Billing EN is 1,000 kilowatts.

, ON"PEAK EIOURS hlondays to Fridays Inclusive (Excluding Holidays): Z,A.hI. to Z P.M.

Holidays are New Year's Day, Memorial Day, Independence Day, Labor'Day, Thanksgiving Day and Christmas Day.

Company reserves thc right to change from time to time the hours specified above in accordance with the operating conditions on Company's system.

e*

PAYhtFttT Tha above nct rate applies when bills cre paid on or before the due date specified on the bill,,which is not less than 30 days from the date bill is mailed. Nhcn not,so pni<l the gross rate applies which is the nbovc net rate plus 59, on the first S200.00 of

'=

the thon unpaid balance of thc monthly bill <<nd 2'L on the remainder thcrcof.

t'OiYTttAC r t'rt;tptt

, tent lrss t!um l yrer.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 List of those generating capacity additions committed for operation after the nucelar facility including ownership rights or power output allocations.

RESPONSE

(1) PP5L currently has no generating capacity additions committed for operation after the Susquehanna units are in-service. There is, however, the potential that PP5L's share of the Safe Harbor hydroelectric plant could be increased by 63 MW sometime after the Susquehanna units are in-service. PP5L owns one-third of the capital stock of Safe Harbor Water Power Corporation which holds a major project license for the operation of the Safe Harbor plant (230 MW) and is currently entitled to one-third of it's capacity (76 MW).

The 63 MW increase in capacity noted above is based on recent study results that indicate the feasibility of expanding the Safe Harbor plant from 230 MW to 417 MW by the addition of hydroelectric units into the five existing bays of the original p'ower house structure.

The current SO-year license for Safe Harbor expires on April 22, 1980.

In April, 1978, the Safe Harbor Water Power Corporation submitted an application to the Federal Power Commission, now known as the Federal Energy Regulatory Commission .(FERC) for a renewed 50-year operating license including installation of the five additional units. The final decision on whether any additions will be made is dependent upon receiving a new long-term license from FERC for the entire Safe Harbor generating station.

(2) AE's future capacity additions are discussed in EROLS Section l.la.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 h Summary of requests or indications of interest by other electric power wholesale or retail distributors, and licensee's response, for any type of electric service or cooperative venture or study.

RESPONSE

In September 1975, the Borough of Lansdale requested PP5L to submit a proposal to supply the electrical requirements to the Borough of Lansdale. An outline of the proposal was submitted to the Borough in April of 1977 with discussions thereafter. At this time, there are no active discussions taking place, and the Borough continues to be served by Philadelphia Electric Co. In August 1978, the Borough requested discussions with regard to a wheeling service by PPOL; these discussions are expected to take place in the near future.

In response to an inquiry in November 1975 from the Borough of Kutztown, PPOL made an offer to supply the total power requirement of the Borough for resale service at 66,000 volts. The Borough elected to continue to purchase its power needs from Metropolitan Edison Company.

In December 1975, Allegheny Electric Cooperative, Inc. requested that PP5L review the possibility of providing 66,000 volt service to a proposed substation of the Tri-County REC of Mansfield, Pennsylvania.

Subsequently, service was requested at 12 kV. Tentative terms have been given for providing 12,000 volt service to Tri-County.

In May 1978, Allegheny Electric Cooperative requested PPOL to prepare a proposal to supply 12,000 volt service to Sullivan County REC. At this time, PP5L is preparing a response to Sullivan County REC outlining the terms and conditions for service.

In June 1978, the Borough of Perkasie, a resale customer being served at 12,000 volts, requested PP4L to investigate serving the Borough at 66,000 volts. This request is presently being evaluated.

In September 1977, the General Public Utilities Corporation expressed an interest in purchasing capacity in amounts up to 500 MW and associated energy from PPfL'.s Susquehanna SES for the period June 1981 through May 1984. Negotiations are underway.

In February 1978, the City of Vineland (New Jersey) expressed an interest in purchasing capacity in amounts up to 30 MW and associated energy from PP5L's generating stations beginning in 1983 and continuing for an undefined period or purchasing an ownership interest in PPOL's genexating stations. PPgL responded that an ownership

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW interest in Martins Creek SES Units 83 5 t4 and from Susquehanna SES could be considered. The City of Vineland then expressed interest in purchasing 'an ownership interest in Susquehanna SES or purchasing capacity and associated energy from Susquehanna SES. Negotiations are underway.

In January 1978, the Atlantic City Electric Company expressed an interest in purchasing from PPgL's generating station capacity and associated energy in the amount of about 100 MW in 1983 and increasing thereafter for an undefined period or purchasing an ownership interest in PP4L's generating stations. PP5L responded that an ownership interest in Susquehanna SES or firm purchases of capacity and associated energy from Martins Creek SES Units t3 and 84 and from Susquehanna SES could be considered. Negotiations are underway.

(2) Southern Maryland Electric Cooperative, Inc. (SMECO) has recently requested information from AE on the possibility of joint ownership in future generating facilities. Further discussions on this request are planned.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 2 Licensees whose construction permits include conditions pertaining to antitrust aspects should list and discuss those actions or policies which have been implemented in accordance with such conditions.

RESPONSE

No conditions pertaining to antitrust aspects were included in the Susquehanna SES construction permits.

SUSQUEHANNA SES INFORMATION FOR ANTITRUST REVIEW OF OPERATING LICENSE APPLICATION AUGUST, 19?8 DOCKET NOS. SO-387 AND 50-388 PENNSYLVANIA POWER 5 LIGHT COMPANY

FRAIL TWO NORTH NINTH STREET, AI. EENTOWN, PA. I8101 PHONE: (215) 821-5151 AUG 31 1978 Mr. William M. Zelinsky Electrical Engineer Power Supply Analysis Section Antitrust and Indemnity Group Nuclear Reactor Regulation U.S.Nuclear Regulatory Commission Washington, DC 20555 SUSQUEHANNA SES INFORMATION FOR ANTITRUST REVIEW OF OPERATING LICENSE APPLICATION ER 100450 FILE 841-2 PLA-278

Dear Mr. Zelinsky:

Enclosed are five (5) copies of a document entitled "Information for Antitrust Review of Operating License Application." This information has been prepared in response to your Letter of May 17, 1978, and Regulatory Guide 9.3. The numbering of the items included in the attached document corresponds to that used in R.G. 9.3.

If you have any questions on this material, please let me know.

Very truly yours, 4A N. W. Curtis Vice President-Engineering 5 Construction WEB:dig PENNSYI.VANIA POWER 8 ll &H T COPAPANY

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW Anticipated excess or shortage in generating capacity resources not expected at the construction permit stage. Reasons for the excess or shortage along with data on how the excess will be allocated, distributed, or otherwise utilized or how the shortage will be obtained.

RESPONSE

(1) The recently filed Susquehanna SES Environmental Report - Operating License Stage (EROLS) responds to this question in Chapter 1, Section 1.1, System Demand and Reliability, Section 1.1.2, System Capacity, and Section 1.3, Consequences of Delay.

(2) For Allegheny Electric Cooperative (AE), EROLS Section l.la responds to this question.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 b New Power Pools or Coordinating Groups or changes in structure, activities, policies, practices or membership of Power Pools or Coordinating Groups in which the Licensee was, is, or will be a participant.

RESPONSE

/

PP5L continues to be a member of the Pennsylvania-New Jersey-Maryland Interconnection (PJM), and also continues to plan and operate its system in accordance with standards accepted by the PJM Management Committee consistent with the reliability principles and practices of the Mid-Atlantic Area Council (MAAC).

Since the Susquehanna SES construction permit antitrust review, which was completed in April, 1972, a number of modifications have been made in the PJM Interconnection Agreement, interconnection Agreements between PJM and other power pools, and the MAAC Agreement. These modifications, are detailed in the documents contained in Appendix A.

(2) Allegheny Electric has experienced no changes in structure, activities, policies, practices or membership of power pools or coordinating groups in which they are a participant.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 c Changes in transmission with respect to (1) the nuclear plant, (2) interconnections, or (3) connections to wholesale customers.

RESPONSE

(1) A description of PP5L's transmission system (PP5L defines transmission voltages as 230 kV and above) was included in Section 8.2 of the FSAR.

Changes in the transmission system associated with the Susquehanna SES since the submission of the construction permit application were discussed in the -Environmental Re ort Amendment No. 4 Februa 1976 and Amendment No. 5 Jul 1976 .

In January, 1978, PP5L finalized an agreement with Allegheny Electric Cooperative, Inc. (AE) for the sale of a 10't undivided interest in the Susquehanna SES. Concurrently, PPpL and AE entered into an agreement whereby AE shall solely own a specific continuous section of the Susquehanna-Sunbury S00 kV line comprising approximately 95~a of the total line and a one-third undivided interest in the right-of-way on which AE's section of the line will be constructed. The remainder of the line and'right-of-way will be owned by PP5L. AE's section of the line will be constructed, maintained and operated by PPOL as agent for AE.

(2) PP5L's transmission system, including the interconnections with adjoining systems, is shown in Figure 8.2-3 of the FSAR. This figure reflects changes that have occurred since the PSAR ~see PSAR Amendment 2, Response to +estion 8, map entitled, "Proposed Major Transmission System, Summer-1971") was submitted. None of these changes is significant with respect to PPgL s dealings with adjoining utilities.

There have been no changes in the interconnection arrangements for AE since its purchase of the 10% interest in Susquehanna SES.

(3) There have been no changes with respect to transmission connections to wholesale customers for either PPgL or AE.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 d Changes in the ownership or contractual allocation. of the output of the nuclear facility. Reasons and basis for such changes should be included.

RESPONSE

In January of 1978, the Pennsylvania Power g Light Company (PP5L) finalized'n agreement with Allegheny Electric Cooperative, Inc. (AE) for the sale of a 10< undivided interest in the two-unit (10SO MW/unit) Susquehanna Steam Electric Station (Susquehanna SES) according to the schedule below:

Ownership Percent PPOL 90 1890 AE 10 210 Total 100+ 2100 Under the terms of the agreement, the two parties are owners as tenants in common. PPgL, however, has the sole responsibility for planning, licensing, design, construction, testing, operation and maintenance of Susquehanna SES.

Through the AE's participation in Susquehanna SES, PP5L has reduced its financing burden by about $ 200 million. Without such participation, PP5L would have to sell an additional $ 200 million of its securities when its needs for outside financing are at an all time high. For example, PP5L's 1977-1979 construction program is expected to require the expenditure of

$ 1.3 billion with about three-quarters of this expected to be obtained from outside financing. In addition, about $ 2S million of maturing long-term debt obligations and $ 14 million of preferred and preference stock sinking fund requrements are planned to be met during 1977-1979 by sales of securities.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 e List changes in design, provisions, or conditions of rate schedules and reasons for such changes. Rate increases or decreases are not necessary.

RESPONSE

(1) On December 29, 1975, in compliance with FPC Order No. 517, PP5L submitted a modification to its fuel adjustment clause applicable to its fifteen resale customers. Essentially, the change altered the clause from one which tracked fuel costs to one which tracked energy costs.

By order at Docket No. ER 76-398, after a period of suspension, the FPC permitted the modification subject to refund to become effective March 15, 1976. Resale customers were permitted to intervene and hearings were held. The initial decision by the Administrative Law Judge was issued March 14, 1977, finding that PP5L's proposed modification to the clause to be just, reasonable and otherwise lawful. Briefs were filed by staff, intervenors and PP5L. To date, no further action has been taken.

There have been no other material changes in the design, provisions or conditions of PP5L rate schedules.

(2) There have been no changes in the design, provisions or conditions of AE's rate schedules since AE purchased an interest in Susquehanna SES.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 f List of all (1) new wholesale customers, (2) transfers from one rate schedule to another, including copies of schedules not previously furnished, (3) changes in licensee's service area, and (4) licensee's acquisitions or mergers.

RESPONSE

(1) On November 22, 1977, a contract was signed between PP5L and UGI Corporation to supply its Luzerne Electric Division with any needed electric requirements above that of their generating capacity. This arrangement extends to 1986 with diminishing supply thereafter to terminate in 1989.

The status of the Borough of Hatfield changed from a partial requirements to a full requirements customer on April 23, 1977.

(2) On May 26, 1978, the Borough of Mifflinburg, served by PP5L, elected to change the delivery voltage from 12,000 volts to 66,000 volts.

At the time 66,000 volt service was established, the customer was transferred from the rate applicable to 12,000 volt service to that applicable to 66,000 volt service. Copies of PP5L's rate schedules applicable to the 12,000 and 66,000 volt service are attached.

(3) There have been no changes in PP5L's service axea.

(4) On December 31, 1976, PPfL acquired all the outstanding stock of Hershey Electric Company (HEC), a wholly-owned subsidiary of Hershey Estates. The acquisition of the capital stock and the repayment of all debts owned by Hersehy Electric approximated $ 7.9 million.

Hershey Electric Company is vested with lawful authority to supply and is supplying to the public electric, light, heat and power service in a 28-square mile territory in and around Hershey, Pennsylvania. At the time of acquisition, Hershey Electric Company had about 5,000 customers and operating revenue from the calendar year 1975 of

$ 8,690,000 and net income of $ 358,000. Hershey Electric Company presently operates as a wholly-owned electric distribution subsidiary of PP5L and it is intended to be merged into PP5L when construction of the necessaxy tie-lines is complete.

the Hershey Electric Company, having no generation capacity of its own, continues to purchase all of its requirements for electric power from Metropolitan Edison Company, a subsidiary company of General Public Utilities Corporation.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW (5) With respect to items (I) through (4), there have been no changes for AE.

PRNNHYLVh~~llh PC)KVI:B & l.l(IHT COMPANY SUPPI;l",':si l'.N'I'4O. 1

., TO.

j"PC Jlh Tl"'CIILI)tJLEiVO. 55 El Fi CTIVE: 12-5-72 APPLICATION Ol GCIIEDULE Service for rc saic. purposes to th< Borough of Mifflinburg Pennsylvania, under cont,rac.t for supply by Company cx-lusivc:ly, from available lines of 1,000 volts or higher. Custoiner furnishes and mainitains all equipment necessary to transform the energy from line voltage.

NI T MONTHLY I'.X'I'F

$ 2.80 per kilowatt.'for the first 150 kilowatts of the Billing KW.

1.95 pc.'r kilowatt for all additional kilowatts of the Billing KW.

The above charges entitle customer to use 50 KWH for each kilowatt of the Billing KW.

2.20 cts. per KWH for the next 50 KWH per kilowatt of the Billing IVV.

1.42 cts. pcr 1CLVII for the next 150 KWH per lcilowatt of the Billing KW, but not more than 150, 000 KWI'1.

0. 83 c(s. per KWH for the next 200 IDVH per kilowatt oi'he Billing KW.

0. 72 cts. per I<WET for all additional KWEI.

ILLTNPi IVV The Billing KlV is the sum of (A) and (8) as follows:

(A) The average kilowatts supplied during the four 15 minute periods of maximum use during the on-peak hours of the current month.

(B) The average kilowatts similarly cletermined during the remaining hours, less item (A), and the remainder divided b'y 2. Item (B) shall not be less than=zero.

The minimum Billing I<W is 150 kilowatts.

4 ON-PEAK HOURS Mondays to Fridays Inclusive (Excluding Holidays): 7 A. M. to 7. P. M.

'.,Holidays are Ncw "eai's Day, Memorial Day, Indepehdence Day, Labor Day, Thanks-giving'-Day and Christmas Day.

Company reset ves the right to change from time to time the hours specified above in accorclance with the operating conditions on Company's system.

PA YM1.", N'I' Thr above nct rate applies when bills are paid on or before the due date specified

~on thc bill, which is not less than 30 days Q om thc date bill is mailed. When not so paid th>> gross Jatc applies which is thc above net rate plus 5% on the first $ 200.00 of the thcri unpai<l balance of thr. monthly bill and 2'j> on tlute remainder tficr'eof.

CO%i'TRA C'l'l"JiIOli Not '.r.ss than 1 vear.

l"PC INTL S("IIL"DULLNO. 70 L']'1'L'CTIVL': May 26, 1978

~ '

d AI'PLlCA'I'IOItt OF SCllEDULI:.

Service for resale purposes to the borough of Mgf u>>dcr contract for supplY by Company exclusively, from available li of 66,0 higher. Customer furnishes and maintains all equipment t t f

voltage,

!tt',ET MONTFILY RATE

$ 2.70 pcr kilowatt for thc first 8,000 kilowatts of the Billing KN.

$ 2e35 per kilowatt for all additional kilowatts of the Billing KN.

The above charges entitle customer to use 50 IGUH for each kilowatt of the Billing KN.

cts. per KNEI for the next 100 KNH per kilowatt of the Billing KN, but

~ 'ot more than 500,000 KNH.

1.0 cts. per KNH for the next.100 1GUH per kilowatt of the Billing,KN.

.7 cts. per IGUH for all additional KNH.

. The attached Fuel Adjustment Clause applies to all KNH supplied under this rate.

BILLING KN The Billing IGU is the sum of (A) and (B) as follows:

(A)'The average kilowatts supplied during the four 15 minute periods of maximum use during the on-peak hours of the current month.

(B) The average kilowatts similarly determined during the remaining hours, less item (A), and the remainder divided by 2. Item (B) shall not be less than. zero.

~

The minimum BQling hN is 1,000 kilowatts.

~ '

e e

ON-PEAK FIOURS Mondays to Fridays Inclusive (Excluding Holidays): Z,A.hl. to.Z P.M.

Holidays are New Ycnr's Day, Memorial Day, Independence Day, Labor'Day, Thanksgiving Day and Christmas Day.

b Company reserves the right to chango from time to time the hours specified above in accordance with the operating conditions on Company's system.

e PAYNEttT The above nct rate applies tchen bills era paid on or before the dne date specified on the bill,.which is not less thnn 30 dnys from the date bill is mailed. Nhcn not so pni<l thc gross rntc applies which is thc nhovc nct rate plus 59, on the first $ 200.00 of the the>> unpnid bnl>>ncc of thc monthly hill >>nd 2'L on the remainder thereof.

('Oih'I'RA(.'IER10l) l

. Not less tliii>> 1 venr.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 1 List of those generating capacity additions committed for operation after the nucelar facility including ownership rights or power output allocations.

RESPONSE

(1) PP5L currently has no generating capacity additions committed for operation after the Susquehanna units are in-service. There is, however, the potential that PP5L's share of the Safe Harbor hydroelectric plant could be increased by 63 MW sometime after the Susquehanna units are in-service. PP5L owns one-third of the capital stock of Safe Harbor Water Power Corporation which holds a major project license for the operation of the Safe Harbor plant (230 MW) and is currently entitled to one-third of it's capacity (76 MW).

The 63 MW increase in capacity noted above is based on recent study results that indicate the feasibility of expanding the Safe Harbor plant from 230 MW to 417 MW by the addition of hydroelectric units into the five existing bays of the original p'ower house structure.

The current 50-year license for Safe Harbor expires on April 22, 1980.

In April, 1978, the Safe Harbor Water Power Corporation submitted an application to the Federal Power Commission, now known as the Federal Energy Regulatory Commission .(FERC) for a renewed 50-year operating license including installation of the five additional units. The final decision on whether any additions will be made is dependent upon receiving a new long-term license from FERC for the entire Safe Harbor generating station.

(2) AE's future capacity additions are discussed in EROLS Section l.la.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST. REVIEW UESTION 1 h Summary of requests or indications of interest by other electric power wholesale or retail distributors, and licensee's response, for any type of electric service or cooperative venture or study.

RESPONSE

In September 1975, the Borough of Lansdale requested PP5L to submit a proposal to supply the electrical requirements to the Borough of Lansdale. An outline of the proposal was submitted to the Borough in April of 1977 with discussions thereafter. At this time, there are no active discussions taking place, and the Borough continues to be served by Philadelphia Electric Co. In August 1978, the Borough requested discussions with regard to a wheeling service by PP5L; these discussions are expected to take place in the near future.

In response to an inquiry in November 1975 from the Borough of Kutztown, PP5L made an offer to supply the total power requirement of the Borough for resale service at 66,000 volts. The Borough elected to continue to purchase its power needs from Metropolitan Edison Company.

In December 1975, Allegheny Electric Cooperative, Inc. requested that PPOL review the possibility of providing 66,000 volt service to a proposed substation of the Tri-County REC of Mansfield, Pennsylvania.

Subsequently, service was requested at 12 kV. Tentative terms have been given for providing 12,000 volt service to Tri-County.

In May 1978, Allegheny Electric Cooperative requested PP5L to prepare a proposal to supply 12,000 volt service to Sullivan County REC. At this time, PP5L is preparing a response to Sullivan County REC outlining the terms and conditions for service.

In June 1978, the Borough of Perkasie, a resale customer being served at 12,000 volts, requested PPpL to investigate serving the Borough at 66,000 volts. This request is presently being evaluated.

In September 1977, the General Public Utilities Corporation expressed an interest in'urchasing capacity in amounts up to 500 MW and associated energy from PPPL'.s Susquehanna SES for the period June 1981 through May 1984. Negotiations are underway.

In February 1978, the City of Vineland (New Jersey) expressed an interest in purchasing capacity in amounts up to 30 MW and associated energy from PP4L's generating stations beginning in 1983 and continuing for an undefined period or purchasing an ownership interest in PPOL's generating stations. PPgL responded that an ownership

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW interest in Martins Creek SES Units 83 5 84 and from Susquehanna SES could be considered. The City of Vineland then expressed interest in purchasing hn ownership interest in Susquehanna SES or purchasing capacity and associated energy from Susquehanna SES. Negotiations are underwayo In January 1978, the Atlantic City Electric Company expressed an interest in purchasing from PP5L's generating station capacity and associated energy in the amount of about 100 MW in 1983 and increasing thereafter for an undefined period or purchasing an ownership interest in PPgL's generating stations. PP5L responded that an ownership interest in Susquehanna SES or firm purchases of capacity and associated energy from Martins Creek SES Units 83 and ft4 and from Susquehanna SES could be considered. Negotiations are underway.

(2) Southern Maryland Electric Cooperative, Inc. (SMECO) has recently requested information from AE on the possibility of joint ownership in future generating facilities. Further discussions on this request are planned.

SUSQUEHANNA SES INFORMATION REQUESTED FOR NRC ANTITRUST REVIEW UESTION 2 Licensees whose construction permits include conditions pertaining to antitrust aspects should list and discuss those actions or policies which have been implemented in accordance with such conditions.

RESPONSE

No conditions pertaining to antitrust aspects were included in the Susquehanna SES construction permits.

PEN) rSYLVANIA REMI JERSEYMAR YLAN0 I NTERCON RECTION 955 JEFFERSON AVENUE VALLEYFORGE col if'ORATE CENTER NORRISTOWN, PENNSYLVANIA 19401 12151 GGG 75GO September 13, 1976 t Federal Power Commission 825 North Capitol'" Street, N.E.

Washington, D. C- 20426 Attention: Mr. Kenneth F. Plumb, Secretary I

Gentlemen:

There is filed herewith, on behalf of the following listed companies, a Supplemental Agreement modifying the Interconnection Agreement between the Virginia Electric and Power Company (VEPCo) and the Pennsylvania-New Jersey-Maryland Group (PJM Group) dated September 30, 1965 as supplemented (Agreement),

, which is on file with the Commission and is identified by -the Rate Schedule

',-Numbers shown for each listed company.

~corn nn FPC Rate Schedule Number Virginia Electric and Power Company 73 Public Service Electric and Gas Company 37 Philadelphia Electric Company 28 Pennsylvania Power & Light Company 43 Baltimore Gas and Electric Company 18 Jersey Central Power & Light Company 23 Metropolitan Edison Comp'any 28 Pennsylvania Electric Company 48 Potomac Electric Power Company 23 It is requested that the proposed Supplements'1 Agreement be assigned an ei! ective I

date of October 15, 1976.

All of t)te Parti s to the Agreement have received copies of this filing which is made on behalf of such Parties by the undersigned in accordance with the author'.zation contained in Section 5.6 of the Agreement. The fo?.lowing documents are submitted herewith in connection with this filing:

1) Six (6) copies of .this letter.

2) Twenty eight (28) copies of the proposed Supplemental Agreement with attached sct dules

3) Six (6) copi s of a summary of schedule rr.visions and additions.

4) Six (6) copies of a statement of the basi>> for the fixed rates for.

services provided in the revised schedules and computations in support Of..rtl)CSe- rateS.

Public Sorvlce Electric ond Gas Comp my General Public Utilitios Corporation Phllodelphia Eloctric Company Jersey Control Power dr Litrt t Company Pennsylvania Power ttr Light Comparer Metropolitan Edaon Compt ny Uoltlmoro Gos and Electric Company Pennsylvania Eloctric Comp sny Potomac Electric Powor Company

5) Six (6) copies of a form of Notice of Agreement suitable for publication in the Federal Register.

6) A check covering the required filing fee.

The revisions contained in the Supplemental Agreement and the revised and new schedules are proposed: (1) to clarify the wording of the Agreement, (2) to bring it into closer conformity with other'agreements,-(3) to delete provisions which are no longer required, (4) to increase certain charges to a more equitable basis or to more nearly cover present costs of service, and (5) to provide for charges for new services and services involving third Parties. The reasons for the several changes involving pricing are more specifically described as follows:

Extended Emer encv Service - Proposed Schedule, 5.02 provides that, under certain specified conditions, an additional charge of $ 0.035 per kiloOatt per day, or alternatively, when the service is not provided directly but from third Parties, a charge of $ 0.021 per kilowatt per day, be applied in connection with the supply of emergency service. The $ 0.035 represents about half of a reasonable fixed charge for installed capacity service, i.e., about half of the fixed charge for Short Term Power

($ 0.50 per kilowatt per week is equivalent to $ 0.071 per kilowatt per day). The Extended Emergency Service is to be supplied when it is not possible or not appropriate to arrange for a Short Term Power Transaction. Because the added charge is applied automatically and for short periods and results from the mutual assistance that one Party provides for the other, it is appropriate that the rate be at a level less than the full capacity charge (approximately 50/. of th'e full capacity'charge).

Short Term Power - The rate for Short Term Power that is provided in Schedule 7.02 is increased and the conditions of supply are more" completely defined. The increase is to bring the price in line with present costs and other agreements of both Parties.

The better definition'f the service conditions is necessary be placed on such transactions and if if greater reliance is to they are to be effectively used in reducing the overall costs of providing capacity. The present Agreement provides for a charge of

$ 0.06 per kilowatt per day; based on a 5-day week this is equivalent to $ 0.30 per kilowatt per week. The revision increases this charge to $ 0.50 (based on a 6-day week);

it also provides that a charge of $ 0.125 per kilowatt per week be applied when the Short Term Power is delivered by either Party to or from another area.

There were no Short Term Power transactions between VEPCo and the PJM Grou:>

during the twelve months immediately preceding the date on which the proposed increase in rate pro"ided in Schedule 7.02 is to become effective. IIence, no comparison of revenues is possible. Rates are proposed for new services including Extended Emergency Service, and delivery of Short Term Power or Extended Em"rgency Service by either Party to or from a third Party. Because of the uncertainty of the needs of either Party or others for the services provided for, predict the transact.',ons and revenues und'er the proposed it is impossible to schedules.

The proposed rates for Short Term Power are sImilar to rates previously fi'.ed by VEPCo and the PJM Group under agreements with othe .s, and the proposed rates for Extended Emergency Service are similar to rates previously filed by the PJM Group in interconnection agreements with The Cleveland Electric Illuminat'ing Company, th '.

Allegheny Power System Group and the New York Power Pool except that in the lat:er agreement the service was identified as "Supplemental Operating Capacity". Sup port for the several proposed rates is provided in the enclosed statement.

No facilities 'are required to be installed or modified in order to provide the services covered by the proposed revisions.

Copies of this letter and all enclosures will be furnished promptly to the Regulatory Commissions of Pennsylvania, New Jersey, Maryland, Delaware, Virginia, North Carolina, West Virginia and the District of Columbia for their information.

A check in the amount of $ 1,300 is enclosed to cover the filing fee in accordance with the Commission's Regulations determined as follows: $ 500 for a moderately complex Rate Schedule for one Party pursuant to Section 36.2(f) and

$ 100 for each additional submittal for each of the other Parties to the Agreement pursuant to Section 36.2(e).

Very truly yours, Wilmer S. Kleinbach Manager TPW:cab Enclosures cc: Virginia Electric and Power Company

SUPPLF~1ENTAL AGREE1 lENT BETE'EEN VIRGINIA ELECTRIC AND PONER COMPANY Referred to as VEPCo PUBLIC SERVICE ELECTRIC AND GAS COMPANY PHILADELPHIA ELECTRIC COMPANY PENNSYLVANIA PO'iKR & LIGHT COMPANY BALTIMORE GAS AND ELECTR1C CO1IPANY JERSEY CENTRAL POLAR & LIGHT COMPANY METROPOLITAN EDISON COMPANY PENNSYLVANIA ELECTRIC COMPANY POT0~1AC ELECTRIC 'POWR COMPANY Referred to collectively as the PJM GROUP This Supplemental Agreement to the Interconnection Agreem<:nt (Agreement) between VEPCc and the PJM Group dated september 30, 1965, as amended and supplemented, clarif'.i;es the wording of that Agreement; brings it into closer conformity with other agreements; deletes provis.ons which are no longer required; increases

'certain charges in order to cover present costs of servic>>, and provides charges for n"w services and

'servici:s involving third parties. In accordance with the au"horization provided in the Agreement, this.

Supplemental Agreement is submitted for filing with the Fe leral Power Commission by the Manager of the Office of the Pennsylvania-New Jers y-Maryland Interconnection, on behalf of all Signatories.

SUPPLEMENTAL AGREEMENT BETWEEN

'YL'I'Co hND L)E PJM GROUP THIS SUPPLEMENTAL AGREEMENT, made as of the first day of September, 1976, by and between VIRGINIA ELECTRIC AND POWER COMPANY, a Virginia corporation, herein'-

after referred to as "VEPCo", and the following companies hereinafter referred to collectively as the "PJM Group": PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a New Jersey. corporation> PHILADELPHIA ELECTRIC COMPANY> a Pennsylvania corporation, PENNSYLVANIA POWER & LIGHT COMPANY, a Pennsylvania corporation, BALTIMORE GAS AND ELECTRIC COMPANY, a Maryland corporation, JERSEY CENTRAL POWER & LIGHT COMPANY, a C

New Jersey corporation, METROPOLITAN EDISON COMPANY, a Pennsylvania corporation, PENNSYLVANIA ELECTRIC COMPANY, a Pennsylvania corporation, the latter three companies all being subsidiaries of General Public Utilities Corporation, and POTOMAC ELECTRIC POWER COMPANY, a District of Columbia and Virginia corporation (hereinafter VEPCo on the one hand and the PJM Group on the other hand are sometimes referred to individually as a "Party" and together as "Parties" and the individual companie which execute this SUPPLEMENTAL AGREEMENT are sometimes referred to individuall) as "Signatory" and collectively as "Signatories" );

WHEREAS, the Signatories hereto are Signatories to an agr'cement dated i ptember 30, 1965 as amended and supplemented, known as the Interconnection Agreement between VEPCv and the PJM Group (Agreement); and WHEREAS, it is de;ired to amend the Agreement ta clarify and update its provisions.

NOW, THEREFORE, the Signatories hereto hereby agree as follows:

Section I. The A'greement shall be and is hereby amended:

A. By deleting the first MlKREAS clause and inserting in lieu thereof the following'.

"WHEREAS, the electric system of VEPCo pursuant to appropriate agreements, is interconnected and is operated on a coordinated basis with the systems of Appalachian Power Company, Carolina Power 6 Light Company and Allegheny Power System, and all such systems are also interconnected and their operations coordinated with others not Signatories; and" B. By deleting Sections. 1.1, 1.2 and 1.3 and inserting in lieu thereof the

'ollowing:,

"1.1 In order to realize the full benefits of interconnection, VEPCo

.and the PJH Group shall'ooperate in the exchange of information with regard to pertinent matters affecting the development and reliable operation of their respective systems, sh'all cooperate in the determination of the benefits of interconnection, and shall coordinate the operation of their respective generating and trans-mission facilities so long as thi.s does not violate or interfere with any obligations of the Parties to others.

"1.2 Each P arty shall have facilities or contractual arrangements adequate to serve its own load and to provide reserve, and shall exercise reasonable care to design, construct, maintain, and operate its facilit: es, in accordance with good utility operating practice, i ~

such manner. as to avoid imposing a burden on the other Party's system facilities 0

through the unauthorized utilization of transmission or otherwise (i.ereinafter referred to as "Burden" ). If at any time the record over a reasonable prior period shows clearly that one Party is 2

placing a burden upon tlute other, the Party causing such burden shall take -such measures as are necessary to remove the burden from the other.,

or the Parties shall enter into such arrangements as shall provide for equitable compensation to the Party being burdened. Either Party may.

install and operate on its system such relays, disconnecting devices, and other equipment as it may deem appropriate for the protection of its system or for relief of a burden to its system.

"1.3 Each Party shall provide or otherwise arrange for operating reserve capacity sufficient for reliable operation of its system- Any operating reserve capacity arranged for by one Party with the other Party shall be accounted for as an operating capacity transaction."

'C. By deleting the parenthetical phrases beginning on lines 4 and 17 of Section 1.7.

D. By deleting Sections 2.5 and 2.8.

E. By deleting Section 3.6'nd inserting in lieu thereof the following:

Appropriate metering devices shall I'3.6 be installed as required to measure the energy flow at the point of interconnection between the Parties and at such other points of interconnection as may from time to time be established. Each Party shall maintain records of the quantities of energy interchanged on 'all the transmission lines

'interconnecting the'arties."

F By deleting Sections 4.3 and 4.4 and inserting in lieu thereof the .following:

"4.3 The Parties shall'ay for services supplied in accordance with this Agreement in amounts determined in accordance with schedules attached nereto and made a part hereof.

"4.4 Bills for the charges for services sx pplied in accordance with this Agreement during each month will be rendered by the tenth day of the

~" following month and will be payable on the first banking day common to 0

the Parties hereto following the nineteenth day of the month in which they are rendered. Interest on unpaid amounts on any bill rendered under this Agreement shall accrue at ten percent (10%) per annum from the date due until the date upon which payment is made."

G. By deleting Schedules 1.01, 2.01 and 3.01.

H. By deleting Schedules 4.01, 5.01, 6.01 and 7.01 and adding the following Schedules:

4 02 - ECONOMY OPERATING CAPACITY AND ENERGY TRANSACTIONS 5.02 - EMERGENCY OPERATING CAPACITY AND ENERGY Tf44NSACTXONS 6 02 - SCHEDULING AND ACCOUNTING 7 02 - SHORT TERM POMER 9.01 - OTHER ENERGY TRANSACTIONS Section II. EXCEPT as hereinabove provided, the terms and conditions of the XN WITNESS WHEREOF, the Signatories hereto have caused these presents to be signed in their respective names, by their respective'uthorized officers, as of the day and year first above written.

VXRGIN)A ELECTRXC AND PCMER COMPARE sy +~. 7 sc%li~~~f.

Vice Presidpnt PUBLXC.SEPVICE ELECTRIC AND GAS COMPANY Vice . sident

PHILADELPHIA ELECTRIC COMPANY P (

By I ice President

~ i

'" "V<" I III >Pie>>'a " I' ~ '<<ll i'0 ~ ' t ~ II Itive f ~ a es ~ >> i ~ I~ w ir, ~ + v ~ ~

By i ~ ~ 'l PENNSYLVANIA PONER & LIGllT COMPAN Y

~Lice

~~0~e~

Ftb" ident BALTI110RE GAS AND ELECTRIC COMPANY Vice President JERSEY CENTRAL PO'HER 6'LIGHT COMPANY i' ~II!. ~(,: ~l.ai'.,i (

Vice President METROPOLITAN EDISOiN COMPANY By 5 Vice President PENNSYLVANIA ELECTRIC COMPANY ice Preside t POTOMAC ELECTRIC POMER COMPANY

..rl ice President

(I,I tl I'Ilk It'I~ II ~ IN'<'tH'OaMIPI' ll'M&tfel&I lo,l I

~ ~ '

~ J eWea Aelh 1

SCHEDUI.E 4.02 TO INTERCOYVECTIOiv AGREEi~>E IT BETIiEEih VEPCo AND THE PZiI GROUP Issued September 1, 1976 Effective\ October 15, 1976 ECONO.IY OPERATING CAPACITY AND EYEPZiY TRANSACT10.'IS Section 1.4 of this Agreement provides for interchange of operating c'apacity and energy on an economy basis. Such interchange shall'e defined and accounted for as outlined below.

Section 1 - Economv 0 eratina Caoacit 1.1 An economy operating capacity transaction is defined as a scheduled interchange of operating capacity wherein one Party receives operating capacity from the other Party that replaces higher cost operating capacity of the receiving Party.

1.2 Economy operating capacity supplied shall be charged and paid for on the basis of the cost incurred for such supply plus, the amount, if any, paid for capacity obtained for this purpose from others not Signatories, to which shall be added one-half the difference between the cost to the supplying Party and the value to the receiving Party which shall be deemed to equal the calculated cost to it of making s hach capacity avail'able Section 2 - Economv Ener 2.1 An economy energy'ransaction is de:.ned as an interchange of energy wherein a Party schedules the receipt o.'nergy from the other Party to replace I igher cost energy of the receiving Party.

2.2 Economy energy shall be charged and Inlaid for on the basis of the cost of such energy generated and bought,  : f any, adjusted for trans-mission losses to the point or points where the energy leaves the system

<<2 Schedule ~i.02 or systems of the supplying Party, plus one-hall the diiference between the total supply cost so determined and the value of the scheduled energy to the receiving Party, which shall be deemed to equal the calculated cost to it of replacing such energy made available at the point or. points where such energy enters the system or systems of the receiving Party.

SCIIEDULE 5.02 TO INTERCOibiXECTIO'3 AGREEa~!E'AT BETWEEN VEPCo AXD T)lE PJif GROUP Issued September 1, 1976 Effective October, 15, 1976 EHERGEYCY OPERATING CAPACITY AYD EYERGY TRANSACTIONS Section 1.5 of this Agreement provides for emergency operating capacity and emergency energy transactions. Such emergency transactions shall be defined and accounted for as outlined below.

Section 1 - Emergency Onerating Capacity 1.1 An emergency operating capacity transaction is defined as a scheduled interchange of operating capacity wherein the receiving Party is suffering a capacity deficiency and is unable to obtain assistance from other companies with which it is pooled or interconnected. This provision shall not be construed to require a Party suffering a capacity deficiency to schedule operating capacity from the other Party.

1.2 Emergency operating capacity supplied from one Party to the other Party shall be charged and paid for on the basis of the cost irfcurred for such supply plus the amount; if my, paid for capacity obtained for this purpose from others not Signatories, to which shall be added ten percent (10%). When a Party sup ~lies such emergency operating capacity to the other Party from generating capacity'not specifically ope'rated for such supply, the cc, t of the supplying Party shall be the wei~,hted average cost of the highest cost capacity operated by the supplying system in the amount equivalc nt to such emergency operating capacity.

Schedule 5.02 Section 2 - Fmer~encv Fnerr. ~

2.1 An emergency energy transaction is dcfin<<d as the interchange of energy wherein one Party schedules from the other Party energy which it is unable to provide on its own system or systems with which it is pooled or

'interconnected. This provision shall not be construed to rcquiqe a Party to schedule emergency energy from the ot'her'arty.

2.2 Emergency energy shall be charged and paid for on the basis of the cost of'such energy generated and bought, if any, adjusted for transmission losses to the point or points where the energy leaves the system or systems of the supplying Party, plus ten percent (10%).

Section 3 - Exterided Emerpenc Service 3.1 'i%enever emergency operating capacity or emergency energy is supplied by one Party to the other Party for a period exceeding two consecutive calendar days,'not including Sundays and holidays, the above charges and payments shall be increased by an additional capacity charge of $ 0.035 per kilowatt per day based on the maximum hourly supply of capacity or energy, so long as the capacity

~ ~

and energy so supplied is supplied directly by the supplying Party from its own capacity. To the extent the maximum capacity or .energy supplied exceeds the c6pacity or energy which could have been supplied directly, a transmission charge of $ 0.021 per kilowatt per day shall be substituted for the $ 0.035 i'er kilowatt.

r 3.2 In the event the emergency operating capacity or ener'gy supplied by one Party to the other is scheduled for delivery to' system not a Signatory to this Agreement, the above mentioned additicnal charges shall be applied on the first day of such supply and all subsequ<<nt.days thereafter.

'SCllEDULE 6.02 .

TO INTERCONNECTION AGRFEi~tENT BETWEEN VEPCo AND T1IE PJif GROUP Issued September 1, 1976 Effective October 15, 1976 SC)/EDULTNG AND ACCOUNTING Section 1.6 of the Agreement provides for the establishment of daily operating capacity and energy schedules between VEPCo and the PJ."( Group and the accounting'or the resulting interconnection transactions.

Scheduling of and accounting for the transactions between the Parties shall be performed by the Office of the Pennsylvania-New Jersey-Haryland Interconnection for the PJM Group and by the Power Supply Department of VEPCo ior VEPCo.

Section 1 - Records 1.1 Energy associated with various transactions, including electrical losses associated therewith, shall be accounted for each clock hour. Proper consideration shall be given to such electrical losses in accordance with the manner agreed upon by the Operating Committee.

1.2 Operating capacity associated with v~rious transactions shall be accounted for on '.he basis of the period of time such capacity is scheduled.

1.3 The Parties shall keep such log shee"s and other records as may be needed to afford ~ clear history of the various transactions made, by one Party with the other. Zn maintaining such records, the Parties shall provide such detail as may be needed in, connection with the settlements under this Agreement.

Schedule G.02 Section 2 - Com onents of Cost '

2.1 The following components of cost, when appli.cable, shall be included for operating capacity and energy transactions:

2.11 0 eratinv Canacitv Start-up and shutdown cost (boiler and turbine).

No load cost (boiler and turbine).

Associated additional maintenance cost (boiler and turbine).

Charge (or credit) for energy generated at a cost above (or below) its value on the system or systems of the supplying Party.

Incremental labor costs.

Taxes (not including income).

Miscellaneous incremental operating costs.

2.12 ~Ener Incremental fuel cost.

Incremental transmi.ssion losses.

'Incremental labor cost.

Incremental maintenance cost. 1 Taxes (not including income).

Miscellaneous incremental operating costs.

h Section 3 - Inadvertent Interchan e 3.1 Inadvertent interchange for each Party is defined as the difference between net actual energy flora and net scheduled 'energy flow to or from that Party. Inadvertent interchange shall be accumulated as a credit or a debit and shall be repaid in kind.

3.2 Each Party shall endeavor by mutually acceptable methods to minimize inadvertent interchange.

r 3.3 Inadvertent interchange accumulated during "on-peak" hours shall be repaid dur'ing "on-peak" hours; and inadvertent interchange accumulated during "off-peak'ours shall'e repaid durin~; "off-peak" hours. The h

specific hours tc be classified as "on-peak" c>r "off-peak" shall be determined from time to time by the Operating Committee.

w3 Schedule G.02 Section 4 - Control of Kilovar Ezcha'n .e 4.1 Neither Paity shall be obligated to deliver kilovars for the benefit of the other. Neither. Party shell be obligated to receive kilovars vhen to do so might introduce objectionable operating conditions.on its system..

Subject to the foregoing, the Operating Committee shall establish from time to time (a) voltage levels to be maintained and (b) operating procedures for establishing and maintaining an equitable distribution of reactive po~"er.

SCHEDULE 7.02 TO INTERCOXa'ivECTIOil AGREE KIST'.

BETl EEN L ~

VEPCo AND THE PJH GROUP Issued September 1, 1976 J

Effective October 15, 1976",

SHORT TERif POLLER Section 1.8 of this Agreement provides that VEPCo and the PZii Group shall set forth additional schedules to this Agreement to provide for special services to'e rendered in furtherance of the intent of this Agreement. This Schedule 7.02 replaces Schedule 7.01 as one such additional Schedule.

/

Short Term Power shaIl.be considered to be electric power that is scheduled on a weekly basis between the Parties to meet the needs of a Party desiring power on a temporary basis from a Party having excess or from others wi.th which it has similar agreements- Schedules may be established for one or more weeks and as used

.ierein the term "week" shall mean any seven consecutive days.

Section 1 - Services to be Rendered 1.1 Either Party may arrange to reserve from the other, for periods of one or more weeks, Short Term Power whenever, in the sole judgement of the Par'ty requested to reserve the same, such'power is available. Upon, request, the supplying Party shall furnish to the reserving Party estimates of load

'capacities, and other relevant data by means of which the reserving Party can assess the availability of such power.

1.11 Prior to each reservation 'of Short Term Power, the number of megawat".s to be reserved, the period of reservation, and the source of the power if the supplying Party is in turn reserving.

~ ~

power f'om another system, or the ultimate destination of the power if the reserving Party i'n tarn reserving .power for another system, shall be determined >y the Parties. Such deter-mination shall be confirmed in writi'ig.

vv>>Quu'u i ~ 4(

1.12 If the reservation is supplied from the supplying Party' system, it may be reduced only when 'during such period conditions arise that could not have been reason'ably foreseen at the time of the reservation and cause the reservation to be burdensome to the supplying Party' system. If the reservation is transmitted by the supplying Party from another system, it may be reduced only when and to the extent reduced by such other system or when during such period conditions arise that could not have been reasonably foreseen at the time of the reservation and cause the trans-mission to be burdensome to the supplying Party's system.

'The supply or transmission of the reservation shall be considered burdensome if continuation would jeopardize service to firm customers on the supplying Party's system or interrupt prior commitments by the supplying Party for the delivery of similar commitments to another system 'or systems-The supplying Party 'shall notify the receiving Party promptly of any reduction in reservation and shall specify the amount of megawatts reduced and the period of reduction.

I Such notification shall be confirmed in writing 1.13 During ach period that Short Term Power has been reserved, the Party that has agreed to su'pply such power shall upon call pr >vide operating capacity ("Short Term Operating Capacity" ) of up to and including the number of megawatts then reserved and deliver electric energy ("Short Term Energy" )

to the .':eserving Party at a rate during each hour of up to and including such number.

Schedule j. 02 I Sect. i on 2 - Com >c nsation H

2.1 ~

The reserving Party shall pay the supplying Party for any period that Short Term Power P

is reserved.

2.11 $ 0.50 per kilowatt reserved per week to be supplied from the supplying Party's system less, for 'each day (other than Sunday) during any part of which the amount of such Short Term Power from the supplying Party's system is reduced by the supplying Party, one-sixth of said $ 0.50 per kilowatt of the reduction; plus 2.12 for each kilowatt of the reserved Short Term Power purchased by the supplying Party from another system (a) the amount paid therefor 'by the supplying Party plus (b) for each week such Short Term Power is reserved $ 0.125 per kilowatt less, for each day (other than Sunday) during any part of which the amount of such Short Term Power is reduced by the supplying Party for reasons as-set forth in 1.12, one-sixth of said $ 0.125 per kilowatt of the reduction; plus 2.13 110% of the cost of providing Short Term Operating Capacity called for under Subsection 1.13 of this Schedule that. is I

related to the Short Term Power provided on the supplying Party's own system and 110% of the amount paid by the supplying Party for all other such Short Term Operating Capacity; plus 2 lk 110% o.'. the cost, adjusted for transmission losses, of supply ng Short Term Energy called .",or under Subsection l.'13 of this Schedule that is related to the Short Term Power provided on the supplying Party's oem system and 110% of the amount paid by the supplying Party, adjusted for transmission losses, for all other such Short Te:m Energy '

l~- Schedu le '). 02 Section 3 - Termination r

3.1 Either Party upon one year prior Mritten notice to the other may terminate this Schedulp.

~

SCHEDVI,E 9.01 TO ~

INTERCONNECTION AGREEHENT.

DETVHEN VEPCo Ah'D TIIE PJiii GROUP Issued September 1, 1976 Ef fective October 15, 1976 OTIIFR FNI'.RGY TRANSACTIONS Section 1.8 of this Agreement provides that VEPCo and the PJII Group shall set forth additional schedules to this Agreement to provide for special services to be rendered in furtherance of the intent of this Agreement. This Schedule 9.01 is one

'uch additional Schedule.

The Parties recognize that from time to time occasions may arise when it may be impracticable to arrange Economy Energy transactions as provided for under Section 2 of Schedule 4.02 and at the same time one Party may have electric energy

("Other Energy" ) which it is willing to make available from its own system or from sources outside its own system, or both, that can be utilized advantageously for short intervals by the other Party. Either Party may schedule Other Energy from the other Party whenever, in the sole judgment of the Party requested to supply the same, such energy is available. Prior to each delivery of Other Energy, the'amount and time of delivex'y shall be detexmined by the Pa> ties.

Other Energy supplied by one Party shall be charged to,and paid for by the other Party on the basis of the cost of genexating it and the amount paid for i".

to such systems not a Pax ty to this Agreement, all adjusted for transmission lo>>ses,

'us ten percent (10%) of such cost and a'mount as so adjusted.

VEPCo-PJH INTERCONNECTION AGREENENT Summar of Schedule Revisions and Addi.tions Schedule Present Schedules 1.01, 2.01 and 3.01 are deleted-4.02 Present Schedule 4.01 covers OPERATING CAPACITY TRANSACTIONS and the revised Schedule covers ECONO>1Y OPERATING CAPACITY AND ENERGY 'TRANSACTIONS.

5.02 Present .Schedule 5.01 covers ENERGY TRANSACTIONS and the revised Schedule covers EHERGENCY OPERATING CAPACITY AND ENERGY TRANSACTIONS ~

4.02 & The texts of present Schedules 4.01 and 5.01 have been rearranged

5. 02 to form the revised Schedules covering economy and emergency interchange, respectively; and that part of 5.01 which dealt with Inadvertent Inter-change is now included in revised Schedule 6.02. Revised Schedule 5.02 also includes provisions for additional fixed service charges for "Extended Emergency Service" which replace the provision in the present Schedule 4.01 for an additional charge applied to Emergency Operating Capacity.

6. 02 Present Schedule 6.01 has been rearianged with new subheadings, and the text on Inadvertent Interchange now in present Schedule 5.01 and a new section on Control of Kilovar Exchange are added.

7.02 The obligations involved in Sl>ort Term Power transactions under present Schedule 7.01 have been clarified; the demand rate applicablu to the amount of reserved power is increased; a charge fo'r services involving third parties applicable under certain conditions is inclu led, and the provision for a "Reactivation and Deactivation Charge" is de;eted.

9.01 This is a new Schedule covering Otner Energy Transactions.

VEPCo-P JH INTERCONNECTION AGREE>IENT STATE))ENT OF THE BASIS OF THE FIXED RATES FOR EXTENDED ENERGENCY AND SHORT TER)) PONER SERVICES AND SUPPORTING CO".1PUTATIONS The fixed rates for Extended Emergency and Short Term Power services specified in the proposed Schedules to the VEPCo-PJH Interconnection Agreement can be supported on a cost basis. These rates are:

1. The additional capacity charge of $ 0.035 per kilowatt per day specified in Schedule 5.02 and associated with the supply of Extended Emergency Service; and

2. The capacity charge of $ 0.50 per kilowatt per week specified in Schedule 7.02, Section 2.11 and associated with the supply of Short Term Power; and

3. The charge related to the delivery to or from third parties of certain capacity services of $ 0.021 per kilowatt per day specified in 5.02 and $ 0.125 per kilowatt per week specified in Schedule 7.02.

CAPACITY CHARGE IN SCHEDULE'5.02 The $ 0.035 per KM-day is a negotiated rate, intended to compensate the suppliers of Extended Emergency Service for some part of their fixed costs for investment in generating and transmission facilities. Out-of-pocket or variable costs are other-wise provided for in the charges for operating capacity and energy.

In the determination of the rate,'it was recognized that it should be less than (approximately half of) the full capacity cost as determined for Short Term Power on the premise that the supply of Extended Emergency Service is for short periods of time, does not constitute a firm capacity transaction, and results from the mutual assistance that one Party provides for the other.

CAPACITY CHARGE IN SCHEDULE 7.02 The $ 0.50 per KW-week is a negotiated rate intended to compensate the supplier of Short Term Power for full fixed annual costs for investment in generating and ransmission facilities, prorated for the period of the reservation, on the basis that Short Term Power is available capacity reserved by the supplying system for the deficient system for periods of one or more weeks and constitutes a firm capacity transaction. Out-of-pocket or variable ccsts are otherwise provided fo" in the charges for Short Term Operating Capacity er d Short Term Energy.

DELIVERY CHARGES IN SCHEDULES 5.02 AND 7.02 t The charge for. delivery of capa'city to or fron a third party is also a

negotiated rate that is less than the full cost, b-sed on average transmission investment per unit of system peak load.

The supporting conputations for VEPCo are sho~ n on pages 2 and 3, and for ti'e PJM Group on pages 4 and 5.

VXRGDKA ELECTRIC A~!D PO",~rB .CO~PA"6'HORT Ti..KI A!Fi) E<z-~.':-0 2'",.".Q~iCY CAPACITY SERVICE COST 2" E~TYSXS PRODUCTION K)SSIL ~~=2 PiLZZS AiV3 TRANSMISSION Production Plant Tr m'smission Fossil Fuel +its Plant Annual ~ s 0/IQi = 816Z.88 0/IQC = 851.28 (1) V~~ Rate of Return Amrtization Factor (9.605) @.5.64 1.08 45.88 (2) ( .66%) .40 (3) Federal Xncorre Tax .(3 73') 6.08 2.29 (4) Prop rty Tax ( .62K) 1.01 .38 (5) Insurance ( .25') .41 .15 (6) Op ration and Naintenance Expense .70 (7) Annual Charges 29.05 4988 Choacitv Char e for Short Term Power Capacity , 429.05 Transmission 9.80 43Y.85/KN/YR  : 52 Weeks = 40.747/IGNleek C

Proposed Charge = $ 0. 500/El/tleek

~Cl . f ~ 0- ~ S.

$ 38.85/IQJ/YR  : 365 Keys = $ 0.106/IQl/Day X 50," = 0.053/IQ1~

Proposed Charge 4U. 035/Kt"Voay Rate For Deli~'erv to or from Tnird Par

'ctual Cost Transmission <9.80  : 52 Lfeeks = 40.188/IQ18 eek Proposed Charge = 40.125fiQJ/t;eel One Sixth = PO." 021/IQf/E ay

VlHGTNXA FL>CLRKC NH) PO"~R CO'ZN~lY S!!ORT ri~it rim ~.-.~"..D ~'".~: (!C v o'L ."-rML~'5 .CAPACrn'(vL4v BASE 0(t FPC-1 D!IT!4 AS Q; E="v="-B 31 1 75

~

(1) Production Plant (Fossil Fuel Units) ($ ) @.,03>,.496,974 (A)

(2) Fossil Fu 1 Units Capability (KJ) 6,333 (9)

(3) Production Plant (Fossil Fuel t:~its) ($A":!) $ 162.88 D.r~d 'hlated Production Ex~nses. (Fossil Fu 1 Eu.ts)

(4)

(5)

(6)

(65~ x $ 40,9S0,406) + $ 6,172,308: ($ ),

'32,809,571 Capabili"y of Leu d Combustion Mx'sin s + (2) (Rl)

Pr du tion L( we (Fos~il, Fu 1 Units) ($/61/YR)

Trans~ssicn Pl~at ($ )

6~790,000 (D (c)

~ ~

(7) 443?,096,704 (E)

(8) Deranstrated Capability, 1975 (IQ1) 7~133>000 (F)

(9) Tr~m~'ss" on Plant ($/h";JIYR) $ 61.28 (10) Trans;; 'ssion Expense ($ ) 44,981,821 (G)

(ll) Trans@'ssion ~ense ($/r'G('/YR) .0-7O

+ Cc(7hustion turbir. s rent expense.

. (A) 1975 FPC-1, P. 401, Colum (g) line 15 + P. 402, Colutm '(g) line 41 (B) 1975 FPC-l, P. 432(l), ColuTn (b) line 10+ Colum (c) lan 10 +

P. 432a(l), Colum (d) line 10 + Col(~ (e) line 10 +

Colum {f) line 10 + P. 432(2), Colure (b) line 10 +

Colum (e) lir. 10.

(C) 1975 FPC-l, P. 417) Col~i (b) lin 20 Colum (b) li..e 5 + P. 4:.8, Colum (b) lin 73 Colum (b) lir.e 62 Colum (b) '.~e 65.

(D) 1975 P. 432a(2), Colure (f) line 10 + P. 432(3), Colum (b',.

FPC-1,'E) line 10 + Colum (c) lin 10 + P. 432a(3), Cole~ (d) line 10 + Colum (e) line 10 + Col~ (f) lin '10.

1975 FPC-l, P. 402, Colum (g) line 53.

(F) 1975 FPC-l, P. 431, Colum (b) lin .38.

(G) 1975 FPC-l,, P. 418, Colum (b) line 95.

SUPPORTING COMPUTATIONS - PJM BASIS PJM costs necessarily represent a composite of various company costs, based on different capitalizations, different service lives, different methods of tax accounting, and different state and local tax obligations. On a representative basis, however, the PJM costs are above the amounts necessary to support the proposed rates. Consequently, the compromises involved in the determination of estimated costs on a PJM basis are not of critical importance. For further explanat:ion of computations, see notes which folio'w on next page.

Since Extended Emergency and Short Term Power. services will most oft:en be supplied by combustion turbines, costs have been determined on the basis of such supply e Ratio Combustion Turbines System Transmissio-..

Ca italization (12-31-75) (Cost at Installation) (Imbedded Cost: )

Bonds 52% 6 8-5 = 4.42% 6 7.0 = 3.64'/

Preferred 13% 6 8.5 = 1.11% 6 7.75= 1.01'/

Common Equity 35% 814.0 = 4.90% 814'.0 = 4.90'l.

10.43% 9.55" Return Round to 10.5/ Round to 9.5'/

t Original Cost (Avg. of PJM'T's)

Life in Years Book/Tax Level Carrying Charge Rate

$ 112/KW 22.5/22.5 16.5%

$ 58/KW 40/24 13 ~ 5%

Annual Costs Level carrying charge $ 18.48 $ 7 ~ 83 Fixed 0&M expense .50 (2%) 1 ~ 16 Total 818.98 $8 ~ 99 Rounded Rounded Total Annual Cost $ 19.00/I'W/YR $ 9 F 00/KW/YR Ca acit Char e for Extended Emer encv Service

.Total annual cost: Capacity $ 19 Transmission 9

$ 28/KW/YR ; 365 davs = $ 0.077/KW/DAY x 50'/. = $ 0..038/Kn/DAY Proposed Charge = $ 0 '35/ 'DAY Ca acit Char e for Short Term Power Total annual cost: Ca 5acity $ 19 Tr ansmi ss ion 9

$ 28/KW/YR ; 52 weel:s = $ 0.538/KW/WEEK Proposed Charge = $ 0 '0/KW/WE K ie for Deliver to or .'rom Third Part:ies Total annual cost: Transmission $ 9/KW/YR  : 52 weeks = $ 0.173/KW/WEEK Proposed Charge = $ 0i125/I,"'/WEE'n(.

SI~t'h = SO.091/V;./n.iv

SUPPQFZXNG CO~PUTATlONS - PJlf BASlS'.(cont'd)

1. Capacity costs are based on the current average PJlf companies'nvestnent cost f'r combustion turbine instaU."-tions, which amounts to $ 112/ni1. The return used. for combustion turbines is based on rates for debt and preferred equity which are representative of the rates incurred by the member 'companies during the period. when the bulk of'he PJl1 combustion turbines were installed..

1 Transmission costs are based, on the 1975 FPC Form 1 total transmission plant investments or PZ4 companies, adjusted to exclude the estimated. invest...ent in facilities used. fo or related to step-down transfonwtion to voltages below 110 KV; This transmission investment ($ 1807 million), divided. by the all-time PJM peak of 30,993 Vif yields $ 58/IGJ. Such transmission has been installed. over many years, and. accordingly the return on transmission investment is based. on representative imbedded. costs.

3.. Xn addition to return, depreciation, and. income tax, the carrying charge rates

~

reflect the use of double declining balance depreciation, an H-2 mortality dispersion characteristic, the 4~~ investment tax credit and 1~~ other. taxes. 'She composi e income tax rate is 52.Q which includes the Pennsylvania corporate net income tax.

Fixed GM expenses are estimated. at $ 0.50/iGl/YR for CT's and, 2g of gross plant for transmission.

u

UNITFD STATES OF AMERICA FEDERAL PQKR COMMISSION VEPCo - PJH Group ) Docke t No. E-Interconnection Agreement ) Date NOTICE OF SUPPLEHENT TO INTERCONNECTION AGREEMENT

. Take notice that on September, 1976 Virginia Electric and Power Company (VEPCo) and the Pennsylvania-New Jersey-Haryland Group (PJH Group) tendered for filing a proposed Supplemental Agreement dated September 1, 1976 to the Interconnection Agreement between them dated September 30, 1965, which is filed with the Commission under the following Rate Schedule designations:

Rate Schedule Virginia Electric and Power Company FPC No. 73 Public Service Electric and Gas Company 37 Philadelphia Electric Company 28 Pennsylvania 'Power & Light Company '43 Baltimore Gas and Electric Company 18 Jersey Central Power & Light Company 23 Metropolitan Edison Company 28 Pennsylvania Electric Company 48 Potomac Electric Power Company The proposed Supplemental Agreement clarifies th wording of the Interconnection

,'reement; brings it int > closer conformity with othe:.. agreements; deletes provisicns which are no longer required; increases certain charg".s in order to cover present costs of service, and provides charges for new services and services involving third Parties.

No new facilities will be installed nor will exi::ting facilities be modified in connection with the prop~ised Supplemental Agreement. It is requested that the proposed

'pplemental Agreement become effective on October 15, 1976.

Any person desiring to be heard or, to make any protest with reference to the subject matter of this Notice shou'ld, on or before file with the Federal Power Commission, 825 North Capitol Street, N.E., Washington, D.C. 20-'i26, petitions to intervene or protest in accordance with the requirements of the Commission's Ru'.es of, Practice and Procedure (18 CFR 1.8 or 1.10). All protests filed with the Commission will be r

considered by it in determining the appropriate action to be taken but will not serve to make the protestants parties to the proceeding. Persons wishing to participate as a party in any hearing therein must file petitions to intervene in accordance with the Conanission's Rules. The documents referred to herein are on file with the Commission and available for public'nspection.

Secre tary

SCHEDULE 8 01

'O INTERCONNECTION AGREEMENT BETWEEN VEPCO AND TILE PJM GROUP Issued , March 27, 1974 Effective January 1, 1974 FUEL CONSERVATION ENERGY Section 1.8 of this Agreement provi.des that VEPCO and the PJH Group shall set forth in additional schedules the arrangements for 'specific services to be rendered in furtherance of the intent of this Agreement. This Schedule 8.01 has been agreed to by the parties in accordance therewith.

Fuel Conservation Energy shall be considered to be electric energy that is t

If scheduled between the Parties during off-peak hours as defined in this Schedule, solely for the purpose of conserving fuel inventories. The following are the terms and conditions governing the generation and supply of such energy by one Party for the other, and also the transmission of Fuel Conservation Energy to and from systems interconnected with VEPCO or the PJM Group.

Section 1 Services ti~ be Rendered 1 1 Either Part'~ may arrange to obtain such Fuel Conservation Energy from the other whenever, in its sole judgment, the Party requested to supply the same has the capability and the fuel resources to make such energy available 1 ll. At the beginning of each week, upon request of the receiving party, the supplying pat:ty will furnish the receiving party a tentative'schedule of hourly energy deliveries. Prior to each hour, the dispatcher in the receiving system will notify the dispatcher in the supplying system of the amount

of Fuel Conservation Energy the receiving system 1

desires The dispatcher in the supplying system I

will res'pbnd by stating the amount of Fuel Conser-vation Energy to be made available in the next.

hour, and the estimated cost. thereof, for energy generated on his own system. The dispatcher for the supplying system will also provide, as available, the same information for energy supplied by a third party The dispatcher for the receiving party shall either accept or reject delivery, or accept a smaller amount of energy than that available.

1 12 If such energy is supplied from the supplying party' system, it may be reduced when during such period conditions arise that could not have been reasonably forseen and cause the supply of the energy to be burdensome to the supplying party's system. If the energy is transmitted by the supplying party from another system, it may be reduced (1) when and to the extent reduced by such other system or (2) when during such period conditions arise that could not have been reasonably foreseen and that cause the tran~mission of the energy to be burdensome to the supplying party's system, or (3) when a transmission or ot.her limitation in the system 'of the receiving part) or another system (other than the receiving part) ) interconnected directly or indirectly with the system of the receiving or supplying party makes it irrpractical, as a technical mat.,ter, to receive or deliver such energy The supply or transmission of

&3 W the energy shall be con'sidered burdensome if continuation would jeopardize service to firm 1

customers on the supplying party's system.

1.13 For the purpose of this Schedule, off-peak hours shall be defined to be between the hours of 10:00 p.'m.

and 7:00 a.m. Eastern Standard Time or Eastern Daylight

.Saving Time (whichever Time is in legal force on the system of the supplying Group) on any day other than Sunday, and during any hour on Sunday.

Section 2 Com ensation 2 1 The receiving party shall pay the supplying party for each kilowatthour of Fuel Conservation Energy supplied from the supplying party' system an amount equal to 110% of the out-of-pocket replacement cost of generating such energy plus three mills per kilowatthour.

2 2 The receiving party shall pay the supplying party for each kilowatthour of Fuel Conservation Energy purchased by the supplying party from another system the amount paid therefor by the supplying party plus 1 75 mills per kilowatthour.

2 3, For purposes of this Schedule, out-of-pocket replacement cost of supplying Fuel Conservation Energy shall mean out-of-pocket cost of generating such energy plus or minus .m adjustment (to be made by sup'plemental bill) to reflect increases or. decreases in the cost of fuel on a Btu basis between the average cost of fuel at the stations from which the energy was d .livered during the month in which the energy was delivered and th average cost of purchased

\

fuel for these stations for the second m>nth after such month of delivery.

Section 3 - Billin s and Payments All bills for'mounts=owe'd by one party to the other shall be due and payable on the first banking day common to both parties following the nineteenth day of the

'onth in which they are rendered, or on the fifteenth day following receipt 'of bill, whichever date be later. Interest on unpaid amounts shall accrue at,ten p'ercent (10/

per annum from the date due until the date upon which payment is made. Unless other-.j'ise agreed upon a calendar month shall be the standard monthly period for the

) purpose of settlements under this agreement.

Section 4 - Termination This Schedule shall remain in effect for one year unless extended by mutual agreement of the parties.

THIS AGREEMENT, made this eighth day of March 1974 by and among

'TLANTIC CITY ELECTRIC COMPANY, BALTIMORE GAS AND ELECTRIC COM-PANY, DELMARVAPOWER Ec LIGHT COMPANY, JERSEY CENTRAL POWER Sz LIGHT COMPANY, METROPOLITAN EDISON COMPANY, PENNSYLVANIA ELEC-

'RIC COMPANY, PENNSYLVANIA POWER Ec LIGHT COMPANY, PHILADELPHIA ELECTRIC COMPANY, POTOMAC ELECTRIC POWER COMPANY, PUBLIC, SER-VICE ELECTRIC AND GAS COMPANY, AND UGI CORPORATION.

WITNESS ETH:

WHEREAS, the signatories hereto are either signatories or associated in operation with signatories to an agreement, dated September 26, 1956, as amended and supplemented, known as the Pennsylvania-New Jersey-Maryland Interconnection Agreeme'nt (PJM Agreement); and ~

WHEREAS, the signatories hereto are all among the signatorie's in the Mid-Atlantic Area Coordination Agreement (MAAC Agreement), dated April 23, 1971; WHEREAS, the signatories hereto own and operate fully interconnected elec-tric supply systems, and the planning and operations of the bu]k power supply facil-ities of such systems are coordinated pursuant to various agreements, including both the PJM Agreement and the MAAC Agreement; and 7/HEREAS, current conditions involving fuel availability demand the prompt development of all possible measures for fuel conservation; and WHEREAS, by Order No. 496, issued November 29, 1973, the Federal

'Power Commission (FPC) has determined that'he regulatory and policy guidance of that Commission, state public service commissions,.governors and other Fed-eral, state or local officials should be invoked to achieve all possible reductions by ultimate consumers in the use of electric power and energy for residential, commercial, industrial, transportation or other uses consistent with human health, "safety and public welfare needs; and II VfHEREAS, each signatory hereto is a public utility subject to the jurisdic-tion of the FPC and under orders and regulations of that Commission is requested to e'ffect all possible savings in the consumption of energy and to advise the Com-

~ission of the specific steps undertaken to effect such reductions in the consump-tron of electrxc power and energy, and VQIERZAS, by virtue of the PJM and MAAC Agreements each signatory hereto relies on the bulk power apply systems of the other signatories hereto in providing adequate and reliable service to its customers; and VfHEREAS, the coordinated planning and operations under the PJM and MAAC Agreements.and the resulting reliance of each signatory on the others re-quires that the steps to effect reductions in the consumption of electric energy be taken on a coordinated basis in order to best serve the interests of all our custom-ers and to minimize impact on the adequacy and reliability of service, and lVHEREAS,. policies and procedures should be established for conserving energy and for coordinating any reductions in energy use made necessary by in-adequate supplies of fuel; NOAV, THEREFORE, the signatories hereto agree as follows:

SECTION 1 It is the policy of the signatories hereto and of PJM to operate on a one- ~

system basis, utilizing available fuel resources to produce electrical energy to supply the loads of all PJM signatories and associated systems, regardless of any such individual system s fuel or eriergy availability, under the principl'e of economic dispatch within constraints of reliability and fuel availability.

SECTION 2 To conserve energy and to permit the substitution of a more abundant fuel for one that is in short supply," measures shall be taken from time to time, as di-rected by the Management Committee established under the PJM Agreement, which t may affect the supply of electric energy to customers.

will be related generally The extent of these measures to the availability of fuel in storage or expected from cur-rent deliveries. As available fuel suppli.'es diminish, conservation of energy re-sources shall be accomplished initially by voltage reductions and by voluntary cus-to'mer reductions in energy u'se. If further reductions in energy use are required by r

continuing decreases in the availability of fuel, the steps to be taken in the reductions in energy use program shall be as set forth in Schedule 1 attacQed hereto and made a part of this Agreement.

SECTION 3

~ Under present conditions and without regard to the amount of fuel available, certain departures from normal operating procedures, which have an acceptable impact on reliability and economy, shall be made effective. These include, but are not limited to:

(a) Rescheduling of maintenance, to permit best use of coal-fired generation during the winter period, even though some mainte-nance must be done during a possibly high load period of summer.

(b) Maximum practicable use of PJM coal-fired generation and of pur-chases of coal-fixed generation from other arias, even when this is not in accord with economic dispatch.

(c) Opening of limiting transmission lines and increases in trans-mission line ratings, based on temperature, to avoid operation of capacity with limited fuel availability that would otherwise be required to control line loadings.

.r

~ '~(d) .Reduction of the spinning component of the PZM operating re-serve requirement, to avoid operation of capacity with limited fuel availability so long as quick-starting units are available for operation.

. (c) Reliance on manual tripping of pump storage hydro units, operat-

'ng as pumps, to limit use of capacity with limited fuel availability that otherwise would be required to control line loadings following a contingency.

SECTION 4 Each signatory hereto shall promptly confer. with the appropriate Govern-.

mental agencies with respect to the implementation of the reductions in energy use I

program that may be made necessary by the unavailability of adequate fuel supplies.

SECTION 5 Each signatory shall establish procedures. for informing its customers of the

need for energy conservation and of the steps to be taken in carrying out the re-r auctions in energy use program, and shall file with the appropriate regulatory authorities its p)an to terminate or suspend service for violation of lawful orders

'I to curtail the use of service.

SECTION' Any energy or operating capacity transactions that may be required by or among the signatories hereto as a result of their actions to conserve energy shall be carried out under the provisions of existing agreements, including the -PZM Agreement, agreements of PZM with others, and separate agreements among two or more of the signatories hereto.

SECTION 7 This Agreement is subject to compliance with the applicable requirements

~

of all regulatory authorities havin jurisdiction in the premises.

SECTION 8 No signatory shall be liable for the failure of any other signatory to perform its obligations hereunder.

SECTION 9 4

C Any waiver of the rights of any signat'ory as to any default of any other sig-natory or any other matter arising hereunder shall not be deemed a waiver as to any other default or other matter arising hereunder.

SECTION 10" t This Agreement shall remain in effect for one year from the date written unless extended by agreement of the signatories hereto.

first above, I

6 r ~ ~

ZN VGTNESS WHEREOF, the signatories have caused this Agreement to be duly executed as. of March 8, 1974.

ATLANTICCITY ELECTRIC COMPANY fJ President BALTIMORE GAS AND ELECTRIC COMPANY sy c P. 7/

Chairman c.( e-~ '3g.

DELMARVAPOWER 8c LIGHT COMPANY t nX

~'~/i JLr

By . E";

President J'ERSEY CENTRAL POWER h LIGHT COMPANY Chairman I~

v METROPOLITAN EDISON COMPANY s,

.Chair man, '- '. -c>>i PENNSYLVANIA.ELECTRIC COMPAN Y

~

'1

]

f~

~

,By I Chairman PENNSYLVANIA POWER 8c LIGHT COMPANY By l g (. l~

President /-

PHILADELPHIA ELECTRIC COMPAN Y By Chairman

.rZ,

'OTO C ELEC R C POWER COMPAN Y Cx 8 f.gc-c C'hairma PUBLIC SERVICE EL CHIC AND GAS COMPANY By C. 'OCi~r: .

('z,P

(.~I) 4.'

Chairman

• ~-

UGI CORPORATIO By rc-(

President I

~ f

SCHEDULE 1 This schedule sets forth the program referred to in Section 2 of the Agree-ment, the several steps of which are to be made effective by each signatory as pro-

.vided hereafter.

STEP A (estimated reduction of normal loads - about 5/o)

1. Public appeals are to be made through appropriate news media asking customers to reduce their use of electric energy because of the short-age of fuel.

2. Voluntary customer energy reduction programs, as agreed upon from time to time by the company and its customers, are to be pla'ced in effect.

3. A 3% voltage reduction is to be made effective on a continuous basis.

STEP 8 (estimated reduction of normal loads - about 5'~/o)

l. A 5 jo voltage reduction is to be made effe'ctive on a continuous basis.

2. In addition, and to the extent that necessary governmental approvals

~ have been obtained, the fo]lowing mandatory reductions or eliminations of power uses and reductions of hours of operation of various users shall be made effective.

t I 2-1. Eliminateall outdoor flood and advertising lighting, except for the minimum level to protect life and property and a'single illu-minated sign identifying commercial facilities that are open after dark.

2-2. Reduce general lighting levels in stores and offices as close to minimum safety levels as possible.

Schedule 1 page 2 2~3t Eliminate show window and display lighting.

2-4. . Reduce the number of elevators operating in office buildings during non-peak hours by at least 50%.

2-5. Reduce parking lot lighting by at least 50%.

2-6. Minimize energy use by maintaining a temperature of no less than 80 degrees by operation of cooling equipment and no more than 60 degrees by operation of heating equipment.

2-70 Minimize work schedules,.as for building cleaning and main-V

~ \

'enance, restocking, etc.', which would require offices or industrial facilities to be open beyond normal working hours.

~ I

.~~ J

. 2-8. Curtail nighttime sports, entertainment and recreational activities.

2-9.. Close all public museums, art galleries and historic buildings.

2<<10. Require Sunday closing of retail establishments, except for essential services to the public.'-11.

j Require closing from 7 p.m. to'9 a.m. of all retail establish-ments, except essential services to the public.

STEP C (estimated reduction of normal loads - about 5%)

P Direct all customers, except as noted, to reduce their use of electric power,'s compared to a similar billing period in the 12 months ending with September 1973,I,

'I

~

by the following amounts:

Residential Customers (all loads for housing and related home activities) 5% reduction

Schedule 1 page 3 Manufacturing (considered self-explanatory) 10% reduction (all loads which are not residential

'ommercial or manufacturing) 25%%uo reduction The groups of customers exempt from full compliance are listed at the end of this schedule.

STEP D (estimated reduction of normal loads - about 8%)

Direct all customers, except as noted, to double the amount of reduction required in Step C. The same groups of customers are exempt from full compli-ance.

STEP E (estimated reduction oi normal loads - about 4%)

~

Interrupt loads on a rotating basis during the hours from 8:30 a. m. to 4:30 s

p. m. All load which can be disconnected shall be disconnected for a period of two t

hours, in four sequential blocks, as determined by each utility company. The groups of customers excluded from the interruption of load are listed at the end of this schedule.

Vhere particular manufacturing or processing operations do not permit in-

. terruptions of service, or where such interruptions would cause severe hardship or would have an unacceptable impact on continuous operations, etc., the utility com-pany shaD secure the equivalent reduction in use from the customers that might oth-erwise be interrupted by some method other than the prescribed rotating interrup-tions.

STEP P (estimated reducti'ons to be as required)

~

Implement a progressive reduction of manufacturing and commercial cus-tomer use on an as-required basis down to levels required only for basic plant and

'chedule 1 'page 4

~ (

employee security. Require further residential curtailment down.to normal life sup-port requirements. The groups of customers excluded from these final reductions are the same as those excluded in Step E.

The groups of customers excluded or exempt under Steps C through F are as follows:

Industrial and commercial establishments listed below must strive to meet, but are not mandated to meit the requirements of the several steps. In doing so, such customers should undertake the reduction of electric energy consumption to the fullest practical extent consistent with continued operation of the services, func-tions or activities for which the customer is responsible.

SIC Numbe'r 40 - Railroads 41 Local and suburban transit 45 Transportation 'by air .

46 Pipeline transportation 48 Communications (telephone, radio and television)~

49 Electric, gas and sanitary services 111) - Coal mining and related functions 121) 291 Petroleum refining 806 Hospitals 4911 Electric sal s for resale under FPC jurisdiction 9190) Prisons 9290) Police and fire fighting facilities~

9390) 9349) Mater supply<"

t 4941) 4These classifications arc to be excluded at the discretion of the utility company.

Schedule 1 page 5 Federal activities essential to national defense

~, Life support systems>> consideration should be given to advance notification of customers with life support systems such as iron lungs, shaker beds and kidney, machines.

. The additional groups of customers excluded or exempt only under Steps C and D are:

SIC Number 20 - Food and kindred products, except 2024, ice cream and frozen dess'erts; 2052, cookies and crackers; 207, con-fectionary and related products; and 208, beverages, all of which are not exempt.

II Step A shall be taken by the Management Committee established under the t PJM Agreement when fuel supplies of the signatories are decreasing and in its judgment the remaining supplies are sufficient for approximately

.of their oil-fired generation or approximately 30 10 days'peration days'peration of their coal-fired generation.

Provided that the necessary authorizations have been received. from proper r

governmental authorities, Step B shall be taken by the Management Committee when the fuel supplies continue to decrease and the remaining supplies will otherwise be-come less than sufficient for approximately 10 days'peration of their oil-fired generation or approximately 30 days'peration of their coal-fired generation.

Steps C through F shall be taken only if there are further decreases in the fuel supply and the exhaustion of some essential component of that supply is thrcat-ened. Provided that the necessary authorizations have been received from proper

+These classifications are to be excluded at the discretion of, the utility company.

Schedule 1 page 6

'governmental authorities, the decision to implement these steps, in whole or in 1

Ipart, shall be made by a consensus of the signatories hereto.

Recognizing that the fuel situation is extremely complex and that the above stated criteria may not be applicable in all developing situations, ithe PJM energy and fuel supply situation shall be continuously monitored and, as deemed necessary, any one or more steps of the reduction in energy use program shall be implemented.; I 1

ESTIMATED REDUCTIONS IN ENERG'Z USE STEP PER C EN TAGE OF NORMAL US E IN STEP . CUMULATIVE g%%u 10%%uo 15%

D 8%  ? 3%%uo 4%%uo 27%

il I= r=Fr=d rivC, 5d$ JR7 ~> NNHD .

PENNSYLVANIA-NEWJERSEY" MARYLAND INTERCONNECTION 955 JEFFERSON AVENUE VALLEYFOROE CORPORATE CENTER NORRISTOWN, PENNSYLVANIA 19401 (215) 666i7560 December 12, 1977 l

Federal Energy Regulatory Commission

'25 North Capitol Street, NE Washington, DC 20426 C

Attention: Mr. Kenneth F. Plumb, Secretary Gentlemen:

There is filed herewith, on behalf of the following listed companies, proposed Schedule 7.03, Revision No. 1 and proposed Schedule 5.04 modifying the original Pennsylvania-New Jersey-Maryland Interconnection (PJM) Agreement as heretofore amended and supplemented, which is on file with the Commission and is ident'ified by the Rate Schedule designation shown for each. listed company.

Rate Schedule Public Service Electric and Gas Company FPC No. 23 Philadelphia Electric Company 21 Pennsylvania Power & Light Company 21 Baltimore Gas and Electric Company 9 Jersey Central Power & Light Company 7 Metropolitan Edison Company 7 Pennsylvania Electric Company 24 Potomac Electric Power Company . 19 All of the above listed parties to the PJM Agreement have received copies of and have approved this filing which is made on behalf of such parties by the under-signed in accordance with the authorization contained in Section 3.3 (vi) of the PJM Agreement.

The following documents are submitted herewith in connection with this filing:

1) Six (6) copies of this letter;')

Twenty-two (22) copies of proposed Schedule 7.03, Revision No. 1;

3) Twenty-two (22) copies of proposed Schedule.5.04;

4) Six (6) copies of a form of 'Notice of Application suitable for publication in the Federal Register;

5) A check coirering the required Public Service Electric snd Gss Company filing fee., Oenersl Public Utilities Corporation Philadelphia Electric Company Jersey Central Power a Light Company Metropolitan Edison Company Pennsylvania Power Pa Light Company Pennsylvania Electric Company Ssltlmore Gas and Electric Com ~ny Potomac Electric Power Company \

I The proposed schedules provide for the sharing among the PJM companies of amounts paid or received by PJM for generating and/or transmitting Conservation Energy, as defined in agreements with others. Therefore, the proposed schedules are being filed concurrently with new Conservation Energy schedules. of the APS-PJM and NYPF<PJM Agreements. An effective date of Janua'ry 1, 1978 has been requested for the latter schedules because transactions to conserve coal may be needed by that date. Consequently, the proposed schedules filed herewith should be effective on the same date to provide the accounting procedures internal to PJM for Conservation ~

Energy transactions with others. Therefore it is respectfully submitted that good cause exists for waiver of notice of requirements and the Commission is hereby requested, pursuant to Section 35.11 of its Regulations, to .waive notice of require-ments and order the proposed Schedule 7.03, Revi.sion 1 and proposed Schedule 5.04 to be effective as of January 1, 1978.

I Proposed Schedule 7.03, Revision 1, which will supercede Schedule 7.03, is not intended to and will not change current allocation procedures of existing Schedules.'he Schedule, as revised, provides for the internal allocation of Conservation Energy received or delivered and the payments and charges associated with the generation of such energy. When PJM generates Conservation Energy for others, the supplying com-panies will be identified and credited for the energy supplied using the same method as currently in effect under Schedule 7.03(e), except, special provision is made to account for supplemental charges for the replacement cost of fuel. Such special

"'rovision is required due to the retroactive nature of such charges. Conservation Energy received by PJM will be allocated internally to those companies whose generation is curtailed to conserve energy, but only if that company is receiving energy that hour and then only to the extent of such receipt Any remaining Con-servation Energy would then be allocated among all remaining receiving companies.

Such energy received will be accounted for using the same method as currently in effect under Schedule 7.03(d) except, special provision is made to account for any supplemental bills from others to adjust for the suppliers'ut<<'of-pocket cost of replacement fuel, due to the retroactive nature of such bi.lls.

Proposed new Schedule 5.04 provides for the allocation of the fixed charge for generation service (3.75 mills/kwh for PJM) and the fixed charge, for transmission service (1.75 mills/kwh for PJM). When PJM is generating or receiving Conservation Energy, the associated fixed charges will be allocated in the same manner as presently provided in Schedule 5.02 for fixed charges associated with Extended Emergency and Supplemental Operating Capacity. transactions between PJM and others. 'hen PJM is transmitting Conservation Energy i:t is proposed to allocate the fixed charge for transmission service in proportion to the components comprising the basis for the charge as follows:

'C Corn onents of Service Char e*

mills/kwh '7, of total 1

(a) Transmission investment 1.22 577. In accordance with Schedule 5.03 which allocates payments to PJM for transmission services.

+Supporting computations for these .components. are stated in Attachpent II of separate letters dated December 12, 1977 submitting for filing new Conservation Energy schedules to the APS-PJM and NYPP-PJM Agreements.

(continued)

7. of.

mills/kwk total t

(b) Administrative expense ~ 25 12' In accordance with Schedule 9.01 which 7L allocates the expenses of the Office of the PJM Interconnection (c) Transmission losses .66 317. . Based on computer load flow analyses, one-third of the additional losses will be on the 500 KV system and will be allocated in accordance with Schedule I 12.03 of the EHV Agreement which allocates losses on the 500 KV system.

The balance of the additional losses will be on lower voltage lines and C

will be allocated in proportion to the change in losses for each PJH company determined by computer load flow analysis for typi'cal transfers of conservation energy. s

~

In response to Section 35.13(b) of the Commission's Regulations, it is pointed out that because of the uncertainty of the duration of the .coal miner's strike or other events which might determine the need for Conservation Energy transfers and because of variable operating restrictions in'the event the transfers are required, estimates of the charges and payments to be allocated under the proposed Schedules have not been made. To the extent that Section 35.13(b)(1) of the Commission's Regulations is deemed applicable to this filing, waiver of that regulation is requested based on the foregoing.

Copies of this letter and all enclosures will be furnished promptly to the Regulatory Commissions of Pennsylvania, New Jersey, Maryland, Delaware, Virginia and the District of Columbia for their infoxmation.

A check in the amount of $ 800 is 'enclosed pursuant to Section 36.2(e) of the Commission's Regulations to cover the filing fee determined as follows: $ 100 for a nominal rate schedule for one party', and $ 100 for each additional submittal for each of the other parties to the'PJM Agxeement.

'Very truly yours, Wilmer S. Kleinbach Manager TRW: par Enclosures

Page 1 of "-

SCHEDULE 7.03 REVISION NO. 1 (Supersedes Initial Schedule Issued June 15, 1977)

Issued: December 12, 1977 Effective:

ACCOUNTING FOR INTERCHANGE OF ENERGY'ITH OTHERS (a) Accounting among the Part'.. " Hereto 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 INTERCHANGE I

(b) Except as provided in (c), (d), and (e), when scheduled energy is received by THE INTERCONNECTION from others, the amount and value of avoided gen ration of each Party Hereto shall be determined each hour by the Office of THE INTERCONNECTION based on the ascending order of unit operating costs provided by the Parties Hereto. Each Party Hereto whose generation was avoided shall be debited for the amount of such avoided generation at a rate per kilowatth'our halfway between its value of avoided generation per kilowatthour and the average billing rate paid by THE INTERCONNECTION for the energy scheduled to be received during that hour, but in no event shall such debit exceed its value. The information provided under Schedule 7.01(a) by each Party Hereto whose generation was avoided shall be ad]usted by the amount 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 Hereto, the Office of THE ItlTERCONNECTION shall determine for each plant a pumping cutoff rate defined as the generation rate per kilowatt-hour on THE INTERCONNECTION at which pumping shall be reduced or discontinued because energy generated above that rate for pumping would provide uneconomical I I

Page 2 of 5 energy during the generating cycle. During .any hour in which economy

~ i energy is received by THE INTERCONNECTION from others and the amount of energy utilized by the Parties Hereto for pumping exceeds the amount that could have been generated on THE INTERCONNECTION at or below the pumping cutoff rate, such amount of excess shall be considered avoided generation valued at the pumping cutoff rate in determining the value of avoided generation in (b).

(d) When scheduled energy 1's received by THE INTERCONNECTION from others, any part of which is Emergency, Supplemental or Short Ter:n energy, as defined in agreements between the Parties Hereto and others, the amount of'uch part shall be allocated each hour by the Office of THE INTER-CONNECTION among the Parties Hereto in proportion to their respective energy receipts as reported under Schedule 7.01(a) for which they cannot provide replacement values (including pumping energy receipts, if any).

The corresponding value of such energy to each Party Hereto shall be determined by the Office of THE INTERCONNECTION as the average cost to generate such energy by others, increased by 207.. Each Party Hereto 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 THE INTERCONNECTION for Emergency, Supplemental or Short Term energy received during that hour.

The information provided under Schedule 7.01(a) by each Party Hereto who received 'a share of such energy shall be adjusted by the amount allocated to each, to reflect the receipt of such energy from others.

(e) When scheduled energy is received by THE INTERCONNECTION from others, any part of which is Conservation Energy, as defined in agreements between the Parties Hereto and others, the amount of such part shall be allocated each hour by the Office of THE INTERCONNECTION among the Parties Hereto in the following sequential steps:

~ '1) To those who Parties Hereto whose generation was report energy receipts under 'Schedule 7.01(a) in pro-Page 3 curtailed and of 6 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 Barties Hereto who report energy receipts 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 Hereto shall be deter-mined by the Office of THE INTERCONNECTION as the average cost to supply such energy by others, increased by 207.. Each Party Hereto who received an allocated share of such energy shall be debited for the amount of its I share at a rate per kilowatthour halfway between its assigned value per kilowatthour and the average billing rate paid by THE INTERCONNECTION for Conservation Energy received during that hour., The information provided under Schedule 7.01(a) by each Party Hereto who received a share of such energy shall be adjusted by the amount allocated to each, to reflect the receipt of such energy from others. Each Party Hereto 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'ut-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 THE INTERCONNECTION to others, the amount and cost of generation increased by each Party. Hereto to supply the energy shall be determined each hour by the Office of THE INTERCONNECTION based on unit operating costs provided by the Parties Hereto. When such scheduled energy is Emergency, Conservation, Supplemental or Short Term

.Page 4 of G the cost of generation increased by each Party Hereto shall include the operating capacity costs. Each Party Hereto whose generation was I

~ L 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 THE ItlTERCONNECTION for the scheduled energy supplied t

-during that hour, but in no event shall such credit by less than its cost.

The information provided under Schedule 7.01(a) by each Party Hereto who supplied energy to others shall be adjusted by the amount and cost of the energy supplied, to reflect the delivery of such energy to others. Whenever THE INTERCONNECTION renders a supplemental bill to others for the supply of Conservation Energy, as provided for in agreements. with others, each Party, Hereto with billing adjustments shall be debited or credited, as the case may be, its respective amounts of'such supplemental bill.

(g) The difference between the sum of the amounts 'debited or credited to the Paities Hereto under (b), (d), (e), and (f) and the amounts paid to or received from others by THE INTERCONNECTION shall be allocated as a credit to all Parties Hereto as follows:

(1) One-third in proportion to the System Capacity of each Party Hereto at the time of the transaction.

(2) Two-thirds in proportion to the transmission investment of Party Hereto effective for the then current revision of I'ach Schedule 5.03.

(h) When the scheduled interchange with others in an hour is such that all'r part of the energy received by THE INTERCONNECTION is equal in amount to all or part of the energy supplied by THE INTERCONNECTION, the difference between the billing amounts paid and received by THE INTERCONNECTION for. the equal amount of energy shall be determined and each Party Hereto shall be credited for a share of such difference allocated as provided in (g).

'f

(

Page 5 of 6 INADVERTENT INTERCHANGE (i$aL Inadvertent interchange shall be determined by the Office of THE INTERCONNECTION as the net difference each hour between the nletered 4

and the scheduled interchange with others.

(j) Inadvertent interchange shall be accounted for each hour by the Office of THE INTERCONNECTION as follows:

(1) When the metered interchange exceeds the scheduled interchange, the inadvertent interchange shall be accounted for at the average rate per kilowatthour of all generation avoided or supplied by the Parties Hereto, depending on the direction of inadvertent flow.

(2) When the scheduled interchange exceeds the metered 1

interchange, the inadvertent interchange shall be accounted for at the average billing rate p'aid to ox received from others, depending on the direction of inadvertent flow.

(3) When the metered interchange is opposite in direction

\

to the scheduled interchange, the inadvertent inter- .

change shall be accounted for in two parts:

(A) The energy actually xecieved ox supplied shall be accounted for at the average rate per kilowatthour of all generation avoided or supplied by the Parties Hereto, depending on the direction of inadvertent

Page 6 of 6 (B) The balance of the. inadvertent interchange shall be accounted for at the billing rate paid to or received from others, depending on the direction of inadvertent flow.

I (k) Each, Party Hereto shall be debited or credited, as appropriate, for its share of the cost or value of inadvertent interchange determined I

in (j) and allocated as provided in (g).

C

Page 1 of 2 SCHEDULE 5.04 TO THE PJM AGREEMENT Issued: December 12, 1977 Effective:

ALLOCATION AMONG PARTIES HERETO OF PAYMENTS AND CHARGES FOR CONSERVATION ENERGY (a) Agreements between the Parties Hereto, acting as a group, and others not party to the AGREEMENT, provide for the generation and delivery of Conservation Energy as defined in sdch agreements. Allocation among Parties Hereto 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 t therewith, shall tion be made in accordance with this schedule.

(b) Those portions of such charges by others for the generation of Conserva-Energy and those portions of such payments to the Parties Hereto for the generation of Conservation Energy shall be accounted for and billed ig within THE 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 fiom the Parties Hereto, "the portion of the payments described in (a) shall be divided as follows:

(1) 707. representing payment for generating capacity shall be allocated among the Parties Hereto in proportion to their respective actual Contract Capacities in that portion of the Planning Period in which the seriices were provided, after adjustments for sales and purchases

Page 2 of 2 under Schedules 3.01 and 5.01.

(4) 307. representing payment for transmission services shall be allocated as provided in Schedule 5.03.

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 i& share of the payments as so allocated.

4 (e) When the Parties Hereto transmit Conservation 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) 12% representing payment for administrative expenses shall be allocated as provided in Schedule 9.01; (3) 317. representing payment for transmission losses shall be allocated in two parts:

(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.

n, g

Page 1 of 2 UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Tc Docket.No. E Date Public Service Electric and Gas Company Philadelphia Electric Company Pennsylvania Power & Light Company Baltimore Gas and Electric Company Jersey Central Power & Light. Company Metropolitan Edison Company Pennsylvania Electric Company Potomac Electric Power Company Notice of Application Take notice that on the Office of the Pennsylvania-New Jersey-Maryland Interconnection filed on behalf of the above listed utilities a revised Schedule'.03 and a new Schedule 5.04 modifying the Interconnection Agreement which is on file with the Commission.

The proposed schedules provide for 'the sharing among the PJM companies of amounts paid or received by PJM for generating and/oi transmitting Conservation Energy. Specifically, the revision to Schedule 7.03 provides methodology for allocating internally Consexvation Energy received or delivered and the payments and charges assoc'ated with the generation of such energy. Proposed Schedule 5.04 provides for the allocation of the fixed charges associated with Conservation Energy ll II transactions.

Because of the uncertainty of fuel supplies associated with the coal miners'trike, and the possibility that transactions will be required imminently which would require utilization of the proposed Schedules, the Parties have requested that the Commission waive its notice requirements and that the proposed Schedules become effective January 1, 1978.

Any person desiring to be heard or to protest said application should file a petition to intervene or protest with the Federal Energy Regulatory Commission

Page 2 of 2 825 North Capitol Street, N.E., Vashington, DC 20426, in accordance with Sections.,1.8 and 1.10 of the Commission's Rules of Practice and Procedure. All TL I

such petitions or protests should be filed on or before Protests will be considered by the Commission in determining the appropriate

,action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a petition to .inter-vene. Copies of this'pplication are on file. with the Commission and are available:

for public inspection.

P 'Nf.'SYLVPNIA-NEWQERSEY-MARYLAND 1NTERCC!NN -CTl&M I 956 JEFFERSON AVENuE VALLEYFORGE CORPORA1C CENTER NORRISTOWN, PENNSYLVANIA 19401 (215) 666.1560 June 27, 1977 Federal Power Coounission 825 North Capitol Street, NE Mashington, DC 20426 Attention: Hr. Kenneth F, Plumb, Secretary

, Gentlemen:

There is filed herewith, on behalf of the following listed companies, a Supplemental Agreement dated June 13, 1977 modifying the original Pennsylvania-

'New Jersey-Haryland Interconnection (PZi'1) Agreement as heretofore amended and supplemented, which is on file with the Commission and is identified by the Rate I Schedule designation shown for each listed company.

I

~Com an Rate Schedule

, Public Service Electric and Gas Company Philadelphia Electric Company Pennsylvania Power & Light Company Baltimore Gas and Electric Company.

FPC

'l No." 23 21 9

Jersey Central Power &,Light Company 7

'Metropolitan Edison Company 7

~pennsylvania Electric Company 24

'Potomac Electric Power Company 19 All of the above listed parties to the PJM Agreement have received copies

'of and hav'e approved this filing, which is made on behalf of such parties by the undersigned in accordance with the authorization contained in Section 3.3(vi) of the PJM Ag reement.

It is requested that the proposed Supplemental Agreement be assigned an effective date of August 1, 1977.

The following documents are submitted herewith in connection with this filing:

1) ~

Six (6) copies of this letter.

2) Twenty-two (22) copies of the Supplemental Agreement, dated June 15, 1977

'ublic Service Electric end Gaa Company General Public Lltllltlea Cor poratlon PhIIadelphla Electric Company Jeraey Central Power Ib Light CompanyI Penntylvanla Power 6r Light Company Metropolitan Edison Company Penntylvanl ~ Electric Company Sat\Imore Ga ~ end plagal r w esosv

~

I

3) Six (6) copies of Exhibit 1 - a summary 'of proposed new schedules and proposed changes to pres'ent schedules of the PJM Agreement.

4) Six (6) copies of a Notice, suitable for publication in the Federal Register.

5) A check covering the required filing fee.

The Supplemental Agreement sets forth additional rights and obligations of the PJM companies with respect to coordinating the installation and operation of generating capacity and major transmission facilities, and modifies the provisions for the sharing of the costs and benefits of coordinated 'operation.

Article 7 covering Operating Capacity Requirement and Obligations has been-clarified and updated to include provision, for regulating capability. Provisions of the'present Agreement covering accounting for energy and operating cap'acity have been transferred to'roposed new schedules. This approach is consistent with the cbanges made in Capacity Accounting'in the April 1; 1974 Supplemental Agreement.

Previous supplements to the PJM Agreement contained in Standard Practices 2>>5, 3-7, and 6-1 have been transferred to new schedules and provision made to'ancel these Standard Practices. Provisions to account internally for energy and operating capacity transactions with non-members previously covered in Standard Practice 3-7, have been revised to recognize the participation of the parties in the outside trans-action, rather than allocate equal shares of such outside transactions to all parties as under the present Agreement. One-half of the PJM savings on outside transactions will be allocated among the participant parties (in the same manner as savings are shared on internal transactions) and the other half will be shared by all parties I

~in proportion to size as measured one-third by System Capacity and two-thirds by Transmission Investment (Schedule 5.03). Each party's percentage share based on data as of June 1, 1977 is listed in Exhibit 1 under Schedule 6.04. No change is proposed in the accounting and billing for the interchange of 'energy and operating capacity between the parties themselves.

With the changes proposed in accounting for interchange, 'all savings will be allocated by participation and/or size. It is also proposed to change the allo-cation among the parties of the expenses of the Office of the Interconnection from equal shares to a method which also .recognizes participation and size.. Each party' percentage share based on data for the 1976-1977 Planning Period is listed in Exhibit 1 under Schedule 9.01.

Y Summarized on Exhibit 1 attached are the proposed changes, to present schedules and the content of proposed new schedules, which are herewith submitted for filing with the Supplemental Agreement.

There are no new rates proposed for which a billing comparison can be made in accordance with Section 35.13(b)(l) of the Commission's Regulations. It is recog-nized that the change proposed in accounting for outside transactions wi'll affect the total debits and credits of the parties. In the past it has not been lto'identify the individual parties whose equipment participated in outside necessary trans-actions. There are no data available from which the individual participants in outside transactions over the twelve 'months prior to August 1, 1977 can be determined.

)It,is also not possible to predict the outside transactions and individual participant

~parties to such transactions over the twelve months following August 1, 1977. There-fore, while individual parties may have attempted general judgmental evaluations of the impact of the proposed changes, no mathematical quantification or of

'the effect of the proposed changes is possible and none has been made. computation To the extent that Section 35.13(b)(l) of the Commission's Regulations is deemed applicable to this filing, waiver of that regulation is requested based on the foregoing.

t ,"the I

No facilities are required to be installed or modified in order to provide services covered by the proposed revisi.on.

Copies of this letter ynd all enclosures will be fu'rni.shed promptly to the Regulatory Commissions of Pennsylvania, New Jersey, Maryland, Delaware, Virginia and the District of Columbia for their information.

A check in the amount of $ 1200 is enclosed to cover the filing fqe in accordance with the Commission's Regulations determined as follows: $ 500 for a moderately complex rate schedule for one party pursuant to Section 36.2(f)

,and $ 100 for each additional submittal for each of the other parties to the PJH Agreement pursuant to Section 36.2(e).

Very truly yours, Wilmer S. Kleinbach Manager TPW:par Enclosures

PENNSYLVANIA-NEW JERSEY-MARYLAND INTERCONNECTION SUPPLEMENTAL AGREEMENT BETWEEN PUBLIC SERVICE ELECTRIC AND GAS COMPANY PHILADELPHIA ELECTRIC COMPANY PENNSYLVANIA POWER & LIGHT COMPANY BALTIMORE GAS AND ELECTRIC COMPANY JERSEY CENTRAL POWER & LIGHT COMPANY METROPOLITAN EDISON COMPANY PENNSYLVANIA ELECTRIC COMPANY POTOMAC ELECTRIC POWER COMPANY This Supplemental Agreement to the Pennsylvania-New Jersey-Maryland (PJM) Interconnection Agreement dated September 26, 1956, as amended and supplemented (AGREEMENT), sets forth additional rights and obligations of the PJM companies with respect to coordinating the installation and operation of generating capacity and major trans-facilities, and modifies the provisions for the sharing of 'ission the costs and benefits of cooidinated operation. In accordance with the authorization provided in the AGREEMENT, this Supplemental Agreement is submitted for filing with the Federal Power Gommission the Manager of the Office of PJM on behalf of all the signatories.

'y

THIS SUPPLEMENTAL AGREEMENT, made as of the fifteenth day of June, 1977, by and between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a New Jersey corporation (PS); PHILADELPHIA ELECTRIC COMPANY, a Pennsylvania corporation (PE); PENNSYLVANIA POWER 6 LIGHT COMPANY, a Pennsylvania corporation (PL); BALTIMORE GAS AND ELECTRIC COMPANY, a Maryland corporation (BC); JERSEY CENTRAL POWER & LIGHT COMPANY, a New Jersey corporation (JC); METROPOLITAN EDISON COMPANY, a Pennsylvania corporati,on (ME); PENNSYLVANIA ELECTRIC COMPANY, a Pennsylvania corporation (PN); the latter three companies (herein called collectively GPU Group) all being subsidiaries of General Public Utilities Corporation; and POTOMAC ELECTRIC POWER COMPANY, a District of Columbia and Virginia corporation (PEPCO).

WITNESSETH THAT:

WHEREAS, the signatories hereto are signatories to an agreement, dated September 26, 1956, as amended and supplemented, known as the Pennsylvania-New Jersey-Maryland Interconnection Agreement (AGREEMENT); and WHEREAS, it is desired to amend the AGREEMENT to set forth addition'al rights and obliga'tions of the Parties Hereto wi.th respect to coordinating the installation

'and operatiod of generating capacity and major transmission facilities, and to modify the provisions for the sharing of the costs and benefits of coordinated operation.

NOW, THEREFORE, the signatories hereto hereby agree as follows:

Section I. The AGREEMENT shall. be and is hereby amended:

A. By deleting the word "equally" in the last sentence of Section 3.3, deleting the period at the end of the sentence and inserting there-after the phrase "in accordance with Schedule 9.01."

B. By deleting the second sentence of Section 3.4 and inserting in lieu thereof the following:

"The Manager shall be a non-voting member of the OPERATING COMMITTEE.

Page 2 of 2 SCHEDULE 5 01 adjustments for sales already allocated qnder. this paragraph and for sales and .purchases under Schedule 3.01.

When others reserve power from the Parties Hereto during a Planning Period, payments received with respect to such reservation (exclusive of payments covered by (b)'hereof) shall be divided into two parts: (i) the part representing payment 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 time-to-time as the MANAGEMENT COMMITTEE shall direct. Part (i) of the payments shall be allocated among the Parties Hereto in the same proportions as determined in (d). Part (ii) of the payments shall be allocated among the Parties Hereto as provided in Schedule 5.03. Each Party Hereto shall receive from the billing agent, its share of the. payments as so allocated

Page 1 of 2 SCHEDULE 5 02 REVISION NO. 1 (Supersedes Initial Schedule Issued June 26, 1974)

Issued: June 15, 1977 Effective: August 1, 1977',.

ALLOCATION AMONG PARTIES HERETO OF EXTENDED EMERGENCY AND SUPPLEMENTAL OPERATING CAPACITY PAYMENTS "AND CHARGES (a) Allocation among Parties Hereto of those portions of the payments a'nd charges for Extended Emergency and Supplemental operating capacity, as defined in agreements between the Parties Hereto and others, 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 payments and charges which are for operating capacity and energy shall be accounted for and billed within THE 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 accordance with Schedule 2.21(e)) in that portion of the Planning Period in which the services were purchased.

(d) When others purchase Extended Emergency and Supplemental operating capacity from the Parties Hereto during a Planning Period, the portion described in (a) of the payments with respect to such transactions shall be divided into I

two parts: ~

(i) the part representing payment for generating capacity and (ii) the part representing payment for transmission services, the division being 70% for generating capacity and 30/ for transmission services,

Page,2 of 2 SCHEDULE 5 02 subject to review from time to time as the MANAGEMENT COMMITTEE shall direct. Part (i) of the payments shall be allocated S

among the Parties Hereto 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 under Schedules 3.01 and 5.01. Part (ii)-

of the payments shall be allocated among the Parties Hereto as provided in Schedule 5.03. Each Party Hereto shall receive from the billing agent 'its

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share of the payments as so allocated

SCHEDULE 6.01 Page 1 of 1 REVISION NO. 1 (Supersedes Initial Schedule Issued April 15, 1976)

Issued: June 15, 1977 Effective: August 1, 1977 ACCOUNTING FOR REGULATING CAPABILITY (a) Section 7; 1 of this AGREEMENT provides for the determination of,a Regulating Capability Requirement for THE INTERCONNECTION.

(b) The total regulating capability provided by all Parties Hereto 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 Hereto shall be determined by the ratio of (1) its concurrent Operating Capacity Obligation determined in accordance with S'chedule 6.03 hereof to (2) the sum of such obligations for all Parties Hereto.

(d) A Party Hereto 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 such difference.

(e) Each Party Hereto that has a deficiency in any hour shall be debited and each Party Hereto that has an excess shall be credited in the Regulating Capability Account at rates determined from time-to-time by the OPERATING COMMITTEE, subject to the approval of the MANAGEMENT COMMITTEE. Such rates, sha'll be representative of the energy replacement costs and other variable operating costs on THE INTERCONNECTION for the particular type of equipment'perated to provide such excess.

Page 1 of 1 SCHEDULE 6 '2 Issued: June 15, 1977 Effective: August 1, 1977 l OPERATING RESERVE REQUIREMENT AND ALLOCATION (a) Section 7.1 of this AGREEMENT provides for the determination of an Operating Reserve Requirement for THE INTERCONNECTION.

(b) By application of suitable probability methods to appropriate data for THE INTERCONNECTION, the operating reserve required for THE INTERCONNECTION 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 probability of equip-ment malfunction or failure, the load level 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 must 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 THE INTERCONNECTION allocated to each Party Hereto shall be determined by the ratio of (1) the average of its loads at the time of THE INTERCONNECTION peak load each week to (2) the average of THE INTERCONNECTION peak loads each week, all as measured during the weeks of the corresponding seasonal period of the preceding year. The seasonal periods shall be specified from time-to-time by the OPERATING COMMITTEE.

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SCHEDULE 6.03 Issued: June 15, 1977 Effective: August 1, 1977 ACCOUNTING FOR OPERATING CAPACITY (a) For the purpose of accounting under this AGREEMENT, the Operating Capacity Obligation of each Party Hereto 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 applied in the determination of the estimated peak load for THE INTERCONNECTION, plus its share of the Spinning Reserve Requirement allocated in accordance with Schedule 6.02.

(2) During all other hours, its actual load plus its share of the Spinning Reserve Requirement allocated in accordance with Schedule 6.02.

The time and duration of the peak periods each day shall be specified by the Office'f THE INTERCONNECTION.

s (b) Load diversity on THE INTERCONNECTION, for the purpose of this schedule, s

shall be the remainder obtained by subtracting the estimated peak load of THE INTERCONNECTION for any period from the sum of the estimated individual System peak loads of the Parties Hereto for such period. The proportional share of the estimated load diversity on THE lNTERCONNECTlON in any peak period allocated to each Party .Hereto shall be determined by the same ratio as in Schedule 6 02(d).

Page 2 of 4 SCHEDULE 6 '3 (c) A Party Hereto whose synchronized capacity during a peak period .is more or less than its obligation,,as determined under (a) shall be considered to have an excess or deficiency, respectively, by the amount of such difference.

(d) Each Party Hereto that 'has a deficiency of synchronized capacity shall I

determine its replacement value as the avoided cost to operate available equipment in amount equal to its .deficiency. 'In the event that the.

capacity of available equipment of a Party Hereto is le'ss than its deficiency, it shall use as the replacement value for such difference the weighted average cost per kilowatt, increased by 20%y of the highest s

cost capacity operated on, THE INTERCONNECTION by Parties Hereto, equal in amount of capacity to the total synchronized capacity deficiencies of all Parties Hereto for which equipment is not available to determine replace-ment values.

(e) Each Party Hereto that supplies excess synchronized capacity by operating equipment for THE INTERCONNECTION which is excess to its own,requirements l

shall determine its cost to operate such equipment and shall charge such cost in the'perating Capacity 'Account. In the event the total capacity of such equipment exceeds the sum of the deficiencies of the Parties Hereto, the costs for the highest cost equipment in amount of capacity equivalent to such sum shall be charged in the Operating Capacity Account I

and the costs for the remaining equipment shall be charged in the Energy Account.

(f) Each Party Hereto that supplies excess synchronized capacity by operating equipment for THE INTERCONNECTION but uses any part of such equipment  !

to meet its own requirements (incidental excess) shall charge for such

I I Page 3 of 4 SCHEDULE 6 '3 excess in the Operating Capacity Account either at zero cost or in a manner specified by the OPERATING COMMITTEE. In the event the total of the deficiencies of the Parties Hereto is greater than 'the total y

l, amount of capacity operated for THE INTERCONNECTION by Parties Hereto I

I having excesses for which costs are charged in the Operating Capacity Account, the difference shall be allocated equally to the extent possible I

to the Parties Hereto having incidental excesses

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except that the amount allocated to any Party Hereto shall not exceed the amount of its incidenta 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 (l) the total costs'harged in the Operating Capacity Account for all peak periods of a day of Parti'es Hereto having excesses and (2) the total replacement values for all peak periods of a day of the Parties Hereto having deficiencies. One-half of the daily savings shall be allocated to those Parties Hereto supply operating 1

capacity in proportion to the amount of capacity so supplied, and the other half shall be allocated to those Parties Hereto receiving operating capacity in proportion to the total replacement values of each such Party Hereto.

(h) Each Party Hereto that has a deficiency in operating capacity during peak periods shall be debj.ted in the Operating Capacity Account its total replacement value for all peak periods of the day less its allocated share of the daily savings. Each Party Hereto that supplies operating capacity during peak periods shall be credited in the Operating Capacity Account for its total cost for all peak periods of

Page 4 of 4' SCHEDULE 6.03 the 'day plus its allocated share of the daily savings.

(i) All debits and credits arising from a deficiency in the Operating Capacity Obligation of any Party Hereto in hours other than during peak periods shall be entered in the Energy Account.

Page 1 of 4 II SCHEDULE 6.04 Issued: June 15, 1977 Effective: August 1, 1977 ACCOUNTING FOR INTERCHANGE OF OPERATING CAPACITY WITH OTHERS (a) Accounting among the Parties Hereto for the interchange of operating capacity between THE INTERCONNECTION and others not party to the AGREEMENT shall be made in accordance with this schedule..

(b) When economy operating capacity is received by THE INTERCONNECTION from others, the 'amount and value of avoided operation of each Party Hereto each day shall be determined by the Office of THE INTERCONNECTION based on unit operating costs provided by the Parties Hereto. Each Party Hereto who avoided operating its generating equipment shall be debited an amount halfway between its value of avoided operation and the billing amount paid by THE INTERCONNECTION to others for an equivalent amount of operating capacity received, but in no event shall such debit exceed its value. The amount of operating capacity from others received by each Party Hereto shall be considered as synchronized capacity for purposes. of accounting under Schedule 6.03.

(c) When Emergency, Supplemental or Short Term operating capacity, as defined in agreements between the Parties Hereto and others, is received without energy by THE INTERCONNECTION from other's during peqk periods of a day, it shall be allocated each peak period by the Office of THE INTERCONNECTION among the Parties Hereto in proportion to their deficiencies, as determined in Schedule 6.03(c), for which they cannot provide replacement values on their own equipment. The corresponding value of such operating capacity

Page 2 of <

SCHEDVLE 6.04 to each Party Hereto shall be determined by'the Office'f THE INTER-CONNECTION as the average cost of the operating capacity supplied by others-, increased by 207.. Each Party Hereto who received an allocated share shall be debited an amount halfway between, its assigned value and its allocated share of the total billing amount paid by THE INTERCONNECTION for the operating capacity received. The amount of operating capacity from others allocated to each Party Hereto shall be considered as syn-V chronized capacity for purposes of accounting under Schedule 6.03.

(d) When Emergency, Supplemental or Short Term operating capacity is A

received with energy by THE INTERCONNECTION from others during peak periods of a day, and when Emergency, Supplemental or Short Term operating capacity is received by THE 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, Supplemental or Short Term energy under Schedule 7.03(d).

(e) When operating capacity is supplied without energy by THE 'INTERCONNECTION to others during peak periods of a, day, on equipment specifically operated by THE INTERCONNECTION for such supply, the cost of supply in each peak period shall be determined by the Office of THE INTERCONNECTION based on unit operating costs provided by the Parties Hereto. Each Party Hereto 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 THE INTERCONNECTION for the operating capacity supplied from its equipment, but in no event shall such credit be less than its cost.

(f) When operating capacity is supplied without energy by THE INTERCONNECTION to others during peak periods of a day from excess synchronized capacity.

Page 3 of 4 SCHEDULE 6.04 operating for THE INTERCONNECTION, the cost of supply in each peak period shall be determined by the Office of THE INTERCONNECTION based on unit operating costs provided by the Parties Hereto. Each Party Hereto shall be credited a share of the billing amount paid by others for the operating capacity supplied in proport'ion .to its share of the Spinning Reserve Requirement determined in 'accordance with Schedule 6.02(d).

(g) When Emergency, Supplemental 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 THE INTERCONNECTION to others in hours other than during peak periods, the cost of generation increased by each Party Hereto as determined under Schedule 7.03(e) 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 Hereto under (b)., (c) and.(e) and the amounts paid to or received from others by THE INTERCONNECTION shall be allocated as a

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credit to all Parties Hereto as follows:

(1) One-third in proportion to the System Capacity of each Party Hereto at the time of the transaction.

(2) Two-thirds in proportion to the transmission investment of each Party Hereto effective for the then current revision of Schedule 5.03.

the interchange of operating capacity with others during I'i)

When a peak period is such that all or part of the economy operating capacity

Page 4 of 4 SCHEDULE 6.04 received by THE INTERCONNECTION is equal in amount to all or part of the economy operating capacity supplied by THE INTERCONNECTION (or similarly for Emergency operating capacity), the difference between the billing amounts paid and received by THE INTERCONNECTION for that equal amount of operating capacity shall be determined and each Party Hereto shall be credited for a share of such difference allocated as provided in (h).

Page 1 'of 2 SCHEDULE 7.01 Issued: June 15, 1977 Effective: August .1, 1977 ACCOUNTING FOR INTERCHANGE OF ENERGY (a) Each Party Hereto shall inform the Office of THE INTERCONNECTION of the'et amount and cost of energy supplied by it to THE INTERCONNECTION or the net amount and replacement value of energy received by it from THE INTERCONNECTION for each hour of the day.

(b) = The Office of THE INTERCONNECTION shall determine the net amount and'ost of energy supplied by THE INTERCONNECTION to others not party to this AGREEMENT and the net amount and replacement value of energy received by THE INTERCONNECTION from others for each hour of the day.

(c) The total amounts of energy supplied in (a) and (b) in each hour shall be checked against and reconciled with the total amounts of energy received in (a) and (b) in that hour.

(d) The accounting among the Parties Hereto for energy supplied by THE INTERCONNECTION to others not party to this AGREEMENT and for energy received by THE INTERCONNECTION from others shall be determined by the Office of THE INTERCONNECTION in accordance with Schedule 7.03.

(e) The accounting for energy interchange among the Parties Hereto, after adjustment by the Office of THE INTERCONNECTION for interchange with others in accordance with Schedule 7.03, shall be determined by the Office of THE INTERCONNECTION for each hour as follows:

(1) Each Party Hereto receiving energy from THE INTERCONNECTION shall be debited for energy received at a rate per kilowatthour half-way between its replacement value per kilowatthour and the weighted average cost per kilowatthour of all Parties Hereto supplying energy to THE INTERCONNECTION during that hour.

SCHEDULE 7 ~ 01 Page 2 of 2

( 2) Each Party Hereto supplying energy to THE INTERCONNECTION r

shall be credited for energy supplied at a rate per kilowatthour halfway between its cost per kilowatthour and the weighted average replacement value per kilowatthour of all Parties Hereto receiving energy from THE INTERCONNECTION during that hour.

(3) When a Party Hereto operates or'ould have operated boiler capacity and/or machine 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 Hereto .receives energy from THE INTERCONNECTION to supply pumping energy for its pumped storage hydro capacity, it shall use as the replacement value of such energy, the weighted average cost per kilowatthour, increased by 20%, of the highest cost block of energy generated on THE INTERCONNECTION in'the same hour, equal in amount to the total pumping energy received from THE INTERCONNECTION by all Parties Hereto in that hour.

When a Party Hereto receives energy from THE INTERCONNECTION for which it has no replacement value, it shall use as the replacement value of such energy the weighted average cost per kilowatthour, increased by 20%, of the next highest cost block, below the block determined in (4), of energy generated on THE INTER-CONNECTION in the same hour equal in amount to the total energy of all Parties Hereto for which there is no replacement value.

Page 1 of 1 SCHEDULE 7.02 Issued: June 15, 1977 Effective: August 1, 1977 ACCOUNTING FOR CONVENTIONAL HYDRO ENERGY (a) Any Party Hereto whose System includes hydro capacity shall have the right to determine whether or not such capacity is to be operated for THE INTERCONNECTION.

'I (b) Each Party Hereto whose hydro capacity is operated for THE INTERCONNECTION shall determine each hour the differenc'e between the hydro kilowatthours actually generated and the hydro ki'lowatthours 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 50% 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 COMMITTEE.

(c) Each Party Hereto whose hydro capacity is operated as a synchronous l

condenser for spinning reserve'y the Office of THE INTERCONNECTION and is excess to 'the Party Hereto in meeting its operating capacity

. obligation, shall be credited at a rate determined from time-to-time 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).

Page, 1 of 4 SCHEDULE 7 '3 Issued: June 15, 1977 Effective: August 1,, 1977 ACCOUNTING FOR INTERCHANGE OF ENERGY WITH OTHERS (a) Accounting among the Parties Hereto for the interchange of scheduled and inadvertent energy between THE INTERCONNECTION and others not party to the AGREEMENT shall be made in accordance with this schedule.

SCHEDULED INTERCHANGE (b) Except as provided in (c) and (d), when scheduled energy is received by t

THE INTERCONNECTION from others, the amount and value of avoided generation of each Party Hereto shall be determined each hour by the Office of THE INTERCONNECTION based on the ascending order of unit operating costs provided by the Parties Hereto.'ach Party Hereto whose gene-ation 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 THE INTERCONNECTION for the energy scheduled to, be received during that hour, but in no event shall such debit exceed its value. The information provided under Schedule 7.01(a) by each Party Hereto whose generation was P

avoided. shall be adjusted by the amount 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 Hereto, the Office of THE INTERCONNECTION shall determine for .each plant a pumping cutoff rate defined as the generation rate per kilowatthour on THE INTERCONNECTION at which pumping shall be reduced or discontinued because energy generated above that rate for pumping would provide uneconomical energy during the generating cycle. During any hour in which economy energy is received by THE INTERCONNECTION from others and

Page =2 of 4 SCHEDULE 7.03 the amount of enargy utilized by. the Parties Hereto for pumping exceeds the amount that could have been generated on THE INTERCONNECTION at or below the pumping cutoff rate,,such amount of excess shall be considered avoided generation valued at the pumping cutoff rate in determining the value of avoided generation in (b).

(d) When scheduled energy is received by THE INTERCONNECTION from others, any part. of which is Emergency, Supplemental or Short Term energy, as defined in agreements between the Part'ies Hereto and others, the amount of such part shall be allocated each hour by the Office .of THE INTER-CONNECTION among the Parties Hereto in proportion to their respective en'ergy receipts as reported under'chedule 7.01(a) for which they cannot provide replacement values (including pumping energy receipts, if any).

The corresponding value of such energy to each Party Hereto shall be determined by the Office of THE INTERCONNECTION as the average cost to generate such en'ergy by others, increased by 207.. Each Party Hereto who received an allocated share of such energy shall be debited for the amount of its share at a rate per kilowatthour halfway between value per kilowatthour and the average billing rate its'ssigned paid by THE INTERCONNECTION for Emergency, Supplemental or Short Term energy received during that hour. The information provided under Schedule 7.01(a) by each Party Hereto who received a share of such energy shall be ad)usted by the amount allocated to each, to reflect the receipt of such energy from others.

(e) When scheduled energy is supplied by THE INTERCONNECTION to others, the amount and cost of generation increased by each Party Hereto to supply the energy shall be determined each hour by the Office of THE INTERCONNECTION

Page 3 of 4 SCHEDULE 7 '3 based on unit operating costs, provided by the Parties Hereto. When such scheduled energy is Emergency', Supplemental or Short Term, the cost of generation increased by each Party Hereto shall include the operating capacity costs. Each Party Hereto whose generation was increased shall be credited for the energy supplied at a rate per

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kilowatthour halfway between its cost per kilowatthour and the average billing rate paid by others to THE INTERCONNECTION for the scheduled energy supplied during that hour, but in no event shall such credit be less than its cost. The information provided under Schedule 7.01(a) by each Party Hereto who supplied energy'o others shall be adjusted by the amount and cost of the energy supplied, to reflect the delivery of such energy to others'f)

The difference between the sum of the amounts debited or credited to the Parties Hereto under (b), (d), and (e) and the amounts paid to or received from others by THE INTERCONNECTION shall be allocated as a credit to all Parties Hereto as follows:

(1) One-third in proportion to the System Capacity of each Party Hereto at the time of the transaction.

(2) Two-thirds in proportion to the transmission investment of each Party Hereto effective for the then current revision of Schedule 5 '3 When the scheduled interchange with others in an hour

'g) is such that all or part of the energy received by THE INTERCONNECTION is equal in amount to all or part of the energy supplied by THE INTERCONNECTION, the difference between the billing amounts paid and received by THE INTERCONNECTION for that equal amount of energy shall bedetermined and each Party Hereto shall be credited for a share of such difference allocated as provided in (f) ~

Page 1 of 2 SCHEDULE 8 F 01 Issued: June 15, 1977

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Ef fective: August 1, 1977 COMPONENTS OF COST OR REPLACEMENT VALUE (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 INTERCONNECTION:

(1). Boilers Firing-up cost;

'I No-load cost during period of operation; Peak-prepared-for maintenance cost; Incremental labor cost; Other incremental operating costs.

(2) Machines Starting cost from cold to synchronized operation; No-load cost during period of operation; Incremental labor cost; Other incremental operating costs.

(b) Each Party Hereto shall include the 'following components or their equivalent in the determination of costs or replacement values for energy supplied or received from THE INTERCONNECTION:

Incremental fuel cost; Incremental maintenance cost; Incremental labor cost; Other incremental operating costs.

(c) Replacement values shall be quoted only for capacity available for operation, as determined from time<<to-time by the OPERATING COMMITTEE.

Page 2 of 2 SCHEDULE 8 01 (d) All fuel cost or replacement value components shall employ'the marginal fuel price experienced by the Party Hereto'.

(e) The OPERATING COMMITTEE shall from time-to-time define in detail the method of determining the costs entering into the said components, and the Parties Hereto shall adhere to such definitions in the preparation of incremental costs used on THE INTERCONNECTION.

PJM COORDINATED PROGRAM FOR REDUCTION IN ENERGY USE In late'973 the electric public utilities which make up the Pennsylvania-'ew Jersey-Maryland Interconnection (PJM), became concerned with the problems associated with the adequacy of their fuel supplies. They concluded that it was essential to adopt an advanced planning approach to deal with periods when their available fuel supplies may be dangerously low. In considering this action, some background information may provide helpful perspective. The PJM utilities have for many years planned and operated their systems on a coordinated basis. One of the pioneer power pools, PJM has fostered the concept that the interconnected companies should be operated on the basis of. the lowest overall costs consistent with providing reliable service.

In meeting the objectives of efficient operation of systems spread across a region including all or parts of five states and the District of Columbia, PJM has had the cooperation of both federal and state regulatory authorities. The PJM concept requires the commitment of each system to each other system in the coordinated supply to the entire area covered. Provincial interests have been set aside in the optimized operation to the ultimate benefit of all customers throughout the PJM region.

Coordinated action has,dealt with emergency circumstances, as well as efficiencies of operation. In the late 1960's, the spectre of blackouts and brownouts arose due to possible generating capacity deficiencies in periods of extremely high demand caused by unforeseen load growth. Circumstances called for a coordinated plan to deal with curtailing load to protect all systems in PJM. Such a plan was developed and formed the basis of discussions or filings by the members with the several state utility commissions and the FPC. The plan, which provided measures ranging from requests for voluntary customer curtailment to actually interrupting customer service on a selective basis, is consistent throughout the region served by

PJM companies. It is effective without regard to the actual generating capacity situation on any one system.

Since 1973 the utilities of PJM have been threatened by an equally serious problem. It concerns the supplies of. fuel which they must have in order to provide electric service. Utilities are consumers of fossil fuel resources. PJM companies require large amounts of coal and oil as well as smaller, but also vital amounts r

of uranium in order to produce electricity. If their supply of such fuels is seriously diminished or cut off, it can only mean curtailed production of electricity.

Experience since 1973 has proven that the supply of oil for such purposes is dependent on many circumstances over which PJM and its members have little, if any, control. Coal supplies, which until now have been reasonably adequate, have helped PJM meet its energy demands despite the oil supply situation. However, a significant strike in the coal 'industry could create a fuel supply crisis for PJM much more serious than that experienced with oil supplies.

Events such as natural disasters, national defense circumstances, international trade obstruction, and governmental directives, may also disrupt fuel supplies and therefore affect or limit the ability to generate electricity. The threat of these circumstances require prudent management to plan, recognizing that such conditions may develop, and that the fuel supply situation in PJM will be critical for the foreseeable future. It will require constant and careful monitoring of the fuel situation in order, for the PJM companies to do a competent job of meeting energy requirements with the fuel resources on hand and reasonably available.

The PJM utilities have, of course, all taken steps to promote energy conservation, both by their customers and in their own operations. These steps clearly have been quite helpful in conserving fuel resources when current consumption is considered ln the light of prior use and growth patterns..

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Another step taken by PJM has been that of scheduling its generating capacity with the objective of conserving available fuel resources. These actions have to date been primarily aimed at conservation of oil supplies which became critically low during the 1973 oil embargo. Coal-fired generation was operated more to achieve this result. This policy could be applied in the opposite direction--

to use more oil in the event a severe coal supply problem were to develop.

Despite all these measures, there may be periods when overall fuel supplies in PJM may be seriously inadequate. Cognizant of the fact that such an event might border on catastrophe, the PJM utilities prepared to act on a coordinated basis and in a consistent manner. A comprehensive energy reduction program was devised. The terms ofthis procedure were set forth in an agreement among the PJM utilities, dated March 8, 1974, to coordinate the reduction in energy use, should such action become necessary. By its own terms, the 1974 Agreement expired after one year. At the end of that year it was considered that the procedure was still valid and that the Agreement could be re-enstated on short notice, if necessary Formal extension of the Agreement was not considered necessary at that time.

An awareness of the present energy situation and analysis of potential fuel supply developments has convinced the PJM members that an advanced planning approach to their fuel supply situation is again imperative. This has resulted in a reexam-ination of the concepts of the 1974 Agreement in the light of current considerations.

The process has resulted in the execution by the PJM member companies of a new agreement, the 1977 Energy Use Reduction Agreement, as an on-going procedure to deal with major potential fuel shortage situations. The Agreement incorporates the fuel conservation generation measures already referred to. It provides for continual monitoring of fuel supplies and analysis of the fuel energy situation. Moreover, if fuel supplies diminish to the danger level, the plan provides for the conservation of available fuel resources by reduction in energy use by customers.

The program initially attempts to accomplish conservation by way of voltage reductions and by voluntary customer reductions in use. However, if fuel supplies continue to drop, the program provides a number of additional steps to curtail f

energy consumption. These'easures are tough. They go so far as to actually restrict many customer choices heretofore considered to be entirely matters of sole concern to the customer. They provide for limitations upon business opera-tions and recreational activities. They ultimately include selective interruption of customer service to prevent electric energy use in order to conserve fuel.

The measures proposed in the energy reduction plan are both revolutionary and extreme when viewed against the historical pattern of the energy industry in this nation. But if available fuel supplies diminish drastically, they may provide the only means available to conserve available fuel and maintain essential electric service. Because the program is so comprehensive and goes beyond voluntary cooperation, there is a basic question of authority to carry out such measures.

The utilities of PJM operate under different state laws. Even within a particular state, there can be differences in interpretation as to the legal authority of the utility-to adopt and enforce such a program. Overall, the general feeling is that the explicit mandate and sanction of the police power of the state itself is required to carry out such a program, exercised by way of executive order, or utility comnission action or otherwise. But one thing is certain. If an enforced and comprehensive energy reduction program is to be effective, it must have appropriate authorization under law in all the jurisdictions in which PJM utilities operate. Moreover, it requires the active participation of the multi'-'tate governmental authorities on a consistent basis.

The energy reduction program conceived by the PJM utilities is embodied in f

an Agreement between PJM utilities and associated companies in the power pool.

The heart of the program and the PJM approach are clearly set out in Section 1 of the Agreement:

It is the policy of the signatories hereto and of PJM to operate on a one-system basis, utilizing available fuel resources to produce electrical energy to supply the loads of all PJM signatories and associated systems, regardless of any such individual system's fuel or energy availability, under the principle of economical dispatch within constraints of reliability and fuel availability.

The specific energy use reduction plan is contained in Schedule 1 of the Agreement. It was developed by the utilities. A review of the drastic actions set out in this schedule clearly shows the need for government involvement and action in the event of serious fuel shortages. As already noted, there is no way that sufficient electricity can be produced in PJM without an adequate supply of fuel. Without sufficient fuel, the only recourse is to reduce the use of electric energy. The means of accomplishing reduction of energy use is what the schedule is all about.

The various steps of the schedule provide the ability to meet different and changing situations. A brief review will illustrate the comprehensive nature of the several measures.

Upon identification that a fuel shortage is developing, the public will be notified of the situation and requested to reduce electric energy use.

Large commercial and industrial customers would be contacted individually and asked to implement a voluntary en'ergy reduction plan. Based on recent past experience of conservation measures, it is believed that this public appeal, the voluntary plan, along with a 3% voltage reduction, will result in a reduction in energy use of about 57., resulting in a similar reduction in the need for fuel.

It is anticipated that such reduction would vary greatly from customer to customer, based on individual conditions and commitment. Thus, it is important that the customers understand the reasoning for the appeal, and that they be

'dvised of specific measures that they may take to effect further reductions in use.'

5-

If the appeals do not produce sufficient reductions in use to meet the rate of change in diminishing fuel supplies, further reductions in use must be made.

It is at this point that stronger appeals must be made and that, as contrasted to the first appeal, these reductions may involve substantial ".sacrifices" by the customer.

Support by all governmental agencies becomes especially important at this stage, since the steps call for moving from the purely voluntary reduction to a mandatory reduction. The items included in Step B of the program cover a range of severe restrictions on use. They include, for example, the curtailing of night recreational activities and closing of businesses through evening and nighttime hours. The mandate and sanction of the police power of government is essential if these steps are to be implemented.

In the event these measures do not produce sufficient reductions, the next step entails a form of "rationing of available fuel" by directing customers to reduce electric energy use as compared to the same billing period in the preceding 12 months. It is recognized that this is a serious step, and that each utility must be cognizant of the diverse customer concerns and problems which will develop.

Each utility will establish a review procedure to provide customers with responsible answers to questions about levels of prior use and any special situations prevailing.

Here again, positive authorization of governmental agencies is critical, since the customer is being required to depart from his historical relationship with the utility in which the customer "purchased what he wanted".

In the event the fuel situation continues to deteriorate, further and more drastic action will be required to prevent total failure of the electric system.

The ultimate step in the program is to sequentially interrupt essentially all customers each and every day. If even more curtailment is required, progressive further reduction in use by all customers would be required.

The steps outlined above dramatize what a serious effect a fuel shortage emergency could have on the electric energy customers and on the life style and tQe economy of the region. The utilities recognize that electric energy is a part of a much larger total and extremely complex energy picture. Although they cannot predict today if any of the steps of the emergency plan may ever be needed, they are convinced that a potential serious fuel supply situation exists today and will continue for some years into the future. The PJM companies believe their plan, if supported by the necessary authorizations by the states involved, and if applied in a uniform manner, will minimize the impact on the region of a shortage of fuel to generate electric energy. I May 27, 1977

AGREi.>~X>< ~ Oi~l COOrtDZ3<T~D FROGRAl>i FOR R- DUCTZOil Zi'l EllERGY USE THIS AGREE<4!El!T, mage thi s l ~ day o f +PAL'lr. 7 ] Qa 77 )

oy ar.d among ATLP~ITZC CITY ELECTRIC CON?A'.lY, BALTIMOR"" GAS AND ELECTRIC r

COY>PzblY, D'ASCAR'iA . 0'>'iER & LIGHT COMPANY, JE .8EY C ilTRAL POWER & LIGHT COi".~.'=-!Y, METRO OLZTAH =DISOil CO!HPANY, K".iilSYLVP:CIA ELEC RZC COMPS

.Ea" SYL'>'P'lZA POWER & LZG:".T CCl~PA'7Y, PHILADELPHIA ELECTRIC COMPANY )

PO 0:! AC EL- C TP ZC POWER CQl! Pal Y, PUBLiC S RV ICE iL C TRlC AND GAS C;0:1F."='l Y, and UG I C OR FOR ATION ~

W ITIVES TH:

i i.~n'~i::, the signa.ories hereto are either signatories o" a" socia+e=' operation with signatori. s to an agreemer.t, dated Seatezbe 26 2 > l9 i6 i as amend d end supple .ented, known as th l9;,6

~ enn=> isn a-He<>r ~ r sey-Y>arylaad Interconnection Agreement ( PJ! A rec-t} ~

epd

- HER-AS, the s'gnetories her to are all among the signatories Aid-A lant c A a Coo dination Agreement (ii!AAC Agr ement), dated A>ri I 2> . l97l; and Ri;~~, ne signatories hereto own and operate fully inter-cor:nected electrc supp 1 y syster"s,

~

and the planning and ope ations of I

th b>> < po" er suppl~ facilities of such systems are coordinated rsu nt to;arious agreements, includ'ng both the PJYi Agreement and the NAAC P greement; and 4i'. i,-AS, e r nts such as natural disasters, disruptions to fuel r-pp-~i nati onal de fense c rcums tance s, international trade obs tructions sunup> ~

and 4. ove r nme nta ) A irectives may adversely affect, or threaten to ad-af-' he gene roti on of e le ct ici -y, and may der ar.d the prompt impl . enta"ion or a-l possibie measures to reduce energy use; and

NH."".BZAS, by Order bio. 496 i =sued Hoverbe 29, 1973, the Power Commi ssior. (>> PC ) e stablished the pre cedent that, in emergencies involving the availability of fue's used for the ger era-tio.. of e ect ' pow r and energy, the regulatory anc policy guidance o= that Com";..'ssion, s.ate public service comm'ssions, governors and other "<<ederal, sta+e or local officials may be invozed .o achiev a 1 poss 'ble s:.v'gs oy electric uti'ties in the'r consumption of the fuel in shor. supply anc. to ach'eve all possib'e reduc ions oy ulti-ma-. conan ers in the use of e'tr'c poiwer and. energy for residen'tial, ccmmerc'al, . ridus trial, transpo tation and other uses consistent w'th hu=.an health, sa ~ tv ard public welfare needs; and 4';i"-.R." "-, eac i signatory hereto is a public u;' ity sub ~ect to th jurisd ct'n of the: PC and under orde s 'nd regulat'ns of that Commiss. cn ~ay ce requested to effect all possiole savings o any fuel in short supply an" in the consump.ion of erergy and to advise the Com:.:i=.";'n o the specif- c steps under.a¹n to e feet such educ-tions in the cor sumption of electric power and. energy; an"

':i'l E.=..AS, by v'tu of the PJH and i4AAC Agreement each signa-tory hereto reli=s on the bul'>> power supply systems o the other sigra-

.,or'es hereto in prov ding adecuate anc reliable se vice to i s cus-tom '; arid.

NH P,"~

A3, the coord inated planr.ing and operations und r the and iiAAC Agreemen s and the result.'g reliance of each signatory the o.hers reo~ - es that the steps to effect reductions in the ion o' ' L ic energy be taken on a coordinated basi s in nest e-"e .he in er sts of he customers of all signa ories to mini .i-e the impac of such steps on the adequacy and relia-bi li"y o. sp rv'

~rli!EREAS, poles an.". procedures should be established. for

.onse v'ng fuel 'n short supp'y and for coord'nating any reductions in ene rgy use j I

HOtf) .E""R-FORE, the signatories hereto agree as follows:

SECT:OH 1 On -System Oneration Xt is the pn'icy of the sign tories her to to. operate on a one-system basis, G

')

t zing ava 'able fue 1 resources to produce e'ec "r. energy to supply the loads of all PJH signatories and as so' c. hays v ms ) regard.'ess of any 'nd'id.ual system's fuel or en avai'oi1.'y, un" er the principle o e conom'pat ch with' cons .: ai. t of re liaol li and fuel availability.

VTQ~f Proc'2 am to Red uce Load o conserve energy or permit the subst-'u" on- of a more abundant fuel fo" one that is in short supply, measures shall be n) as d'rec ed by the Man gement Committee established under the tak wavy)

PJ!! Agr ement, which may affect the supply of electr'c energy to cus omers . Zf >> duct'ns in en rgy use are requ- red, the program o "

successi re act'ns to be taken shall be as set forth in Schedule 1 H

ettachcd her to which may oe changed from tir e- o-time as condi ions waT~

0 SZCTIOH 3 De >art ure s from 'formal Oner at inc Procedure s fiithouc regard to the amount. oz fuel then available, cer-tai.. d. partures fro... norm"'p ra" ng p ocedures, - ich hav an acceptable impact on reliability and economy, shall be made ef ective as de termin=. d "y t¹ Management C omni +tee . These include, but .are not limited t o:

(a) -

i?eschedu ~

ing of ma'ntenance, to perm' best use of the ava'b' fue s upply.

( f L',Rim .. practicable use within PZi'i of gene rat 'n hav'g the more abundn fue'upply and of purchases of generation having the more abundant fuel supply from other areas, even vien this 's not in accord ~rith economic dispatch.

(c) Open'g of 'mi t.'g tr*nsmis "ion lines and. increases in transni" sion 1-'ne rati. gs, bas d on temperature, to avoid operation o capacity vith limited fue 1 availabili y tha"

.<culd othe r ii se be renuired to cont" ol line load' gs .

(d) Heduction of the spinning component of the PJH operating reserve requirement to avoid operation of capacity with limited fuel availability so long as quick-starting un's are a r*ilable for operation.

(e) Reliance on manual tr'pping of pumped storage hydro un's, 1'perating as p mps, to limit use of capacity vith limited fuel arailability tha otherwise '>ould be reauired to control 'i"e oa" 'gs fol o~ing a contingency I ~

SKCTIOI'I Governmental Action To the exten+ that actions se+ for h in Schedule 1 recuir-ing governmen+a'pp'x~al-may becor e necessary, each signatory here+o sha'1 pro ptly confer with the appropri* e Governmental agencies with respect t" the implementation o..the reduction in energy use pro-ram.

S C TRON Public Znformat'n Each signatory s? all e stablis.". procedures for infor. ing its customers of tne need for energy con ervation and of the steps to be taken 'n carrying out the red 'ction 'n energy use program.

Existina Aar ements Any energy or operating capacity transactions tnat may be req ir " oy or among he sign=tories hereto as a resul. of their actions to conse ve energy shall oe carried out under the provisions of exis 'ng agreement"-, inc'ding the PJM Agreement agreements between PJM and ot'.". rs, and separate agreements among two or more of he signa-P torie" hereto.

SECTION 7 Qom'Ql c ance vli<<h Re;ulations T? is Agrecm nt is sub) ct to comp'<<<<e

re on.'rerneuts o= a' regulatory authorities havin" gauri sdict'n in the or mises.

S~CTiGb 8

~to s gnatory shall be liable f or the fa'ure of any other s gna ory +o oerfor~ its o'pl'. gati ons hereuz der, C TTOPT a ve G Bights Any waiver of the rights of any signatory as to any de ault of an-- ot he signatory or any o+he matt r ar'ing hereund.er shall not be deemed a w, ' as to any oth r d.efa lt c other ma ter a,rising SEC TON 10 E "fe ctive Date and. Te m'ation This Ag ement shall become effective as of the date first above w r' t n and sha'3. cont inue in full force and e fx e ct unt

term'na ed oy consent of all signator es nere o, or by any signatory ter one yea"'s vritten notice to the other signatoriep.

Iit 4ITHESS wHEPEO., the signatories have caused th' Agree-men. ic be duly ezecuted .

s of the* dey and year first above irritten.

ATLPZiTIC C~TY ELECT."-.IC COa~iPPZTY Pres'd",n, BALTIi!!QP.E GAS A'HD EL CT"-IC CO~'PA~tY "y fr Ch 'man lM..VA PO'il: .. & LIGHT CONPAHY By Pre s ident JERSEY CE."T "2 'L 'PO'.4E2 8; LIGHT COifPU: Y aa. man

/

i'~ TRC "OLITA'( EDISON COMPLY PE2iNSYLVA'GAIA 3'v az.r an ELECTRIC COMPLY B 'y PENif SYLVAN IA POvi'3 5 LIGHT 'Oi~fP92f Y By Chairman PHIL "~ LPHIA ELECT:?IC CO!4PAPiY By

- cChairman

POTO:!A. EL I ~vFH CONPZIY Chai "ma PUBLIC SEBVI ~ ELE RIG Aii9 GAS CObiPAHY B.y President UG I C OR PO "CA.TIFF P"e sider.t

SCHEDULE 1 This schedule sets forth the program referred to. in Section 2 oz the Agr ement, the several steps oz whicn are to be mace effective by each s'gnatory as provided her inafter.

S'::.P A Public appea's ara to 'oe made'hrough app ropr>> ate news media.

asking customers to r'ed'uce their use of e lectric energy be-

'c" use of the shortage of energy resources

2. Voluntary .customer energy reduct>> on progr ams, as agreed upon rom time ~o t'me by the company and its customer s, are to b p3.aced in efz"ect.

3 ~ A 3~~> voltage reduction is to be made ez'feet've on a continuous

'I basis .

4 A 5/> vol age reduc 'on is to be m de effect'e on a continuous basis.

2. Xn addit'on, and o the extent that necessary governmental aa"..rorals have been obtained, the follow>>ng manda.ory re-due tio..s or el'minations of power uses and reduct>> ons oz hours of operation of various users shall be made effect>> ve.

2 3. El'm'ate *13. outdoor flood and advertising ligh -'ng, except for the min mum level to protect life and prope "ty and a single illuminated s gn iden ifying commerc'al facilities that are open after dark.

Beduce general lighting le rais in stores and offices as close o m nimum safety levels as possible.

'~cnecu'e 1 page 2 r 'e 2 3 Eliminate show wirdow and disp'ay lighting.

2-Q. , Reduce the number of elevators operating in off'e buildirg" dur'ng non-peak hours by at least 50",~.

I 5 Reduce pa king lot ligh 'ng by at 'east .5%>.

)

2-0 ~ Vinimi"e energy use by maintainir g a temperature of no less than 80 degrees by operation of.coo'ing equipment and no. more thar 60 degrees by operation of r

ne at ing e q,uipme n

7. ilini. ice work schecule s, as +or building clear.'g and K

main-enance re stocking, etc., wh" ch woulc. reau'e offices o" industrial facilities to be open beyond normal wo  ! ng hours.

2-8. Curtail nighttime spo ts, nterta>> nment and, recreatioral activltie s ~

o. Close al'ublic museums, ar't gall 'es a,.d hist o. '

bu'dings ~

2-10. Beau". re Sund ay clos'g of retail establ'h'ents; excep or essentia'er rices to the public.

2-3.1. Reaui r clos'ng from 7 p.m. to 9 a.m. of all retai' stab'shments, exc pt essential serv'ces to the J

pub li.c e ST~~ P Direct all custome s except as noted, to reduce their use of power, as compared to a similar billirg period. in the pre-ceding 12 months by the following amounts:

Residential Customers (all loads for housing and rel ted home acti rities) 5$ reduct-'.

Schedule 1 page 3 Manufacturing (considered self-explanatory l0"I'z reduc t 3.

Commercial (al'oads whi"h are not residential or manufacturirg) 15~) red uct'he groups of cus+omers exempt .from full complianc are lis+ed at the end o- his schedu'e-STEP D Direct al'us.omers e'ept as noted,. to d onble . the amount o f S

reduction ~equi>ed 'n Step C. The same groups of custom rs are ezempt from full complianc ST-".9 S 3nt r "up+ loads on a rotating basis during the hours from 8:3Q a.m.

to ~:30 p.m. All load which can be disconnected shall be disconnected for a period "f two hours, 'n =.our sequent'al blocks, as de+er ined by eac.. uti'ity company. The g oups of customers ezclud d f om he interru" ion o loa are listed at he end of this s chedu' .

Nhere par 'u ar manufacturing or processing operations do not permit 'nterruptions of ser rice or wher such interrup ions would cause severe hardshi p or would have an unacceptable impact on contin-uous operations, etc., the uti3.'y company sha3.1 secure the equivalent 0

reduction .'n usc from the custome s that might otherwise be interrupted by some method oth than the prescribed rotating in er uptions.

STgP F I.

3mplement a progressive reduction of manufacturing and conmer-cial customer use on;~~ *s-recuired basis down to leve's requi ed on3y basic plant and emp'oyee security. pequire further res'dent'al

Schedule 1 "page curtoilment down to normal life support requirements. Th groups of customers excluded f 'om these final reductions are the same as those exc'.'ed in Ste" E.

The groups of customers excluded or exempt under Steps C through P are as fo'1 ows:

Xndust ial.and commerc al e tablishments 1'sted below must s trivet to meet, but are not mand,a-'.ed to meet the req.uirements of the several steps ..ln doing so, such customers should undertake the reducti Qn of I

electr'c= energy co'nsumption to the fullest pract'al extent cons ."tent I wi ~h con nued ooeration of the serv'ces, funct'ons or activit. s fo" which he ustomer is 're sponsible .

STC .Tumber 4O Rail oads cvocal and. suburban transit Qc Tran"po tation"by air 46 Pipe'='ne transportat'on 48 Communications (telephcne', radio and television)-::

i9 =le ctri c, gas and sanitary se rvi ce s 11 1)'21) Coa'ining and related. funct'ns 291 Petroleum refir'ng 8c6 Hospitals 49 1 Electric sales for resale under FPC Jurisdiction 919o) Prison" 9290) 939O) Poli ce and fi r fighting faci litics+

9349) Uate r supply:

4941)

+These c'ass ." cations are to be excluded at the d'. scretion of the utility company.

S c iedul e 1 page 5

~ V ~

~ ' \ \~

Federal act'vities essential to nation."l de-ense

'ife support systems - consideration sho" ld be given to advance notification of customers with life sup or. systems such as i "..n lungs, shaker beds and k'dney mach'nes.+

The additional groups of cus.omers excluded or ezempt onl- under Steps C and D are:

Numbe r 20 Food and kindred products, except 2024, 'ce cream and frozen desser s; 20-,2, cookies 'and crackers:

207, con fe c tie.;ary and re lated p" oduct s; an" 208, beverages, all of which are not exempt.

X.-;nlementa+ 'n S"ep A sha'1 be ken by the Manage: ent Commit" e es+eolished under he PJM Agr ement whe" fuel suppl'es of the, signatories are de-c eas'ng and in it" )udgment the remaining supplies are suff.ent approximately 10 days 'pera .'n of their oil-f'red generation or approz.".,:ately 30 days 'peration of their coal-fired gener*t'n.

Provided the. the necessary author'"a+'ons hav be n received from proper governmental aut? critics, Step 3 shall be taken by the Management Committee when the fuel supplies continue to decrease and the remain ng sup"-lies w.'l otherwise become less then sufficient for spp- ofiimately 10 days 'peration of their oil-fired generation or approxima+ely 30 days '- operation 'of their coal-f'ed generation.

Steps C through F shall be taken only if ther are further de-creases in the fuel supply and the ex? austion of some essentia com-ponent of hat supply is threatened. prov'ded tha~ the necessary authors@at" ons have be n received from proper gov rnmental au.horities,.

~These classifications are discretion of the ut'ity to be excluded at the company. '

the d=c'sion to implement these steps p in whole or in part, shell be made oy a consensus of the signatories hereto.

Becogni"ing that the energy reso-'ace situation is extr ately c o..op le x anc'. that tne above stated crite "'a may rot be a pJ>> cable 'n a' d'e velcping situations, the -PJN energy and fuel suppl'ituation i

shall be cont'nuous y monitored and, as deemed necessary; any one or

PENNSYLVANIA-MEN JERSEY.- MARYLAND INTERCONNECTION 955 JEFFERSON AVENUE VALLEYFORGE CORPORATE CENTER NORRISTOWN, PENNSYLVANIA 19401 (215) 555.7550 April 15, 1976 Federal Power Commission 825 North Capitol Street, N.E.

Washington, D.C. 20426 Attention: Mr. Kenneth F. Plumb, Secretary Gentlemen:

Enclosed herewith for filing on behalf of the following listed parties to the Pennsylvania-New Jersey-Maryland (PJM) Interconnection Agreement are sixteen (16) copies of proposed Schedule 6.01 modifying the original Interconnection Agreement dated September 26; 1956, as heretofore amended and supplemented, which is on file with the Commission under the followi'ng Rate Schedule designations.

~Com nn Rate Schedule Public Service Electric and Gas Company FPC No. 23 Philadelphia Electric Company 21 Pennsylvania Power & Light Company 21 .

Baltimore Gas and Electric Company 9 Potomac Electric Power Company 19 Jersey Central Power & Light Company 7 Metropolitan Edison Company 7 Pennsylvania Electric Company 24 The proposed Schedule provides for the accounting and billing among the parties to the PJM Agreement for excesses and deficiencies of regulating capability as defined in the proposed Schedule. The parties request that the proposed Schedule become effective on June 1, 1976.

Operating practices in effect on the PJM Interconnection require each party to provide its share of the regulating capability required to control tie line loadings and frequency in accordance with nationally adopted criteria for interconnected operation. For various reasons, such as, the scheduled outage for maintenance of generating units- and the relative fuel costs of operating units capable of regulating, some parties from time-to-time provide more than their share of the regulating capability required, and other parties less. The recent rapid escalation in fossil fuel costs has aggravated the economic burden 'of those parties which supply more than their share of the required regulating capability. Hence, the parties have agreed uponi the procedure set forth in the proposed Schedule whereby the excesses and deficiencies of regulating capability among the parties will be accounted for hourly and those General Public Utllltics Corporation PublIc Service Electric and Gas Company Jersey Central Power G Light Company Philadelphia Electric Company Metropolitan Edison Company Pennsylvania Power & Llcht Company Pennsylvania Electric Company Saltimore Gas end Electric Company Potomac Electric Power Company

<<2 parties which provide less than their share of the required regulating'capability on PJM will make payments to those. parties which provide more than their share, at rates representative of the cost of providing such excess capability.

The regulating capability required each hour on PJM may be assigned to different types of units as dictated by economic dispatch, the availability of generating units, and the load level on the interconnection. For example, at heavy load levels, marginal fossil-fired steam units and possibly combustion tur'bines would be in operation and could be assigned a portion of the regulating, capability required, while at light and medium load levels, these units would not be in operation and the regu-lating capability would be assigned to base load fossil-fired steam units. Since the nature of regulating capability is to respond instantly to system control signals to it I

maintain tie line loadings and system frequency at scheduled values, is difficult to determine accuratelyhowmuch, if any, of the regulating capability assigned to a given unit is actually delivered, and equally difficult to determine the true, cost of energy obtained by the owner of a regulating unit to replace energy which may not have been generated by that unit. Furthermore, the owners of units which provide regulating capability incur additional expenses associated with reduced efficiency and increased maintenance, which are difficult to determine. Therefore, the proposed Schedule provides that the accounting be based on rates which are representative of the energy replacement costs and other vari'able operating costs on the PJM Interconnection for the particular types of equipment which may be operated to provide the regulating capability required on PJM.

In response to Section 35.1(b) of the Commission's Regulations, it is pointed out that because the delivery and receipts of regulating capability depend on many variable factors among which are the availability of generating units having regulating capability, the PJM running rate, and the total regulating capability it is impossible to predict the transactions and revenues to be accounted 'equired, for under the proposed Schedule.

No facilities are required to be installed or modified in order to provide the services covered by the proposed Schedule.

In response to Section 35.8(a) of the Commission's Regulations, there are enclosed three copies of a form of Notice of Application suitable for publication in the Federal Register.

A check in the amount of $ 800 is enclosed pursuant to Section 36.2(e) of the Commission's Regulations to cover the filing fee determined as follows: $ 100 for a nominal rate schedule for one party and $ 100 for each additional submittal for each of the other parties to the Agreement.

All parties to the PJM Agreement have approved this filing and have received copies thereof. This filing is made on behalf of the parties by the undersigned in accordance with Section 35.1(b) of the Commission's Regulations and the authorization contained in Section 3.3(vi) of the PJM Agreement.

Copies of this letter and its enclosures will be furnished promptly to the Regulatory Commissions of Pennsylvania, New Jersey, Maryland, Delaware, Virginia and the District of Columbia for their information.

Very truly yours, Wilmer S. Kleinbach TPW:cab Manager

, Enclosures I

SCHEDULE 6.01 TO THE PENNSYLVANIA-NEW JERSEY-MARYLAND INTERCONNECTION AGRhEMNT ACCOUNTING AND BILLING FOR REGULATING"CAPABILITY Issued: 'pril 15, 1976 Effective.'.June'1, 1976 (a) Accounting and billing among Parties Hereto for excesses and deficiencies of Regulating Capability shall be made in accordance with this Schedule.

(b) Regulating Capability is that amount of synchronized capacity under automatic I

response used to control tie line loading and frequency of THE INTERCONNECTION-The operating practices of THE INTERCONNECTION, as accepted by the MANAGEMENT COMMITTEE in accordance with Section 4.1 (xi), require each Party Hereto to provide its share of the Regulating Capability requirement of THE INTERCONNECTION, I

as determined from time-to-time by 'the OPERATING COMMITTEE.

(d) The total Regulating Capability provided by all Parties Hereto to meet the Regulating Capability requirement of THE INTERCONNECTION shall be accounted for each hour and the proportional share of such total Regulating Capability require-ment assigned to each Party Hereto shall be determined by the ratio of (1) its concurrent Operating Capacity Obligation determined in accordance with Article 7 hereof to (2) the sum of such obligations for all Parties Hereto.

,(e) A Party Hereto whose Regulating Capability in any hour is more or less than its proportional share as determined under (d) shall be considered to have an excess or deficiency,,respectively, by the amount of such difference.

Those Parties Hereto that have deficiencies in any hour shall make payments through the billing agent to those having excesses at rates determined from time-to-time by the OPERATING COMMITTEE, subject to the approval of the MANAGEMENT COMMITTEE. Such rates shall be reprhsentative of the energy replace-ment costs and other variable operating costs on THE INTERCONNECTION for the particular type of equipment operated to provide,such excess

UNITED STATES OF &KRICA FEDERAL POWER COMMISSION t 1 Pennsylvania-New Jersey- Docket No.

Maryland Interconnection Date NOTICE OF APPLICATION Take notice that on the following listed parties to the Pennsylvania-New Jersey-Maryland (PJM) Interconnection Agreement tendered for filing proposed Schedule 6.01 modifying the Interconnection Agreement which is on file with the Commission under the following Rhte Schedule designations:

Rate Schedule Public Service Electric and Gas Company FPC No 23 Philadelphia Electric Company 21 Pennsylvania Po'wer & Light Company 21 Baltimore Gas and Electric Company 9 Potomac Electric Power Company 19 Jersey Central Power & Light Company 7 Metropolitan Edison Company 7 Pennsyl'vania Electric Company 24 The proposed Schedule provides for the accounting and billing among the parties to the PJM Agreement for excesses and deficiencies o'f regulating capability which is defined in the Schedule as that amount of synchronized capacity'pecifically dedicated and used to control tie line loadings and frequency of the PJM Interconnection.

Operating practices in effect on the PJM'nterconnection require each party to provide each hour its share of such regulating capability. The proposed Schedule makes provisio'ns for those parties which provide less than their share to make payment to those parties which provide more than their share, at rates representative of the cost of providing such regulating 'capability. June 1, 1976 is requested as the effective date of the proposed Schedule.

Any person desiring to be heard or to make any protest with reference to the subject matter of this Notice should on or before file with the Federal Power Commission, Washington, D.C. 20426, petitions to intervene or protests in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 1.8 or 1.10). Persons wishing to become parties to the C

proceeding or to participate as a party in any'hearing related thereto must file

! petitions to intervene in accordance with the Commission's Rules. All protests filed with the Commission will be considered by it in determining the appropriate action to be taken but will not serve to make the protestants parties to the proceeding.

The documents referred to herein are on file with the Commission and are available for public inspection.

Secretary

PENNSYLVANIA-NEWJERSEY-MARYLAND I N YERCON N ECTION Public Service Electric and Gas Company Baltimore Gas and Bectric Company New Jersey Power S Light Company Philadelphia Electric Company Pennsylvania Electric Company Jersey Central Power S Ught Company Pennsylvania Power 4 tdght Company Metropolitan Edison Company Potomac Electric Power Company 955 JEFFERSON AVENUE VALLEYFORGE INOUSTRIAL PARK NORRISTOWN. PGNNSYLVANIA 19401 (2te> eee.75eo June 26, 1974 Federal Power Commission 825 North Capitol Street, N.H.

Washington, D. C. 20426 Attention: Mr. Kenneth F. Plumb, Secretary

!i Gentlemen:

Enclosed herewith for filing on behalf of th'e following listed parties to the Pennsylvania-New Jersey-Maryland (PJM) Interconnection Agreement are 16 copies of two proposed schedules (Schedules 5.02 and 5.03) modifying said Interconnection Agreement, as hexetofore amended and supplemented, which is on file with .the i

ll

., Commission under the following Rate Schedule designations:

Rate Schedule Public Service Electric and Gas Company FPC No. 23 Philadelphia Electric Company '21 Pennsylvania Power 6 Light Company 21 Baltimore Gas and Electric Company 9 Potomac Electxic Power Company 19 Pennsylvania Electric Company 24 Metropolitan Edison Company 7 Jersey Central Power 6 Light Company 7 The parties request that these proposed schedules be assigned an effective date of August 1,.1974.

The proposed schedules provide for the allocation within PJM of payments to or receipts from other systems outside of. PJM with z'espect to certain capacity and transmission services, such as those provided for in the New York Power Pool (NYPP)-PJM Agreement, which has been filed with the Commission with the request that it become effective on August 1, 1974. Since transactions may thereaftex occur which will require the proposed allocation of the related charges. within PJI4, it is requested that these proposed schedules also be made effective as of

'hat date.

The proposed schedules provide that the payments to others for capacity and

,i~transmission services be allocated within PJM on the basis of the then existing

'apacity obligations of the several parties to the PJM Agreement. When payments

~ 52M June 26, 1974

're received by PJM for the specified services, they are to be appropriately divided between payments for generating capacity and for transmission. The receipts related to capacity are then allocated within PJM in proportion to certain defined capacity quantities; and the receipts related to transmission aie allocated in proportion to certain defined investments in bulk power transmission. The allocation factors applicable to capacity transactions will depend on current obligations and capacities, as specifically defined in the PJM Agreement; these factors will be generally proportional to company size. The allocation factors for transmission for the 12 months beginning June 1, 1974 are as shown in the. following tabulation:

Public Service Electric and Gas Company 24.0%

Philadelphia Electric Company 24.6 Pennsylvania Power & Light Company 12.2 Baltimore Gas and Electric Company 12.8 General Public Utilities Corporation 18.9 Pennsylvania Electric Company Metropolitan Edison Company Jersey Central Power & Light Company Potomac Electric Power Company 7.5 100.0/.

In addition to the proposed Schedules 5 '2 and 5.03, there is also submitted herewith three copies of a notice suitable for publication in the Federal Register, in accordance with the requirements of Section 35.8(a) of the Commission's Regulations.

All parties have concurred in the filing of these proposed schedules. Section 3.3(vi) of the PJM Agreement authorizes their filing with this Commission by the Manager of the Office of the PJM Interconnection, and in accordance with Section 35.1(b) of the Commission's Regulations these are being submitted by the Manager on behalf of all parties-Copies of this letter and all enclosures have been mailed to all signatories to the Agreement and will promptly be furnished to the Regulatory Commissions of Pennsylvania, New Jersey, Maryland, Delaware, Virginia and the District of Columbia for their information.

Enclosed herewith is a check payable to the Treasurer of the United States in the amount of $ 100.00, as a filing fee in accordance with Section 36.2(e) of the Commission's Regulations.

Very truly yours, ~

Wilmer S. Kleinbach Manager

Ig P

'pe gl I

I UNITED STATES OF'MERICA FEDERAL POWER COMMISSION Pennsylvania-New Jersey-Maryland ) Docket No. E-Interconnection ) DATE NOTICE OF APPLICATION Take notice that on , Public Service Electric and Gas Company, Philadelphia Electric Company, Pennsy'lvania Power & Light Company, Baltimore Gas and Electric Company, Potomac Electric Power Company, Pennsylvania

'I I Electric Company, Metropolitan Edison Company and Jersey Central Power & Light Company (PJM Interconnection) tendered for filing pursuant to section 205 of the Federal Power Act and Part 35.12 of the regulations issued thereunder, two mutual agree-

! ments issued June 26, 1974 for share allocation among the PJM membership of amounts paid to or received from non-members for certain capacity and. transmission services. The share allocation agreements which are designated as Schedules 5 ~ 02 and 5 ~ 03 to the September 26, 1956 PJM Agreement as supplemented provide that the payments to others II for capacity and transmission services are to be allocated within PJM on the basis of I

the then existing capacity obligations of the several parties to the PJMAgreement. When payments are received by PJM for the specified services, they are to be appropriately

~

) d'ivided between payments for generating capacity and for transmission. The receipts related to capacity are then allocated within PJM in proportion to certain defined capacity quantities~ and the receipts related to transmission are allocated in

<proportion to certain defined investments in bulk power transmission..

I It has been requested that the schedules be made effective as of August 1, 1974 to coincide with the effective date of an agreement with others, under which payments by or to PJM may Ibe made, which will then, require the proposed allocation within PJM.

Any person desiring to be heard or to make any protest'with reference to said application should on or before 1974, file with the Federal Power Commission, Washington, D C. 20426 petitions to intervene or protests'n

accordance 'with the requirements of the Commission's rules of practice and procedure (18 CFR 1.8 or 1.10). All protests filed with the Commission will be considered by it in determining the appropriate action to be taken but will not serve to make the protestants parties to the proceeding.'ersons wishing to become parties to a I proceeding or to participate as a party in any hearing therein must file petitions to I intervene in accordance with the Commission's rules. The application is on 'file with I the Commission and is available for public inspection.

Secretary

PENNSYLVANIA-NEW, JERSEY-MARYLAND INTERCONNECTION SCHEDULES 5.02 AND 5.03 TO INTERCONNECTION AGREEMENT AS AMENDED AND SUPPLEMENTED BE'HKEN PUBLIC SERVICE ELECTRIC AND GAS COMPANY PHILADELPHIA ELECTRIC COMPANY PENNSYLVANIA POWER 6, LIGHT COMPANY BALTIMORE GAS AND ELECTRIC COMPANY PENNSYLVANIA ELECTRIC COMPANY METROPOLITAN EDISON COMPANY JERSEY CENTRAL POWER 6 LIGHT COMPANY POTOMAC ELECTRIC POWER COMPANY These schedules to the Pennsylvania-New Jersey-Maryland (PJM) Interconnection Agreement dated September 26, 1956, as amended and supplemented, provide for the allocation within PJM of payments to or receipts from other systems outside of PJM with respect to certain capacity and transmission services. '

SCHEDULE 5.02 . Page 1 of 2 ALLOCATION AMONG PARTIES HERETO OF EXTENDED EMERGENCY AND SUPPLEMENTAL OPERATING CAPACITY PAYMENTS AND CHARGES Issued: June 26, 1974 Effective'-August 1, 1974 (a) Allocation among Parties Hereto of those portions of extended emergency and supplemental operating capacity payments and charges, which are determined at specified rates 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.

l (b) Those portions of such payments and char'ges which are for operating I

capacity and energy shall be accounted for and billed within THE INTER-CONNECTION in accordance with Standard Practice Account 3-7 or revisions thereof.

(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"in that portion of the Planning Period in which the services were purchased.

(d) When others purchase extended emergency and supplemental operating I,'apacity from the Parties Hereto 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 for generating capacity and (ii) the part representing payment for

SCHEDULE 5.02 Page 2 of 2 transmission services, the division being 70% for generating capacity and 30% for transmission services, subject to review from time to time as the MANAGEMENT COMMITTEE shall direct. Part (i) of'he payments shall be allocated among the Parties Hereto 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 under Schedules 3.01 and 5.01; Part. (ii) of the payments shall b'e allocated among the Parties Hereto as provided in Schedule 5;03.

Each Party Hereto shall receive from the billing agent its share of the payments as so allocated.

SCHEDULE 5.03 Page 1 of 4 ALLOCATION AMONG E.ARTIES HERETO OF TRANSMISSION SERVICE CHARGES FOR CAPACITY TRANSACTIONS'ssued:

June 26, 1974 Effective: August 1, 1974 (a) Allocation among Parties Hereto of transmission service charges related l

to, or part of capacity transactions under agreements between the Parties I

Hereto and others not party to the AGREEMENT, and the billing within THE INTERCONNECTIOV in connection therewith, shall be made in. accordance with j 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 portion 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 sharc allocated to each Party Hereto shall be proportioned to the investment of each in sp'ecified bulk po'wer transmission facilities, appropriately adjusted far other arrangements it may have involving its responsibilities 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 from time to time and shall be revised, if required, as agreed by the MANAGEMENT COMMIITEF ~

)(d) For the purpose of this schedule, the investment of each Party Hereto in specified bulk power tr'ansmission facilities shall be that classified

SCHEDUM . 5. 03, Page 2 of 4 as plant in service'on its -books of account, initially as of December 31, 1973; and the transmission charge allocation ratio shall be revised.

annually on June 1 each year to reflect such investments as of the previous December 31.

SCHEDULE 5.03 Page 3 of 4 EXHIBIT A DETERMINATION OF INVESTIKNTS IN BULK POWER TRANSh1ISSION FACILITIES OF PARTIES HERETd AND OF TRANSMISSION ALLOCATION RATIOS For purposes o'f this Schedule, the bulk power transmission facilities of the Parties Hereto shall be all facilities operated at 110 kv or higher voltage levels, but not including facilities used for, ll or related to step-down transformation to voltages below 110 kv. The extent of the investment-in such specified bulk power transmission facilities 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 with the following

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procedure:

1. Tabulate for each Party Hereto:

(a) Allocated investment responsibilities in the jo'intly 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 facilities 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.

SCHEDULE 5.03 Page 4 of 4 EXHIBIT A (e) Investment in balanCe of reported'ransmission plant (equal to total reported transmission plant investment less item (d) and less investment in all owned facilities 500 kv and above) ..

(f) Adjustments (plus or minus) of investment responsibility on a multi-party*basis as agreed and 1

reported to PJl4 by the involved Parties Hereto.

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2. Determine the portion of ite'm l(e) that is applicable to 110 kv or higher voltages, by multiplying 1'(e) by 75% times the ratio of item l(c) to item l(d) .

3. Determine 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 sum of the corres-ponding amounts for all Parties Hereto.

A lication of Exhibit A (PEP selected for illustrative purposes only)

(Million Dollars)

Investments a/o 12/31/73 PEP 9JM

l. (a) Investment Responsibility 500 kv and above K-C 18.5 248.'8 LDV 69.1 SE B-N ~

Total 18. 5 317.9 (b) Other facilities 500 kv and above 0 76. 7 (c) Investment in transmission lines at 110 to 345 kv 54.8 (696.7)

(d) Total reported in transmission lines exclu'sive of lines 500 kv and above 106. 6 (909. 3)

Total reported transmission plant 222. 2 (2,140.4)

(e) Investment in balance of reported transmission plant (Total report'ed 109. 1 (836. 3) transmission plant minus (d) and all owned facilities 500 kv and above)

(f) Adjustments'of investment responsi-bility due to multi-party agreements 2.6 (-11.3)

2. Portion of l(e) applicable to 110 kv or higher voltages 42.0 (491. 1) x l(e) x 75%

1(d) '

54'. 8 x 109.1 x 0.79 = 42.0 106. 6 3.. Total bulk power transmission investment 117 ~ 9 1,577. 3 I

1(a) +. (b) + (c) + (f) + 2

4. Allocation ratio for transmission charge 7. 5% 100. 0%

, . Figures for PJM in parentheses ( ) are not required by Exhibit A computations and are included here only for information.

FEDERAL,POWER, COMMISSION WAsHINGTON, D.C. 20426 IN RKI'LY REFER TO:

PKb-RC Docket No. E-8713 Pennsylvania-New Jersey-Maryland Interconnection Attention: Mr. >Tilmer S. Kleinback Manager 955 Jefferson Avenue Valley Forge Industrial Park Norristown, Pennsylvania 19401 Gentlemen:

By letter dated April 1, 1974, you submitted for filing supple-mental agreements dated April 1, 1974, to the PJM Interconnection Agreement. Your submittals have been accepted for filing to become effective June 1, 1974, and have been designated as shown on the Attachment.

Notice of the filings was issued on April 19, 1974, with comments, protests or petitions to intervene due on or before May 15, 1974. No comments, protests or interventions have been filed.

It is noted that the instant submittal contains contractual obliga-commitments to develop annually, capacity requirements and tions for the PJM long-xange plan. Please be advisdd that as such data becomes available PJM should submit its forecasted electric generating requirements, the allocations of such requirements and the responsibilities for meeting such obligations. Such informa-tion should be in sufficient detail as to. show the various 'compo-nents of the forecast obligation.

This acceptance for filing does not constitute approval of any service, rate, charge, classification, or any rule, regulation, contract, or practice affecting such rate or service provided for in the rate schedule supplements as designated on the Attachment; nor shall such acceptance be deemed as recognition of any claimed

Pennsylvania-'New Jersey-Maryland Interconnection contractual right or obligation affecting or relating to such service or rate; and such acceptance is without pre)udice to any findings or orders which have been or may hereafter be made by the Commission in any proceeding now pending or hereafter instituted by or against the companies of the Pennsylvania-New Jersey-Maryland Interconnection.

This acceptance for filing terminates Docket No. E-8713.

By direction of the Commission.

Secretary cc: See Attached List of Addressees

List of Addressees Public Service Electric & Gas Company 80 Park Place Newark, New Jersey 07101 Philadelphia Electric Company 1000 Chestnut Street Philadelphia, Pennsylvania 19107 Pennsylvania Power & Light Company 901 Hamilton Street Allentown, Pennsylvania 18101 Baltimore Gas and Electric Company Building Baltimore, Maryland 21203 Potomac Electric Power Company 929 E Street, N. W.

Washington, D..C. 20004 Pennsylvania Electric Company 1001 Broad Street Johnstown, Pennsylvania 15907, Metropolitan Edison Company P. 0. Box 542 Reading, Pennsylvania 19603 Jersey Central Power & Light. Company Madison Avenue at Punch Bowl Road Morristown, New Jersey 07960

t Rate Schedule Desi ations Instrument Date: April .1, 1974 Filing Date  : April 1, 1974 Effective Date : June 1, 1974 I

Instrument: Supplemental Agreement- to the PJM Interconnection

~tom an Public Service Elect:ric Supplement No. 47 to and Gas Company Rate Schedule FPC No. 23 (Supersedes Supplement No. 44 to FPC No 23)

Philadelphia Elect:ric Supplement No. 47 to Company Rate Schedule FPC No. 21 (S'upersedes'Supplement No. 45 to FPC No. 21)

Pennsylvania Power and Supplement No. 47 to Light Company Rate Schedule.FPC No. 21 (Supersedes Supplement No. 44 to FPC No. 21)

E Baltimore Gas and Electric Supplement No. 48 to Company Rate Schedule FPC No. 9 (Supersedes Supplement No. 45 to FPC No. 9)

II Potomac Electric Power Company Supplement No. 26 to Rate Schedule FPC No. 19 (Supersedes Supplement No. 23 to FPC No. 19)

Pennsylvania Electric Company Supplement No. 47 to Rate Schedule FPC No. 24 (Supersedes Supplement No. 44 to FPC No. 24)

Metropolitan Edison Company Supplement No. 47 to Rat:e Schedule FPC No. 7-(Supersedes Supplement No 44 to FPC No. 7 Jersey CentralPower and Light Suppl'ement No. 47 to Comp-ariy Rate" Schedule FPC No. 7 (Supersedes Supplement No. 44 to FPC No .7)

PENNSYLVANIAWEW7ERSEY-MARYLAND INTERCONNECTION SUPPLEMENTAL AGREEMENT BETWEEN PUBLIC SERVICE ELECTRIC AND GAS COMPANY PHILADELPHIA ELECTRIC COMPANY PENNSYLVANIAPOWER 6 LIGHT GAS, AND ELECTRIC COMPANY COMPANY'ALTIMORE PENNSYLVANIAELECTRIC COMPANY METROPOLITAN EDISON COMPANY JERSEY CENTRAL POWER 6 LIGHT COMPANY POTOMAC ELECTRIC POWER COMPANY This Supplemental Agreement to the Pennsylvania-New Jersey-Maryland (PJM) Interconnection Agreement dated September 26, 1956, as amended and, supplemented, provides for further strengthening of the coordination of planning and operation among the PJQ companies. Provisions are included pertaining to the determination and establishment of the forecast electric generating capacity requirements of PJM as a whole, the allocations, of such requirements to the companies, and the responsibilities for meeting such, obligations and the accounting therefor among the companies.

In.accordance with the authorization provided herein', this Supple-mental Agreement is submitted for filing with the Federal Power Commission by the Manager of the Office of PJM on behalf of all the signatories.

THIS SUPPLEMENTAL AGREEMENT, made as of the first day of April, 1974, by and between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a New Jersey corpo-ration; PHILADELPHIAELECTRIC COMPANY, a Pennsylvania corporation; PENNSYLVANIA POWER & LIGHT COMPANY, a Pennsylvania corporation; BALTIMORE GAS AND ELECTRIC COMPANY, a Maryland corporation; PENNSYLVANIAELECTRIC COMPANY, a Pennsyl-vania corporation; METROPOLITAN EDISON COMPANY, a Pennsylvania corporation; JERSEY CENTRAL POWER & LIGHT COMPANY, a New Jersey corporation, the latter three companies (herein called collectively GPU Group) all being subsidiaries of General Public Utilities Corporation; and POTOMAC ELECTRIC POWER COMPANY, a District of Columbia and Virginia corporation.

WITNESSETH THAT:

WHEREAS, the signatories hereto are signatories to an agreement, dated September 26, 1956, as amended and supplemented, known as the Pennsylvania-New Jersey-Maryland Interconnection Agreement (AGREEMENT);

and WHEREAS, the signatories hereto own and operate fully-interconnected elec-tric supply systems, and- the planning and operations of the bulk power supply facili-ties 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

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WHEREAS, each signatory hereto relies on the bulk power supply systems of the other signatories hereto in providing reliable service to its customers; and WHEREAS, the signatories hereto are coordinating the. installation of generating capacity additions and major transmission facilities; and

WHEREAS, it is desired to amend. the AGREEMENT to set forth the'respective rights and obligations of the Parties Hereto with respect to such coordination.

NOW, THEREFORE, the signatories hereto hereby agree as follows:

Section I. The AGREEMENT shall'be and is hereby amended:

A. By deleting paragraphs c) through j) of Section 1.1 and inserting in lieu thereof the following:

"c) 'Net Capability'hall mean the number of megawatts of electric power which can be delivered by an electric generating unit of a System under conditions and criteria specified by the OPERATING COMMITTEE and approved by the. MANAGEMENT COMMITTEE. Net Capabilities for all units shall be determined for both summer and winter operating conditions; "d) 'System Capacity'hall mean the sum of the Net Capabilities, based on specified summer operating conditions, of-all electric generating units of a System, with proper adjustments for firm capacity commitments of such System independent of this AGREEMENT, and decreased by the amount of the limitations imposed by transmission facilities, reactive kilovolt-amperes or any other limitations which prevent the simultaneous utilization of said firm capacity commitments or Net Capabilities of said units, such limitations to be determined under conditions and criteria specified by the OPERATING COMMI'7TEE and approved by the MANAGEMENTCOMMITTEE; "e) 'Contract Capacity'hall mean the number of megawatts of electric power which a Party Hereto has provided to meet its obligations hereunder for electric generating capacity and shall be equal to%he System Capacity of a System with proper adjustments for firm commitments under Schedule 2.01 (d) (3) and 2.01 (e) (f), (g),and (h);

"f) 'Planning Period'nitially shall mean the twelve months beginning June 1 and extending through May 31 of the following year., provided as changing conditions may require, the MANAGEMENT COMMITTEE shall specify other 1

planning periods; .

II "g) Unless otherwise qualified, 'load'nd 'capacity'hall mean megawatts of load and megawatts of capacity; "h) 'Unavailable Capability'hall mean the algebraic difference at any time between System Capacity and the available capability at that time. Avail-able capability shall be determined according to definitions and criteria specified by the OPERATING COMMITTEE and approved by the MANAGEMENT COMMITTEE. The several component causes of unit unavailability, namely:

(1) forced outages, (2) planned and maintenance outages and (3) miscellaneous adjustments, shall be determined according to definitions and criteria spe-cified by the OPERATING COMMITTEE and PLANNING AND ENGINEERING COMMITTEE and approved by the MANAGEMENT COMMITTEE."

By deleting NJ in the first line of Section 2.1.

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By deleting Sections 3.3 and 3.4 and inserting in lieu thereof the following:

"3.3 The MANAGEMENT COMMITTEE shall, establish an Office of THE INTER-CONNECTION, initially to be located near Philadelphia, Pennsylvania, and shall appoint a Manager, who, pursuant to policies established by the MANAGEMENT COMMITTEE, with other necessary personnel under his supervision, shall have the following duties and responsibilities:

1

"(i) to perform such functions as may be directed by the MANAGEMENT COMMITTEE;

"(ii) to coordinate the operation and maintenance.'of the bulk power supply. facilities'f THE INTERCONNECTION used for'oth load and reactive supply, subject to the provisions of 4.1, so as to main-tain reliability of service and obtain the maximum overall economies consistent therewith;

"(iii) to coordinate the operation and maintenance of the bulk power supply facilities of THE INTERCONNECTION with such facilities of the systems of others not party to this AGREEMENT in accordance with agreements betwe'en 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 THE INTERCONNECTION;

"(v) to furnish such information and reports as are required to keep the Parties Hereto fully informed of the outlook for, the functioning of, and results achieved by THE INTERCONNECTION;

"(vi) to file with the Federal. Power Commission on behalf of the signa-tories hereto, this AGREEMENT, amendments or supplements hereto, and revised sqhedules to replace those attached to,and made a part of this AGREEMENT;

"(vii) to consult with the OPERATING COMMITTEE, provided for in 3.4, regarding operating principles, practices and procedures as they relate to the achievement of overall reliability and economy of operation of THE INTERCONNECTION;

"(viii) to consult with the PIANNING AND ENGINEERING COMMITTEE, provided for in 3.S, regarding the plans of the Pa+es Hereto as they relate to the reliable and economic operation of THE INTERCONNECTIO¹

"(ix) to initiate and make operating studies of the bulk power supply facilities of THE INTERCONNECTION and make such recommen-dations and initiate such actions as may be necessary to main-tain reliable operation on THE INTERCONNECTION; "Initially, all regular personnel of the Office of THE INTERCONNECTION shall be employees of PE. During the continuance of such arrangement, the Manager shall report to the PE Member of the MANAGEMENT COM-MITTEE in matters pertaining to personnel administration. In all other

'atters he shall report to the MANAGEMENT COMMITTEE. The cost of the Office of THE INTERCONNECTION and expenses associated there-with, including salaries and expenses of said personnel, space and any necessary facilities, shall be shared equally by the Parties Hereto.

"3,4 Each member of the MANAGEMENT COMMITTEE shall appoint, by written notice to the other members,.a representative to serve on an OPERATING COMMITTEE. Unless otherwise agreed by the MANAGEMENT COMMITTEE, the Manager shall act as Chairman of the OPERATING COMMITTEE, but shall not be a voting member thereof. Except as otherwise provided, recommendations and decisions of the OPERATING COMMITTEE shall be by majority vote of its members. Minority recommendations may be sub-mitted, and upon request of any Party Hereto, any decision shall be subject to approval by the MANAGEMENT COMMITTEE.

"The OPERATING COMMITTEE shall:

"(i) establish and revise as necessary operating principles, practices E

and procedures for THE INTERCONNECTION consistent with this AGREEMENT and the policies established by the MANAGEMENT COMMITTEE'(ii) cooperate with the Manager in conducting the operation of THE INTERCONNECTION to achieve a. high overall level of reliability and economy of service in accordance with established operating

\

principles, practices and procedures, recognizing individual system operating requirements for load and for reactive supply, contractual obligations and other pertinent factors;

"(iii) in conjunction with each Party Hereto, review and evaluate the operating practices and procedures of such Party Hereto relat'ing to the overall operating reliability of the bulk power supply fa-'ilities of THE INTERCONNECTION inciuding location, character and amounts of spinning reserve and regulating capacity, adequacy

'of automatic control, sources and need for reactive capacity, voltage schedules and I other pertinent conditions, and make recom-mendations to such Party Hereto with respect thereto; I

"(iv) cooperate with the Manager with regard to studies and investiga-tions concerning overall reliability of the. bulk power supply

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facilities of THE INTERCONNECTION made in accordance with

3. 3 (ix) and in carrying out such actions as may be initiated as a result of such studies and investigations;

" (v) advise the PLANNING AND ENGINEERING COMMITTEE, provided for in 3.5, regarding. the plans of the Parties Hereto as they I

relate to the reliable and economic operation of THE INTER-CONNECTIO¹

"(vi) establish practices for accounting in accordance with thi.

AGREEMENT for electric generating capacity obligations and interchange o'f energy'and operating capacity;

"(vii) perform such other studies and investigations as may be direct d by the MANAGEMENT COMMITTEE or hereinafter specified in this AGREEMENT'(viii) appoint subcommittees and task forces when needed to assist it in carrying out its duties and responsibilities hereunder.

"3.5 Each member of the MANAGEMENT COMMITTEE.shall appoint, by written notice to the other members, a representative to serve on a PLANNING AND ENGINEERING COMMITTEE. The MANAGEMENT COM-MITTEE shall designate the. Chairman, who shall arrange meetings as re-quired and report committee findings to the MANAGEMENT COMMITTEE.

Except as otherwise provided, recommendations and decisions of the PLANNING AND ENGINEERING COMMITTEE shall be by majority vote of its members. Minority recommendations may be submitted, and upon request of any Party Hereto, any decision shall be subject to approval by the MANAGEMENT COMMITTEE.

" The PLANNING AND ENGINEERING COMMITTEE shall:

"(i) on a continuing basis review the planning principles, pro-cedures and standards established or subsequently established in accordance with 4.2 relating to matters affecting the overall design and reliability of the bulk power supply facilities of THE INTERCONNECTION and make recommendations to the MANAGE-MENT COMMITTEE with respect thereto;

"(ii) in conjunction with each Party Hereto, review, evaluate and coordinate the planning for generating capacity, reactive cap-ability. and voltage control, and transmission facilities of such Party Hereto and other matters relevant to the reliability of such bulk power supply facilities of the Parties Hereto and'maintain a continuing composite long-range plan to provide adequate and reliable service on THE INTERCONNECTION; I

"(iii) periodically recommend to the MANAGEMENT COMMITTEE the Forecast Requirements for electric generating capacity of THE INTERCONNECTION, and prepare and submit to the MANAGEMENT COMMITTEE the allocation of such Forecast Requirements to each Party Hereto as provided in schedules attached and made a part hereof; il (iv) perform such other studies and investigati'ons as may be directed by the MANAGEMENT COMMITTEE or hereinafter specified in this AGREEMENT;

"(v) appoint subcommittees and task forces, when needed to assist in carrying out its duties and responsibilities hereunder.

"3.6 The MANAGEMENT COMMITTEE shall e'stablish fro'm time to'time such other committees as it deems. necessary.

"3.7 To facilitate and provide for the work of the Office of THE INTERCCNNECTION and of the several committees appointed by the MANAGEMENT COMMITTEE, each Party Hereto shall:

"(i) maintain 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 co-ordination of planning, including those data required for capacity accounting, (e) the preparation of maintenance schedules, (f) the analysis of system disturbances, and (g) such other purposes as will contribute to the reliable and economic operation of THE INTERCONNECTION;

"(ii) provide such recording, telemetering, communication and control facilities as are required for the coordination of its operations with those of the other,-Parties Hereto, including equipment re-quired both in normal op'eration 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 THE INTERCONNECTION, (b) meet its obligation on a timely basis for supply of records and data, (c) serve on committees and participate in their required investigations, and (d) share in the representation of THE INTER-CONNECTION in inter-regional and national reliability activities;

"(iv) share in the costs. of committee activities and investigations I

(including costs for consultants, computer time and other appropriate items), communication facilities used by all the Parties Hereto (in addition to those provided in the Office of THE INTERCONNECTION), and such other expenses of THE INTER-CONNECTION as are approved for payment by the MANAGEMENT COMMITTEE. The share of such costs assigned to each Party Hereto shall be proportional to its allocated cost for the Office of THE INTERCONNECTION, as provided in 3.3."

D. By deleting ARTICLE 4 and inserting in lieu thereof the following:

"ARTICLE 4 "Coordinated Planning and Operation "4.1 Each Party Hereto shall cooperate with the other Parties Hereto in the coordinated planning and operation of the bulk power supply facilities of its System so as to obtain the greatest practicable degree 6f reliability, compatible economy and other advantages from the pooling of the re-spective electric system loads, electric generating capacities and electric transmission facilities, and each shall render to the others the services provided to be rendered hereunder, and may render such other services as the interconnection of their Systems makes possible and will be of mutual advantage to them and to the public served by them; provided, that each Party Hereto shall retain sole control over its wholly-owned facilities and its services and shall determine the availability of its facilities for use in THE INTERCONNECTION, and

- lo-

that such facilities shall always be first available to the owner for its own use, except as otherwise agreed to. In furtherance ef such co-operation each Party Hereto shall:

"(i) .consult. with the other Parties Hereto and coordinate the instal-lation of its electric generation and transmission facilities with those of such other Parties Hereto so as to maintain reliable service to its own electric customers and those of the other Parties Hereto and to obtain the maximum overall economies consistent therewith;

"(ii) cooperate with the signatories of MAAC to augment the reliability of the bulk power supply facilities of the region;

"(iii) make available to THE INTERCONNECTION the electric generat-ing capacity available for operation in excess of its System re-quirements;

"(iv) make available to THE INTERCONNECTION its electric transmission

'facilities available in excess of its System requirements; (v) provide or arrange for'ufficient transmission line and transformer capacity between its electric generating plants and its connections with the bulk power transmission facilities of any other Party or Parties Hereto, for delivery of a capacity amount equal to the sum of its equitable share of the Forecast Requirement of THE INTERCONNECTION, as provided for in 6.1, plus any System Capacity which it su*pplies to another Party Hereto, less the sum of its own weekly peak load plus Unavailable Capacity at l

the ti'me of such load plus any System Capacity which it receives from another Party Hereto.

f "For the purposes of this subsection a transmission connection I

between any Party Hereto and any other Party or Parties Hereto may be considered also to include:

"(a) transmission facilities which may be used by a Party

~

Hereto to the extent of its capacity located in jointly owned plants, for which such facilities were provided, plus any additional capacity therein that may be available for power transfer between it and other Parties Hereto; and

"-(b) parallel transmission, lines external to any Party Hereto and to THE INTERCONNECTION, through which power transfers to other Parties Hereto may be arranged; I

"(vi) provide sufficient reactive capability and voltage control facilities to (1) meet. the reactive requirements of its system and (2) adequately maintain voltage levels and stability required by the bulk power supply facilities of THE INTERCONNECTION;

"(vii). coordinate the operating schedules of its generating facilities with those of the other Parties Hereto so as to maintain reliable service to its own customers and those of the other Parties Here!.~

'nd to obtain the maximum operating economies consistent there-with;

"(viii) coordinate its schedules of planned outages of generation and I

transmission facilities with those of the other Parties Hereto so as to maintain reliable and economic operation on THE INTER-CONNECTION;

"(ix) cooperate with the other Parties Hereto in the analysis and foster-ing of conditions required to maintain reliable and economic operation on THE INTERCONNECTION; (x) engage in coordination with the other Parties Hereto and with others in the planning and operation of the regional bulk power supply facilities to secure a high level of reliability and con-tinuity of service and other advantages of pooling on a regional basis;

"(xi) adopt and apply THE INTERCONNECTION standards as accepted by the MANAGEMENT COMMITTEE with respect to system design, equipment ratings, operating practices and maintenance practices.

The MANAGEMENT CO MITTEE shall review the recommendations of the PLANNING AND ENGINEERING COMMITTEE provided for in. 3.5 (i) and shall establish planning principles, procedures and standards relating to th6 adequacy and reliability of the bulk power supply facilities of THE INTERCONNECTION which shall not be inconsistent with the principles, procedures and standards of MAAC.

"4.3 Each Party Hereto shall submit periodically to the PLANNING AND ENGINEER-ING COMMITTEE through its representative on that committee its plans for the addition, modification and removal of generation and bulk power transmission facilities. Such submittals shall cover a period of years specified by the MANAGEMENT COMMITTEE from time to time. Deviations 0

from previously submitted plans shall be brought promptly to the at-tention of the

/

PLANNING AND ENGINEERING COMMITTEg by the same means.

<<4 4 The continuing composite long-range plan to provide adequate and re-liable service on THE INTERCONNECTION, maintained by the PLANNING AND ENGINEERING COMMITTEE in accordance with 3.5 (ii), shall be based on the plans submitted under 4;3. Such plan shall adequately meet individual requirements and obligations of the Parties Hereto under this AGREEMENT, and shall reflect (i) benefits of inter-area ties and obligations under agreements with others not party to this AGREEMENT, (ii) the need for inter- and intra-regional transmission and (iii) any other forecast conditions and facility additions that could contribute to overall reliability and compatible economy of service in THE INTER-CONNECTION.

II 4 5 after review of the plans of any Party Hereto under 3.5 (ii), members I'f, of the PLANNING AND ENGINEERING COMMITTEE believe that such plans are not in accord with the planning principles, procedures and standards established under 4.2, and may adversely affect THE INTER-CONNECTION and regional reliability, they shall so inform such Party Hereto through its representative on the PLANNING AND ENGINEERING COMMITTEE and request that the proposal be'modified to conform to I

such planning principles, procedures and standards. l Each Party Hereto shall report to the OPERATING COMMITTEE through its representative on that Committee as promptly as possible changes in its operating practices'nd procedures relating to the reliability of the bulk power supply facilities of THE INTERCONNECTION. The OPERATING COMMITTEE shall review such reports in accordance with 3.4 (iii), and if any change in operating practice or procedure of the Party Hereto is not in accord with the established operating principles, practices and procedures for THE INTERCONNECTIOIl and such change adversely affects THE INTERCONNECTION and regional reliability, it shall so inform such Party Hereto through its representative on the OPERATING COMMITTEE and request that such change be modified to conform to such operating principles, practices and procedures."

E. By deleting ARTICLE 5 and inserting in lieu thereof the following:

"ARTICLE 5 4

"Planning Period Load Diversity Entitlements "5.1 Planning Period load diversities on THE INTERCONNECTION, for the pur-poses of this AGREEMENT, and the entitlements and obligations of each Party Hereto with respect thereto, shall be defined and determined in accordance with a schedule attached and made a part hereof."

F. By deleting ARTICLE 6, as previously amended, and inserting in lieu thereof the following:

- 15

"ARTICLE 6 "Electric Generating Capacity Requirements and Obligations II 6 The eiectric generating capacity requirement of THE INTERCONNECTION shall be an amount of capacity sufficient to carry the load, permit maintenance and provide reserve adequate to achieve a high degree of reliability. The MANAGEMENT COMMITTEE, after consideration of the recommendations of the PLANNING AND ENGINEERING CgMMITTEE provided for in 3e5 (iii), shall determine the Forecast Requirements for electric generating capacity of THE INTERCONNECTION for specified Planning Periods and ratify the allocation of equitable shares thereof to each Party Hereto.

"6,3 Prior to a specified Planning Period each Party Hereto shall plan to install or shall otherwise arrange for sufficient Contract Capacity and associated transmission facilities to carry its equitable share of the Forecast Requirement of THE INTERCONNECTION for such period. Each Party Hereto shall submit to the MANAGEMENT COMMITTEE its plans r

e i/l ~,'i (

for fulfillment of its obligations upder)+ipse,Section as provided in a schedule attached and made.a part hereof.

II 6 3 The Accounted-For Requirement for electric generating capacity of THE INTERCONNECTION shall be determined for each Planning Period and each Party Hereto shall account for its equitable share thereof in accord-I ance with a schedule attached and made a part hereof.

II 6 4 A Party Hereto that has less Contract Capacity than its equitable share of,,

the Accounted-For Requirement of THE INTERCONNECTION shall be con-I sidered deficient by the amount of the 'difference, I

0 t "6.5 In the planning of its capacity installations and purchases, Hereto shall provide generating capacity of such character that, under each Party normal. operating conditions, it can supply, if needed, the energy re-qulrements of its own load and its allocated share of spinning reserve and regulating capacity, provided, however, that any Party Hereto may install or participate in ownership of units of any size that it finds ap-propriate to its needs, subject only to the responsibility for possible additional reserve in accordance with schedules attached and made a part hereof."

G. By deleting Section 8.1, as amended, and inserting in lieu thereof the following:

"8.1 CAPACITY ACCOUNT. The payments for adjusted planned purchases of capacity and for deficiencies in Contract Capacity payable or re-ceivable by Parties Hereto shall be determined in accordance with schedules attached and made a part her'eof."

H. By deleting Section 10.4 and inserting in lieu thereof the following:

"10.1 The meter locations to be used by the Parties Hereto in determining r E their energy transactions on THE INTERCONNECTION shall be as agreed upon from time to time by the OPERATING COMMITTEE."

I. By deleting ARTICLE 1.1. and .'inserting in lieu thereof the following:

"ARTICLE 11 "Billing "11.1. At the end of each month and by the fifth working day of the following month, the Office of THE INTERCONNECTION shall prepare a statement 4

ll showing the debits and credits to each Party Hereto for adjusted planned purchases and sales of capacity, for Accounted-.For Defiqiencies and Excesses of Contract Capacity, for interchange of Operating Capacity and Energy, and for the appropriate share of transactions with others not party to this AGREEMENT. From the net party balances so deter-mined, the Office of THE INTERCONNECTION shall prepare billing statements for all transactions which occurred during the month, and PE, as agent for THE INTERCONNECTION, shall make collection and disbursements pursuant to such statements on or before the first bank-ing day common to all the Parties Hereto following the nineteenth day of the month in which the billing statements are prepared.

"11.2 PE shall pay the costs of the Office'f THE INTERCONNECTION, as pro-vided for in 3.3 and shall issue monthly bills to the other Parties Hereto for their share of such cost, adjusted to provide for equalization of expenses incurred by Parties Hereto associated with the Office and its operation or with those other facilities or activities for which ex-pense is to be shared under 3.7 (iv). Such bills shall be prepared and paid monthly."

18

J . By changing the period at the end of Section 14.1 to a semicolon and inserting i

I thereafter the phrase "all subject to the provisions of Schedule 1.11, attached and made a part hereof."

By cancelling the following Supplements to the AGREEMENT currently on file as part of the rate schedules of the signatories hereto:

(1) Standard Practice Acct. 4-2, issued June 30, 1967;

.(2) Standard Practice Acct. S-l, issued May 4, 1967; (3) Letter to the Federal Power Commission, dated May 3, 1968; (4) Supplemental Agreement, dated November 19, 1970.

Section II. The installed capacity accounting for the obligations under Article 6 here-tofore in effect shall be terminated and final settlement determined as set forth in Standard Practice, Acct, 1-1, issued October 31, 1956, paragraph b). Said Standard shall thereafter be cancelled and shall no longer be part of the AGREEMENT.

I'ractice Said final settlement shall be divided by seven, and'such amount included in the monthly billing statements under Section 11.1 for each of the seven months after the date this SUPPLEMENTAL AGREEMENT becomes effective.

Section III. Except as hereinabove provided, the terms and conditions of the AGREE-MENT shall remain in full-force and effect.

Section IV. This SUPPLEMENTAL AGREEMENT shall become effective as of June 1, 1974, provided, however, that in order that there shall be a gradual transition, the undertaking of certain of the obligations hereunder shall be as provided in Schedule

l. Ol, attached and made a part hereof.

19

IN WITNESS WHEREOF, the signatories hereto have caused these presents to be signed in their respective names, by their respective authorized of'ficers, as of the day and year first above written.

PUBLIC SERVICE ELECTRIC AND GAS COMPANY By Vice ident PHIlADELPHIA ELECTRIC COMPANY sy Vice Presiden PENNSYLVANIA POWER & LIGHT COMPANY By Vice Pre dent BALTI ORE GAS AND ELECTRIC COMPANY By Vice r ent PENNSYLVANIA ELECTRIC COMPANY By Vice President METRCPOLI N EDISON COMPANY B

Vice President JERSEY CENTRAL POWER & LIGHT COMPANY By Vice President POTOMAC ELECTRIC POWER COMPANY By Vice Pr ident

'CHEDULE TRANSITION

1. 01 Page 1 of 4

~ Issued: April 1, 1974 Effective: June 1, 1974 (a) As provided in Section IV of the SUPPLEMENTAL AGREEMENT of which this Schedule is a part, the undertaking of certain of the obligations under such SUPPLEMENTAL AGREEMENT shall be as provided herein during the transition period.

(b) The transition period shall be deemed to include the Planning Periods beginning June 1, 1974 (1974-75) and June 1, 1975 (1975-76) . Accordingly, said SUPPLE-MENTAL AGREEMENT shall be effective through ofay 31, 1976 as modified in this Schedule and shall be fully effective as written with respect to the Planning Period beginning June 1, 1976, and Planning Periods subsequent thereto, (c) The Forecast Requirements of THE INTERCONNECTION required under Schedule 2.01(b) shall be 38,000 megawatts for the 1974-75 Planning Period and 40,750 megawatts for the 1975-76 Planning Period, subject to review and final deter-mination by the MANAGEMENT COMMITTEE prior to June 1, 1974 and june 1, 1975, respectively.

V (d) The requirements of Schedule 2.01 (d) through (h) relating to firm commitments with respect to plans submitted, and.the determination of planned purchases and sales in connection therewith, shall be waived for the 1974-75 and 1975-76 Planning Periods. For the purposes of Schedule 3.01 during such periods, the actual Contract Capacity of a Pagy'Hereto shall be considered to be equal to f

its actual System Capacity, Payments under Schedule 4.01 shall be made only

'ith respect to Accounted-For Deficiencies and Excesses as determined under

~ Schedule 3.01 during such Planning Periods.

SCHEDULE 1. 01 Page 2 of 4 i (e) The Forecast Obligations of the Parties Hereto shall be calculated for the 1974-75 and 1975-76 Planning Periods in accordance with Scheduie 2.21(b),

except that the large unit adjustments (U) shall be considered to be zero.

(f) With respect to thy 1974-75 and 1975-76 Planning Periods, Schedule 2.21(d) shall be modified to read as follows:

"The Forecast Obligation of each Party Hereto as determined under para-graph (b) hereof shall be reduced to equal-(1) its forecast diversified Planning Period peak plus (2) the product of a reduction ratio and the difference between such determined Forecast Obligation and its forecast diversified Planning Period peak. For any portion of a Planning Period, such reduction ratio shall be the lesser of (i) the difference between the sum of the System Capacities expected to be available on THE INTERCON-NECTION in that portion of the Planning Period and the forecast Planning Period peak of THE INTERCONNECTION divided by the difference between the Forecast Requirement of THE INTERCONNECTION as determined in Schedule 1.01(c) and such Planning Period Peak, or (ii), as applicable, 0.65 in the 1974-75 Planning Period and 0.80 in the 1975-76 Planning Period."

(g) The average forced outage rates of the Parties Hereto for the 1974-75 and 1975-76 Planning Periods required for the purposes of Schedule 2.212 shall be as showr.

on Exhibit A, attached hereto.. Such rates shall be subject to review and final determination by the MANAGEMENT COMMITTEE prior to June 1, 1974 and June 1, 1975, respectively. The relationship of increases in percent reserve requirement to load drop ratio required for the purposes of Schedule 2.214, for. the 1974-75 and'1975-.76 Planning Periods, shall be as shown on Exhibit B, also attached 1

hereto.

II, SCHEDULE '1. 01 Page 3 of 4 EXHIBIT A AVERAGE FORCED OUTAGE RATES OF PARTIES HERET 1974-75 'PLANNING PERIOD PARTY RATE 9o PS 16. 83 PE 8.55 PL 8.35 BC 10.03 GPU 9.55 PEPCO 9.10 ~

1975-76 PLANNING PERIOD PARTY RATE 0/

PS 16.46 PE 8.55 PL 8.29 BC 9.86 GPU 9.59 PEPCO 9. 07

SCHEDULE 1. Ol Page 4 of 4 EXHIBIT B INCREASE IN PERCENT-RESERVE VS. LOAD DROP RATIO 1974-75 PIANNING PERIOD Load Dro Ratio Increase in Percent Reserve

.86 .00

.87 .00

.88 .01

.89 .03

.90 .10

.91 .24

'92 .40

.93 .70

.94 1.15

.95 1.71

.96 2.54

.97 3. 66

.98 4.98

.99 6.30 1.00 7.62 1.01 8.95 1.02 10.28 1,03 11.61

l. 04 12.94 1.05 14.27 1.06 15.60

, 1975-76 PLANNING PERIOD Load Dro Ratio Increase in Percent Reserve

.86 F 00

.87 .Ol

.88 .03

.89 .10

.90 .20

.91 .42

.92 .73

.93 1.21

.94 1.85

.95 2.68

.96 3.60

.97 4.70

.98 6.10

.99 7.51 1.00 8.93 1.01 :I.0.35 1.02 '1.77 1.03 13.20 1.04 14. 65 1.05 16.10 1.06 17.55

SCHEDULE I. 11 Page 1 of 1 TERMINATION AND WITHDRAWAL Issued:,April 1, 1974 Effective: June 1, 1974 (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) Obligations under Article 6 of a signatory hereto withdrawing from this AGREE-MENT in accordance with Section 14.1 shall continue through the period ending with Friday of the last calendar week of the Planning Period in which such with-drawal is effective.

SCHEDULE 2. 01 Page 1 of 4 FORECAST RE UIREMENTS OF THE INTERCONNECTION Issued: 'pril 1, 1974 Effective: 7une,l, 1974 (a) Section 6.1 of this AGREEMENT provides that Forecast Requirements for elec-tric generating capacity of THE INTERCONNECTION shall be determined for specified Planning Periods and be equitably shared among the Parties Hereto.

The Forecast Requirements of THE INTERCONNECTION and the equitable shares thereof shall be expressed in megawatts.

(b) The MANAGEMENT COMMITTEE shall make determinations of. the Forecast Re-quirements of THE INTERCONNECTION for all of the Planning Periods included in the composite long-range plan of THE INTERCONNECTION maintained by the PLANNING AND ENGINEERING COMMITTEE in accordance with Section 4.4 of this AGREEMENT. The recommendations of the PLANNING AND ENGINEERING, COMMITTEE submitted for consideration of the MANAGEMENT COMMITTEE in connection with such determinations shall be made in accordance with the guide-lines set forth in Schedule 2.11 or revigion thereof.

Forecast Requirements shall be determined annually before April 30. Any of such Forec'ast Requirements may be revised from time to time by the MANAGE-MENT COMMITTEE, except that, unless otherwise agreed by the MANAGEMENT COMMITTEE, the Forecast Requirements of THE INTERCONNECTION covering the next three full Planning Periods following such annual determination shall be considered firm and not subject to redetermination thereafter.

SCHEDULE 2. 01 Page 2 of 4 (c) Each Forecast, Requirement of THE INTERCONNECTION determined under para-l graph (b) hereof shall be allocated'in equitable shares among the Parties Hereto I \

in accordance with Schedule 2.21 or revision thereof.

(d) Each Party Hereto shall submit to the MANAGEMENT COMMITTEE its plans for carrying the share (hereinafter called Forecast Obligation) of the Forecast Re-quirement 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 AGREEMENT, from a Party Hereto or others not party of this AGREEMENT; and (3) purchases of additional required capacity from other Parties Hereto in accordance with paragraph (e) hereof at the rates specified in Schedule 4.01 or revisions thereof in effect at the time the service is supplied.

Capacity planned to be installed by a Party Hereto after the beginning of a 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 Hereto shall also, indicate the nature and current status of commitments with respect to each addition, retirement and sale or purchase of capacity included in its plans. The MANAGEMENT COMMITTEE shall review the adequacy of the submittals hereunder both as to timing and magnitude.

SCHEDULE 2. 01 Page 3 of 4 I II (e) Unless otherwise agreed by the MANAGEMENT COMMITTEE, the plans submitted by each Party Hereto under paragraph (d) for a Planning Period shall be considered a firm 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 be from Parties Hereto which have planned System Capacities in excess of their respective Forecast Obligations. The planned sale by each such supply-ing Party Hereto shall be determined by allocation in direct proportion to the amounts of such forecast excess as of the time such commitments are made by the purchasing Party Hereto.

Such planned sales shall thereupon likewise be considered firm commitments of the supplying Parties Hereto, provided, however, that when the actual System Capacity of a Party Hereto during any portion of the Planning 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 limited 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 Hereto shall be the amount by which the smaller of its planned or actual System Capacity is deficient in comparison with its Forecast Obligation'.

(g) Adjusted planned purchases of capacity as provided in.(f) shall be apportioned to and supplied by other Parties Hereto to the extent that the smaller of their planned or actual System Capacity exceeds their respective Forecast Obligations.

SCHEDULE 2. 01 Page 4 of 4

/

~(h) If the sum of the excesses determined in (g) is less than the su~ of the deficien-cies determined in (f), then the adjusted planned sales shall be the respective excesses of the supplying Parties Hereto, and the adjusted planned purchases shall be the sum of the excesses determined in (g) allocated in proportion to the deficiencies determined in (f).

SCHEDULE 2'. 1 1 Page 1 of 2 GUIDELINES FOR CALCULATION OF FORECAST REQUIREMENTS OF THE INTERCONNECTION Issued: April', 1974 Effective: June 1, 1974 (a) By application of suitable probability methods to appropriate data and forecasts for THE. INTERCONNECTION, the Forecast Requirements for electric generating capacity of THE INTERCONNECTION shall be calculated for specified Planning Periods as the amounts of capacity which provide an acceptable level of re-liability.

(b) The calculations of Forecast Requirements by the PLANNING AND ENGINEERING COMMITTEE, 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 THE INTERCONNECTION and such additional data and forecasts as are found neces-sary to meet changes in method of computation or in system conditions:

(1) Estimates of summer and winter peak loads for each Planning Period as specified in Schedule 2.211, based on estimates for each System prepared by the respective Parties Hereto reflecting a 50% probability of occurrence and on summer peak diversities determined by the PLAN-NING AND ENGINEERING COMMITTEE from recent experience.

(2) Estimates of seasonal load shape which are consistent with forecast averages of 52 weekly peak loads prepared by the Parties Hereto for their respective Systems.

(3) Variability of loads within each week, due to weather and other re-curring and random factors, as determined, by the PLANNING AND ENGINEER-ING COMMITTEE.

SCHEDULE 2.11 Page 2 of 2 l(4) Unit sizes and types for both existing and proposed units.

I

'(5) Forced outage rates for existing mature units, as determined by the PLANNING AND ENGINEERING COMMITTEE from recent experience, and for immature and proposed units based upon forecast rates related to unit type, size and other pertinent characteristics.

(6) Planned and maintenance outages of generating units as determined by the PLANNING AND ENGINEERING COMMITTEE, based on forecasts submitted by the Parties Hereto for their respective Systems.

(7) Miscellaneous adjustments to System Capacity due to all causes, as determined by the OPERATING COMMITTEE, based on forecasts submitted by the Parties Hereto for their'espective Systems.

(8) Interconnections 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 such areas.

SCHEDULE 2.21 Page 1 of 3 ALLOCATION,OF FORECAST RE UIREMENTS TO PARTIES HERETO Issued: April 1, 1974 Effective: June 1, 1974 (a) The Forecast Requirement of THE INTERCONNECTION shall be allocated to the Parties Hereto in accordance with this schedule.

(b) For any Planning Period, the Forecast Obligation of a Party Hereto shall be cal-culated as follows:

Forecast Obligation = P x 1 +R+F+U+D 100 Where:

P the forecast diversified Planning Period peak of the Party Hereto, in megawatts, determined in accordance with Schedule 2.211 hereof; R ~ the margin of the Forecast Requirement for the Planning Period over the forecast Planning Period peak of THE INTERCONNECTION, in percent of such Planning Period peak; the forced outage rate adjustment, in percent, determined in ac-cordance 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, determined in accordance with Schedule 2.214 hereof.

require from time to time the addition of other. factors in the above equation

SCHEDULE=2. 21 Page 2 of 3 and the revision or deletion of factors currently included therein. If, in the opinion of a Party Hereto, any such change is required, such Party Hereto shall request that the MANAGEMENT COMMITTEE have the matter studied and a recommendation made. Upon approval of a change by'the MANAGEMENT COMMITTEE, this schedule and related subschedules shall be appropriately revised and supplemented and shall thereupon be made effective.

(d) If, during any portion of a Planning Period for which capacity commitments have been made in accordance with Schedule 2.01 (e), the Forecast Require-ment of THE INTERCONNECTION exceeds the sum of the System Capacities expected to be available on THE INTERCONNECTION, the Forecast Require-ment of THE INTERCONNECTION as determined in Schedule 2.01 (b) shall be reduced for that portion of the Planning Period to such sum. The Forecast Obligation of each Party Hereto shall be reduced to equal (1) its forecast diversified Planning Period peak plus (2) the product of a reduction ratio and the difference between its Forecast Obligation as determined under paragraph (b) hereof and its forecast diversified Planning Period peak. Such reduction ratio shall'be. (1) the-difference between the sum of the System Capacities expected to be available on THE INTERCONNECTION and the forecast Planning Period peak of THE. INTERCONNECTION divided by (2) the difference between the Forecast Requirement of THE INTERCONNECTION as'determined in Schedule 2.01 (b) and such Planning Period peak.

SCHEDULE 2.2l Page 3 of 3 (e) If the loads of any Party Hereto contain elements for whi'ch such Party Hereto is not required to furnish reserve capacity, suitable adjustment shall be made with respect to the capacity obligations of such Party Hereto as approved by the MANAGE5IIENT COMMITTEE.

SCHEDULE 2.211 Page 1 of 2 I

g 0 FORECAST DIVERSIFI Z) PLANNING PER OD PEAKS P Issued; I

April 3., 1974 Effective: June 1, 1974 (a) The forecast diversified Planning Period peaks of the Parties Hereto (P) shall be determined in accordance with this schedule so long as the forecast Planning Period peak of THE INTERCONNECTION is a summer peak.

(b) For the purposes of this schedule, the forecast maximum one hour load of a System during the period June through September of a Planning Period shall be its summer peak, and the forecast maximum one hour load during the period December through March of the Planning Period shall be its winter peak.

(c) The forecast diversified Planning Period peak of a Party Hereto shall be its I

Planning Period peak as defined herein reduced by itp Planning Period peak diversity entitlement and its summer peak diversity entitlement.

(d) In a Planning Period each Party Hereto shall be classified as either a summer peaking System or'a winter peaking System. In tie determination of such classi-fication the winter peak of each Party Hereto shall be reduced by the excess of its total capability under winter operqting conditio@a over its tqtal capability under summer operating conditions. 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, independent of this AGREEMENT, and reduced by the limitations specified in 1.1 (d), such Net Capability adjustments and limitations being respectively determined for winter and summer operating conditiops. 'A Party Hereto having a summer peak. which exceeds its winter peak so reduced shall be classified aq a summer peaking

SCHEDULE 2.211 Page 2 of 2 System, and its Planning Period peak shall be equal to such summer peak. A Party Hereto which has a winter peak so reduced which exceeds its summer peak shall be classified as a winter peaking System. The Planning Period peak of a winter peaking System shall be equal to the average of (i) its reduced winter peak for the Planning Period and (ii) the greater of its summer peak for the Plan-ning Period or its reduced winter peak for the Planning Period immediately pre-ceding.

(e) The Planning Period peak diversity entitlement of a winter peaking System shall be one half the difference between its Planning Period peak and its summer peak.

The Planning P'eriod peak diversity entitlement of a summer peaking System shall be the ratio of the difference between its summer peak and its reduced winter peak to the sum of such differences for all the summer peaking Systems multi-plied by the sum 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 determined exceeds the sum of the differ-ences between the summer peaks and reduced winter peaks of the summer peaking Systems, such entitlements shall be proportionately reduced to equal in total such lower sum.

(f) The summer peak diversity entitlement of a Party Hereto shall be the ratio of its summer peak to the sum of the summer peaks of all Parties Hereto multiplied by the difference between such sum of summer peaks and the forecast Planning m

Period peak of THE INTERCONNECTION.

SCHEDULE 2.212 Page 1 of 3 FORCED OUTAGE RATE AD USTMENTS F Issu d: April 1, 1974

~

Effective: June 1, 1974 4

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

(b) The forced outage rate adjustment shall be the amount, in percent, by which the average forced outage rate of a Party Hereto is more or less than the average forced outage rate of THE INTERCONNECTION, multiplied by 1.4. If more, such adjustment shall be considered plus (+) in the equation in Schedule 2.21 (b); if less, such adjustment shall be 'considered minus (-) in such equation.

(c) The factor 1.4 represents the change in requirement for capacity installed on THE INTERCONNECTION in percent of peak load for every one percent change in average forced outage rate on THE IN1ERCONNECTION. Such relationship shall be regularly reviewed (initially annually) by the PLANNING AND ENGINEER-ING COMMITTEE in connection with its calculations of Forecast Requirements of THE INTERCONNECTION, using methods and data consistent with those utilized therein. If such review indicates a difference in the relationship, the PLANNING AND ENGINEERING COMMITTEE shall report its finding and recom-mendation to the MANAGEMENT COMMITTEE. Upon approval of a change by the MANAGEMENT COMMITTEE, this Schedule shall be appropriately revised and supplemented and shall thereupon be made effective as to Planning Periods for which capacity commitments have not yet been made in accordance with Schedule 2.01 (e).

SCHEDULE 2. 212 Page 2 of 3 (d) The average forced outage rate of a Party Hereto in a Planning Period shall be j I 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 and excluding capacity sold independent of this AGREEMENT. Such rate shall also include the ad/ustment, if any, for system capacity unavailable due to energy limitations determined in 'accordance with definitions and criteria specified by the OPERATING COMMITTEE and approved by the MANAGEMENT COMMITTEE. For the purposes of this Schedule, the average forced outage rate of THE INTERCONNECTION shall be the average of the average forced outage rates of all the Parties Hereto weighted by their All rates shall be in percent.

t respective diversified Planning Period peaks.

(e) The forced outage rate of a unit not yet in service or which has been in service less than one full calendar year at the time 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 Forecast Requirement of THE INTERCONNECTION.

(f) The forced. outage rate of a unit in service six or more full calendar years at the time of forecast shall be the average rate experienced by such unit during the I

three most recent calendar years. Historical data'hall be based on official reports of the Parties Hereto under rules and practices approved by both the OPERATING COMMITTEE and the PLANNING AND ENGINEERING COMMITTEE.

SCHEDULE 2. 2 l2 Page 3 of 3 (g) The forced outage rate of a unit in service at least one full calendar year but less than six full calendar years at the time of the forecast shall be determined as follows:

Full Calendar Years of Service Either the mature rate, as defined in paragraph (e), or one-third the rate experienced during the calendar year plus two-thirds the mature rate, whichever is lower.

Either the mature rate, or two-thirds the average rate experienced during the two calendar years plus one-third the mature rate, whichever is lower.

Either the mature rate, or the average rate experienced during the three calendar years, whichever is lower.

Either two-thirds the mature rate plus or1e-third the rate experienced during the most recent calendar year, or the average rate experienced during the three most recent calendar years, whichever is lower.

Either one-third the mature, rate plus two-thirds the average rate experienced during the two most recent I

calendar years, or the average rate experienced during the three most recent calendar years, whichever is lower.

I

SCHEDULE 2. 213 Page 1 of 2 LARGE UNIT AD USTMENTS U Issued: April 1, 1974 Effective: June 1, 1974 (a) Large unit adjustments of the Parties Hereto (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 Hereto as of Sept-x ember 30 of the Planning Period is in excess of the specified size of unit defined herein.

(b) The large unit adjustment shall be five percent of t'e amount, in megawatts, by which such excess of a Party Hereto is more or less than a proportionate part of the total of such excesses'of all Parties Hereto, allocated to each Party Hereto in accordance with the ratio of its forecast diversified Planning Period peak to the Planning Period peak of THE INTERCONNECTION. If more, such adjustment shall be considered plus (+) in the equati'on in Schedule 2.21 (b);

if less, such adjustment shall be considered minus (-) in such equation. For use in such equation, the adjustment of a Party Hereto shall be expressed in percent of its forecast diversified Planning Period peak. The specified size of unit initially shall be 900 MW.

(c) Whenever through ownershi'p or purchase the System Capacity of a Party Hereto includes a portion of the capability of a unit larger than the specified size, the megawatts assigned to the Party Hereto with respect to the capability of such unit in excess of the specified size shall be in proportion to the ownership or purchase by the Party Hereto.

SCHEDULE 2.213 Page 2 of 2 (d) The five percent factor in item (b) represents the effect on the requirement for capacity to be installed on THE INTERCONNECTION of the operation of units larger than the specified size, as planned at the time this Schedule initially becomes effective. Such factor, and the specified size of unit, shall be regularly reviewed (initially annually) by the PLANNING AND ENGINEER-ING COMMITTEE in connection with its calculations of Forecast Requirements of THE INTERCONNECTION, using methods and data consistent with those utilized therein. If such review indicates a difference in the effect on capacity require-ments, or that the specified size of unit should be increased, the PLANNING AND ENGINEERING COMMITTEE shall report its finding and recommendation to the MANAGEMENT COMMITTEE. Upon approval of a change by the MANAGE-MENT COMMITTEE, this Schedule shall be appropriately revised and supple-mented and shall thereupon be made effective as to Planning Periods for which capacity commitments have not yet been made in accordance with Schedule 2.01 (e).

SCHEDULE 2. 214 Page 1 of 2 LOAD DROP AD USTMENTS D Issued: April 1, 1974 Effective: June 1, 1974 P

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

(b) A Party Hereto 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 fore-cast average of its 52 weekly peak loads, (2) the forecast average of its Unavail-able Capability in each week because of planned and maintenance outages, and (3) the forecast average of its miscellaneous adjustments, to its Planning Period peak, is greater than the load drop ratio for THE INTERCONNECTION.

~ (c) For the purposes of this schedule, the load drop ratto for THE INTERCONNECTION shall be the average of the load drop ratios of all the Parties Hereto weighted by their respective Planning Period peaks.

(d) The load drop adjustment, expressed in megawatts, of a Party Hereto having a I

need for load drop shall be (1) the increase in percent reserve requirement on THE INTERCONNECTION corresponding to the load drop ratio of such Party Hereto, less the increase in percent reserve requirement on THE INTERCONNECTION corresponding to the load drop ratio of THE INTER'CONNECTION, multiplied by (2) the Planning Period peak of the Party Hereto, and (3) 0.5, to reflect a sharing of such needs and the supplying thereof among the Parties Hereto. For each Planning Period, the relationship of increases in percent reserve requirement of THE INTERCONNECTION to various load drop ratios of THE INTERCONNECTION

SCHEDULE 2,214 Page 2 of 2 shall be determined by the PLANNING AND ENGINEERING COMMITTEE in con-nection with its calculation of the Forecast Requirement of THE INTERCONNECTION for the Planning Period, using methods and data consistent with those utilized therein.

(e) The total of the load drop adjustments of Parties Hereto having need for load drop (total adjustment) shall be considered as supplied by the Parties Hereto having load drop ratios equal to or less than the load drop ratio of THE INTER-CONNECTION.

(fl The load drop adjustment of a Party Hereto supplying load drop shall be the total adjustment times the ratio of (1) the product of the Planning Period peak of such Party Hereto and the excess of the load drop ratio of THE INTERCON-NECTION over the load drop ratio of such Party Hereto, to (2) the sum of such products of all Parties Hereto supplying load drop.

(g) The load drop adjustments, as expressed in megawatts, shall be converted to percentages, for use in the equation in Schedule 2.21 (b), by dividing . the respective megawatt amounts by the diversified Planning Period peaks of the several Parties Hereto, Load drop adjustments of Parties Hereto needing load drop shall be considered plus (+), and adjustments of the Parties Hereto sup-plying load drop shall be considered minus (-) in such equation.

SCHEDULE 3. 01 Page 1 of 3

~ i ACCOUNTED-FOR REQUIREMENTS AND OBLIGATIONS Issued: 'pril 1, 1974 Effective; June 1, 1974 (a) 'ection 6.3 of this AGREEMENT provides that an Accounted-For Requirement for electric generating capacity of THE INTERCONNECTION shall be determined for each Planning Period and be equitably shared among the Parties Hereto. The Accounted-For Requirement of THE INTERCONNECTION as determined in para-graph (c) hereof and the equitable shares thereof shall be expressed in megawatts.

{b) The equitable share {herein called Accounted-For Obligation) for each Party Hereto of the Accounted-For Requirement of THE INTERCONNECTION shall be equal to its Forecast Obligation for a Planning Period, plus an adjustment equal to the (1) The actual average of its 52 weekly peak loads during the Planning Period minus the forecast average of its 52 weekly peak loads; and (2) The actual average of its 52 weekly Unavailable Capabilities during the Planning Period minus the forecast average of its 52 weekly Un-available Capabilities, all multiplied by 0.5. The forecast average of its 52 weekly Unavailable Capabilities shall be determined as the algebraic sum of:

(i) its forecast average System Capacity during the Planning Period times its forecast average forced outage rate, (ii) the forecast average of its Unavailable Capability in each week because of planned and maintenance outages, and

SCHEDULE 3,01 Page 2 of 3 (iii) the forecast average of its miscellaneous adjustments in each I

week.

The factor 0.5 may be changed from time to time by the MANAGEMENT COMMITTEE to reflect current conditions.

(c) The Accounted-For Requirement for electric generating capacity of THE INTER-CONNECTION shall be the sum of the Accounted-For Obligations of the Parties Hereto.

(d) In the event that the Accounted-For Requirement of THE INTERCONNECTION as determined in paragraph (c) hereof is greater than the sum of the actual Con-tract Capacities of the Parties Hereto during any portion of a Planning Period, the Accounted-For Requirement of THE INTERCONNECTION she'll be reduced to equal such sum for that portion. The Accounted-For. Obligation of each Party Hereto shall be reduced to equal (1) its forecast diversified Planning Period peak plus (2) the product of a reduction ratio and the difference between its Accounted-For Obligation as determined. under paragraph (b) hereof and its fore-cast diversified Planning Period peak. Such reduction ratio shall, be (I) the difference between the sum of the actual Contract Capacities of the Parties Hereto and the forecast Planning Period peak of THE INTERCONNECTION divided by (2) the difference between the Accounted-For Requirement of THE INTERCONNECTION as determined in paragraph (c) hereof and such Planning Period peak.

SCHEDULE 3. 01 Page 3 of 3 its actual Contract Capacity exceeds its Accounted-For Obligation. The Accounted-For Deficiency of a Party Hereto shall be the amount by which its Accounted-For Obligation exceeds its actual Contract Capacity.

(f) Those Parties Hereto 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 respective Accounted-For Excesses, at the rate provided for in Schedule 4.01.

SCHEDULE 4. 01 Page 1 of 2 RATES AND PAYMENTS FOR CONTRACT CAPACITY Issued: April 1, 1974 Effective: June 1, 1974 (a) Payment by a Party Hereto for planned purchases of capacity under Schedule 2.L1 I

and for Accounted-For Deficiencies under Schedule 3.01 shall be based on a rate determined annually by the MANAGEMENT COMMITTEE. The annual rate effective June 1, 1974 shall be $ 14.60 per kilowatt; effective June 1, 1975 shall be $ 16.425 per kilowatt and effective June 1, 1976 shall be $ 18.25 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 System Capa-cities. Payments shall be made by Parties Hereto that have adjusted planned purchases to those supplying Parties Hereto that have adjusted planned sales in that portion at a daily rate equal to 1/365 of the rate specified in (a).

(c) Accounted-For Deficiencies and Excesses shall be determined for each portion of a Planning Period, measured in days, as required by changes in Accounted-For Obligations'r actual Contract Capacities. Payments shall be nade by the Parties Hereto that have Accounted-For Deficiencies to those that have Accounted-For Excesses in that portion at a daily rate equal to 1/365 of the rate specified in (a).

(d) B'illings under (b) and (c), and under Schedule 5.01 (c) and (d), shall be monthly with respect to the portion or portions of the Planning Period in a month. Such billings shall be kept current through estimates made'during the Planning Period:

SCHEDULE 4. Ol Page 2 of 2 from time to time as required by changes in actual System and Contract Capa-cities, or quarterly as required by Accounted-For Obligations. All estimated computations and payments shall be revised as required at the end of the Planning Period to reflect actual conditions.

SCHEDULE S.Ol Page 1 of 2 ALLOCATIONAMONG PARTIES HERETO OF SHORT-TERM POWER RESERVATIONS Issued: April 1, 1974 Effective: June 1, 1974 (a) Allocation among Parties Hereto of Short-Term Power reservations under agree-ments between the Parties Hereto and others not party to the AGREEMENT, and the accounting and billing within THE INTERCONNECTION in connection with such reservations, shall be made in accordance with this schedule. This schedule supersedes Standard Practice Acct. S-l, issued May 4, 1967.

(b) Operating capacity and energy transactions associated with such reservations shall be accounted for and billed within THE INTERCONNECTION in accordance with Standard Practice Acct. 3-7 or revisions thereof.

(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 in that portion of the Planning Period.

(d) When others reserve power from the Parties Hereto during a Planning Period, such reservation shall be allocated among those Parties Hereto having Ac-counted-For Excesses not sold to meet Accounted-For Deficiencies in that portion of the Planning Period in proportion to such unsold Accounted-For Excesses; provided, however, that the portion of such reservation, if any, which cannot be so allocated shall be allocated among all Parties Hereto in proportion.to

SCHEDULE 5.01 Page 2 of 2 their respective actual Contract Capacities, after adjustments for sales already allocated under this paragraph and for sales and purchases under Schedule 3.01. The Parties Hereto shall receive from the billing agent shares of the payments with respect to such reservation (exclusive of payments covered by (b) hereofl in the same proportions.

PHILADELPH IA ELECTRIC CO M NY

@<<EtVpo

. 2301 MARKET 'STREET

. ~~Pre ]gp~

EXEC. ygp p)

PHILADELP.HIA. PA. 19101 1215) 841-4230 W. C. ASTLEY VICC I'IICSIOCNT September 24, 1973 Messrs. C. H. Hoffman A. Gavin~

J. W. Gore, Jr.

P. L. Lumnitzer J. S. Bartman R. H. Sims D. F. Hughes Qon f1 own nrs ~

Enclosed is a fully executed copy of the Letter Agreement, dated September 11, 1973, modifying Section 2. 1 of the Interconnection Office Facilities Agreement.

Pennsylvania-Net'ersey-Maryland Sincerely, Enclosure

PHILADELPHIA ELECTRIC COMPANY 2301 MARKET STREET PH1LADELPH IA. PA. 19101 (2 IS) 841-4230

w. c. ASTLEY VICC fIICIIDCNT September 11, 1973 E

Public Service Electric and Gas Company, 80 Park Place, Newark, N. J. 07101 Pennsylvania Power Er. Light Company, Two North Ninth Street, Allentown, Pa. 18101 .

33altimore Gas and Electric Company, Gas and Electric Building, Baltimore, Md. 21203 Pennsylvania Electric Company, 1001 Broad Street, Johnstown, Pa. 15907 Metropolitan Edison Company, Post Office Box 542, Reading, Pa. 19603 Jersey Central Power Ec Light Company, Madison Avenue at Punch Bowl Road, Morristown, N. J. 07960 .

Potomac Electric Power Company, 1900 Pennsylvania Avenue, NW, Washington, D. C. ZOC RE: Revised Schedule of Compensation for Facilities Owned by Philadelphia Electric Company and Covered Under the Pennsylvania-New Jersey-Maryland Interconnection Office Agreement Gentlemen:

Section 2. 1 of the PJM Interconnection Office Facilities Agreement, dated 7/31/69, provides for compensation to Philadelphia Electric Company for facilities and equipment which are owned by the Company but used in PJM operations. This article provides for the payment to Philadelphia Electric Company "carrying charges on PE's gross plant in-I vestment in said facilities and equipment (initiall at the rate of 1% ger month to include a fair return on investment depreciation and income taxes)."

On ..uly 12, 1973, at the 146th meeting oi the PJM iMaragement Committee it was decided to modify the compensation procedure contained in Section 2. 1 of the Agreement.

Commencing July 1, 1973, the current, practice of applying a single 1+>o monthly carrying 0

Vl

char'ge rate to gross plant investment will be changed to a practice of subdividing the

~lant into three life categories, each with its own carrying charge rate, so that, as of 1

l uly 1, 1973, t'e language inSection 2. 1 underlined above shall no longer apply. The initial life categories and their associated monthly carrying charge rates, effective h as.

of July 1, 1973, a'e listed below:

Estimated Book Life Monthl Carr in~ Char e Rate, 35 years 1.00%

20 years 1.25%

10 years 1.90 %

If the foregoing is in accordance with your understanding so indicate by signing in the space provided below and returning the enclosed copies of this letter which, upon being signed by all of you, will constitute an amendment to the agreement among the companies dated 7/31/69.

~ .

Sincerely, The foregoing is in accordance with our understanding.

Public Service Electric and Gas Company Metropolitan Edison Company I

By ir I! C Vice President Vice President Pennsylvania Power.h Light Company Jersey Central Power 8: Light Company

\

Exec. Vice President Vice President Baltimore Gas and Electric Company Potomac Electric Power Company r

(.-f By By J UVice Pres>dent / Vice President cnnsylvania Electric Co'mpany ce President

I It is our understanding that the provisions of ARTICLE V, Agreement For. Operation of the Pennsylvania-Ncw Jersey-haryland Intcrconncction, prevail when a signatory's operating personnel and operating facili.ties are directed by The Office to act for. The Office when circumstance prohibits The Office from performance of its assi,gned duties and responsibilities. If you concur, will you please confi.rm the fact by signing this memorandum.

For Public Service Eleh<r'ic and Gas Company For Philadelphia Electric Company PQ t For Pennsylvania Power & Light Company S~'J' For Balt io e Gas and E3e ric Company For Pennsylvania Elect- Company For Hetropolitan Edison Company For Ncw Jersey Power & Light Company For Jersey Central Power & Light Company For Potomac Electric Power Company November 5, 1970

gp+=~7-r>r>E; 73@-DOBJr=-r i lr-> REr<<T ~/~7 ~~

PKNNSYLVANIA-NKWJKRSKY-MARYLANDINTKRCONNKCT>EIN 955 JEFFEflSON AVENUE VALLEYFORGE CottPOAATE CENTER NORBISTOWN, PENNSYLVANIA 1940l (2 1 5) 665 7550.

December 12s 1977 Federal Energy Regulatory Commission.

825 North Capitol Street, N.E.

Washington, DC 20426 r

Attention: Mr. Kenneth F. Plumb, Secretary Gentlemen:

There is filed herewith, on behalf of the following listed companies, proposed I

Schedule 8.02 replacing Schedule 8.01 to the NYPP-PJM Agreement, dated April 9, 1974, as supplemented (The .A'greement), which is on file with the Commission under the following Rate Schedule designations:

I Rate, Schedule 1

Central Hudson Gas & Flectric Corporation FPC No. 49 Consolidated Edison Company of New Yoxlcs Incorporated 33 Long Island Lighting Company 20 New York State Electric & Gas Corporation 65 Niagara Mohawk Power Corporation 86 Oxange and Roclcland Utilities, Incorporated 31 Rochester Gas and Electric Corpoxation 17 Referred to collectively as NYPP Group I

Public Service Electric and Gas Company 51 Philadelphia Electric Company 42 Pennsylvania Power & Light Company 66 Baltimore Gas and E)ectric Company 28 Jersey Central Power & Light Company 42 Metropolitan .Edison Company 45 Pennsylvania Electric Company 72 Potomac Electric Power Company 31 Referred to collectively as PJM Group The following documents axe submitted herewith in connection with this filing:

l. Six (6) copies of this letter.

2. Thirty (30) copies of proposed Schedule 8.02.

Puhlic Sorvlco Electric en>t Gos Company Gonorol Put>llc Utilities Corporation Philo>i>>it>hta Electric Corr>t>any Jersey Central Power Pv Light Company Pennsylvania Power Fr Light Co>npony Metropolltnn Erlison Company t

pennsylvania Eloctrlc COmpany aaltln>ore Gos end Electric compony Potomac Eloctric Power Company'

3. Six (G) copies of statements (Attaclmicnts I and.II) of the basis for the fixed rates for service proposed in Schedule 8.02 and computations in support of these rates.

4. Six (6) copies of a form of Yotice of Agreement suitable for publication in the Federal Register.

5. A check covering the required filing fee.

In view of the strike by coal miners which adversely affects the supply .of coal to the parties, and in keeping with the Order of the Federal Power Commission under Docket RH74-22, the Parties to th'e Agreement have prepared the proposed Schedule 8.02, which provides for the transfer of energy between the Groups during an energy emergency. The Schedule also provides the flexibility to permit transfers of energy to and from systems interconnected with HYPP or PJH. Proposed Schedule 8.02 replaces Schedule 8.01 which expired on December 31, 1975. In view of the to conserve coal may necessitate near term use of the proposed Schedule.

foregoing,'ransactions Therefore, it is respectfully submitted that good cause exists for waiver of notice of requirements and the Commission is hereby requested, pursuant to Section 35.11 of its Regulations, to ~~aive notice requirements and order the proposed Schedule to be effective as of January 1, 1978. It is proposed tha't the Schedule will terminate on December 31, 1978 unless extended by mutual agreement.

Proposed Schedule 8.02 is not intended to and will not take the place of existing Schedules. The Schedule provides that, for the purpose of conserving energy resources, either NYPP or PJH may arrange to obtain from the other con-servation energy when, in the other's judgment, it has the capability -and fuel resources to provide the same. Such arrangements are to be scheduled for per.'ods of one or more weeks. The arrangements, including the number of megawatts per hour to be supplied, the period of suppl'y, the source and destination, and the estimated cost, as well as modifications thereto, are subject to mutual agreement in advance of supply. The Schedule also provides the method for determining com-pensation for such service.

All of the signatories to the Agreement have'pproved this filing and have received copies thereof. This filing is being made on behalf of such signatories by the undersigned in accordance with the authorization contained in Section 5.08 of the Agreement.

In response to Section 35.13(a) of the Commission's Regulate.ons, it is pointed out that Subsection 2.1 of 'the proposed Schedule provides that the charge for con-servation energy generated on the supplying group's system will be 110%.of the out-of-pocket replacement cost of generating the energy, plus' generation service charge of 3.75 mills per kilowatthour. Subsection 2.3 of the Schedule defines replacement cost of generating the energy as out-of-pocket cost of generating sai,d energy, plus or minus an adjustmcnt (to be made by supplemental bill). to reflect increases or decreases, if any, in the cost of fuel, on a Btu basis, between the month in which the energy is delivered and the second month after such month of delivery. The 3.75 mill per kilowatthour charge is intended to assure that conservation energy service does not adversely affect the financial capa-bility of the supplying system or result in discrimination to its customers. Tlute charge will cover standby and extra maintenance costs and is intended to provide a reasonable contribution to the carrying charges on the facilities involved in generating and transmitting conservation energy. The development of these charges are shown on Attachments I and II hereto.

Subsection 2.2 of the proposed Schcdulc prove.dcs for a service charge of 1.75 mills pcr kilowatthour for dclivcrics of conservation energy from systems inter-connected with NYPP or PJM. This charge is intended to cover losses, administrative charges and other costs oC arranging for and delivering conservation energy from the interconnected systems and to make a reasonable cohtribution to the carrying charges of the transmission facilities required to make thc trans'actions possible..

The development of this charge is shown on Attachments I and XI hereto.

In response to Section 35.13(b) of the Commission's Regulations, it out that because of the uncertainty of the coal miner's 'strike or other cvcnts is pointed which might determine the need for conservation energy transfers and because of variable operating restrictions in the event the transfers are required, estimates of the transactions and revenues under the proposed S'chedul.e have not been made.

To the extent that Section 35.13'(b)(1) of the Commission's Regulations is dccmed applicable to this filing, waiver of that regulation is requested based on the foregoing.

Copies of this letter and its enclosures will be furnished promptly to the Regulatory Commissions of New Yoxk, Pennsylvania, New Jersey, Maryland, Delaware, Virginia, and the District of Columbia, for their information.

'I A check in the amount of $ 600.00 is enclosed pursuant to Section 36.2(f) of i the Commission's Regulations to covex the filing fee determined as follows:

$ 500 for a moderately complex rate schedule for one Group and $ 100 for concurrence by the other Group.

Very truly yours, I is (

'llilmer S. Kleinbach Manager TRW:par Enclosures J

~e 1of4 NYPP - DERIVATION OF GENERATION SERVICE CHARGE Annual Annual Hourly Net Plant Net Fixed Carrying Carrying Investment Plant Investment Charge Charge Charge Cost Book .Ca abili Per KW Rate Rate Rate

($ 1,000) ~

$ /KW/yr MillS/WW d (c x d) (1000e/8760)

Older Steam Plant 1,260, 646 7, 185. 3 . 175. 45 15. 28 26. 81 3. 06 Gas Turbine Plant 421,227 4, 332. 7 97. 22 16. 59 1;89 n an om osite . 1, 681, 873 11, 518,0 146. 02 15. 73 22. 97 B. 62 i an"mission Plant 1,689, 959 27, 885. 0 60. 60 10. 30 1,18 A. Generation Service Charge 3. 80 Negotiated. 'at 3. 75 Mills/IQK Notes: ia) A@usted for step-up transformer costs.

(b) Generating Plant at nameplate capacity.

Transmission Plant MVA at 0. 9 power factor.

~ge 2orC NYPP " DERIUA ION OF RANSMISSION PAR Y RUIC CHARGF A. Transmission. Car in Char es:

Annual Annual Hourly Net Plant Net Fixed Carrying Carrying Investment Plant Investment .; Charge Charge Charge Book Cost a abili Rate Rate

$ 1, 000 $ /KW/yr Mills/IGVH c e f (cx d) (1m /8760)

NYPP Composite 1, 689, 959 27, 885 60. 60 1V,O 10. 30 1. 18 B. ransmission Losses The average cost per KUlHR to supply additional transmission losses determined

~ by multiplying the average increase in losses for various power transfers across NYPP (2%) by the estimated incremental cost to generate such losses (30 mQls) 0. 60 Combined Total 1. V8 Proposed Charge 1. V5

NYPP "

SUMMARY

~F INVFS MF

~e3 of 4 Gross Cost of Adjustment for Own Leased Gen. Step-Up Net Plant Net Plant Investment Plant Facilities Transformer s Investment Ca abili Per KW

$ 1, 000 qa,000 $ 1, 000 f1, 000 $ /KW b C d f (a+be) (d/e)

/

Older Steam Plant CH 95, 675 0 5V4 96, 249 537. 4 1V9. 10 CE 396, 430 0 + 0 396, 430 2,293. 3 1/2. 86 LILCO 75, 340 0 + 572 V5,912 493. 9 153.VO NYSEG 139,2V1 0 1, 504 140, VV5 673. 8 208. 93 NMPC 390,844 0 + 4,609 395, 533 2, 232. 0 1VV.21 OSR VV, 980 0 + 545 V8, 525 49o. 1 158.60 RGE 76 465 0 + 757 77 222 459. 8 16V 95 NYPP Composite 1,252, 005 0 + 8j 641 1,260, 646 7, 105. 3 175. 45 Gas Turbine Plant

'+

'ECH 3, 324 140, 445 + 124,085 0

+

107 0

3, 431 264, 530

42. 5 80. V3 102. 41 LILCO 117,6VO 0 + 1,V62 119, 432 1, 264. 2 94.4V NYSEG 0 0 0 0 0 0 21, 819 0 + 810 22, 629 321. 2 70. 45 OKER 1, 149 + B,400 + 210 7, V59 83. 7 92. 70

~8 0

~

RGE 3 446 0 0 3 446 90. 68 NYPP Composite 207, 853 + 130, 485 + 2, 889 421,22V 4, 332. V- 97. 22 Gen. Plant 1,539,858 130,485 + 11,530 1, 681, 873 11, 518. 0 146.02 ransmission Plant CH 55, Voo 0 1, 067 54, 633 833 65. 59 CE BV3, 519 0 0 673,519 . 8, 568 78. 61 LILCO 14V,288 0 4, 809 142, 479 3, 36B 42. 33 NYSEG 216, V81 + V65 2, 606 213, 940 3, 403 Bl. 42 NMPC 482, 846 + 7,203 7, 044 483, 085 9, 054 53. 36 0tH 52,207 0 1, 335 50, 072 902 56. 40 RGE 70 182 P A rg 3 431 ~16 9 g2. R4 NY Composite 1~ Bn (~ 523 + 101 054 r 7, 618 12 60g1 nc9 2V, 885 60

4of4 NYPP - SUMMAR OF FIXED HARGf. OMPONEN ON GENERA 1NG "P Fixed Char e Rates - of Investment

$ 1,000 Bent or Fed. NYS Net Plant Leasing Book Book Income Prop. Earnings Investment Costs Return ~De rec Tax Tax Insur Tax ~otals Older Steam Plant CH 96,249 5. 05 3.39 2.82 1.V9 0. 10 0. 10 13. 25 CE 396,430 a (2.04) 5. 06 2.89 .

2.58 5.7V 0. 10 0. 11 14. 25 LILCO 75, 912 4,03 2.86 2.05 7.3V 0. 10 0. 13 18. 54 NYSEG 140,7V5 6. 95 3. 33 2. V8 2. 1V 0. 10 0. 12 15. 45 NMPC 395, 533 6. 10 3.33 3.49 3.35 0. 10 0. 12 16. 49 O&R 78, 525 6. 52 3. 12 3. 68 4. 38 0. 22 .0. 13 18. 01 RGE 77 222 2. 91 ~286 ~ 1. 83 ~441 0. 50 ~

0. 10 12. 62 NYPP Composite 1,260,648 (0.64) 5,49 3.08 2,89 4.23 0. 13 0. 12 15. 28 as rhine Plant CH 3,431 V. 85 5. 00 ~

4,97 1,88 0. 10 0. 15 19. 55 CE b 264,530 c 3. 87 d 4,1V e 2.10 f 1.80 3. 64 0. 05 0. 12 15. V5 LILCO 119,432 6,99 4. 00 2. 82 5. 92 '.10 0. 15 19. 98 NYSEG 0 NMPC  : 22,629 ~

6. 40 4. 00 3. 60 2. 90 0,10 0. 13 17. 13 0&B b V,V59 c 7.42 d 1.18 e 0.81 f 0,68 3. 10 0. 15 0. 10 13. 22 RGE 3 446 ~720 ~400 ~320 ~870 ~050 0. 20 '330 NYPP Composite 421,227 2. 58 5. 08 2. 75 2. 20 4. 25 0. 07 0. 13 17. 06 Gen Plant Com site 1, 681; 873 0. 17 5. 32 2. 98 2.72 0. 11 ODO 15. 73 NOTES: a. BeQects net credit for interdepartment rents.

b. Includes own plant investment plus boolc value of leased. plant. (Net plant investment)

c. Based on leased plant rental costs divided by net plant investment.

d. Based on boolc return on owned plant divided. by net plant investment.

e. Based, on book depreciation on owned plant divided by net plant investment.

f. Based on Fed. Income Tax on owned plant divided by net plant investment.

• -..6.. 7.',,....,,, ~

la g LV ~ ~ ~~ ~ k ~

Page 1 of '4 PJM SUPPORT FOR FIXED RATES IN SCllEDULE 8.02 ISSUED DECEHBI',R 12'977 PJM -costs necess..rily represent a composite, of various company costs', based on different'plent sites and types of construction, different c..pitalizations, different service lives, different methods of tax accounting, and different state and local tax obligations. For the purpose of these supporting computations, average PJH values are used and the computed costs in all cases are higher tl>an the proposed fixed rates.

Char e for Generation Service The fixed charge for generation service is based on the following components.

'a) The levelized annual cost of a current installation of a combustion turbine, which is the same approach used for installed capacity charges internal to PJH (Docket No. ER 77-301).

(b) The annual cost for the combined investments of the PJM companies in transmission facilities 110 KV and above.

Since such investments were m de over .". span of. years, the return rate used is based on average embedded costs.

(a) (b)

COMBUSTION 'YSTLN TURBINE TRANS( IIAS fON Current Average Plant Investment $ 163/KN (1) Gross $ 63.50 (2)

Net 5D.LO Life in Years >> Book/Tax 23/16 40/30 Carrying Charge Level 14 5% (3) 15.7% (4)

Rate'nnual Costs $ /Kll/YR Carrying Charge $ 23. 64 $ 9.46'5)

Fixed 0 6 H Expenses - estimated .50 1.37 (5)

Total $ 24.14 $ 10.73 Unit Costs - er KNIIR 2.76 mills 1.22 mills Combined Total 3.98 mills Negotiated At 3 ~ 75 mills

Page 2 of' Char e for Transmi sion Service Thc.fixed charge for transmissi.on service is based on the following components:

(a) The annual cost per KWllR for system investment in transmission facilities 110 KV and above (same as (b) for generation service)- 1.2? mills (b) Administrative expcn es determined as a cost per KWllR by dividing the cost to oper..te and maint.ain the PJH Control Center in 1976 ($ 5,386,000) by the amount of power interchanged in 1976 between PJ11 Companies and with others (21.3 x 109 KWHR). 0.25 mills (c) The average cost per KWllR to supply additional

,transmission losses determined by multiplying the average increase in losses for various power transfers across PJM (3%) by the estimated incremental cost to generate such losses (22 mills). 0.66 mills Combined Total 2.13 mi,lls

.Negotiated At l. 75 mills (1) Costs were estimated by each PJH company to install on its system for service in 1977 a simple cycle 50 llW combustion turbine. .These costs vary- among the companies depending on site conditions and environmental requirements.

PS PE Pl, BC GPU PEP PJH AVERAGE

$ /KW 135 125 225 192 177 125. 163 (2) Transmission costs are based on the 1976 FPC Form 1 total transmission plant investments for PJH companies, adjusted to exclude thc estimated investments in facilities used for, or related to, step-down transformation to voltages below 110 KV.

Transmission investmcnt $ 1,969,000,000 $ 63.50/KW PJM Peak load prior to 12/31/76 30,993,000 K'W Accumulated depreciation per books (21.1%) ~13. 40/Ktl Net plant invcstmcnt $ 50.10/KW

Pape 3 of 4 NOTES: (Co>>t'd)

(3) F,.ctoris used to develop level carrying ch..rge rate are as follows'.

Comb. Turb.

Book 1.ifc 23 Ta>; Life 16 HortaliLy Dispersion R2 Accel. Depreciation DDB Fund., Used During Const. 3%

Salvage 0 Remove 1 0 Realty Tax Rate 0 Invcstmcnt Credit Rate 10%

Capi ta1 Stock Tax Rate 0 Effective Income Tax Rate 52. 9%

Return Rate (Sce below for development) 10.7%

Other Taxes 1.0%

Levelizcd Carrying Cl>arge Rate 14 ~ 5%

PJH COilPANIES 'CAPITALI7ATION AND FINANCING COSTS 12/31/76 CAPITALIZATION AVF.RAGl'.

FINANCING PS PE PL BC GPU PEP AVG. COST COi~lPOS ITE DEBT 48 51 51 50 53 54 51 8 8.7 4.44 PRL'FERRED 14 14 18 12 12 12 14 8 9.3 = 1.30 COl'li~lON 38 35 31 38 35 34 35 9 14.2 = 4. 97

10. 71 use 10.7 FINANCING COST

~

DEBT 8.5 9.5 . 7.8 9.0 9.0 8.5 8. 7 PREFERRED 9.0 9.5 8.5 10.0 9.5 9;0 9.3 COi~lYiOil 14.0 14.0 14.3 14.5 13.5 15-0 14-2

Page 4 of 4 NOTES: (Cont'd)

(4) Return. rate (see beloii for development) 9. 75% 9. 75%

Deductions: Interest (see below) ~

-3. 70 Levelized excess of DDB tax depreciation for 30 yr. life over SLN for 40 yr. life (4.15-2.50), -1.65 Basis for income taxes 4.40%

Income taxes Basis x 1.125 95% 4.95%

Other taxes 1. 00'/.

Total annual carrying charge rate 15.70%

PJ/1 COiNPANIES ENBEDDED COSTS OF CAPITAL 12/31/76 PJH PS PE PL BC GPU PEP AVG-DEBT, 6. 74 7. 74 7. 77 6. 78 7.60 6.96 7.26 PREFERRED 7.03 7.71 8.53 7.36 8.50 7.86 7. 83 AVERAGE CAPITALIZATION COifPOSITE AVERAGE RETURN RAT.".. DEBT 51% 8 7. 26 3. 70 PREFERRED 14 8 7.83 l. 10 COM tON 35 8 14.2, 4.97 9.77 use 9.75 (5) Annual charges-'n

$ /vw net plant $ 50-10 x 15.7% 7. 87 Depreciation on gross plant $ 63.50 x 2.5% 1.59 9.46 II (6) 2% of Gross Plant

8.02 of SCHEDULE (REPLACING SCHEDULE 8 TO

'l) Page 1 3 INTERCONNECTION AGREE!'IENT BET'WEEN THE NYPP GROUP AND HE PJM GROUP Issued: December 12, 1977 Effective:

CONS ERVATIOt1 ENERGY Section 1.10 of this Agreement provides that the NYPP Group and the PJH Group shall set forth in additional schedules the arrangements for specific services to be rendered in furtherance of the intent of this Agreement. This Schedul~ 8.02 becomes effective according to terms of the accepted filing and replaces Schedule 8.01, which by its terms expired on December 31, 1975.

Conservation Energy shall be considered to be electric energy that is scheduled between the Groups solely for the purpose of meeting an energv shortage which is caused by curtailments of energy sources which result from fuel unavail-ability, governmental actions or widespread disasters, any one of which i., beyond control of the Groups, making it necessary for the deficient Group to conserve energy resources over an extended period of time. The following are the terms and conditions governing the generation and supply of such Energy by one Group for the other, and also the transmission of Conservation Energy to and from systems inter-connected with the NYPP Group or the PJH Group. As used herein'he term "week" shall mean any seven consecutive days.

Section 1 - Services to be Rendered 1.1 Either Group may arrange with the other, for periods of one or more weeks, for the delivery of Conservation Energy. The Groups shall determine the number of megawatts per hour to be supplied, the period of'upply, the estimated cost and the source of supply if the supplying Group is in turn obtaining it from another system, or the ultimate destination if a Group is

Page 2 of 3 in turn arranging for the supply for another system.

1.2 During each weekly period for which Conservation Energy has been

/

arranged, the Group that has agreed to supply such Energy will,'pon call, deliver megawatt-hours to the receiving Group in amounts up to and including the number of megawatt-hours equal to the product of the period of supply in hours and the number of megawatts then arranged for, at a rate of delivery which is agreeable to both Groups. After arrangements for. Conservation Energy have been made the deliveries may be reduced only when conditions arise that could not have been reasonably foreseen at the time of the arrangement and cause the arrangement to be burdensome to the supplying, 'receiving or trans-mitting systems.

Section 2 - Compensation 2.1 The receiving Group shall pay the supplying Group for each kilowatt-hour of Conservation Energy supplied from the supplying Group's system an amount equal to 1107. of the out-of-pocket replacement costs of generating such Energy plus 3.75 mills per kilowatt-hour.

2.2 The receiving Group shall pay the supplying Group for each kilowatt-

,hour of Conservation Energy purchased by the supplying Group from another system for delivery to the receiving Group, the amount paid therefor by the 1

supplying Group plus 1. 75 mills per ki iowa t t-hour.

2.3 For 'purposes of this Schedule, out-of-pocket replacement cost of supplying Conservation Energy shall mean out-of-pocket cost of generating such Energy plus or minus an adjustment (tb be made by supplemental bill) to reflect increases or decreases in the cost of fuel on a Btu basis between the cost of fuel at the stations from which the'nergy was delivered during the month in which the Energy was deliverec and the cost of such fuel for the second month after such month of delivery; rovided however, that in circumstances

Page 3 of 3 in which the supplying Group anticipates that it will be unable, despite diligent efforts to ascertain the replacement cost of fuel until I a date subsequent to the second month after the month of delivery, and notification is provided in writing by the supplying Group to the receiving Group, such adjustment shall be made by supplemental bill whenever such replacement cost of fuel becomes available.

Section 3 - Billings an'd Pa ments Bills for the charges fox sexvices supplied in accordance with this Schedule during each month will be rendered by the tenth day of the following month and will be payable on the first banking day common to the parties hereto following the nineteenth day of the month in which they the fifteenth day following receipt of bill. Interest on unpaid amounts on any bill rendered under this Schedule shall accrue at ten percent ( H)%)

per annum from the date due until the date upon which payment is madi .

Section 4 - Termination This Schedule shall remain in effect until December 31, 1978 unless extended by mutual agreement of the HYPP Group and the PJN Group, except the terms of Section 2 and Section 3 shall continue in effect until all bills for Conservation Energy are rendered and payment made therefor.

Page 1 of 2 UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COi~fMISSION Docket No. E Da Electric Corporation te'entral Hudson Gas &

Consolidated Edison Company of New York, Incorporated, Long Island Lighting Company New York State Electric & Gas Corporation Niagara Mohawk Power Corporation Orange and Rockland Utilities, Incorporated Rochester Gas and Electric Corporation Referred to collectively as NYPP Group Public Service Electric and Gas Company Philadelphia Electric Company Pennsylvania Power & Light Company Baltimore Gas and Electric Company Jexsey Central Power & Light Company Metropolitan Edison Company Pennsylvania Electric Company Potomac Electric Power Company Referred to collectively as PJM Group Notice of Agreement Take notice that on the Office of the Pennsylvania-New Jersey-Maryland Interconnection filed on behalf of the above listed utilities a revised Schedule 8.02 to Interconnection Agreement between the NYPP Group and the PJM Group effective as of August 1, 1974.

The new Schedule provides that, for the purpose of conserving energy resources, either Group may arrange to obtain conservation'energy from the other. When supplied, 4

the charge for conservation energy generated on the supplying Group's system will be 4

110% of the out-of-pocket replacement cost of generating the energy, plus a gener-ation service charge of 3.75 mills per kilowatthour. The new Schedu'lso provides for a transmission service charge of 1.75 mills per kilowatthour for deliveries of fuel conservation energy from systems 'nterconnected with the NYPP Group ox the PJM Group. These rates were reached by negotiation of the parties and are consistent with the order of the Federal Power Comnlssion under Docket RM74-22.

Page 2 of 2 Because of the current uncertainty of fuel supplies associated with the

( coal e>iners'trike, and the possibility that transactions will be required imminently under the proposed Schedule, the Parties have requested that the Commission waive its notice requirements and that the proposed Schedule become 1

effective January 1, 1978. Its stated termination date is December 31, 1978.

Any person desiring to be heard or to protest said application should file a petition to intervene or protest with the Federal Energy Regulatory Commission, 825 North Capitol Street, N.E., Washington, DC 20426, in accordance with Sections 1.8 and 1.10 of the Commission's Rules of Practice and Procedure. All such petitions or protests should be filed on or before Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the t ~ proceeding.

vene.

Any person wishing Copies of to this application are for public inspect:on.

become a on party must file with file a petition to inter-the Commission and are available

PENNSYLVANIA-NEWJERSEY>> MARYLAND INTERCONNECTION

~ "'ublic Service Electric and Gas Company Philadelphia Electric Company Pennsylvania Power a Light Company Baltimore Gas and ElectriC Company Pennsylvania Electric Company Metropohtan Edison Company New Jersey Power A Light Company Jersey Cenlral Power

• Light Company Potomac Electric Power Company 055 JCPCERSON AVSNIJS i~ECF IV.- 0 VALLEYFORGE INDUSTRIAL PARK NORRISTOWN. PENNSYLVANIA 'lpaOI APRS 0 i975 tgISI eee.75eo tATO:";CCNIXFCTlC:l i ittl'LQ Li I T Apl April 29, 1975 MANAGEMENT COMMITTEE ALSO TO:

Messrs. C. H. Hoffman Mr. John R. Vogel, Executive Director W. C. Astley New York Power Pool H. L. Collins 3890 Carman Road J. W. Gore, Jr. Schenectady, Net" York 12303 R. H. Sims D. F. Hughes Gentlemen:

FPC ACCEPTANCE FOR FILING OF SCHEDULE 8.01-FUEL CONSERVATION ENERGY TO NYPP-PJM INTERCONNECTION AGREEMENT The Federal Power Commission notified the PJM Interconnection Office by letter dated April 24, 1975 of the acceptance for filing of Schedule 8.01 to the NYPP-PJM Interconnection Agreement which was filed with the FPC by my letter dated December 13, 1974. In accordance 'with our request, the FPC has allowed the Schedule to become effective December 1, 1974.

Attached is a copy of the FPC letter to which is attached the Rate Schedule designations assigned to these filings for each of the signatory companies. The attachment also includes a column indicating that the original Fuel Conservation Energy Agreement between NYPP and PJM, which was filed on March 26, 1974 and became effective January 1, 1974, is cancelled.

Very truly yours, g

Wilmer S. Kleinbach 4U~

Manager WSK: cab Attachment cc: Mr. R. C. Williams PJM Operating Committee PJM Operating Arrangements Committee

~ e

p hL ru I

~~

$1 Cae

+4iiS~~

825 North Capitol Street Nashingtone OoCo 20426 Pennsylvania-New Jersey-Maryland Interconnection iN REPLY REFER T04 Attention: Mr. Wilmer S. Kleinbach PWR-RC Docket No- E - 9180 Manager Q'r g 955 Jefferson Avenue iiF:q P (, I Valley Forge Industrial Park Norristown, Pennsylvania 19401 Re~ Your letter dated December 13, 1974, submitting for filing on your own behalf and. on behalf of New York Power Pool, Schedule 8.01 to the PJM-NYPP In erconnection Agreements Fuel Conservation Energy.

gentlemen!

The above rate filing submitted by your company has been accepted for filing and has been designated ai folio<<st As shown on the Attachment Notice of the filing <<as issued on February 5> 1975> with comments~ protestse or petitions to intervene due on or before February p0 s 1975 No coaacntse protestsq or interventions have been filed.

1 with reference to your request for waiver of the notice requireaentsc the Commission has found that good cause has been shown for such action pursuant to the requirements Section 205(d) of the Federal Power Act and Section 55, 11 of the Commission's Regulations thereunder and has provided that the rate schedule shall become effective DeCeiaber ls 1~%,

This acceptance for filing docs not constitute approval of any service, rate> charge~ classifica-tions or any rules regulation~ contracts Or practice affecting such rate or service provided for in the above-designated rate schedule(s); nor shall such acceptance be deemed as recognition of any claimed contractual right or obligation affecting or relating to such service or rate; and such acceptance is without prejudice to any findings or orders which have been or aay hereafter be made by the Commission lii any proceeding now pending or hereafter instituted by or against your company, This acceptance for filing terminates Docket No. E - 9180+

I By direction of the "Coaaission.

cct New York Power Pool Attention: Mr. Francis E. Drake, Jz.

Chairman Kenneth F, Plumb 39 East Avenue Secretary Rochester, New York 14o49

~" h'fSAC l MKZ (Do cket No. E-0180)

Supplement Entitlorl S>chcdulo 8.01 Fuol Conservation Energy NYPP-PJbl Intorconnoc l;ion hgroomont Dated: December 13, 1~$ 74 Filod  : December 16, 1<$74 I'.ffcctivo: December 1, l<)74 Supplement No. 8 to Supersede FPC No. FPC No.

Central Hudson Gas & Electric Corporation 49 46 Consolidated Edison Company of Nov York, Incorporated 33 30 Long Island Lighting Company .20 17 Nov York State Electric 8 Gas Corporation 6'6 58 Niagara Ifohawk Pover Corporation 80 Orange and Rockland Utilities, Incorporated 31 28 Rochester Gas and. Electric Corporation 17 14 Referred to collectively as NYPP Group

" Public Service Electric and Gas Company 51 $0 Philadelphia Electric

~

Company 42 40:

Pennsylvania Po-.rer 8 Light Company 66 64 Baltimore Gas and Electric Company 28 27 Potomac Electric Power Company

'0

~

31 Pennsylvania Electric Company 72 71 Ifetropolitan Edison Corrrpany 44 Jersey Central Power 8; Light Company 42 33

,': Referred to coll.ectively as PJl4 Group ~ ~

PENNSYLVANtA- NEW JERSEY" MARYLAND l NTERCONNECTlON t (,)

Public Service Electric and Gas Company Philadelphia oectric Company Pennsylvania Power 6, Light Company Oattimore Gas and Electric Company Pennsylvania Electric Company Metropolitan Edison Company 955 JCFFSASON AVSNUC VALLSY FOAGC INDVSTAIALPARK New Jersey Power 6 Light Company Jersey Central Power S Light Company Potomac Electric Power Company NOAAISTOWN. PCNNSYt.VANIA t940t t215) 666 7560 December 13, 1974 I

Federal Po~er Commission 825 North Capitol Streets N.E.

Washington, D. C. 20426 Attention: Mr. Kenneth F. Plumb, Secretary Gentlemen:

Enclosed herewith for filing on behalf of the following listed companies are thirty (30) copies of proposed Schedule 8.01 to the NYPP-PJM Interconnection Agreement dated April 9, 1974 which was tendered for filing on June 27, 1974 and assigned Docket No. E-8876.

Central Hudson Gas & Electric Corporation Consolidated Edison Company of New York, Incorporated Long Island Lighting, Company

~ ( New York State Electric & Gas Corporation Niagara Mohawk Power Corporation Orange and Rockland Utilities, Incorporated Rochester Gas and Electric Corporation Referred to collectively as NYPP Group Public Service Electric and Gas Company Philadelphia Electric Company Pennsylvania Power & Light Company Baltimore Gas and Electric Company Potomac Electric Power Company Pennsylvania Electric Company Metropolitan Edison Company Jersey Central Power & Light Company Referred to collectively as PJM Group By Order of the Commission under Docket RM 74-22 (Page 30), the utilities in the Middle Atlantic region were requested to continue to develop appropriate rate schedule supplements for the generation of electric energy as they may be capable of generating to help coal burning utilities should the latter, experience fuel supply emergencies. Pursuant to that request, proposed Schedule 8.01 has been prepared by the parties to expand the provisions for Fuel Conservation Energy transactions contained in the NYPP-PJM Agreement dated March 26, 1974 (Docket No- E-8702) which is on file with the Commission (for example, Central Hudson Gas & Electric Corporation FPC Rate Schedule No. 46).

2>>

Proposed Schedule 8.01 provides for the same arrangements and rates for delivery of Fuel Conservation Energy as contained in the present NYPP-PJH Agreement dated March 26, 1974 and also includes provision for the generation of Fuel Conservation Energy by either Group for the other. Because of the effect of the recent miners'trike on" the coal supply situation, it is xespectfully submitted that good cause exists for waiver of notice requirements and the Commission is hereby requested, pursuant to Section 35.11 of'its Regulations, to waive notice requirements and order the proposed Schedule to be effective as of December 1, 1974. It is further proposed that Schedule 8.01 remain in effect until December 31, 1975, unless extended by mutual agreement of the parties'n view of the fact that the NYPP-PJM Interconnection Agreement dated April 9, 1974 and proposed Schedule 8.01 contain all of the provisions set forth in the NYPP-PJM Agreement dated March 26, 1974, it is requested that the latter Agreement be cancelled as of the time the proposed Schedule 8.01 becomes effective.

All of the signatories to the Agreement have approved this filing and have received copies thereof. This filing is being made on behalf of such signatories by the undersigned in accordance with the authorization contained in Section 5.08 of the NYPP-PJM Interconnection Agreement dated April 9, 1974.

In response to Section 35.12 (a) of the Commission's Regulations, it is pointed out with respect to the fixed rate of 3.0 mills per kilowatthour specified in Section 2.1 for generating Fuel Conservation Energy, that only the NYPP Group is expected to generate such energy under this Agreement, at least for the immediate present. In support of such rate, the NYPP Group stipulates that an incentive must be added to the incremental costs of supplying Fuel Conservation Energy to insure that there is a clear economic reason to encourage the generation of such energy.

The figure of 3.0 mills per kilowatthour was arrived at through negotiations and t;he NYPP Group considers it (

to be an appropriate amount to provide an incentive to encourage the generation of Fuel Conservation Energy. The fixed rate of 1.75 mills per kilowatthour specified in Section 2.2 for delivery of Fuel Conservation Energy from other systems is the same rate as contained in the present NYPP-PJH Agreement dated March 26, 1974-In response to Section 35.12 (b) of the Commission's Regulations, it is pointed out that because of the uncertainty of the availability of fuels, both coal and oil, operating restrictions, and the capability of the supplying party, estimates of the transactions and revenues under the proposed Schedule are impossible to predict.

No new facilities will be installed or modified in order to supply the service..

In response to Section 35.8 (a) of the Commission's Regulations, there are enclosed three copies of a form of Notice of Agreement suitable for pu<lication Sn the Federal Register.

A check in the amount of $ 500 is enclosed pursuant to Section 36.2 (f) of he Commission's Regulations to cover the filing fee.

Copies of this letter and its enclosures will be furnished promptly to the Regulatory Commissions of New York, Pennsylvania, New Jersey, Maryland, Delaware, Virginia, and the District of Columbia for their information.

truly yours,

~ 4'PW:cab Very l

Wilmer S. Kleinbach Enclosure Manager cc: T. A. Phillips D. D. Journey

UNITED STATES OF AMERICA FEDERAL POWER COMMISSION NYPP-PJM Eockek No. E-Interconnection Agreement ) Date NOTICE OF INTERCONNECTION AGREEMENT Take notice that on December , 1974 the New York Power Pool (NYPP Group) and the Pennsylvania-New Jersey-Maryland Group (PJM Group) tendered for filing proposed Schedule 8.01 dated December 13, 1974, to the Interconnection Agreement between them dated April 9, 1974, which was tendered for filing with the Commission on June 27, 1974 and assigned Docket No.'-8876. The members of the NYPP Group are:

Central Hudson Gas & Electric Corporation Consolidated Edison Company of New York, Inc.

Long Island Lighting Company New York State Electric & Gas Corporation t( The members of the Niagara Mohawk Power Corporation Orange and Rockland Utilities, Inc.

Rochester Gas and PJM Group are:

Electric Corpora tion Public Service Electric and Gas Company

~

Philadelphia Electric Company Pennsylvania Power & Light Company Baltimore Gas and Electric Company Potomac Electric Power Company Pennsylvania Electric Company Metropolitan Edison Company e

Jersey Central Power & Light Company The proposed Schedule expands existing provisions for Fuel Conservation Energy transactions by making provision and specifying rates for the generation of Fuel Conservation Energy by either Group for the other, while continuing the provisions contained in the present NYPP-PJM Agreement dated March 26, 1974 which became effective January 1, 1974 by order of the Commission under Docket No. RM 74-22.

That Agreement will be cancelled when the proposed Schedule becomes effective.

Because of the current uncertainty of fuel supplies and the possibility that transactions will be required imminently under the proposed Schedule, the parties have requested that the Commission waive its notice requ rements and that the proposed Schedule become effective December 1, 1974. The proposed Schedule shall remain in effect until December 31, 1975 unless extended by t"..e parties. No new facilities will be installed nor will existing facilities be modified in connection with the proposed Schedule.

Any person desiring to be heard or to make any protest with reference to the subject matter of this Notice should, on or before file with the Federal Power Commission, 825 North Capitol Street, N.E., Washington, D.C. 20426, petitions to intervene or protest in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CF.=. 1.8 or 1.10). All protests filed with the Commission will be considered by it 'n determining the appropriate action to be taken but will not serve to make the protestants parties to the proceeding. Persons wishing to participate as a party in any hearing'therein must file petitions to intervene in accordance with the Commission's Rules. The I

documents referred to herein are on file with the Co..mission and available'or public inspection.

Secretary

SCHEDULE 8.01 TO INTERCONNECTION AGREEMENT BETWEEN THE NYPP GROUP AND THE PJM GROUP Issued December 13, 1974 Effective December 1, 1974 FUEL CONSERVATION ENERGY Section 1.10 of this Agreement provides that the NYPP Group and the PJM Group shall set forth in additional schedules the arrangements for specific services to be rendered in furtherance of the intent of this Agi.cement. This Schedule 8.01 has been agreed to by the parties in accordance therewith.

Fuel Conservation Energy shall be considered to be electric energy that is scheduled between the Groups, for periods of one or more weeks during off-peak hours's defined in this Schedule, solely for the purpose of conserving fuel inventories. The following are the terms and conditions governing the generation

~( and supply of such Energy by one Group for the other, and also the tran mission of Fuel Conservation Energy to and from systems interconnected with the NYPP Group or the PJM Group. As used herein the term "week" shall mean any seven consecutive days ~

Section 1 - Services to be Rendered 1.1 Either Group may arrange with the other, for periods of one or more weeks, for the delivery of Fuel Conservation Energy whenever, in its sole judgment, the Group requested to supply the same has the capability and the fuel resources to make it available.

1.11 Prior to such arrangement for Fuel Conservation Energy,'he number of megawatts to be supplied, the period of supply, the estimated cost, and the sources of supply if the supplying Group is in turn obtaining it from another system, or the ultimate destination if a Group is in turn

2>> Schedule 8.01 arranging for the supply for another system, shall be determined by the Groups. Such determination shall be confirmed in writing, if requested

, by either Group.

1 ~ 12 If such Energy is supplied from the supplying Group's system, it may be reduced only when during such period conditions arise that could not have been reasonably foreseen at the time of the arrangement and cause the arrangement to be burdensome to the supplying Group's system. If the Energy is transmitted by the supplying Group from another system, it may be reduced only (1) when and to"the extent reduced by such other system or (2) when during such period conditions arise that could not have been reasonably foreseen at the time of the arrangement and cause the transmission of the Energy to be burdensome to the supplying Group's system or (3) when a transmission or other limitation in the system of the receiving Group or another'system (other than the receiving Group) interconnected directly or indirectly with the system of the receiving or supplying Group makes it impracticable, as a technical matter, to receive or deliver such'nergy. The supply or transmission of the Energy shall be considered burdensome if continuation would jeopardize service to firm customers on the supplying Group's system.

1.13 For. the purpose of this Schedule, off-peak hours shall be defined to be between the hours of 11:00 p.m. and 7:00 a.m. Eastern Standard Time or Eastern Daylight Saving Time (whichever Time is in legal force on the system of the supplying Group) on any day other than Sunday, and certain legal holidays, and during any hour on Sunday and such legal holidays.

1 ~ 14 During each weekly period that Fuel Conservation Energy has been arranged for, the Group that has agreed 'to supply such Energy shall upon call deliver megawatthours to the rechiving Group in amounts up to and

0 3<< Schedule 8.01 including the number of megawatt-hours equal to the product of seventy-two (72) hours and the number of megawatts then arranged for ("receiving Group's

. Entitlement" ).

1 15 During the period of the arrangement, the supplying Group and the receiving Group may arrange, as dictated by operating conditions, available generating capability and fuel resources, to deliver and to take, respectively, (1) amounts of Fuel Conservation Energy at a rate of delivery exceeding the number of megawatts then arranged for during the hours specified in Subsection 1.13 or, (2} the receiving Group's Entitlement or some portion thereof, in part during the hours specified in Subsection 1.13, and in part during other hours.

Section 2 - Com ensation 2.1 The receiving Group shall pay the supplying Group for each kilowatt-hour of Fuel Conservation Energy supplied from the supplying Group', ystem an amount equal to 110% of the out-of-pocket replacement cost of generating such Energy plus 3.0 mills'per kilowatthour.

2.2 The receiving Group shall pay the supplying Group for each kilowatt-hour of Fuel Conservation Energy purchased by the supplying Group from another system and supplied during the period of the arrangement the amount paid therefor by the supplying Group, including interest, if any, plus 1.75 mills per kilowatthour which includes compensation for supplying transmission losses.

2.3 For purposes of this Schedule, out-of-pocket replacement cost of supplying Fuel Conservation Energy shall mpan out-of-poaket cost of generating such Energy plus or minus an adjustment (to be made by supplemental bill) to reflect increases or decreases in the cost of fuel on a Btu basis between the cost of fuel at the stations from which the Energy was delivered during the

Schedule 8.01 month in which the Energy was delivered and the cost of such fuel for the second month after such month of delivery; rovided however, that in

. circumstances in which the supplying Group anticipates that it will be unable, despite diligent efforts, to ascertain the replacement cost of fuel until a date subsequent to th'e second month after the month of delivery, and notification is provided in writing by the supplying Group to the receiving Group, such adjustment shall be made by supplemental bill whenever such replacement cost of fuel becomes available.

Section 3 - Billings and Pa ents Bills for the charges for services supplied in accordance with this Schedule during each month will be rendered by the tenth day of the following month and will be payable on the first banking day common to the parties hereto following the nineteenth day of the month in which on the fifteenth day following receipt of bill. Interest on unpaid amounts on any bill rendered under this Schedule shall accrue at ten percent (10%) per annum from the date due until the date upon which payment is made.

Section 4 - Termination This Schedule shall terminate December 31, 1975 unless extended by I

mutual agreement of the parties~

PENNSYLVANIA-MES JERSEY-MARYLAND INTERCC1IMNECTIOiX

( Public Service Electric and Gas Company Philadelphia Eleclric Company Pennsylvania Power C Light Company Baltimore Gas and Electric Company Pennsylvania Electric Company Metropohlan Edison Company New Jersey Power g Light Company Jersey Central Power 8, Light Company Potomac Electric Power Company 955 JCFFERSON AVCNUE VALLEYFORGC INOUSTRIAI PARK NORRISTOWN. PENNSYLVANIA 19401 t215) 666 7560 June 26, 1974 Federal Power Commission 825 North Capitol Street, N.E.

Washington, D. C. 20426 Attention: Mr. Kenneth F. Plumb, Secretary Gentlemen:

There are filed herewith, on behalf of the following listed companies, thirty (30) conformed copies of a new Interconnection Agreement dated April 9, 1974 between those listed as the NYPP Group and those listed as the PJMl Group:

~ ( Central Hudson Gas & Electric Corporation Consolidated Edison Company of New York, Incorporated Long Island Lighting Company New York St'.ate Electric & Gas Corporation Niagara Mohawk Power Corporation Orange and Rockland Utilities, Incorporated Rochester Gas and Electric Corporation Referred to collectively as NYPP Group Public Service Electric and Gas Company Philadelphia Electric Company Pennsylvania Power & Light Company Baltimore Gas and Elec'tric Company Potomac Electric Power Company Pennsylvania Electric Company Metropolitan Edison Company Jersey Central Power & Light Compdny Referred to collectively as PJM Group The Agreement will be known as the NYPP-PJM Interconnection Agreement and it is requested that it become effective on August 1, 1974.

The documents accompanying this letter include:

1. The above mentioned copies of the NYPP-PJM Interconnection Agreement.

June 26, 1974

2. A statement of the basis for the fixed rates for capacity and transmission services used in the Agreement and computations in support of these rates.

3. A check covering the required filing fee.

4. Three copies of a form of Notice of Agreement suitable for publi-cation in the Federal Register, in accordance with the requirements of Section 35.8(a) of the Commission's Regulations.

The NYPP-PJM Interconnection Agreement has been distributed to and has been signed by all parties, indicating the requisite agreement among them. When the Agreement was prepared for signature, an effective date of June 1, 1974 was envisaged, and was so stated on the several schedules. That stated date will be superseded by the effective date assigned when the Agreement is accepted for filing by the Commission. As heretofore mentioned, it is requested that the Agreement become effective on August 1, 1974.

The creation of the NYPP and the construction of new high capacity ties between PJM and southeastern New York made comprehensive pooling arrangements between the PJM Group and the NYPP Group desirable. Interchange transactions between the Groups are currently carried out under an existing agreement now on file with the Commission.

It was made originally in 1951 and has been supplemented or revised on numerous t

occasions. However, of the NYPP Group, only Niagara Mohawk Power Corporation and New York State Electric 6 Gas Corporation are signatories. Thus, it does not provide an appropriate basis on which to build an expanded interconnection agreement suitable to present-day conditions. Accordingly, it is intended that such agreement be cancelled as of the time the NYPP-PJM Interconnection Agreement becomes effective, and an appropriate filing is being made with the Commission to this effect.

'I The NYPP-PJM Intercohnection Agreement provides for the continued parallel operation of the electric systems of the two Groups, for cooperation with regard to matters affecting the development of such systems and the reliable operation of such systems, and for capacity and energy interchange transactions between the two Groups. Except for the addition of new parties, there is no change from existing day-to-day operations or in basic economy and emergency interchange transactions. No new facilities will be installed or modified in connection with instituting this Agreement.

New services are specified for new conditions, including Supplemental Operating Capacity and Energy, Non-Replacement Energy, and transmission related to various capacity transactions. Otherwise, the scope of the Agreement generally parallels that of the PJM Group's agreements with .the Allegheny Power System companies, Virginia Electric and Power Company, and The Cleveland Electric Illuminating Company; all of which are on file as rate schedules with the Commission.

Because the services provided and accounted for in the NYPP-PJM Interconnection Agreement are limited to various classes of interchange and related transmission charges, it is impossible to predict the transactions which will take place there-under. The rates for interchange on an economy, emergency, or non-replacement basis will be determined by the same methods used in other interchange agreements of the parties. The PJM Group has no other rates for supplemental services. Neither the NYPP Group nor the PJM Group presently have rates for transmission comparable to those specified in Schedule 6.01. As indicated above, support for the fixed rates for capacity and transmission services is provided in the statement attached.

June 26, 1970 In accordance with Section 36.2(f) of the Commission's Regulations, this

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filing is accompanied by a check for $ '500.

This filing is made by the Manager of the Office of the PJM Interconnection, on behalf of all the parties, under the authorization contain'ed in Section 5.08 of the NYPP-PJM Interconnection Agreement.

Conformed copies of the NYFF-PJM Interconnection Agreement together with copies of this letter and its enclosures will be furnished promptly to the Regulatory Commissions of New York, Pennsylvania, New Jersey, Maryland, Delaware, Virginia and the District of Columbia for their information.

Very truly yours, Wilmer S. Kleinbach Manager Enclosure

NYPP-P JM INTERCONNECTION AGREEMENT STATEMENT OF THE jjASIS OF TjjE RATES FOR CAPACITY AND TRANSMISSION SERVICES AND SUPPORTING COi REPUTATIONS The fixed rates for capacity and transmission services specified in the NYPP-PJM Intercqnnection Agreement can be supported, on a cost basis. These rates are:

1. The additional capacity charge of $ 35 per megawatt per day, specified in Schedule 3.01, Section 2.2 and associated with the supply of Supplemental Operating Capacity; and

2. The charge for transmission service, related to the delivery or transrqission of certain capacity services, of $ 20 per megawatt per dey, specified in Schedule 6.01, Section 2.1.

~( CAPACITY CjjARGE IN ScjjEDULE 3.01 The $ 35 peg HW-day i's a SECTION 2.2 negotiated rate, intended to compensate the suppliers of the capacity service for some part of their fixed costs for investment in generating and transmission facilities. Out-of-pocket or variable costs are otherwise provided for in the charges for operating capacity.

The considerations entering into the determination of the rate were:

(1) its comparability to a rate used in NYPP for supplemental capacity supplied and utilized within that Group, and (2) recognition that it sjtould be less than (approximately half of) the full capacity cost, such as might be determined for Short-Term Power or comparable firm services. This second consideration is based on the premise that the supply of such capacity service often results in a sharing of reserves and the dependence of o'e Group on the other for reserve capacity, and, consequently, the rate for such service should recognize a sharing of the benefits.

TRANSMISSION CHARGE IN SCHEDULE 6.01 SECTION 2.1 The charge for transmission of capacity is also a negotiated rate that is less than the full cost, based on average transmission investment per unit of system peak load.

SUPPORTING COMPUTATIONS - PJM BASIS PJM costs necessarily represent a composite of various company costs, based on different capitalizations, different service lives, different methods of tax accounting, and different state and local tax obligations. On a representative basis, however, the PJM costs are above the amounts necessary. to support the proposed rates'. Consequently, the compromises involved in the determination of estimated costs on a PJM basis are not of critical importance. For fQrther explanation of computations, see notes whi.ch follow on next page.

Since Supplemental Operating Capaci.ty will most often be supplied by combustion turbines, costs have been determined on the basis of such supply.

Ratio Combustion Turbines S stem Transmission (12-31-73) Current Cost) (Imbedded Cost)

Bonds 51% 6'8.5 = 4.34% 6 6.25 = 3.19%

Preferred 14% 6 8.5 = 1.19% 9 7.25 = 1.01%

Common equity 35% 612.0 ~ 4.20% 612.0 = 4.20%

Return 9.73% 8.40%

Income Tax Com utation Return 9. 73% 8.40%

Deductions - interest -4.34 -3.19 Levelized excess of DDB tax depr. for 30 yr. life over SLM for 40 yr. life - (1) -1. 48 t Basis for taxes Income tax = 1.125 x Basis

'"nvestment Gross plant Accrued depreciation (3 Accrued deferred taxes yrs. for CT's)

5. 39 6.06%

$ /KW

$ 110.00

-14.75

-5.75

3. 73

4. 20%

$ /KW

$ 51.00

-8. 00(per

- (1) books.

Net plant $ 89 50 $ 43.00 Annual Char es ~/Kd// YR ~/Ku/YR On net plant- Return + Income tax

+ 1% Other taxes (16.79%) $ 15.03 (13.60%) $ 5.85 On gross plant - Depreciation ( 4 ~ 44%) 4.88 ( 2.50%) 1.28

.Oper at ion and Ma in te nance 0.50 ( 2.00%) 1.02 Total $ 20.41 8.15 Credit for operating capacity and energy benefits retained by owning company ~1. 20 - (1)

(rounded) (rounded)

Net annual cost $ 19.00 8.00 Rate for Su lemental 0 eratin Ca acit Net annual cost - capacity $ 19

- transmission 8

$ 27/KW/YR x 1000 = $ 74/MW/day x 50% = $ 37/MW/day t ate for Transmission Net annual cost Serv c transmission $ 8/KW/YR 365 days x 1000 Proposed Charge = $ 35/MW/day

= $ 22/MW/day 365 days Proposed Charge = $ 20/MW/day (1) Not Applicable

- P>l

( SUPPORTING COMPUTATIONS BASIS (CONT'D)

Nssss

1. Capacity costs are based on the current average PJM companies'nvestment

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cost for combustion turbine installations, which amounts to $ 110/Kif.

Because the current average age of CT's in PJM is only about 3 years, i.t is appropriate to consider carrying charges based on current rates for debt and preferred stock. The nature of the transactions involved are such that it is appropriate to consider income taxes as being normalized.

Book life for CT's (20 and 25 years in several companies) is considered to be 22.5 years, this being the same as the ADR life used for tax purposes.

s

2. Transmission costs are based on 1973 FPC Form 1 total transmission plant investments for PJM companies ($ 2, 140 million), adjusted to exclude the estimated investment ($ 563 million) in facilities used for, or related to step-down transformation to voltages below 110 KVP divided by the 1973 PJM peak load of 30,993 !Q, which amounts to $ 51/KW. Such trans-mission has a greater current average age than the CT's. Return on that transmission investment is, therefore, based on representative imbedded costs; and the income tax computation provides fo'r a deduction representing the levelized difference between tax and book depreciation.

3. Computed income taxes are those applicable in Pennsylvania, where t he composite rate is 53%, which is equal to the state rate of 9.5% plus 48% (100-9.5). Other taxes are assumed to be a nominal 1% of depreci.ated plant, which is less than the rate applicable in some parts of PJMP other than Pennsylvania.

4 Fixed 0 & M expenses are estimated at $ 0.50/104/YR for CT's and 2% of gross plant for transmission. A credit against expense is indicated for the CT's, this representing certain benefits retained by the owning company, and hence a reduction in the net cost of the capacity made available to others.

4 The NYPP costs are derived from the composite investment costs to which are applied a levelized annual fixed charge rate. As with the PJH companies, the NYPP member companies utilize different capitalizations, different service lives, different methods of tax accounting and different local tax obligations. The NYPP systems have also used costs determined on the basis of using combustion turbines as a source of supplemental operating capacity.

1. Cost Of Ca ital Gas Turbine System Transmission Cap. (Current Cost) (Imbedded Cost)

Ratio Nom. Eff. Nom. Ef f.

a. Debt 52% at 8.5% 4.42% at 6.5% = 3.38%

b. Preferred 14% at 8.5% 1.19% at 6.5% = 0.91%

c. Common 34/ at 12.0% 4.08% at 12.0% = 4.08%

Return 9.69% 8.37%

Rounded to 9. 7% 8. 4%

2. Levelized Annual Fixed Charge Rate (Percent of Book Cost)

a. Book Return 6.65% 5. 67'/.

b. Book Depreciation '4.00% 2. 50%

c. Deferred Income Tax 0. 14% 0. 58%

d. Capital Recovery 10.79% 8. 75%

e. Federal Income Tax l. 75% 1.35%

f. Insurance 0. 10/. 0.10%

g. Property Tax 6. 10% 6.10%

,h. NYS Gross Income Tax (3%) 0.58% 0.51%

i. NYS Gross Revenue Tax (0.75%) 0.15% 0.12%

j. Total Fixed Charge 19.47% 16.93%

H Rounded to 19. 5% 17. 0%

SUPPORTING COMPUTATI XS - NYPP BASIS (CONT'D)

DERIVATION OF GAS TURBINE & Tk vSMISSION SYSTEM CARRYING CHARGES ORIGINAL INVESTMENT (BOOK COST) Gen. Net CARRYING CHARGES Equiv. Capability Equiv. Levelized Annual Daily Total and Plant Annual Carrying Carrying Plant Transmission Investment Fixed Charges Charges Investment at Peak Per Charge Per Per Costs Load KW Rate KW MW (1) (3)

($ 1000) MW $ /KW $ 1KW/YR $ 1MW/Day b c d e f (a/b) (c x d) (1000e/365)

GAS TURBINE PLANT CH 3,431 42. 5 80. 73 CE 262)557 2,583.1 101.64 LILCO 66,343 699.1 94.90 NYSEG 0 0 0 NMPC 22,494 321. 2 70.03 ORU 8)059 83. 7 96.28 RGE - 3 446 38.0 90.68 NYPP COMPOSITE 366,330 3,767.9 97.22 19.5% 18.96 51.94 TRANSMISSION SYSTEM (2)

CH 54,633 633 86.31 CE 673,519 8,220 81.94 Transmission LILCO 142)372 2)929 48.61 (Wheeling)

NYSEG 213,940 1)751 122.18 Capacity NMPC 483,085 4,896 98.67 Charge ORU 50,872 640 79.49 Negotiated RGE 71 431 922 77. 47 at NYPP COMPOSITE 1,689,852 19,991 84.53 17.0% 14.37 39.37 = 620/>M0 Gas Turbine & Transmission Carr in Char e 91.31 at 50% 45.66 Gas Turbine & Transmission Ca acit Char e Ne~otiated at = $ 35/MtiD (1) Data from FPC Form 1 (1973); adjusted by estimated step-up transformer costs.

(2) Includes Capital Equivalent of Transmission Rents paid to PASNY; also reflects adjustment for Generation Step-up Traiisf~~mers reported in Transmission Plant.

(S) Cen4 r lp, C. p:Ibility nt'nm< pl:It R:It)ii);S . TI 1namlSS10n <'d Oil )V)'t Aillili.ll p<:ik Lnad.

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UNITED STATES OF AMERICA FEDERAL PCMER COMMISSION Central Hudson Gas & Electric Corporation Docket No. E Consolidated Edison Company of New York, Inc.

Long Island Lighting Company Date New York State Electric & Gas .Corporation Niagara Mohawk Power Corporation Orange and Rockland Utilities, Inc.

Rochester Gas and Electric Corporation Referred to collectively as NYPP Group Public Service Electric and Gas Company Philadelphia Electric Company Pennsylvania Power & Light Company Baltimore Gas and Electric Company Potomac Electric Power Company Pennsylvania Electric Company Metropoli.tan Edison Company Jersey Central Power & Light Company Referred to collectively as PJM Group NOTICE OF FILING OF NYPP-PJM INTERCONNECTION AGREEMENT Take notice that on 1974, the Manager of the Office of the Pennsylvania-New Jersey-Maryland Interconnection filed on behalf of the above listed utilities a new Interconnection Agreement dated April 9, 1974 between those listed as the NYPP Group and those listed as the PJM Group. This agreement will be known as the NYPP-PJM Interconnection Agreement and will replace an existing agreement r

between the above listed utilities referred to collectively as PJM Group and Niagara Mohawk Power Corporation and New York State Electric & Gas Corporation.

The filing proposes that the new agreement and the cancellation of the existing agreement become. effective August 1, 1974.

The new NYPP-PJM Interconnection Agreement provides for the continued parallel operation of the electric systems of the two Groups, for cooperation with regard to matters affecting the development of such systems of the parties and the reliable

operation of such systems, and for capacity and energy interchange transactions as covered by the terms of the Agreement.

Any person desiring to be heard or to make any protest with reference to said NYPP-PJM Interconnection Agreement should, on or before file with the Federal Power Commission, 825 North Capitol Street, N.E., Washington, D. C. 20426, petitions to int'ervene or protest in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 1.8 or 1.10). All protests filed with the Commission will be considered by it in determining the appropriate action to be taken but will not serve to make the protestants parties to the proceeding. Persons wishing to participate as a party in any hearing therein must file petitions to intervene in accordance with the Commission's Rules. The NYPP-PZ1 Intergonnection Agreement is on file with the Commission and available for public inspection.

Secretary

XNTERCONNECTXON AGREEIIENT BFTHEEN CENTRAL IIUDSON GAS & ELECTRIC CORPORATXON .

CONSOLIDATED EDISON COMPANY OF NPI YORK, INC LONG ISLAND LIGIITlNG COMPANY NEIN YORK STATE ELECTRIC & GAS CORPORATION NIAGARA MOIIhhK PO'lER CORPORATION ORANGE AND ROCKLhiID UZILITIESi INC ROCHESTER GAS AND ELECTRIC CORPORATION Referred to collectively as NYPP GROUP and PUBLIC SERVXCE ELECTRIC AND GAS COMPANY PIIXLADELPIIIA ELECTP.IC COMPANY PENNSYLVANIA POHER & LIGIIT COMPANY BALTlMORE GAS AND ELECTRIC COlIPANY POTOMAC ELECTRIC PO:iER COi~IPANY PENNSYI.VANIA ELECTP.XC COlIPANY IIETROPOLITAN EDISON COIIPANY JERSEY CENTRAL POKIER & LIGHT COMPANY Referred to collectively as PJM GROUP This Agr'cement provides for the continued parallel operation of the electric systems of the two Groups, for cooperation with regard to matters affecting the development of such systems of the parties, for the reliable operation of such systems and for capacity and energy interchange transactions as covcrcd by tlute terms of the Agreement.

In accordance with the Agreement, this filing is submitted to thc Federal Power Commission by the Ilanager of the Office of the Pennsylvania-Ncw Jersey-Maryland Interconnection, on behalf of all parties.

INTERCONNFCTION AGREE)IENT BETWEEN NYPP GROUP AND PJM GROUP T)IIS AGREEMENT, made and entered into this ninth day of April> 1974, by and among CENTRAL HUDSON GAS & ELECTRIC CORPORATION, CONSOLIDATED EDISON COMPANY OF NEW YORK ~ INC ~ ~

LONG ISLAND LIGHTING COi')PANY ~ NEW YORK STATE ELECTRIC & GAS CORPORATXON, NIAGARA MO))AWK POWER CORPORATXON) ORANGE AND ROCKLlDD UTILITIES, INC. )

and ROC))ESTER GAS AND ELECTRIC CORPORATION, all corporations organized under the laws of the State of New York,'parties of the first part, hereinafter referred to collectively as the "NYPP GROUP", and the following parties of the second part, hereinafter referred to collectively as "PJM GROUP": PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a New Jer'sey corporation, PHILADELPHIA ELECTRIC CO.IPANY, a Pennsylvania corporation, PENNSYLVANIA POWER & LIGHT COMPANY, a Pennsylvania corporation, BALTIMORF. GAS AND ELECTRIC COMPANY, a Maryland corporation, POTO~)AC ELECTRIC POWER COMPANY, a District of Columbia and Virginia corporation, PENNSYI,VANIA ELECTRIC COMPANY, a Pennsylvania corporation, METROPOLITAN EDISON CO.)PANY, a Pennsylvania corporation, and JERSEY CENTRAL POWER & LIG))T COMPANY, a New Jersey corporation, the latter three companies constituting an integrated system known as the GPU System.

WITNESSET)1 THAT:

WIIEREAS, the electric systems of the NYPP GROUP are interconnected with one another and with the systems of others not parties hereto, and are developed and operated on a coordinated basis; and WHEREAS, the electric systems of the PJM GROUP are interconnected with one another and with the systems of others not parties hereto, and are developed and operated on a coordinated basis; and

WIIEREAS, the NYPP GROUP and the PJH GROUP are interconnected by transmission facilities; and WIIEREAS, each GROUP has or may have agreements with others that are similar in nature or intent to this Agreement, and WHEREAS, the parties hereto desire to set forth their respective rights and obligations with respect to the coordinated development and operation of their electric supply systems and the interchange of electric capacity and energy between the NYPP GROUP and the PJII GROUP, in order to obtain improvement in reliability of service to the public and geductions in costs.

NOW, TIIEREFORE, the parties hereby mutually agree as follows-ARTICI.E 1 SERVICES TO BE RFNDERED 1.01 In order to realize the full ben<<fits of interconnection, the NYPP GROUP and the PJH GROUP shall cooperate in the exchange of information with regard to pertinent matters affecting the planned development an'd reliable operation of their respective systems, shall cooperate in the determination of the benefits of interconnection and of their installed capacity requirements, and, to the extent feasible, shall coordinate generating capacity and major transmission additions required by the parties to this Agreeme'nt.

1.02 The,NYPP GROUP and the PJH GROUP shall each use its best efforts to install or otherwise arrange for sufficient installed capacity to meet its, forecast installed capacity requirement in accordance with Schedule 1.01.

1-03 The NYPP GROUP and the PJII GROUP shall each use its best efforts to provide or otherwise arrange for sufficient Operating Reserve Capacity to meet its Operating Reserve Capacity Requirement in accordance with Schedule 2.01 including the provision within each Group for automatic generation control to provide adequate regulation of its system.

1.04 Either the NYPP GROUP or the PJM GROUP, in the event of breakdown of equipment, unusual load demands, or unusual or abnormal conditions in the other Group's system resulting in the need for capacity or energy in excess of that available from sources within or available to that Group, shall, if called upon, supply Emergency Operating Capacity, Emergency Energy or Non-Replacement Energy to the other Group. The period of supply of Emergency Operating Capacity and Emergency Energy shall be limited to the time taken for buyer to expeditiously start additional generation on its own system, to schedule firm capability and energy to which it may be entitled by contract or to purchase Supplemental Operating Capacity and Supplemental Energy as defined in Schedules 3.01 and 4.01. The undertaking contained in this section is limited to the capacity and energy which, in the sole judgment of the supplying party or parties, may be furnished consistent with other obligations and without unduly impairing or jeopardizing service in a system of any party hereto or in the system of others interconnected with it. Accounting for such supply shall be in accordance with Schedules 3.01, 4.01, and 5.01.

1.05 Subject to any arrangements which.now or may hereafter exist between a party or parties to this Agreement and otheis with which they are or.

may become interconnected, the NYPP GROUP and the PJH GROUP shall interchange operating capacity and energy with each other on an economy basis in accordance with Schedules 3.01, 4.01, and 5.01.

1.06 Subject to operating limitations determined by any affected party of the PJM GROUP, the Office of the PJM Interconnection shall act for the PJM GROUP in establishing operating capacity and energy schedules with the NYPP GROUP and shall keep accounts of all resulting transactions under this Agreement that affect the PJH GROUP. The Operating Manager of the New York Power Pool or his designated representative shall act in a similar manner for the NYPP GROUPS

4 1 07 Each of the parties hereto shall retain sole contxol over its own.

facilities and service, and shall determine the availability of its facilities for use in interconnected operations. and such facilities shall always be available first to the owner for use in supplying the requirements of its customers and its commitments to other utility systems. Subject to this reservation and the

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conditions set forth in Schedule 7.01, each of the parties hereto shall make available for the purpose of effectuating this Agreement the facilities in its own system to the extent that capacity of such facilities exists from time to time in excess of its own requirements and the requirements necessary to enable it to meet its obligations to others which now or will hereafter exist. Such facilities shall include the transmission facilities requi.red to render. the services in accordance with Schedule 6.01.

1.08 Nothing in this Agreement shall prohibit any party hereto from making arrangements with any other party or parties hereto or with others not parties hereto for capacity and energy transactions.

1.09 No party of either Group shall intentionally use the facilities of a party of the other Group without its prior written consent for any purpose other than as provided in this Agreement. Ententional use shall be understood to exclude (a) inadvertent interchange (as defined in Schedule 4.01), and (b) that

.flow oi'nergy which is a natural result. of the electrical characteristics of the interconnected network of transmission lines of which the parties are a part, provided that (1) the party causing such interchange or flow has provided, through direct ownership or by contracts with others at the time of such interchange or flow, sufficient transmission facilities to meet its requirements and (2) such interchange or flow of energy is not of such magnitude or duration as to affect adversely the ability of the party over whose system such energy flows to render proper service to its customers or others with whom the party has agreements or as increase materially its system losses-

1.10 Other services to be rendered in furtherance of the intent of this Agreement and the terms and conditions applicable thereto shall be set forth in additional schedules to this Agreement, as may be arranged by the parties hereto.

ARTICI.E 2 ORGANIZATION 2.01 The NYPP GROUP parties shall act collectively on one hand and the parties in the PJM GROUP shall act collectively on the other hand with respect to operations and yccounting for the transactions under the terms of this Agreement.

2 '2 There is hereby established a NYPP-PJM Operating Committee con-sisting of two individuals, one to be selected by the NYPP GROUP, and the other to be selected by the PJM GROUP, each of whom shall act as representative of his Group in operating and accounting matters in connection with this Agreement. In addition, each Group shall select an alternate representative who shall be fully informed and shall act in the absence of the representative. The NYPP GROUP, through the Chairman of the Operating Committee of the New York Power Pool, and the PJM GROUP, through the Chairman of the Management Committee of the Pennsy)vania-New Jersey-Maryland Interconnection, shall each designate in writing to the other within thirty (30) dayy from the date of this Agreement, their initially selected representatives and alternate representatives on the NYPP-PJH Operating Committee and may, by simi'lar notice, change their selectees at any time.

2.03 The NYPP-PJM Operating Committee shall act unanimously in such manner and take such steps as may be necessary to perform its functions and duties hereunder. The parties shall furnish any pertinent data to the NYPP-PJM Operating Committee upon its request.

2.04 The NYPP-PJM Operating Committee shall prepare the necessary Schedules as required under Section 1.10, or'uggest revisions of existing Schedules, as the need arises, for approval of the parties.

2 05 There is hereby established a NYPP<<PJM Planning Committee consisting, of two individuals, one to be selected by the NYPP GROUP, and the other to be selected by the PJM GROUP, each of whom shall act as representative of. his Group in reviewing the plans for modification, expansion and development of generating and transmission facilities, in initiating and supervising joint studies of reliability and economic development, and studying and reporting on other joint development matters including determination of installed capacity requirements. The NYPP GROUP, through the Chairman of the Planning Committee of the New York Power Pool, and the PJM GROUP, through the Chairman of the Management, Committee of the Pennsylvania-New Jersey-Maryland Interconnection, shall each designate in writing to the other within thirty (30) days from the date of this Agreement their initially selected representatives on the NYPP-PJM Planning Committee and may, by similar notice, change their selectees at any time.

2.06 Other committees may be similarly established from time to time as required.

2.07 To resolve any policy matter under this Agreement, or in the event that the NYPP-PJM Operating Committee designated in Section 2.02, the NYPP-PJM Planning Committee designated in Section 2.05, or any other Committee established under. Section 2.06 cannot reach agreement on any matter delegated to it under this Agreement, such matters shall be referred to one or. more representatives designated by the PJM GROUP and a like number of representatives designated by the NYPP GROUP.

ARTICLE 3 OPERATION F 01 The systems of the two Groups shall be operated normally in parallel and each Group shall exercise care to maintain continuity of service in the delivery and receipt oi operating capacity and energy under this Agreement.

3.02 The two Groups shall coordinate to the greatest extent practicable their maintenance schedules of generating and transmission facilities, with due regard to commitments which the parties have with others.

3 '3 The two Groups shall cooperate in making studies from time to time with the objective of improving reliability and effecting all feasible economies including, but not limited to, those possible because of such matters as diversity of loads, diversity of forced outages, and diversity of load deviations from forecast.

3 04 Each Group shall provide automatically controlled generation adequate to regulate tie line flows and shall cooperate in minimizing inadvertent interchange of energy.

3.05 Each Group shall maintain and operate its facilities in accordance with good operating practice so as to enhance bulk power system reliability and thus minimize the likelihood of a disturbance originating in its systems which might impair the service of the system of any party or. the service of other systems interconnected with any party.

3.06 Electric energy will be delivered and received at the several points of interconnection between the two Groups and at such other points of interconnection as may from time to time be established. Appropriate metering devices shall be installed as required to measure the energy flow at each point of interconnection.

Each Group shall maintain records of the quantities of energy interchanged on all the transmission lines interconnecting the two Groups.

ARTICLE 4 BILLING PROCEDURE 4.01 All quantities of operating capacity and energy interchanged hereunder shall be calculated and accounted ior on the basis of the scheduled interchange between the two Groups 4.02 For convenience, any amounts payable or receivable under this Agreement shall be paid or billed and collected, as the case may be, by

Philadelphia Electric Company for the PJM GROUP and by the New York Power Pool for the NYPP GROUP.

4.03 The Parties shalL pay for operating capacity and energy inter-changed hereunder in amounts determined in accordance with Schedules 3.01, 4.01 and 5.01, and for transmission services determined in accordance with Schedule 6.01.

4.04 Bills for the charges for service supplied in accordance with this Agreement during each month will be rendered by the tenth day of the following month and will be payable on the first banking day common to the parties hereto following the nineteenth day of the month in which they are rendered.

ARTICLE 5 GENERAL 5.01 No party shall be considered to be in default in respect of any obligation hereunder if prevented from fulfilling such obligation by gleason of any cause beyond its control including, without limiting the generality of the fore-going, strikes and work stoppages. A party unable to fulfillany obligation by reason of any cause beyond its control will use its best efforts to obviate such cause with reasonable dispatch.

5.02 No party shall be liable for the failure of any other party to perform any of its obligations hereunder.

5.03 By entering into this Agreement, the parties hereto shall not become partners or joint venturers, and the obligations of each shall be several and not joint. This Agreement is not intended to create any liability on the part of any party to persons not parties to this Agreement.

5-04 Any waiver at any time of any rights as to any default hereunder or any other matter arising hereunder shall not be deemed a waiver as to any default or such other matter arising hereunder.

5.05 This Agreement, including all schedules, may bq amended with the consent of the Management Committee of the Pennsylvania-New Jersey<<Maryland

Interconnection and with the'onsent of the. Executive Committee of the New York Power Pool. Amendments shall be in writing and shall be executed by the Chairman of the Management Committee of the Pennsylvania-New Jersey-Maryland Interconnection and by the Chairman of the Executive Committee of the New York Power Pool.

5.06 Whenever reference is made herein to a Schedule it shall be under-I stood to refer to that Schedule as the same may be revised.

5.07 This Agreement and all rights, obligations and performance of the parties hereunder are subject to applicable state and federal laws and to all duly promulgated orders and other duly authorized action of governmental authorities having jurisdiction in the premises, including without limitation, acceptance for filing as a rate schedule by the Federal Power Commission.

5.08 The Manager of the Office of the Pennsylvania-New Jersey-Maryland i

Interconnection is hereby authorized to file with the Federal Power Commission, on behalf of the parties hereto, this Agreement and future amendments, schedules and supplements thereto, as such future amendments, schedules and supplements thereto a re agreed upon between the parties.

5.09 Each of the parties in the PJMGROUP hereby designates the Manager of the Office of the Pennsylvania-New Jersey-Maryland Interconnection, its true and

~

lawful attorney to accept in its respective behalf service of process i.n any action brought against it, in a Federal or State court located in Pennsylvania, by a member or members of the NYPP GROUP arising out of this Agreement provided said

'ember or membe~ of the NYPP GROUP shall, prior to such service, 'send a copy of its complaint in such action by certified mail to each such party ygainst which the action is brou'ght at its principal office directed to the attention of its president.

5.10 Each of the parties in the NYPP GROUP hereby designates the Operating Manager of the New'ork Power Pool, its true and lawful attorney to accept t

in its respective behalf service of process in any action brought against it, in a Federal or State court located in New York, by a member or members of the PJM GROUP

',t arising out of this Agreement provided said member or members of the PJM GROUP shall;

prior to such service, send a copy of its complaint in such action by certified mail to each such party against which the action is,brought at its principal office

directed to the attention of its president.

5.11 In the event of the failure of any party of the PJH GROUP to perform

! any of its obligations hereunder, the other parties of the PJH GPOUP will cooperate r

'ully in aiding l

the NYPP GROUP to identify such party and to obtain such information and data as may be relevant to its rights against such party. To thisI end, without limiting the generality of the foregoing, the other parties of the PJH GROUP will make available to the NYPP GROUP all records of the PJH GROUP and such other V

, information as may be available through the Office of the Pennsylvania-New Jersey-I Haryland Interconnection, and the parties of the PJH GROUP will make available to

[

the NYPP GROUP all relevant information in their possession.

5.12 In the event of the failure of any party of the NYPP GROUP to

) perform any of its obligations hereunder, the other parties of the NYPP GROUP will

~, cooperate fully in aiding the PJH GROUP to identify such party and to obtain such I

information and data as may be relevant to its rights against such party. To this I

, end, without limiting the generality of the foregoing, the other parties of the NYPP GROUP will make avail'able to the PJM GROUP all records of the NYPP CROUP and such other information as may be available through the Operating Hanager of the New York Power Pool, and the parties of the NYPP GROUP will make available to the PJM GROUP all relevent information in their possession.

ARTICLE 6 LIABILITY 6.01 Each party agrees that it will indemnify, protect, and save the other parties harmless from and against any and all loss or liability (except ior losses and liabilities arising from interruption of service, and losses and liabilities arising from electrical .disturbance) for or on account of any injury (including death) or damage to any person or property, due to the negligence or misconduct of itself or any of its officers, agents or employees in or about the performance of this Agreement.

ARTICLE 7 EFFECTIVE DATE AND TELO)INATION 7.01 This Agreement shall become effective as of the date of acceptance for filing as a rate schedule by the Federal Power Commission, and shall continue in effect until terminated by any party hereto giving not less than three (3) years'ritten notice of termination to the other parties hereto.

ARTICLE 8 SUCCESSORS AND ASSIGNS 8.01 This Agreement shall be binding upon, and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement shall not be assigned by any party without the written consent of all other parties except to a.corporation into which such party shall be merged or resulting from consolidation to which such party shall be a party, or to a person or corporation to which substantially all the electric operating properties of such party shall be simultaneously transferred.

IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed in their respective names, by their respective authorized officers, as of the day and year first above written.

CENTRAL HUDSON GAS & ELECTRIC CORPORATION

/s/ John Wilkie Chairman o the Board CONSOLIDATED EDISON CO))PANY OF NEW YORK, INC.

/s/ Charles F. Luce Chairmarf LONG ISLAND LIGHTING COa")PANY

/s/ John J. Tuohy Chairman of the Board NEW YORK STATE ELECTRIC & GAS CORPORATION

/s/ William A. Lyons Chairman

NIAGARA MOHAWK POWER CORPORATION

/s/ John G. Haehl, Jr.

President ORANGE AND ROCKLAND UTILITIES, INC

/s/ Dean B. Seifried President ROCHESTER GAS AND ELECTRIC CORPbRATION

/s/ Francis E. Drake, Jr.

C airman PUBLIC SERVICE ELECTRIC AND GAS COMPANY

/s/ C. H. Hoffman Vice President PHILADELPHIA ELECTRIC COMPANY

/s/ Wayne C. Astley Vice President PENNSYLVANIA POWER 6 LIGHT COMPANY

/s/ J. T. Kauffman Vice President BALTIMORE GAS AND ELECTRIC COMPANY

/s/ J. W. Gore, Jr.

Vice President POTOMAC ELECTRIC POWER COMPANY

/s/ D. F. Huphes Vice President PENNSYLVANIA ELECTRIC COMPANY

/s/ P. L. Lumnitzer Vice President METROPOLITAN EDISON COMPANY

/s/ J. S. Bartman Vice Presi ent JERSEY CENTRAL POWER 6c LIGHT COMPANY

'/s/ R. H. Sims Vice Presi ent

SCHEDULE 1.01 TO INTERCO';lNECTION AGREE".KNT BETWEEN THE NYPP GROUP AND THE PJH GROUP Issued April 9, 1974 Effective Juhe l, 1974 FORECAST INSTALLED CAPACITY REQUIRE1)ENT Section 1.02 of this Agreement provides that the NYPP GROUP and the PZi1 GROUP .shall each use its best efforts to install or otherwise arrange for I

sufficient installed capacity to meet its iorecast installed capacity requirement.

1 1 The forecast installed capacity requirement of each Group shall be

'etermined and sufficient installed capacity to meet that requirement shall be planned for at least five years prior to each peak period. The forecast installed capacity requirement shall be an amount of installed capacity which each Group deems adequate to meet its forecast load and installed r'eserve requirements, and may reflect the benefits of the interconnections between the two Group'nd of interconnection arrangements with others as determined by each Croup.

1.2 Installed capacity shall be defined by the NYPP-PJH Operating Committee, and shall include generating capacity owned by the members of a Group plus or minus the net of firm cap'acity commitments from or to others.

1.3 Xf at any time the record over a reasonable prior period shows clearly that either Group has failed to plan for and provide adequate installed capacity to meet'ts requirements either Group, by written notice given to the other Group, may call for a joint study of the generating capacity installed in and provided to its Group and of the respective transmission facilities affecting the supply and delivery of power and energy under this Agreement. It shall be the purpose of such study to determine the adequacy or inadequacy of the forecast installed capacity requirement and the transmission facilities being provided

Schedule 1.01 to meet the needs of each Group. If it should be found'that one Group is placing a burden upon the other, the Group causing such burden shall take measures as are necessary to remove the burden from the other, or the two, Groups shall enter into such arrangements as shall provide for equitable compensation to the Group being burdened.

SCIIEDULE 2 01 TO INTERCONNECTION AGREEHENT BETWEEN TllE NXPP GROUP AND TNE PJH GROUP Issued Apri,l 9, 1974 Effective June l, 1974 OPERATING RESERVE CAPACITY REQUIREHENTS Section 1.03 of this Agreement provides that the NYPP GROUP and the PJH GROUP shall each use its best efforts to provide or otherwise arrange for sufficient Operating Reserve Capacity to meet its Operating Reserve Capacity Requirement, as hereinafter defined.

1.1 The Operating Reserve Capacity Requirement of each Group shall be an amount of capacity which that Group deems adequate for its own needs in excess oi that required to carry its estimated load, and may reflect the benefits of the interconnections between the two Group and arrangements with others, as determined by each Group.

1 2 The Operating Reserve Capacity of a Group shall be the sum of (1) that part of the Group's installed capacity which is synchronized and not carrying the Group's load or is scheduled to operate and cap be loaded within the capability of available transmission to its reported capability, either automatically or manually in 30 minutes or less, (2) any installed capacity of the'kind described in clause (1) above purchased or otherwise arranged for from the other Group or from others, less any installed capacity of the kind described in clause (1) above committed to the other Group or to others 1.3 Any Operating Reserve Capacity arranged for by one Group with the other Group shall be accounted for as an operating capacity transaction- The supplying Group shall upon call provide energy at a rate during each hour of up" to and including the amount of Operating Reserve Capacity arranged for, and such energy shall be accounted for as an energy transaction.

SCHEDULE 3.01 TO INTERCONNECTION AGREEMENT BETWEEN THE NYPP GROUP AND THE PJM GROUP Issued April 9, 1974 I

Effective June 1, 1974 OPERATING CAPACITY TRANSACTIONS Sections 1.04 and 1.05 of this Agreement provide for interchange of operating capacity. Such capacity interchange shall be accounted for as described below.

Section 1 - Emer,encv 0 crating Ca acit 1.1 An Emergency, Operating Capacity transaction is a transaction wherein one Group supplies capacity from operating capacity during periods when the other Group has insufficient operating capacity in its own system. Such other Group shall be entitled to Emergency Operating Capacity only for the period of time talcen for the buyer to expeditiously'start additiohal generation on its own system, to schedule firm capability and energy to which it may be entitled by contract or to purchase Supplemental Operating Capacity and in no event longer than one calendar day unless otherwise agreed to by the NYPP-PJM Operating Committee.

1.2 Emerge'ncy Operating Capacity supplied by one Group. shall be charged to and paid for by the other Group on the basis of the cost of such supply and the amount paid for capacity obtained for this purpose from other systems not a party to this Agreement, multiplied by 1.1.

When a Group supplies such Emergency Operating Capacity to the other Group from generating capacity not specifically operated for such supply by the supplying Group, the cost of the supplying Group shall be the weighted average cost of its highest cost marginal capacity in operation at the time which is equal in amount to such Emergency Operating Capacity.

Schedule 3.01 2.1 A Sup@cmental Operating Capacity Transaction is a scheduled trans-action wherein one Group supplies for the other Group operating capacity other than firm, emergency, or economy capacity required to meet operating capacity requirements.

, 2.2 Supplemental Operating Capacity supplied by one Group shall be charged to and paid for by the other Group on the basis of the cost of such supply and the amount paid for capacity obtained for this purpose from other systems not a party to this Agreement, multiplied by 1.1, plus an additional charge of $ 35 per megawatt per day based upon the maximum capacity scheduled, but not exceeding the capacity which could have been supplied directly by the supplying Group from its own capacity. To the extent the maximum capacity scheduled exceeds the capacity which could have been supplied directly, the transmission charge provided in Schedule 6.01, shall be substituted for the $ 35 per megawatt.

Section 3 Fconom 0 eratin Canacit 3.1 An Economy Operating Capacity transaction is a scheduled transaction for a mutually agreed upon period wherein one Group supplies operating capacity for the other Group to replace higher cost operating capacity of such other Group.

3.2 Economy Operating Capacity supplied by one Group shall be charged to and paid. for by the other Group on the basis of the cost of such supply and the amount paid for capacity obtained for this purpose from other sy'stems

'I not a party to this Agreement, plus one-half the difference between (1) the sum of. the said cost and the amount paid, and (2) what it would have cost the P

other Group to have operated the capacity replaced.

SCHEDULE 4 01 TO INTERCONNECTION AGREEl1ENT BETE'EEN THE NYPP GROUP AND THE PJH GROUP Issued April 9, 1974 Effective June l, 1974 ENERGY TRANSACTIONS Sections 1.04 and 1.05 of this Agreement provide for interchange of energy. Such energy interchange shall be accounted for as described below.

Section 1 - Emer enc Ener 1-1 An Emergency Energy transaction is a transaction wherein one Group supplies to the other Group energy associated with Emergency Operating Capacity, as defined in Schedule 3.01.

1.2 Emergency Energy supplied by one Group shall be charged to and paid for by the other Group on the basis of the cost of generating it and the amount paid for it to such systems not a party .to this Agre'ement, all adjusted for transmission losses, plus ten percent (10%) of such cost and amount as so adjusted.

Section 2 - Su lemental Ener 2.1 Supplemental Energy is energy scheduled within the limits of Supplemental Operating Capacity. Supplemental Energy supplied by one Group shall be charged to and paid for by the other Group on the basis of the cost of. generating it and the amount paid for it to such systems not a party to this Agreement, all adjusted for transmission losses, plus tart percent (10%) of such cost and amount as so adjusted.

Section 3 - Econom Ener 3-1 An Economy Energy transaction is a scheduled transaction wherein one Group supplies energy to the other Group to replace higher cost energy

2 Schedule 4.01 of such other Group.

3.2 Economy Energy supplied by one Group shall be charged to and paid for by the other Group on the basis of the cost of generating it and the amount paid for it to other systems not a party to this Agreement, plus one-half the difference between (1) the sum of the said 'cost and amount paid, and (2) what it would have cost the other Group to have generated the energy replaced. All costs shall be adjusted for trans-mission losses to points of interconnection between the NYPP GROUP and the PJM GROUP.

Section 4 - Non-Re lacement Ener 4.1 h Non-Replacement Energy transaction is a scheduled transaction wherein one Group supplies energy to the other Group which cannot be scheduled as Economy Energy when (1) the other Group has sufficient operating capacity in its own system but its use of that capacity is restricted for environmental and other reasons, (2) the other'roup is transmitting such energy to systems of others not parties to this Agreement operating under similar restricted conditions, or (3) such transaction is required to contxol the flow of energy on the interconnections between the Groups and with systems of others not parties to this Agreement within operating limits established by the NYPP-PJM Operating Committee. The amount of Non-Replacement Energy so scheduled shall not be greater than the amount of capacity so,restricted.

4.2 Non-Replacement Energy supplied by one Group shall be charged to and paid for by the other Group on the basis of the cost of generating, it and the amount paid for it to such systems not a party to this Agreement, all adjusted for transmission losses, plus ten percent (10%) of such cost and amount as so adjusted.

Schedule 4.01 Section 5 - Ine<lvectcnt In~tctchan,e 5.1 Inadvertent Interchange for each Group is the difference between net actual energy flow and net scheduled energy flow. Inadvertent inter-change shall be accumulated as' credit or a debit and shall be repaid in kind.

5e2 Each Group shall endeavor to balance continuously its generation against its load so that the net loading of all its tie 11nes agrees with the scheduled net deliveries and receipts plus or minus is frequency bias or other obligation.

5a3 Inadvertent interchange accumulated during "on-peak" hours shall be repaid during "on-peak" hours; and, similarly, Inadvertent Interchange accumulated during "off-peak" hours shall be repaid during "off-peak" hours. The specific hours to be classified as "on-peak" or "off-peak" shall be determined from time to time by the NYPP-PJ11 Operating Committee.

SCHEDULE 5.01 TO INTERCONNECT ION AGREEHENT BETWEEN THE NYPP GROUP AND THE P&I GROUP Issued April 9, 1974 Effective June 1, 1974 SCHEDULING AND ACCOUNTING Section 1.06 of this Agreement provides for the establishment of operating capacity and energy schedules between the Groups and the accounting for the resulting interchange transactions.

Section 1 - Records 1 1 Energy scheduled under this Agreement, including electrical losses associated therewith, shall be accounted for each clock hour.

1 2 Operating capacity scheduled under this Agreement shall be accounted for on the basis of the period of time such capacity is scheduled.

la3 Each Group shall keep such log sheets and other records as may be needed to affo'rd a clear history of the various interchanges of capacity and energy. In maintaining such records, the'roups shall provide such detail as may be needed in connection with the settlements under this Agreement.

Section 2 - Com onents of Cost a

, 2.1 The following components of cost, when applicable, sh'all be included for operating capacity a and energy transactions. a

~oenatin ~Ca acit Start-up'nd shut-down cost (boiler and turbine). ~ n No load cost (boiler and'turbine).

Associated additional maintenance cost (boiler and turbine).

Charge (or credit) for increased (or decreased) cost of energy generated by the GROUP associated with such operating capacity transaction. a Incremental taxes.

Hiscellancous incremental operating costs Incremental labor costs

4 6f tlt.tiu3 s.'3 ~ Q3.

I

~guar Incremental fuel cost.

Incremental transmission losses.

Incremental labor cost.

Incremental maintenance cost.

Incremental taxes.

Miscellaneous incremental operating costs.

Section 3 - Priorit of Pricin 3.1 To provide for equitable pricing of the various classifications of operating capacity and energy and of the supplies to various px)rchasersg agreement is necessary as to the order in which costs will be related to these various transactions, as follows:

3.1.1 All internal transactions of'ither group and its firm supplies to others shall be first accounted for, using the lowest incremental costs of available operating capacity and energy in the pricing of such transactions as may be required.

3.1.2 The incremental cosrs applicable to transactions of either Group with the other Group or, for other than firm supplies, with others shall be incurred in excess of the costs used in 3.1.1 except as may 'at times be required by Sche'dule 3.013 paragraph 1.2, for Emergency Operating Capacity supplied from gener'ating capacity not specifically operated for such supply in which case the cost of the supplying Group shall be the weighted average cost of its highest cost marginal capacity in operation at the time which is equal in amount to such Emergency Operating Capacity.

s 3.1.3 The incremental costs of operating capacity and energy supplies

\

shall be determined in the following order of ascending costs, with sufficient blocks of generation assigned to cover all supplies of each classification, whether under this Agreement or otherwise:

(i) Supplemental supplies.

(ii) Economy supplies-(iii) Emergency supplies.

(iv) Non-replacement supplies.

SCHEDULE 6.01 TO INTERCONNECTION AGREEMENT BEXHEEN THE NYPP GROUP AND THE PJM GROUP Issued April 9, 1974 Effective June l, 1974 TRANSMISSION SERVICES Section 1.07 of this Agreement provides that the parties of the NYPP GROUP and the parties of the PJM GROUP shall make available transmission facilities for the purpose of effectuating this Agreement.

Section 1 - Services to be Rendered 1 1 Transmission by one Group for the other Group, to or from a system not a party'to this Agreement, of any reservation of firm capacity, however designated, regardless of whether the other Group is the buyer or seller.

1.2 Delivery of Supplemental Operating Capacity, as provided in Schedule 3.01, by one Group to the other, but only to the extent that the total delivery exceeds the capacity that could have been supplied from the available capacity of the Group that is making such delivery.

1.3 Power circulated, by prearrangement and under special conditions, by one Group through its system for the other, but only to the, extent that this circulation can be considered as "intentional use", as su'ch term is explained in Section 1.09 of the Agreement, and except power circulated under the terms of a separate agreement between parties of either Group.

Section 2 - Com ensation 2-1 .The charge for providing the transmission services defined in Section 1 of this Schedule shall be $ 20 'per megawatt per day applied to the maximum amount of capacity transmitted each day by one Group for the other Group.

2 w Schedule 6.01 2.2 ln the event of curtailment of any services contemplated therein the charge therefor shall be reduced $ 20 per megawatt per day not transmitted.

2.3 To the extent that the transmitting Group obtains payment for the transmission service from a purchaser not a party to this Agreement, the other Group is relieved of its obligation for such payment herednder.

2.4 The cost of transmission losses incurred by the transmitting Group in the transmission of energy associated with any reservation of firm capacity as defined in Section 1.1 of this Schedule or power circulation by prearrangement as defined in Section 1.3 of this Schedule, whenever such energy is not scheduled under the terms of this Agreement, shall be added to the charge for transmission services.

SCHEDULE 7.01 TO INTERCONNECTION AGREElKiVT BFHOEEN THE NYPP GROUP AND THE PJH GROUP Issued April 9, 1974 Effective June 1, 1974 CONTINUITY OF SERVICE Changes in load or available capacity of the supplier may require it to limit or terminate services rendered under Schedules 2.01, 3.01 and 4.01 if continuation of such services would be unduly burdensome. Such limitation or termination shall be made in the following order:

1.1 Economy service.

1.2 Non-Replacement service.

1.3 Emergency service.

1.4 Supplemental service.

Although supplier makes no commitment as to the continuity of service, it will endeavor to continue emergency and supplemental services, even when burdensome, within the limits of good operating practice, so long as the purchaser takes all reasonable steps to obtain alternate supplies and to reduce its load requirements.

'The supplier shall not be required to take steps to limit its load or increase its generation beyond those taken at the same time by the purchaser.

NOTICE OF TERMINATI(N OF AGREEMENT Notice is hereby given that thc interconnection agreement dated August 30, 1951, as heretofore supplemented, which is filed wi.th the Federal Power Commission under thc indicated rate schedule designations, is to bc cancelled 'on the effective date )

I of a ncw agrecmcnt known as the NYPP-PJH Interconnection Agreement which wi.ll be filed with the Federal Power Commission.

Rate Schedule Niagara Mohawk Power Corporation FPC No 5 New York State Electric & Gas Corporation 16 Philadelphia Electric Company 14 Pennsylvania Power & Light Company 11 Pennsylvania Electric Company ll Metropolitan Edison Company 5 Jersey Central Power & Light Company 6 New Jersey Power & Light Company 10 Public Service Electric and Gas Company 20 Baltimore Gas and Electric Company 10 Potomac Electric Power Company 25 There arc no purchasers affected by the cancellation of thi interconnection agreemcnt, other than the parties thereto, and no notices of the proposed cancellation have been served.

Niagara Mohawk Power Corporation Dated May g, 1974 By nior Vi.cc Preside t 0

New York State Electric & Gas Corporation Dated May 8, 1974 By Executive Vice Presid it Philadelphia Electric Company k

Dated May W~, 1974 By ice President i

Pennsylvania Power & Light Company Dated May 19, 1974 Vice President Electric Company

'ennsylvania Dated May ~, 1974 Vice President Metropolitan Edison Company Dated May P.C, 1974 Vice President Jersey Central Power & Light Company "

Dated May >~ 1974 By Vice President Public Service Electric..and Gas Company

. Dated May 2 ~ 1974 By Vice Preside'Ot. V Baltimore Gas and Electric Company Dated May 7-~ 1974 By Vice P re s ide~

Potomac Electric Power Company Dated May X?, 1974 By enioW Vice Pri<sident

, d'-

New Jersey Power 6 Light Company has been merged into Jersey Central Power & Light Company

g~pccc."c iyd, bUc >'DSJEer c o REF'i'Jcr ~, 7/gcsggj PENNSYLVANlA-NENJERSEY-MARYLAND lNTERCONNECTlON 9$ $ JEFFERSON'AVENUE VALLEYFORGE CORPORATE CENTER NORRISTOWN, PENNSYLVANIA 19401 C215) 655.1 $ 60 December 12, 1977 Federal Energy Regulatoxy Commission 825'orth Capitol Street, N.E.

Washington, DC 20426 Attention: Hr. Kenneth F. Plumb, Secretary Gentlemen:

There is filed herewith, on behalf of the following listed companies, proposed Schedule 8.02 to the Interconnection Agreement between the Allegheny Power System Group (APS) and the Pennsylvania-New Jersey<<Maryland Group (PJH) dated April 26, 1965, as supplemented (The Agreement), which is on file with the Commission under the following Rate Schedule designations:

Rate Schedule West Penn Power Company FPC No. 18 The Potomac Edison Company 26 Monongahela Power Company 22 l*

Referred to collectively as APS Group Public Service Electric and Gas Company 36 Philadelphia Electric Company 27 Pennsylvania Power & Light Company 41 Baltimore Gas and Electric Company 17 Jersey Central Power & Light Company 21 Metropolitan Edison Company 25 Pennsylvania Electric Company 45 Potomac Electric Power Company 21 Referred to collectively as PJM Group The following documents are submitted herewith in connection with this filing:

Six (6) copies of thi.s letter.

2. Twenty-two (22) copies of pxoposed Schedule 8.02.

3e Six (6) cooies of statements (Attachments I and IX) of the basis fox the fixed rates for service proposed in Schedule 8.02 and computations in support of these xates.

Public Service Electric and Gas (o npany General Public Utilities Corporation Philadelphia Electric Company Jersey Central Power tg Light Company Metropolitan Edison Company Pennsylvania Power Sc l.ight Cocccriany Pennsylvania Electric Company Settlmore Gas and Electric Com cr ty Potomac Electric Power Company

%2M

4. Six (6) copies of a form of Notice of Agreement suitable for publication in the Federal Register.

5~ A check covering the required filing fee.

In view of the strike by coal miners which adversely affects the supply of coal to the parties, and in keeping with the Order of the Federal Power Commission under Docket RM74-22, the Parties to the Agreement have prepared the proposed Schedule 8.02, which provides for the transfer of energy between the Groups during an energy emergency. The Schedule also provides the flexibility to permit transfers of energy to and from systems interconnected with APS or PJM. Proposed Schedule 8.02 replaces Schedule 8.01 which expired on December 31, 1975, In view of the foregoing, transactions to conserve coal may necessitate near term use of the proposed Schedule.

Therefore, it is respectfully submitted that good cause exists for waiver of notice of requirements and the Commission is hereby requested, pursuant to Section 35.11 of its Regulations, to waive notice requirements and order the proposed Schedule to be effective as of January 1, 1978. It is proposed that the Schedule will terminate on December 31, 1978 unless extended by mutual agreement.

Proposed Schedule 8.02 is not intended to and will not take the place of existing Schedules; The Schedule provides that, for the purpose of conserving energy resources, either APS or PJM may 'arrange to obtain from the other con-servation energy when, in the other's judgement, it has the capability and fuel resources to provide the same. Such arrangements are to be scheduled for periods of one or more weeks. The arrangements, including the number of megawatts per hour to be supplied, the period of supply, the source and destination, and the estimated cost, as well as modifications thereto, are subject to mutual a"reement in advance of supply. The Schedule also provides the method for determining com-pensation for such service.

'4 All of the s'gnatories to the Agreement have approved this filing and have received copies thereof. This filing is being made on behalf of such signatories by the undersigned in accordance with the authorization contained in Section 5.6 of the Agreement.

In response to Section 35.13(a) of the Commission's Regulations, it is pointed out that Subsection 2.1 of the proposed Schedule provides that the charge for con-servation energy generated on the supplying group's system will be 110% of the out-of-pocket replacement cost of generating the energy, plus a generation service charge of 3.75 mills per kilowatthour. Subsection 2.3 of the Schedule defines replacement cost of generating the energy as out-of-pocket cost of generating said energy, plus or minus an adjustment (to be made by supplemental bill) to reflect increases or decreases, if any, in the cost of fuel, on a Btu basis, between the month in which the energy is delivered and the second month after such month of delivery. The 3.75 mill per kilowatthour charge is intended to assure that con-servation energy service does not adversely affect the financial capability of the supplying system or result in discrimination to its customers. The charge will cover standby and extra maintenance costs ynd is intended to provide a reasonable contribution to the carrying charges on the facilities involved in generating and transmitting conservation energy. The development of these charges ere shown on Attacl~ents I and II hereto.

Subsection 2.2 of the proposed Schedule provides for a service charge of 1.75 mills per kilowatthour for deliveries of'conservation energy from systems inter-connected with APS ~r PJM. This charge is inteaded to cover losses, administrative

charges and other costs of arranging for and delivering conservation energy from the interconnected systems and to make a reasonable contribution to .the carrying charges of the transmission facilities required to make the transactions possible.

The development of this charge is shown on Attachments' and II hereto.

In response to Section 35.13(b) of the Commission's Regulations, it is pointed out that because of the uncertainty of the coal miner's strike or other events which might determine the need for conservation energy transfers and because of variable operating restrictions in the event the transfers are required, estimates of the transactions and revenues under the proposed Schedule have not been made.

To the extent that Section 35.13(b)(1). of the Commission's Regulations is deemed applicable to this filing, waiver of that regulation is requested based on the foregoing.

'opies of this letter and i'ts enclosures will be furnished promptly to the Regulatory Commissions of Ohio, Pennsylvania, New Jersey, Maryland, Delaware, Virginia, West Virginia, and the District of Columbia, for their information.

A check in the amount of $ 600.00 is enclosed .pursuant to Section 36.2(f) of the Commission's Regulations to cover the filing fee determined as follows:

$ 500 for a moderately complex rate schedule for one Group and $ 100 for concurrence by the other Group.

Very truly yours, Wilmer S. Kleinbach

'anager TRW:par Enclosures-

Attachment I Page 1 SERVICE ClV,RGE COST ANALYSIS AS OF 12/31/76 Plant Alle henv Foyer System Production Plant ($ 1000's) 1,008,425 Plant Capacity (mw) 6,429 Plant per kv Capacity ($ /kw) 156.86 Plant at 16.9% Carrying Charges (S/kw-yr)* 28.51 Plant ($ /kw-wk.) 0.51 Plant (mills/kwh) 3.03 Transmission Bulk Transmission Plant ($ 1000's) 389,352 Load (mw) 5,031 Bulk Transmis!.ion per kw Load ($ /kw) 77.39 Bulk Transmission at 19.1% Carrying Charges"<

($ /kw-yr.) 14.78 Bulk Transmission ($ /kw-wk.) 0.284 Bulk Transmission (mills/kwh) 1.69 The above generating and transmission plant carrying charges total 4.72 mills per kwh compared to the proposed charge of 3.75 mills per kvh in Subsection 2.1.

The proposed transmitting party service charge in Section 2,2 of 1.75 mills per kvh is less than the sum of the above transmission plant carrying charge of 1.69 mills per kvh and a charge of 0,4-0.6 mills per kvh, depending upon the direction of =he energy transfer, intended to cover losses and administrative charges.

• See Page 2; 16.9% is used for production plant schedule computations since operation and maintenance expenses for production plant are included in the computation of energy costs.

Attachment I Page 2 .

ANNUAL RATE OF CARRYING CHARGES

~Con: onent Ran e of Values Cost of ~foney (52% debt) 9. 0% 10.0%

Federal Income tax (Normalized) 4.4 5.1 Depreciation on Sinking Fund Basis .7 Other Taxes and Insurance (Based on actual experience)

Operation and Haintenance 2.2 2.2 (Based on actual experience)

To tal 17.5%

The above shows a range of values based on embedded and incremental costs.

, Taking into account our best estimate of future conditions, an annual r"te of 19.1/ (including operation and maintenance) has been us<<d in this study. Lihere inclusion of operation and maintenance charges is not apprcpriate 16.9% has be n used. hhen considered over the entire life of the agre<<ment, the above figures are of necessity approximations of the components. It is not intended to indicate that each such component will or should be fixed, at all times, at any given figure. The 19.1% and 16.9% figures it is believed, under all the circumstances and taken in the aggregate, will provide a fair return over the life of the agree-ment and with the recognition that particular component.: may vary somewhat from time to time during the life of the agreement.

ATTACHMENT II Page 1 of 4 PJM SUPPORT FOR, FIXED RATES IiN SCHEDULE 8.02 ISSUED DECEMBER 12 1977 PJM costs necessarily represent a composite of various company costs, based on different plant sites and types of construction, different capitalizations, different service lives, different methods of tax accounting, and different state and local tax obligations. For the purpose of these supporting computations, average PJM values are used and the computed costs in all cases are higher than the proposed fixed rates.

Char e for Generation Service The fixe/ charge for generation service is based on the following components:

(a) The levelized annual cost of a current installation of a combustion turbine, which is the same approach used for installed capacity charges internal to PJM

.(Docket No. ER 77 301).

(b) The annual cost for the combined investments of the PJM companies in transmission facilities 110 KV and above.

Since such investments were made over a span of years, the return rate used is based on average embedded costs.

(a) (b)

COMBUSTION SYSTEM TURBINE TRANSMISSION Current Average Plant Investment $ 163/KH (1) Gross $ 63.50 (2)

Net 50.10 Life in Years - Book/Tax 23/16 '40/30 Carrying Charge Rate Level 14;5% (3) 15.7/ (4)

Annual Costs - $ /KW/YR Carrying Charge $ 23.64 $ 9.46 (5)

Fixed 0 & M Expenses - estimated .50 1.27 (6)

Total $ 24. 14 $ 10. 73 Unit Costs - er Kt&R 2. 76 mills 1.22 mills Combined Total 3 98 mills Negotiated At 3. 75 mills

Page 2 of 4 Char e for Transmission Service The fixed charge for transmission service is based on the following components:

(a) The annual cost per KMiR for system investment in transmission facilities 110 KV and above (same as (b) for generation service)- 1.22 mills (b) Administrative expenses determined as a cost per KWHR by dividing the cost to operate and maintain the PJM Control Center in 1976 ($ 5,386,000) by, the amount of power interchanged in 1976 between PJH companies and with others (21.3 x 109 KWHR) . 0.25 mills (c) The average cost per KWHR to supply additional trapqmission losses determined by multiplying the average increase in losses for various power transfers across PJM (3%) by the estimated incremental cost to generate such losses (22 mills). 0.66 mills Combined Total 2.13 mills Negotiated At 1 75 mills NOTES (1) Costs were estimated by each PJM company to install on its system for service in 1977 a simple cycle 50 HW combustion turbine. These costs vary among the companies depending on site conditions and environmental requirements.

PS PE PL BC GPU PEP PJM AVERAGE

$ /KW 135 125 225 192 177 125 163 (2) Transmission costs are based on the 1976 FPC Form 1 total transmission plant investments for PJH companies, adjusted to exclude the estimated .investments in facilities used for, or related to, step-down transformation to voltages below 110 KV.

Transmission investment $ 1,969.000,000 PJM Peak load prior to 12/31/76 30,993,000 KW Accumulated depreciation per books (21.1%) $ 13.40/KW Net plant investment $ 50. 10/KW

Page 3 of 4 NOTES: (Cont'd)

(3) Factors used to develop level carrying charge rate are as follows:

Comb. Turb.

Book Life 23 Tax Life 16 Mortality Dispersion R2 hccel. Depreciation DDB Funds Used During Const. 3%

Salvage 0 Removal 0 Realty Tax Rate 0 Investment Credit Rate 10%

Capital Stock Tax Rate 0 Effective Income Tax Rate 52. 9%

return Rate (See below for development) 10.7%

Ofher Taxes 1.0%

Levelized Carrying Charge Rate 14. 5%

PJH COMPANIES CAPITALIZATION AND FINANCING COSTS 12/31/76 CAPITALIZATION -  %

AVERAGE FINANCING PS PE PL BC GPU PEP AVG- COST COMPOSITE DEBT 48 51 51 50 53 54 51 8 8.7 4.44 PREFERRED 14 14 18 12 12 12 14 8 9.3 = 1.30 COMMON 38 35 31 38 35 34 35 8 14.2 = 4.97 10.71 use 10.7 FINANCING COST DEBT 8.5 9.5 7.8 9-0 9.0 8.5 8-7 PREFERRED 9.Q 9 5 8.5 10.0 9.5 9;0 9.3 COMMON 14.0 14.0 14.3 14.5 13.5 15.0 14.2

NOTES: (Cont,'d)

(4) Return .rute (see,below for. development) 9. 75% 9. 75/

Deductions'Interest (see below) -3. 70 Levelized excess of DDB tax depreciat'ion for 30 yr. life over SLif for 40 yr. life (4.15-2.50) -1.65 Basis for income taxes 4.40/

Income taxes Basis x 1.125 4.95% 4.95%

Other taxes 1. 00'/

Total annual carrying charge rate 15. 70/

PJ>1 COifPANIES EHBEDDED COSTS OF CAPITAL 12/31/76

, PJH PS PE PL BC GPU PEP AVG.

- DEBT 6. 74 7. 74 7. 77 6. 78, 7.60 6.96 7.26

,PREFERRED 7. 03 7. 71 8. 53 7. 36 8. 50 7. 86 7. 83 AVERAGE CAPITALIZATION COi~f POS ITE AVERAGE RETURN RAT DEBT 51% 6 7.26 3. 70 PREFERRED 14 6 7.83 1. 10 CO+rfQN 35 6 14.2 . 4 97

9. 77 use 9- 75 (5) -Annual charges: S/Kv On net plant $ 50.10 x 15.7% 7. 87 Depreciation on gross plant $ 63.50 x 2.5% 1.59 9.46 (6) 2% of Gross Plant

SCHEDULE 8.02 Page 1 of 3 (REPLACING SCHEDULE 8.01)

TO INTERCONNECTION AGREEMENT BETWEEN THE APS GROUP AND THE PJM GROUP Issued: December 12, 1977 Effective:

COiVSERVATION ENERGY Section 1.8 of this Agreement provides that the APS Group and the PJM Group shall set forth in additional schedules the arrangements for specific services to be rendered in furtherance of the intent of this Agreement. This Schedule 8.02 becomes effective according to terms of the accepted filing and replaces Schedule 8.01, which expired on December 31, 1975 Energy shall be considered to be

'onservation electric energy that is scheduled between the, Groups solely for the purpose of meeting an energy shortage which is caused by curtailments of energy sources which result from fuel unavail-ability, governmental actions or widespread disasters, any one of which is beyond control of the Groups, making it necessary for the deficient Group to conserve energy resources over an extended period of time. The following are the terms and conditions governing the generation and supply of such En r"y by one Group for the other, and also the transmission of Conservation Energy to and from systems inter-connected with the APS Group or the PJM Group. As used herein the term "week" shall mean any seven consecutive days.

Section 1 - Services to be Rendered 1.1 Either Group may arrange with the other, for periods of one or more weeks, for the delivery of Conservation Energy. The Groups shall determine the number of megawatts per hour to be supplied, the period of supply, th estimated cost and the source of supply if the supplying Group is in turn obtaining it from 'another system, or the ultimate destination if a Group 's

Page 2 of 3 in turn arranging for the supply for another system.

1.2 During each weekly period for 'which Conservation Energy has been arranged, the Group that has agreed to supply such Energy will, upon cal'1, deliver megawatt-hours to the receiving Group in amounts up to and including the number of megawatt-hours equal to the product of the period of supply in hours and the number of megawatts. then arranged for, at '

a rate of delivery which is agreeable to both Groups. After arrangements for Conservation Energy have been made the deliveries may be reduced only when conditions arise that could not have been reasonably foreseen at the time of the arrangement and cause the arrangement to be burdensome to the, supplying, receiving or trans-mitting systems.

Section 2 - Compensation 2.1 The receiving Group shall pay the supplying Group for each kilowatt-hour of Conservation Energy supplied from the supplying Group's system an amount equal to 1107. of the out-of-pocket replacement costs of generating such Energy plus 3.75 mills per kilowatt-hour.

receiving Group shall pay the supplying Group for each kilowatt-I'.2 The

,hour of Conservation Energy purchased by the supplying Group from another system for delivery to the receiving Group, the amount paid therefor by the supplying Group plus 1.75 mills per kilowatt-hour.

2.3 For purposes of this Schedule, out-of-pocket replacement cost of supplying Conservation Energy shall mean out-of-pocket cost of generating such Energy plus or minus an adjustment (to be made by supplemental bill) to reflect increases or decreases in the cost of fuel on a Btu basis between the cost of fuel at the stations from which the'nergy was delivered during the month in which the Energy was deliverec and the cost of such fuel for the second month after such month of delivery; rovided however, that in circumstances

Page 3 of 3 month in which the Energy was delivered and the cost of such fuel for the second month after such month of delivery; rovided however, that in circum-stances in which the supplying Group anticipates that it will be unable, despite diligent efforts, to ascertain the replacement cost of fuel until a date subsequent to the second month after the month of delivery, and notification is provided in writing by the supplying Group to the receiving Group, such adjustment shall be made by supplemental bill whenever such replacement cost of fuel becomes available.

Section 3 - Billings and Pa ents Bills for the, charges for services supplied in accordance with this Schedule during each month will be rendered by the tenth day of the following month and will be, payable on the first banking day common to the parties hereto following the nineteenth day of the month in which they are rendered, exce~tthat supplemental bills shall be due and payable on the fifteenth day>following receipt of bill. Interest on unpaid amounts on any bill rendered under this Schedule shall accrue at ten percent (10%) per annum from the date due until the date upon which payment is made.

Section 4 - Termination This Schedule shall remain in effect until December 31, 1978 unless extended by mutual agreement of the APS Group and the PJM Group, except the terms of Section 2 and Section 3 shall continue in effect until all bills for Conservation Energy are rendered and payment made therefor.

Page 1 of 2 UNITED STATES, OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Docket 5o. E Date Central Hudson Gas & Electric Corporation Consolidated Edison Company of New York, Incorporated Long Island Lighting Company New York State Electric & Gas Corporation Niagara Mohawk Power Corporation Orange and Rockland Utilities, Incorporated Rochester Gas and Electric Corporation Referred to collectively as NYPP Group Public Service Electric and Gas Company Philadelphia Electric Company Pennsylvania Power & Light Company Baltimore Gas and Electric Company Jersey Central Power & Light Company Metropolitan Edison Company Pennsylvania Electric Company Potomac Electric Power Company Referred to collectively as PJM Group Notice of Agreement Take notice that on the Office of the Pennsylvania-New Jersey-Maryland Interconnection filed on behalf of the above listed utilities a revised Schedule 8.02 to Interconnection Agreement between the NYPP Group and the PJM Group effective as of August 1, 1974.

The new Schedule provides that, for the purpose of conserving energy resources, either Group may arrange to obtain conservation energy from the other. When supplied, the charge for conservation energy generated on the supplying Group's system will be 110% of 'the out-of-pocket replacement cost of generating the energy, plus a gcner-ation service charge of 3.75 mills per kilowatthour. The new Schedule also provides for a transmission service charge of 1.75 mills per kilowatthour for deliveries of fuel conservation energy from systems interconnected with the NYPP Group ox the

'I PJM Group. These rates were reached by negotiation of the parties and are consistent with the order of the Federal Power Commission under Docket RM74-22,

Page 2 of 2 Because of the current uncertainty of fuel supplies associated with the coal miners'trike, and 'the possibility that transactions will be required imminently under the proposed Schedule, the Parties have .requested that the Commission waive its notice requirements and that the proposed Schedule become effective January 1, 1978. Its stated termination date is December 31, 1978.

Any person desiring to be heard or to protest said application should file I

a petition to intervene or protest with the Federal Energy Regulatory Commission, 825 North Capitol Street, N.E., Washington, DC 20426, in accordance with Sections 1.8 and 1.10 of the Commission's Rules of Practice and Procedure. All such petitions or protests should be filed on or before Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a petition to inter-vene. Copies of this application are on file with the Commission and are available for public inspect:on.

PENNSYLVANIA-NE1hf JERSEY- l"lARYLANDINTEBCON NECTlON 955 JEFFCASON AVENUF VALLEYFORGE COIIPORATE CENTER NORIIISTOWN, PENNSYLVANIA 19401 (215) 666-7560 Harch 3, 1978 Ref: Docket Nos. ER 77-107 ER 77-108 &,77-109 Hr Kenneth F. Plumb, Secretary Federal Energy Regulatory Commission 825 North Capitol Street, itE Washington, DC 20426

Dear Hr. Plumb:

Your letter of January 13, 1978 requ sted additional cost support information with respect to proposed modifications of the APS-PJH Agreement, the NYPP-PJtf Agreement and the PJM Agreement providing for the generation and. transmission of Conservation Energy, which were submitted for filing by my letters dated December 12, 1977 and were assigned the above stated Docket numbers.

A

. The Federal Energy Regulatory Commission by order issued February 13, 1978, conditionally accepted the foregoing submittals to become effective January 1, 1978, as requested, provided that the additional cost support information requested be submitted within 30 days-I Enclosed are six (6) copies of this letter and Attachments 1 through 5 which provide the requested information. These enclosures are submitted by,the undersigned on behalf of, and with the approval of, all the parties to the APS-PJH Agreement, the NYPP-PJH Agreement, and the PJH Agreement, under authorization contained in each said Agreement.

It is respectfully noted that the proposed Agreements for Conservation Energy, which are applicable not only for current coal shortage but to any situation involving regional curtailment of a major energy source, have been agreed to by all tLe parties involved. These proposed Agreements are an important complement to the present Agreements and provide the arrangements needed to maintain the highest possible reliability of regional power supply.

I Ptrbllc Service Electric snd Gss Company Genesot Prrbllc Utillti<<Corporstrc n philadelphia Electric Company wssy central power 5 Lictrt company

~ rletropolitsn Edison comp my Pennsylvania Power dr Light Comosny Pennsylvania Electric Com any

~

Seltlmore Gss snd Electric Company Potornoc Electric Power Company

Mr. Kenneth F. Plumb 2>> March 3, 1978 Copies of this letter and its attachments will be furnished promptly to the Regulatory Commissions oi Delaware, Ma=yland, New Jersey, New York, Ohio, Pennsylvania, Virginia, West Virginia, and the Distgict of Columbia, and to the Economic Regulatory Administration, for their information.

Sincerely, Wilmer S. 1U.einbach Manager WSK:par Attachments cc: Parties to the PJH Agreement APS-PJM Agreement NYPP<<PJM Agreement Messrs. D. J. Bardin W. W. Lindsay

Attachment 1 FERC Re uest (1) Cost support justifying the level of the 20% amount by which energy values are increased under Sections (d) ancZ (e) of Schedule 7 '3 - Revision No. 1 to the PJM Agreemeat.

PJM Res onse Schedule 7.03 covers the accounting among the parties to the PJM Agreement fox interchange of energy with others not party to that Agreement.

The proposed revision makes no change in Section (d) which has been in effect since September 1, 1977 and provides for PJM receipts of Emergency,,

4 Supplemental or Short Term energy. Under the terms of PJM'a Agreements with outside systems, such energy is billed to PZf at the aupplier's cost plus 10%. This bill is paid by thc PJM party 'or parties which receive energy for which they cannot provide replacement va'lu s because they have insufficient available generating capacity to supply their individual system load. Following the accepted procedure for all PJM interchange accounting, which is to allocate to the supplying and receiving parties equal shares of the difference between the cost and the replacement value, it is necessary under computer process ng of the accounting, to assign a value, of the supplier's cost plus 20% to those PJM parties receiving such outside energy in order to develop the PJM bill of the supplier's cost plus 10%. ~

A new Section (e) for PJM receipts of Conservation Energy is proposed in Revision No. 1 to Schedule 7.03 to accommodate the special internal allocations required for such transactions. However, the internal accounting procedures with respect to replacement values and the reascas therefor are the same as Section (d).

2-1 Attachment 2 FFRC Request (2) The cost components contained in the out-of-pocket replacement costs of generating Conservation Energy together with justification for the '107. adder to such costs.

(3) The proposed method of computing thc replacement cost of fuel.

~Res onse The proposed provisions for compensating the supplier of Conservation Energy are the same as were in effect during 1974 and follow the guidelines set forth in FPC Order No. 520 (Docket No. 75-3) issued November 29, 1974, which prescribed the following costing method:

"---the generating---systems shall each be entitled to recover the following costs:

(c) incremental cost associated with its respective generation of emergency service to meet inadequate supplies of fuel or energy. Incremental costs shall mean such operating and main'tcnance expenses incurred that would not have been otherwise incurred if such service had not been furnished. Such expenses shall include the incremental exp nses incurred in the production of the energy so furnished, including incremental fuel expense (i.e., replacement fuel costs),

incremental operating labor and supplies, incremental maintenance, labor and suppli.es, and incremental administrative and general expenses."

Section 2.3 of proposed Schedule 8.02 to both the APS-PB1 Agreement and the NYPP-PJM Agreement states the general concepts involved in computing the out-of-pocket replacement cost of fuel. These are the same concepts that were in effect during 1974 as contained in former Schedule 8.01 to both Agreemcnts. The following elaborates on these concepts:

Generation cost rates for each unit are based on current costs of fuel which are usually based on long-term contractual commitments with suppliers. These commitments, in turn, are related to anticipated normal

2-2 fuel use. When generating units are called upon to supply Conservation Energy, several factors affect thc" fuel cost.

(1) Some major source of fuel - in this instance coal - is in critically short supply on a regional basis.

(2) Unusually high demands will develop for alternate fuels.

(3) Spot purchases of alternate fuels ~.-ill be needed because the requirements will most likely exceed pxevious contrac-tual commitments.

(4) The cost of spot purchases will fluctuate and will not be available in time to adjust the generation cost rates at the time of delivery of Conservation Energy.

(5) Thc energy content (BTV) of spot-purchased fuel may be different from the fuel covered by previous contractual commitmcnts.

When Conservation Energy is supplied, the generation cost rates that are applied in the billing include a certain fuel cost in cents per million BTU. When the cost and BTU content of thc additional fuel needed to generate such energy are finally determined, any difference (increase or decrease) in the fuel cost in cents per mi)lion BTU from that used in the original billing will be billed by sup'plemental bill.

These arxangements axe designed to avoid the supplier of Conscrva-tion Energy suffering a loss due to the unpredictable fluctuations in fuel cost brought on by a regional ox rational shortage or curtailment ox a major energy source, Experience with spot purchases of coal during thc oil embargo in 1974 and with spot purchases of oil in early 1977 when abnormally cold weather curtailed coal-fixed generation has demonstrated the need and justification for these arrangements.

'I

2-3

\

The 10% adder to out-of-pocket replacement costs of generation is customarily applied throughout the electric utility industry to adjust the bills determined by certain known costs to reflect those other costs incurred in the generation and delivery of energy in emer-gency situations which, because the actual amounts are not known with certainty, are not included as known quantities in the generation cost rate. In the supply of Conservation Energy, cost uncertainties include.'a)

Reduced efficiency due to fuel auali.tv. Muchof the conservation energy will necessarily be generated from fuel not delivered under long-term contracts or as part of the utility's normal fuel purchase practices Unusual quantities of fuel purchased on the spot market, perhaps from different suppliers, may well be of a different quality than that assumed in determining the generation cost rate.

(b) Accuracy of heat rates. There are likely to be some uncertainties as to the absolute accuracy of the heat rates used in pricing incremental fuel costs.

(c) Incidental additional ooeratins. labor costs. The supply of Conservation Energy will result in higher than normal hours of unit operati'on This is likely to result in a certain amount of overtime and unusual labor expenses difficult to quantify.

(d) Unusual fuel Durchase. stora e and financing costs. Spot-purchased fuel, in addition to being of different quality than that utilized as part of the util.ity's normal supply, customarily involves above-normal expenses in the purchase,,

storage and financing of the fuel

3-2 Attachment 3 NYPP - CAPITALI7ATIO'.i A BOO: RETURN FOR OLDE.i S'I EAi~ PLA.':

~, Cap.

Ratio Cost of Nom.

Ca ital Vndeprec.

Plant Book Return eg ey eg eg Centr 1 Hudson Debt 51. 51 6.83 3. 52 Preferred 13.44 6. 30 0.85 Cows. aon 34.25 13.00 4.45 Cus t. Deposits 0.80 8.00 0.06 8.88 x 56.9 5.05 Con Edison Debt 46.6 6. 19 2.88 Preferred 12.4 5.97 0. 74 Common 40.2 13. 23 5. 32 Cust. Deposits 0.8 8.00 0.06 9.00 x 56.2 5.06

~Lon Island Debt 51. 52 6.61 3. 41 Preferred 14. 48 7. 22 l. 05 Common 34.00 13.44 4.57 t

9.03 x 44.6 4.03 New York Stat Debt 52.8 6.71 3. 54

~ Preferred 14. 3 7.09 1.01 Common 32. 9 13,50 4 '4 8.99 x 77.3 6.95 Niagara Nohawk Debt 51.42 7.02 3.61 Preferred 14.07 6.78 0.95 Common 34.51 13.75 4.75 9.31 x 65.5 6.10 Oran e 6 Rockland Debt 53. 2 7.'32 3. 89 Preferred 12. 5 6.56 0.82 Common 34. 3 13.50 4.63 9.34 x 69.8 6. 52 Rochester Debt 50.0 5. 22 2.61 Preferred 15.0 5. 23 0. 78 Common 35. 0 13. 50 4. 73

8. 12 x 35.8 2.91

• Based ~n 1975 Cost Data

3-1 Attachment 3 FERC Re uest (4) With respect to cost support submitted on behalf of NYPP please provide (a) the individual member's capitalization showing the cost of debt and preferred stock and the return on common equity resulting from the composite rate of return shown on page 4 of Attachment I, (b) the various components (return, depreciation, taxes> operation and maintenance expense, etc.) of the 17/. annual carrying charge rate applied to the NYPP investment in transmission facilities. The rate of return component should be in sufficient detail to show the individual member's capitalization including cost of debt and preferred stock and return on common equity, a>d (c) support for the estimated generati.ng cost of 30 mills/Elean used in the computation of losses sholem on page 2 of Attachment I.

NYPP Res onse (a) Attached are wo sheets entitled (1) NYPP - Capitalization and Book Return for Older Steam Plants and (2) NYPP - Capitalization and Book Return for Gas Turbine Plants. This material shows the individual members'apitalization, including the cost of debt and preferred stock "nc'. the return on common equity.

(b) Attached are two sheets entitled (1) NYPP - Capitalization and Levelized Book Return for Transmission Plants and (2) NYPP-Summary of Fixed Chazge Components on Transmission Plant. These sheets provide the various components of the 177. annual carrying charge rate applied to the NYPP investment in transmission facilities.

(c) The estimated generating costs of 30 mills per kilowatthour used in the computation of losses was based on the following criteria.

Current operating conditions on the NYPP system indicate that the energy produced to provide conservation energy would be supplied from low-sulphur residual fuel oil generation and, on occasion, from combustion turbines. Energy produced to replace system losses would be generated from the same equip.-..ent.

Currently, energy costs on the older low-sulphur residual fuel oil fired units are about 26.5 mills per kilowatthour. Current energy costs on'the combustion turbines are in excess of 43 mills per kilowatthour. Given the approximate mix of the two types or units in generating conservation energy, the figure of 30 mills pez kilowatthour to proviae losses was estimated.

3-3 NYPP CAPITALIZATION BOOK RETU~V Attachment 3 FOR GAS TURBINE PLA'JT Cap. Cost of Ca Undeprec. Book Ratio Nom. Eff. Plant Return I rg ry Central Hudson Debt 51. 51 6.83 3. 52 Preferred 13. 44 6. 30 0.85 Common 34. 25 13. 00 4.45 Gust. Deposits 0. 80 8.00 0.06 8.88 x 86.1 7.65 Con Edison Debt 46. 6 6. 19 2.88 Preferred 12. 4 5. 97 0.74 Common 40.2 13. 23 5.32 Gust. Deposits 0.8 8.00 0.06 9.00 x 87.3 7.85 Owned Plant  % of Total Plant Cost x 53,1 Book Return  % of Total Plant Cost "4. 17 Lena Island Debt 51. 52 6.61 3.41 Preferred 14.48 7.22 l. 05 Common 34.00 13.44 4. 57 9.03 x 77.4 6.99 Niagara i~fohawk Debt 51.42 7. 02 3.61 Preferred 14.07 6.78 0.95 Common 34.51 13.75 4.75

9. 31 x 68.7 6. 40 Oran,e & Rockland Debt 53.2 7.32 3.89 Preferred 12. 5 6.56 0.82 Common 34. 3 13.50 4. 63

9. 34 x 72 ' 6.74 Cmed. P lan t % o f To ta 1 P lan t Cost x 17.5 Book Re turn  % of To tal Plant Cost 1.18 Rochester Debt 50.0 7. 51 3.76 Preferred 15.0 7.23 1.08 Common 35.0 13.50 4.72 9.56 x 75.3 7.20

• Based on 1975 Cost Data

3-4 Attachment 3 NYPP - CAPITALIZATION 6 LEVELIZED BOOK RETURN FOR TRANSNISSION PLANT Levelized Cap. Book Ratio Nom. Eff. Return

/ ey eg ey Central Hudson Debt 51. 51 6. 83 3. 52 Preferred 13. 44 6. 30 0.85 Common 34. 25 13.00 4.45 Gust. Deposits 0.80 8.00 0.06 8.88 5.79 Con Edison Debt 46.6 6. 19 2.88 Preferred 12.4 5.97 0.74 Common 40.2 13.23 5. 32 Cust. Deposits 0.8 8.00 0.06 9.00 5.89 Lon Island Debt 51. 52 6.61 3.41 Preferred 14.48 7.22 1.05 Common 34.00 13.44 4.57 9.03 5.92 New York State Debt 52. 8 6. 71 3. 54 Preferred 14. 3 7.09 1.01 Common 32. 9 13. 50 4.44 8.99 5.89 Nia ara Mohawk Debt 51. 42 7. 02 3. 61 Preferred 14.07 6.78 0.95 Common 34.51 13.75 4.75 9.31 6. 17 Oran e & Rockland Debt 53. 2 7. 32 3.89 Preferred 12. 5 6. 56 0.82 Common 34. 3 13. 50 4.63 9.34 6.20 Rochester Debt 50. 0 6. 36 3. 18 Preferred 15. 0 6.71 1.01 Common 35. 0 13.50 4. 73

. 8.92 5. 82

-Levelized Book Return is based on:

Average Service Life 40 years Tax Life 24 years Federal Income Tax Rate 487, Tax Treatment - Flow through investment tax credit 47.

NYPP ee

SUMMARY

OF FIXED CHARGE EXPONENTS ON TRANSMISSION PLANT Levelized Annual Fixed Char e Rate - % of Net Investment>>

Oper.

$ 1,000 Fed. NYS Net Plant Book Book Income Prop. Maint. Earnings

~Com ac Investment Return ~De rcc. T"x Tax Tcsllt, Tax Totals CH 54,633 5. 79 2. 50 1.94 1. 68 0. 10 3. 82 0.12 15. 95 CE 673,519 5.89 2. 50 1. 95 4.73 0. 10 3.12 0.14 18.43 LILCO 142,479 5. 92 2. 50 1. 96 5.91 0. 10 3. 13 0.15 19.67 NYSEG

~ e 213,940 5.89 2. 50 l. 95 2.17 0. 10 2.34 0.11 15.06

/pea 6.17 483,085 2. 50 1. 98 2.90 0. 10 2.09 0.12 15.86 06R 50 07~ 6.20 2. 50 1.98 3e60 0. 10 3.84 0. 14 18.36 RGE 71,431 5.82 2. 50 1.95 4.02 0. 10 4.89 0.15 19.43 Transmission Plant Composite 1,689,959 5.97 2.50 1.96 3.82 0.10 2.84 0.13 17.32 Annual Fixed Char e Rate Rounded To 17. 07,

>>Levelized Annual Fixed Char e Rate is Based On:

Average Service Life 40 Years Tax Life 24 Years Federal Income Tax Rate Tat 'l'1'iatf&nt - Flblv throtlgh itivQstn1ltnt tak tredit. 4I NY State Earnings Tax 0.75% of gross revenue Property Tax 8 1975/76 rates Oper. 6 lhint. 8 1975/76 rates

FERC Request (5) With respect to cost support submitted on behalf of APS, please provide the individual member's capitalization showing the costs of debt and preferred stock and return on common equity associated with thc 9.0% and l0.0%

rates of return shown on page 2 of Attachment l.

Alle hen Po"..'er System 0 eratin Com anies

~Ca ital Structure and Honey Cost Rates 0acomoer 3~977 Allegheny Power Svstem Combined Potomac Edison t<onon ahela Power Hest Penn Power Cap. Cost Rate ~ap. Cost, R~ae Cap. Cost Pate Cap. Cost Rate Ratios Emb. ~Com . Ratios 6 ~tom . I ti ~E. Ratios ~E Oebt 4'6 other long-tevill Gbl ~at a a o.as 54, 0,'! '. 29% 3. 94% 53. 7% 7. 6% 4.112 63.1% 7. 63% 4. 05% 52,0/ 6.82/e 3:55%

Preferred stock 12.6 6.98 .88 '11.4 7.54 .86 12.5 7.13 .89 13.1 6.60 .86 Subtotal 4.82 4.97 4,94 4. 41 CollMRon stock v/1 th 9% composite cost rate 33.4 12.51 4.18 . 34.9 11.55 4.03 34.4 11.80 4.06 34.9 13.15 4.59 Total composite cost rate 9.00 '9.00 9.00 9.00 rt Colon stock with Cs

~

10/ composite cost rate 33.4 15.51'.18 34,9 14.41 5.03 34.4 14.71 5.06 34.9 16.02 5.59 9

40 cs S I

Total composite cost rate 10. 00 :10.00 10.00 10. 00

5-1 Attachment 5 FERC Request Please submit a statement as to why the proposed Conservation Energy Service waxrents thc demand related charge of 3.75 mills/KNHR.

~Rcs onset The previously filed Schedules 8.01 to the APS-PZif and NYPP-PZii Agreemcnts, which were in effect during 1974, provided for a generation service charge of 3.0 mills/KHiiR for thc supply of Conservation Energy. Those schedules werc accepted for filing only thxce years ago after lengthy conferences by the FPC with respect to Docket No. 74-22. In proposed Schedules 8.02, this scrvicc charge has been incrcascd to 3.75 mills/KUR to reflect thc increases that have taken place in the past three years in plant investmcnt for generation and transmission facilities, and in annual charges associated therewith.

Following the FPC Order under Docket No. 74-22, the FPC issued on November 29, 1974 Order No. 520 (Docket No. 75-3) amending the Re ulations under the Federal Power Act with respect to the operational and ratemaking principles and guidelines which the Commission will apply to requests for "emergency" orders pursuant to Section 202 (c) of the Act. Part 32.62 of said Order entitled "Emergencies Related to Inadequate Supplies of Fuel and Enexgy for Electric Generating Plants" provides in Section E for Rates and Charges as follows:

"If the service to be rendered has characteristics of firm service similar to that rendered by the supplier to its other customers, the generating and transmitting systems shall each be enti led to recover the following costs:

(a) an allocable portion of 'nvestment costs of its respective i production plant, including return on 'nvestment, depreciation, income taxes, property and othcx taxes related to plant investment and insurance; (b) an <<llocable portion of investment costs of its respective transmission plant, including return on investment, depxcciation, income taxes, proper y and other taxes related to plant investment and insurance;"

5-2 The parties proposing new Schedu'es 8.02 for Conservation Energy transactions consider the supply of such energy as a firm service since it is arranged in advance for periods of one or more weeks and for specified quantities of hourly delivery.

Such arranged-for deliveries may be reduced only i'f unforeseen conditions cause the delivery to be burdensom to any system involved in the transaction. Therefore, the foregoing FPC guidelines for firm service hav been applied in the development of the 3.75 mills/KWHR service charge which is a negotiated charge acceptable to all parties to these Agreements. This charge for all groups of parties is lower than the computed annual charges on an hourly basis per KW as shown below.

APS NYPP Computed Annual Costs - mills/KWHR 3.98 4,72 3.80 Negotiated Service Charge - mills/KWHR 3.75 3.75 3.75

PENNSYLVANIA-NEW JERSEY" MARYLAND INTERCONNECTION 955 JEFFERSON AVENUE VALLEYFORGE CORPORATE CENTER NORRISTOWN, PENNSYLVANIA 19401 l td) dOS 7590 Federal Power Commission August 16, 1976 825 North Capitol Street, N.E.

Washington, D C. 20426 Attention: Mr. Kenneth F. Plumb, Secretary Gentlemen:

There is filed herewith, on behalf of the following listed companies, proposed Schedule 7.03 replacing Schedule 7.02 to the Interconnection Agreement between the Allegheny Power System Group (APS Group) and the Pennsylvania-New Jersey-Maryland Group fPJM Group) dated April 26, 1965'as supplemented (Agreement), which is on file with the Commission and is identified by the Rate Schedule Number shown for each listed company.

~corn aa FPC Rate Schedule No.

West Penn Power Company 18 The Potomac Edison Company 26 Monongahela Power Company 22 Public Service Electric and Gas Company 36 Philadelphia Electric Company 27 Pennsylvania Power & Light Company 41 Baltimore Gas and Electric Company 17 Potomac Electric Power Company 21 Jersey Central Power 6 Light Company 21 Metropolitan Edison Company 25 Pennsylvania Electric Company 45 It is requested that the proposed Schedule become effective on September 20, 1976.

All of the parties to the Agreement have approved this .filing and have received copies thereof. This filing is made on behalf of such parties by the undersigned in accordance with the Juthorization contained in Set.tion 5.6 of the Agreement.

The following documents are submitted herewith in connection with this filing:

1 Six (6) copies of this letter.

2 . Twenty eight (28) copies of proposed Schedule 7.03.

en 3- Six (6) cop es of a statement of the bas.'s for the fixed rate for service proposed in Schedule 7.03 and computations in support of this rate.

4 Six (6) copies of a form of Notice of Agreement suitable for publication in the Fedez al Register.

5 A check covering the required filing fee..

Public Service Electric and Gas Coml sny General Public Utilities Corporation phlladelphla Electric Company Jersey Central Power h Light Company

~ Metropolitan Edison Company Ponnsylvsnla Power da Light Comosr y .

Pennsylvania Electric Company saltlmore Gss and Electric company Potomac Electric Power Company

The only change proposed in Schedule 7.03 is a change in the fixed capacity charge associated with the supply of Short Term Power from $ 450 to $ 500 per megawatt per week. The proposed increase is to bring the price in line with present costs.

The proposed rate is the same as accepted for filing by the Commission for similar services under agreements between the PJM Group and CEI and between the APS Group and AEP. Support for the proposed rate is provided in the enclosed statement.

Because of the uncertainty of the needs of either party or others for Short Term Power, it is impossible to predict the transactions and revenues under the proposed Schedule.

No facilities are required to be installed or, modified in order to provide the services covered by the proposed Schedule.

Copies of this letter and its enclosures will be furnished promptly to the Regulatory Commissions of Ohio, Pennsylvania, New Jersey, Maryland, Delaware, Virginia, West Virginia and the District of Columbia for their information.

A check in the amount of $ 1,100 is enclosed pursuant to Section 36.2(e) of the Commission's Regulations to cover the filing fee determined as follows: $ 100 for a nominal rate schedule for one party and $ 100 for each additional submittal for each of the other parties to the Agreement.

Very truly yours, Wilmer S. Kleinbach Manager TPW:cab Enclosures cc: Allegheny Power System

SCHEDULE 7.03 (REPLACING SCHEDULE 7.02)

TO INTERCONNECTION AGREEMENT BETWEEN THE APS GROUP AND THE PJM GROUP Issued August 16, 1976 Effective September 20, 1976 SHORT TERM POWER Section 1.8 of this Agreement provides that the APS Group and the PJM Group shall set forth additional schedules to this Agreement to provide for special services to be rendered in furtherance of the intent of this Agreement.

This Schedule 7.03 replaces Schedule 7.02 as one such additional schedule.

Short Term Power shall be considered to be electric power that is scheduled on a weekly basis between the Groups to meet the needs of a deficient Group from a Group having'excess or from others with which it has similar agreements. Schedules may be established for one or more weeks and as used herein the term "week" shall mean any seven consecutive days.

Section 1 - Services to be Rendered F 1 Either Group may arrange to reserve from the other, for periods of one or more weeks, such Short Term Power whenever, in the sole judgment of the party requested to reserve the same, such power is available. Upon request the supplying party shall furnish to the reserving party estimates of loads, capacities, and other relevant data by means of which the reserving party can assess the availab'ility of such poser 1.11 Prior to each reservation of Short, Term Power, the number of megawatts to, be reserved, the period of reservation, and the source of the power if the supplying party is in turn reserving power from another system, or the ultimate destination of the power if the reserving party is in turn reserving power for another system, shall be determined by

Schedule 7 03 the parties. Such determination shall be confirmed in writing.

1 12 If the reservation is supplied from the supplying party' system, it may be reduced only when during such period conditions arise that could not have been reasonably foreseen at the time of the reservation and cause the I

reservation to be burdensome to the supplying party' system. If the reservat.ion is transmitted by the supplying party from another system, it may be reduced only when and to the extent reduced by such other system or when during such period conditions arise that could not have been reasonably foreseen at the time of the reservation and cause the trans-mission to be burdensome to the supplying party's system.

The supply or transmission of the reservation shall be considered burdensome if continuation would jeopardize service to firm customers on the supplying party's system or interrupt prior commitments by the supplying party for the delivery of similar conmitments to another system or systems.

Any reduction in reservation shall be confirmed in writing by the supplying party and shall specify the amount of megawatts reduced and the period of reduction.

1.13 luring each period that Short Term Power has been reserved, the party that has agreed to supply such power shall upon call provide operating capacity ("S'.sort Term Operating Capaci.ty") of up to and including the number of megawatts then reserved and deliver electric energy ("Short Term Energy" )

to the reserving party at a rate during each hour of up to and including such number

3w Schedule 7.03 Section 2 - Com ensation 2.1 The reserving party shall pay the sup'plying party for any period that Short Term Power is reserved.

2 ll $ 500 per megawatt reserved per week to be supplied from the supplying party's system less, for each day (other than Sunday) during any part of which the amount of such Short Term Power from the supplying party.'s system is reduced by the supplying party, one-sixth of said $ 500 per megawatt of the reduction; plus 2.12 for each megawatt of the reserved Short Term Power purchased by the supplying party from another system (a) the amount paid therefor by the supplying party plus (b) for each week such Short Term Power is reaerved $ 125 per megawatt less, for each day (other than Sunday) during any part of which the amount of such Short Term Power is reduced by the supplying party for reasons as set forth in 1.12, one-sixth of said $ 125 per megawatt of the reduction; plus 2.13 1107. of the cost of providing Short Term Operating Capacity called for under Subsection 1.13 of this Schedule that is relat. d to the Short Term Power provided on the supplying party's own system and 110/ of the amount paid by the supplging party for all other such Short Term 'Operating Capacity; plus 2 14 1107. of the cost, adjusted for trarsmission losses, of supplying Short Term Energy called for under Subsection 1 ~ 13 of this Schedule that is related to the Short Term Power provided on the supplying party's own system and 1107. <<f the amount paid by the supplying party, adjusted for transmission losses. for all other such Short Term Energy

4 Schedule 7 03 Section 3 - Termination 3.1 Either party upon one year prior written notice to the other may terminate this Schedule

APS GROUP-PJM GROUP INTERCONNECTION AGREEMENT STATEMENT OF THE BASIS OF THE FIXED RATE FOR SHORT TERM P(MER AND SUPPORTING COMPUTATIONS The f$,xed capacity charge of $ 500 per megawatt per week specified in Schedule 7.03, Section 2.11 is a negotiated rate intended to compensate the supplier of Short Term Power for full fixed annual costs for investment in generating ynd transmission facilities, prorated for the period of the reservation, on the basis that Short Term Power is available capacity reserved by the supplying system for the deficient system for periods of one or more weeks and constitutes a firm capacity transaction. Out-of-pocket or variable costs are otherwise provided for in the charges for Short Term Operating Capacity and Short Term Energy.

The sgpporting computations for the APS Group are shown on pages 2 and 3, and for the PJM Group on pages 4 and 5.

SUPPORTING COMPUTATIONS - APS BASIS

$ ERVICE CllARGE COST ANALYSIS AS OF 12/31/75 Plant Alle hen Power S stem Production Plant ($ 1000's) 1,045,688 Plant Cypycity (mw) 6,429 Plant per kw Capacity ($ /kw) 162.65 Plant at $ 5% Carrying Charges ($ /kw-yr)* 24.40 Plant 0. 469 Plant 2. 033 Transmission Bulk Trangmission Plant ($ 1000's) 361,597 Load (mv) 4,588 Bulk Transmission per kw Load ($ /kw) 78. 81 Bulk Transmission at 17% Carrying Charges*

($ /kw-yr.) 13.40 Bulk Transmission ($ /kw-wk.) 0.258 Bulk Transmiss:.on ($ /kw-mo.) 1.117

• See Page 3; 15% .s used for production plant for short-term power schedule coilputations since operation and maintenance expenses for production p1ant are included in the computation of energy costs.

SUPPORTING COMPUTATIONS - APS BASIS (cont'd)

ANNUAL RATE OF CARRYING CHARGES

~Com onene Ran e of Values Cost of Money (55% debt) 8,0 Federal Income tax 2.6 3.7 Depreciatiog on Sinking Fund Basis 1.4 e9 Other Taxes ynd Insurance (Based on actual experience)

Operation and Maintenance 2.1 2.1 (Based on actual experience)

Total 15.2 17.8 The above shows a range of values based on embedded and incremental costs.

Taking into account our. best estimate of future conditions, an annual rate of 17% (including operation and maintenance) has been used in this study.

Where inclusion of operation and maintenance charges is not appropriate 15%

above figures are of necessity approximations of the components. 't has been used. When considered over the entire life of the agreement, the intended to $ ndicate that each such component will or should be fixed, at is not all times, at any given figure. The 17% and 15% figures is believed, under it all the circumstances and taken in the aggregate, will provide a fair return over the life of the agreement and with the recognition that particular com-ponents may vary somewhat from time to time during the life of the agreement.

The negotiated $ 0.50 short-term power capacity charge theoretically produces an annual carrying charge rate on the basis of production and tra~.s-mission plant of 10.8% and a cost of money corn>onent of approximately 7.5%.

The reciprocal short-term power capacity "ate was negotiated at arms-1ength. The contribution to fixed charges as evidenced by the carrying charge rate and cost of money component above are acc ptable only as to this type of reciprocal transaction and the publishing by the Allegheny System of such rates $ s not to be deemed for any purpose whatsoever, that such carrying charge rate oz co~t of money component thereof is adequate or reasonable for any other typo of service.

SUPPORTING COMPVI'ATIONS - PJM BASIS PJM costs necessari represent a composite. of various company costs, based, on different capitalizations, different service lives, different methods of t z accounting, and different state and local tax obligations. On a representative basis, however, the PJM costs are above the amounts necessary to support the proposed rates. Consequently, the compromises involved in the determina ion o estimated costs on a PJM basis are not of critical importance. For further.

explanation of computations, see notes which follow 'on next page.

Since Extended Emergency and Short Term Power services will most often be supplied by combustion turbines, costs have been determined on the basis of such supply.

Ratio Combustion Turbines System Transmission (52-31-75) Cost at Installation) Imbedd.ed. Cos" Bond,s Preferred.

52/

13$

Ie 8.5 8.5 =

=

4.42~ 8 7.0 =

7 75=

3.64$

1.015 Common Equity 35% 814.0 = 4.Mg 0 = Q.c

10. 3 9.55 Return Round. to 10.5$ Round to 9.5+q Original Cost (Avg. of PJM CT's) $ 112/1M 58/

. Life in Years Book/Tax 22.5/22.5 40/24 Level Carrying Charge Rate 16.5$ 13-5$

Annual Costs Level carrying charge g8.48 $ 7.83 Fixed. 0&M expense .50 (@) 1.16 Total QE.gH Rounded. Rounded Total Annual Cost $ 19.00/lÃ/YR $ 9.00/P~l/YR Ca acity Charge for Short Term Power Total annual cost: Capacity .$ 19 Transmission 9 e

W/KW/ER x 1000 = $ 538/RW/MEEK.

52 weeta Proposed, Charge = $ 500/YA/ GKK

SUPPORTING COMPUTATIONS - PJM BASES (cont'd)

Notes

1. Capacity costs are based on the current average PJM companies'nvestment cost for combustion turbine installations, which amounts to 4112/IG<. The return used for combustion turbines is based on rates for debt and preferred equity which are representative of the rates incurred by the member companies during the period when the bulk of the PJM combustion turbines were installed.

2. Transmission costs are based on the 1975 FPC Form 1 total transmission plant investments for PJM companies, adjusted to exclude the estimated investment in facilities used. for or related to step-down transformation to voltages below 110 KV. This transmission investment ($ 1807 million), divided by the all-time PJM peak of 30,993 YiW yields $ 58/KH. Such transmission has been installed over many years, and. accordingly the return on transmission investment is based. on representative imbedded costs.

3. In addition to return, depreciation, and. income tax', the carrying charge rates reflect the use of double declining balance depreciation, an R-2 mortality dispersion characteristic, the 4$ investment tax credit and lpga other taxes. The composite

~

income tax rate is 52.Q which includes the Pennsylvania gross receipts tax.

4. Fixed 0&M expenses are estimated at $ 0.50/KW/YR for CT's and @ of gross plant for transmission.

UNITED STATES OF AMERICA FEDERAL POWER COMMISSION APS Group - PJM Group ) Docket No. E-Interconnection Agreement ) Date NOTICE OF SUPPLEMENT TO INTERCONNECTION AGREEMENT Take notice that on August , 1976 the Pennsylvania-New Jersey-Maryland Group (PJPi Group) tendered for filing on behalf of themselves and the Allegheny Power System

.'Group (APS Group) proposed Schedule 7 ~ 03 dated August 16, 1976 to the Interconnection Agreement between them dated April 26, 1965, which is. filed with the Commission under the following Rate Schedule designations:

Rate Schedule West Penn Power Company FPC No. 18 The Potomac Edison Company 26 Monongahela Power Company 22 Public Service Electric and Gas Company 36 Philadelphia Electric Company 27 Pennsylvania Power & Light Company 41 Baltimore Gas and Electric Company 17 Potomac Ele tric Power Company 21 Jersey Cent"al Power & Light Company 21 Metropolita s Edison Company 25 Pennsylvania Electric Company 45 The proposed Sch dule increases the capacity charge for Short Term Power services in order to cover present costs and to conform with the rate for,similar services in other agreements betw: en the parties and others.

No new facilities will be installed nor will existing facilities be modified in connection with the p=oposed Schedule. The filing party has requested that the proposed Schedule become effec've on September 20, 1976

Any person desiring to be heard or to make any protest with reference to the subject matter of this Notice should, on or before file wi.th the Federal Power Commission, 825 North Capitol Street, N.E., Washington, D;C. 20426, petitions to intervene or protest in accordance with the requirements of the Commission's Rules

\

of Practice and Procedure (18 CFR 1.8 or 1.10). All protests filed with the Commission will be considered by it in determining the appropriate action to be taken but will not serve to make the protestants parties to the proceeding. Persons wishing to participate as a party in any hearing therein must file petitions to intervene in accordance with the Commission's Rules. The documents referred to herein are on file with the Commission and available for public inspection.

Secretary

'SCHEDULE 4.03 (REPLACING SCHEDULE 4,02)

TO INTERCONNECTION AGREEMENT BETWEEN THE APS GROUP AND THE PJM GROUP ~

Issued February 9, 1976 Effective March 15> 1976 ECONOMY OPERATING CAPACITY AND ENERGY TRANSACTIONS Section 1.0 of this Agreement provides for interchange of operating capacity and energy on an economy basis. Such interchange shall be defined and accounted for as outlined below.

Section 1 - Economv 0 eratin Ca acit 1 1 An economy operating capacity transaction is a scheduled trans-action wherein one Group supplies operating capacity for the other Group to replace higher cost operating capacity of such other Group.

1 2 Economy operating capacity supplied by one Group shall be charged to and paid for by the other Group on the basis of the cost of such supply and the amount paid for capacity obtained for this purpose from other systems not a party to this Agreement, plus one-half the difference between (1) the sum of the said cost and the amount paid, and (2) what it would have cost the other Group to have operated the capacity replaced Section 2 - Econom Ener 2il hn economy energy transaction is a scheduled transaction wherein one Group supplies energy to the other Group to replace higher cost energy-2 2 When the transact/on is between the two Groups, the receiving Group shall pay the supplying Group its cost of generating the energy, adjusted for transmission losses to its point of 'delivery, plus one-half the difference between what it would have cost the receiving Group to have generated the energy replaced and the adjusted cost of the supplying Group.

2.3 When the Groups arrange for economy energy to be supplied by or delivered to other systems interconnected with the Groups, but not signatories to this Agreement, payments shall be based on the cost of generating the energy and an allocation of the gross savings which are defined as the difference between (1) what it would have cost the receiving system to have generated the energy replaced, and (2) the supplying system's

\

cost of generating the energy, adjusted for transmission losses to its point of delivery-2 31 Each Group or system participating in the transaction, other than the supplying and receiving systems, shall be paid the sum of (a) its cost of purchasing the energy, (b) its cost of additional transmission losses incurred and (c) 15% of the gross savings remaining after deducting all such"payments for transmission losses.

2 32 The supplying Group or system shall be paid its cost of generating the energy, adjusted for transmission losses to its point of delivery, plus one-half of the gross savings remaining after deducting all (b) and (c) payments made under 2 31

SCHEDULE 8.01 TO INTERCONNECT IOi~ AGREE~)ENT BE'DRED THE APS GROUP AND THE PJM GROUP

'Issued March 26, 197'-)

Ef fective January 1, 197-'UEL CO:)SERVATION ENERGY Section 1 8 of this Agreement provides that the APS Group and the PJM Group shall set forth in additional schedules the arrangements for specific services to be rendered in furtherance of the intent of this Agreem nt. This Schedule 8.01 has been agreed to by the parties in accordance therewith.

Fuel Conservation Energy shall be considered to be electric energy that is scheduled between the Groups, for periods of one or more weeks during off-peak hours as defined in this Schedule, solely for the purpose of conserving fuel inventories. The following are the terms and conditions governing the generation and supply of such Energy by one Group for the other, and also the transmission of Fuel Conservation Energy to and from systems interconnected with the APS Group or the PJM Group. As used herein the term "week" shall mean any seven consecutive days.

Section 1 - Services to be Rendered 1.1 Either Group may arrange with the other, for periods of one or more weelcs) for the delivery of Fuel,Conservation Energy whenever, in its sole judgment, the Group requested to supply the same has the capability and the fuel resources to make it available.

1.11 Prior to such arrangement for Fuel Conservation Energy, the number of megawatts to be supplied, the period of supply', the estimated cost, and the sources of supply if the supplying Group is in turn obtaining it from another system, or the ultimate destination if a Group is in turn

arranging for the supply for another system, shall be determined by the Groups. Such determination shall be confirmed in writing, if requested by either Group.

1.12 Lf such Energy is supplied from the supplying Group's system, it may be reduced only when during such period conditions arise that could not have been reason..ble foreseen at the time of the arrangement'nd cause the arrangement to be burdensome to the supplying Group's system. If the Energy is transmitted by the supplying Group from another system, it may be reduced only (1) when and to the extent reduced by such other system or (2) when during such period conditions arise that could not have been reasonably foreseen at the time of the arrangement and cause the transmission of the Energy to be burdensome to the supplying Group's system or (3) when a transmi sion or other limitation in the system of the receiving Group or another system (other than the receiving Group) interconnected directly or indirectly with the system of the receiving Group makes it impracticable, as a technical matter, to receive such delivery from the supplying Group. Any reduction in the amount of Ene gy shall be confirmed in writing by the supplying or receiving Group as the case may be, and shall specify the amount of megawatts reduced and the period of reduction.

1 13 For the purpose of this Schedule, off-peak hours shall be defined to be between the hours of 10:00 p.m. and 7:00 a.m. Eastern Standard Time or Eastern Daylight Saving Time (whichever Time is in legal force on the system of the supplying Group) on any day other than Sunday, and certain legal holidays, and during any hour on Sunday and such legal holidays.

1.14 During each weekly period that Fuel Conservation Energy has been arranged for, the Group that has agreed to supply such Energy shall upon

call deliver megawatthours to the receiving Group in amounts up to and including the number of megawatt-hours equal to the product of seventy-two (72) hours and the number of megawatts then arranged for ("receiving Group's Entitlement" ).

1 15 During the period of the arrangement, the supplying Group and the receiving Group may arrange, as dictated by operating conditions, available generating capability and fuel resources, to deliver and to take, respectively, (1) amounts of Fuel Conservation Energy at a rate I

of delivery exceeding the number of megawatts then arranged for during l

the hours specified in Subsection 1.13 or, (2) the receiving Group's Entitlement or some portion thereof, in part during the hours specified in Subsection 1.13, and in part during other hours.

Section 2 - Com ensation 2.1 The receiving Group shall pay the supplying Group for each kilowatt-hour of Fuel Conservation Energy supplied from the supplying Group's system an amount equal to 110% of the out-of-pocket replacement cost of generating such Energy plus 3.0 mills per kilowatthour.

2 2 The receiving Group shall pay the supplying Group for each kilowa t-hour of Fuel Conservation Energy purchased by the supplying Group from another system and supplied during the period of the arrangement the amount paid therefor by the supplying Group plus 1.75 mills per kilowatthour.

2.3 For purposes of this Schedule, out-of-pocket replacement cost of supplying Fuel Conservation Energy shall mean out-of-pocket cost of generating such Energy plus or minus an adjustment (to be made by supplemental bill) to reflect increases or decreases in the cost of fuel on a Btu basis between the cost of fuel at the stations from which the Energy was delivered during the month in which the Energy was delivered and the cost of such fuel for the second month after such month of delivery.

4 Section 3 Termination This Schedule shall remain in effect for one year unless extended by mutual agreement of the APS Group and the PJM Group.

PENNSYLVANIA"i'VJ J ERSEY- MARYLAND I NTEH CON N ECTI ON Public Service Dcctric and Gas Company BaltimOre Gas and Electric Company New Jersey Po~er d, Light Company Philadelphia Electric Company Pennsylvan4 Dectric Company Jersey Central Power g Light Company Pennsylvania Power g LiglitCompany Metropohtan Edison Company Potomac Electric Power Company 055 JCFFERSQN AVENUE VALLEYFORGE INDUSTRIAL PARK NORRISTOWN. PENNSYLVANIA tpaot (215) 555 756D November 14, 1974 Federal Power Commission 825 North Capitol Street, N.E.

Washington, D. C. 20426 Attention: Hr. Kenneth F. Plumb, Secretary Gentlemen:

There are filed herewith, on behalf of the following listed companies, twenty-two (22) copies of proposed Schedules to the Interconnection Agreement between the Allegheny Power System Group (APS Group) and thc Pennsylvania-New Jersey-Maryland Group (PJM Group) dated April 26, 1965, as supplemented (Agreement), which is on file with the Commission and is identified by the Rate Schedule Numbers shown for each listed company.

~corn anv FPC Rate Schedule No.

West Penn Power Company 18 The Potomac Edison Company 26 Monongahela Power Company 22 Public Service Electric and Gas Company 36 Philadelphia Electric Company 27 Pennsylvania Power & Light Company 41 Baltimore Gas and Electric Company 17 Potomac Electric Power Company 21 PennaylVania EleCtriC COIuPany 45 Metropolitan Edison Company 25 Jersey Central Power & Light Company 21 The documents accompanying this letter include:

1) Proposed Schedules 1.06, 4.02, 5.02, 6.02, 7.02 and 9.01, all dated November 14, 1974.

2) A summary of Schedule revisions and additions.

3) A statement of the basis for the fixed rates for services provided in the Agreement and computations in support of these rates.

4) A check covering the required filing fee.

5) Three copies of a form of Notice of Agreement suitable for publication in the Federal Register, in accordance with the rcquircments of Section 35.8 (a) of the CDIIJttission's Regulations

It is requested that the proposed Schedules become effective on December 16, 1974.

,All of the parties to the Agreement have "approved this filing and have received copies thereof. This filing is being made by the Manager of the Office of the PJH Interconnection on behalf of all the parties, under the authorization contained in Section 5.6 of the Agreement.

Copies of this letter and all enclosures will be furnished promptly to the Regulatory Commissions of Pennsylvania, New Jersey, Maryland, Delaware, Virginia, West Virginia, Ohio and the District of Columbia for their information.

The revisions are proposed (1) to clarify the wording of the Agreement, (2) to bring it more nearly in conformance with other agreements, (3) to increase certain charges to a more equitable basis or to more nearly cover present costs of service, and (4) to provide for charges for new services and services involving third parties. The reasons for the several changes involving pricing are more specifically described as follows:

Emer,encv Enemy 'Transactions - In Schedule 5.02, provision is made for alternative pricing for emergency energy. The existing agreement provides only for a charge based on the supplying Group's cost plus 10%. Where there is normally a wide spread between the generating costs of the two Groups, pricing on this basis sometimes results in a charge for emergency energy that is less than the charge that, except for the emergency classification, would be made at the same time for an economy transaction. Also, where there is a wide spread, the costs for emergency transactions in one direction are sometimes far different from those in the other direction. It is the agreement of the Groups that these differences are neither desirable nor equitable, and the proposed alternative pricing will tend to correct this condition.

Extended Emergency Service - Schedule -5.02 also provides that an additional charge of $ 35 per megawatt per day, or alternatively, when the service is not provided directly but from third parties, a charge of $ 21 per, megawatt per day be applied in connection with the supply of emergency service. The $ 35 represents about half of a x'easonable fixed charge for installed capacity service, i.e., about half of the fixed charge for Short Term Power ($ 450 per megawatt per week spread over six days equals

$ 75 00 per megawatt per day). The Extended Emergency Service is to be supplied when it is not possible or not appropriate to arrange for a Short Term Power transaction.

Because the added charge is applied automatically and for short periods and results from the mutual assistance that one Group provides for the other, it is appropriate that the rate be at such level (approximately 50% of the full capacity charge) that there is a sharing of benefits of the reduction in capacity that results from interconnected operation.

Short Term Power >> The rate for Short Term Power that is provided in Schedule 7~02 is increased and the conditions of supply are more completely defined. The increase is to bring the price in line with present costs and other agreements of the APS Group. The better definition of the service conditions is necessary if greater reliance is to be placed on such transactions and if they are to be effectively used in reducing the overall costs of providing capacity. The present agreement provides for a charge of $ 0.06 per kilowatt per day; based on a 5-day week this is equivalent to $ 300 per megawatt per week. The revision increases this charge to $ 450 (based on a 6-day week); it also provides that a charge of $ 125 per megawatt per week be applied when the Short Term Power is delivered by either Group to or from another area.

There werc no Short Term Power transactions between the APS Group and the PJM Group during the twelve months immediately preceding the date on which the proposed increase in rate provided in Schedule 7.02 is to become effective.

Hence, no comparison of revenues is possible. Rates are proposed for new services including Extended Emergency Service, and delivery of Short Term Power or Extended Emergency Servicq by either Group to or from a third party. Because of the uncertainty of the needs of either Group or others for the services provided for, it is impossible to predict the transactions and revenues under the proposed schedules.

The proposed rates for Short Term Power are similar to rates previously filed by the APS Group, and the proposed rates for Extended Emergency service are similar to rates previously filed by the PJM Group in an interconnection agreement with the llew York Power Pool except that in the latter agreement the

, service was identified as "Supplemental Operating Capacity". Support for the several proposed pates is provided in the enclosed statement.

No facilities are required to be installed or modified in order to provide the services covered by the proposed revisions.

A check i.n the amount of $ 500 is enclosed pursuant to Section 36.2 (f) of the Commission's Regulations to cover the filing fee.

Very truly yours, Wilm'er S; Kleinbach Manager TPW:cab Enclosures

APS-PWi INTERCONNECTION AGREEMENT Summar of Schedule Revisions and Additions Schedule 1.06 Introductory paragraphs provide that subsequent revisions to the list of metering points will not require further supplements to the Agreement, but instead will be entered routinely into the records of the APS-PWi Operating Committee. The revised Schedule elpo shows a change $ n the name of the first listed metering point from Lincoln to Germantown Substation, and of the eighth listed point of interconnection from Loyalhanna to Social Hall Substation.

A new paragraph is included which provides for metering tests and accounting procedures should metering equipment fail or register incorrgctly.

4.02 Present Schedule 4.01 covers OPERATING CAPACITY TRANSACTIONS and the revised Schedule covers ECONOMY OPERATIiVG CAPACITY AND ENERGY TRANSACTIONS.

5.02 Present Schedule 5.01 covers ENERGY TRANSACTIOVS and the revised Schedule covers EMERGENCY OPERATING CAPACITY AND ENERGY-TRAiVSACTIONS.

4.02 a The texts of present Schedules 4.01 and 5.01 have been rearranged

5. 02 to form the revised Schedules covering economy and emergency inter-change, respectively; and that part of 5.01. which dealt with Inadvertent Interchange is now included in revised Schedule 6.02. Revised Schedule 5.02 also includes the following new provisions with'respect to emergency interchange:

(a') For emergency energy, there is now provided an alternative basis for pricing, additional to the previously provided "cost plus 10%".

(b) Additional fixed service charges are provided for in "Extended Emergency Service".

6.02 Present Schedule 6.01 has been rearranged with new subheadings, and the text on Inadvertent Interchange now in present Schedule 5.01 and a new section on Control of Kilovar Exchange are added.

7. 02 The obligations involved in Short Term Power transactions under present Schedule 7.01 have been clarified; the demand rate applicable to the amount of reserved power is increased; a charge for services involving third parties applicable under certain conditions is included, and the provision for a "Reactivation and Deactivation Charge" is deleted.

9.01 This is a new Schedule covering Non-Replacement Energy Transactions.

SCHEDULE 1 ~ 06 (REPLACING SCHEDULE 1.05)

TO INTERCONNECTION AGREEMENT BETWEEN THE APS GROUP AND THE PJM GROUP Issued November 14, 1974 Effective December 16, 1974 DELIVERY AND METERING POINTS Section 3,6 of this Agreement provides that delivery and metering points between the APS Group and the PJM Croup be set forth in this Schedule. Listed below are such delivery and metering points as of the above effective date.

Section 2.2 of this Agreement provides that the Operating Committee shall act in operating and accounting matters in connection with this Agreement. This listing of delivery and metering points shall be maintained current by the Operating Committee and revisions hereto shall be recorded in the records of that Committee.

Interconnection Delivery Point Meterin Point Volta e KV

mantown Substation Metropolitan Edison Co.)

to Carroll Substation (The Potomac Edison Co.) Pa.-Md. State Line Germantown Substation 115/138 Roxbury Substation (Pennsylvania Electric Co.)

to Guiliord Substation Six miles south of (The Potomac Edison Co.) Roxbury Substation Roxbury Substation 115/138 Garrett Substation (The Potomac Edison Co.)

to eep Creek Tap Pennsylvania Electric Co )

off Penn Mar-Deep Creek Line Garrett Substation Garrett Substation . 115/138 Blairsville East Substation (Pennsylvania Electric Co.) "

to Four miles west of Social Hall Substation Blairsville East Blairsville East (West Penn Power Co.) Substation Substation 115/138 e g . ma Substation (West Penn Power Co.)

to \

P iney Substation (Pennsylvania Electric Co.) Piney Substation Burma Substation 115/138

Schedule 1.06 Interconnection Deliver Point Mete'rin Point Volta e KV okville Jct. Tap Pennsylvania Electric Co.)

off Armstrong-Elko Line Brookville (West Penn Power Co.) Brookville Jct. Substation 138/34.5 Shingletown Tap (West Penn Power Co.)

off 230/46 Shawvi1 le-Lewis town Line Shingletpwn Shingle town and (Pynnsylvania Electric Co. ) Substation Substation 230/138-Dickerson Generating Station (Potomac Electric Pover Co.)

to Doubs Substation Dickerson Generating Dickerson Generating 230 (The Potomac Edison Co.) Station Station Yukon Substation (West Penn Power Co,j, to Keystone Switching Station Keystone Switching Keystone Switching 500 (Pennsylvania Electric Co.) Station Station ko Tap

.est Penn P wer Co.)

off Shawvi 1 le-Forest Linc (Pennsylvania Electric Co.) Elko Substation Elko Substation 230/138 Cabot Substation (West Penn Power Co.)

to Keystone Switching Station Keystone Switching Keystone Switching (Pennsylvania Electr(c Co.) Station Station 500 Doubs Substation (The, Potomac Edison Co.)

to Conastone Substation Six miles east of Doubs Substation 500 (Baltimore Gas and Doubs Substation Electric Co.)

&30 Schedule 1.06 The metering equipment shall be tested by the owners at suitable intervals and its accuracy of registration maintained in accordance with good practice.

At the request of any party, a special test shall be made, but if less than one percent inaccuracy is found, the requesting party shall pay for the test.

Representativey of the Groups may be present at all routine or special tests and whenever any readings for purposes of settlements are .taken from meters not having an autOmytic record. If any test of petering equipment discloses an inaccuracy exceyding one percent, the accounts of the parties shall be adjusted for the period, not exceeding 30 pays, that such inaccuracy is estimated to have existed. Should any metering equipment fail to register, the amounts of energy delivered shall be estimated from the best available data.

SCHEDULE 4.02 (REPLACING SCHEDULE 4'01)

TO INTERCONNECTION AGREEMENT BETWEEN THE APS GROUP AND THE PJM GROUP Issued November 14, 1974 Effective December 16, 1974 ECONOMY OPERATING CAPACITY AND ENERGY TRANSACTIONS Section 1.4 of this Agreement provides for interchange of operating capacity and energy on an economy basis. Such interchange shall be defined and accounted for as outlined below.

Section 1 ~ Econom 0 crating Caoacit 1.1 Pq'conomy operating capacity transaction is a scheduled transaction wherein one Group supplies operating capacity for the other Group to replace higher cost operating capacity of such other Group.

1.2 economy operating capacity 'supplied by one Group shall be charged to and paid fog by the other Group on the basis of 'the cost of such supply and the amount paid for capacity obtained for this purpose from other systems not a party to this Agreement, plus one-half the difference between (1) the sum of the said cost and the amount paid, and (2) what it would have cost the other Group to have operated the capacity replaced Section 2 - Economv Enerp 2.1 An economy energy transaction is a scheduled transaction wherein one Group supplies energy to the other Group to replace higher cost energy of such other Group, 2 ' Economy energy supplied by the one Group shall be charged to and paid for by the other Group on the basis of the cost of generating it and the amount paid for it to other systems not a party to this Agreement, plus one-half .the difference between (1) the sum of the said cost and amount paid, and (2) what it would have cost the other Group to have generated the energy replaced. All costs shall be adjusted for transmission losses;

SCHEDULE 5.02 (REPLACING SCHEDULE 5.01)

TO INTERCONNECTION AGREEMENT BETWEEN THE APS GROUP AND THE PJM GROUP Issued November 14, 1974 Effective December 16, 1974 EMERGENCY OPERATING CAPACITY AND ENERGY TRANSACTIONS Section 1.5 of this Agreement provides for emergency operating capacity and emergency energy transactions. Such emergency transactions shall be defined and accounted for as outlined below.

Section 1 - Emer enc 0 eratinp Caoacit 1.1 An emergency operating capacity transaction is a scheduled trans-action wherein one Group supplies operating capacity for the other Group which said other Group cannot supply in its own system.

t 1 2 Emergency operating capacity supplied by one Group shall be charged to and paid for by the other Group on the basis of the cost of such supply and the amount paid 'for capacity obtained for this purpose from other systems not a party to this Agreement, plus ten percent (10%) in each case When a Group supplies such emergency operating capacity to the other Group from generating capacity not specifically operated for such supply, the cost of the supplying Group shall be the weighted average cost of its highest cost marginal capacity in operation at the time which is equal in amount to such emergency operating capacity.

Section 2 - Emer enc Energy 2.1 An emergency energy transaction is a scheduled transaction wherein one Group supplies energy to the other Group which said other Group cannot supply in its own system.

~ 020 Schedule 5.02 2 2 Emergency energy supplied by one Group shall be charged to and paid for by the other Group on the basis of the higher of either the supplying Group's cost of generating it adjusted'for transmission losses, plus ten percent (10%) of such cost, or a rate halfway between the cost rate of the supplying Group and the weighted average cost of the highest cost block of energy generated on the receiving system in an amount equivalent to the emergency energy received. In the event emergency energy supplied is obtained from another system not a party to this Agreement, it shall be charged to and paid for by the other Croup on the basis of the amount paid for it, adjusted for transmission losses, plus ten percent (10/) o'f the amount as so adjusted.

Section 3 - Extended Emer enc Service 3.1 Whenever emergency operating capacity or emergency energy is supplied by one Group to the other Group for a period exceeding two calendar days, the above charges and payments shall be in'creased by an additional capacity charge of $ 35 per megawatt per day based on the maximum hourly supply of capacity or energy, so long as the capacity and energy so supplied is supplied directly by the supplying Group from its own capacity. To the extent the maximum capacity or energy supplied exceeds the capacity or energy which could have been suppl.'ed directly, an additional transmission charge of $ 21 per megawatt per day shall be substituted for the $ 35 per megawatt.

3.2 In the event the emergency operating capacity or energy supplied by one Group to the other is scheduled for delivery to a system not a party to this Agreement, the above mentioned additional charges shall be applied on the firsp day of such supply and all subsequent days thereafter.

SCHEDULE 6.02 (REPLACING SCHEDULE 6.01)

TO INTERCONNECTION AGREEMENT BETWEEN THE APS GROUP AND THE PJM GROUP Issued November 14, 1974 Effective December 16, 1974 SCHEDULING AND ACCOUNTING Section 1.6 of this Agreement provides for the establishment of operating capacity and energy schedules between the Groups and the accounting for the resulting interchange transactions; Section 1 - Records 1.1 Energy associated with various transactions, including electrical losses associated therewith, shall be accounted for each clock hour.

1~2 Operating capacity associated with various transactions shall be accounted for on the basis of the period of time. such capacity is scheduled.

1.3 Each Group shall keep such log sheets and other records as may be needed to afford a clear history of the various interchanges of capacity and energy. In maintaining such records, the Groups shall provide such detail as may be needed in connection with the settlements under this Agreement.

Section 2 - Com onents of Cost 2.1 The following components of cost, when applicable, shall be included for operating capacity and energy transactions:

F 11 0 eratin, Ca acit Start-up and shut-down cost (boiler and turbine) ~

No load cost (boiler and turbine).

Associated additional maintenance cost (boiler and turbine).

Charge (or credit) for increased (or decreased) cost of energy generated by the Group

'associated with such operating capacity transactions.

Incremental labor costs.

Incremental taxes.

Miscellaneous incremental operating costs

w2w Schedule 6.02 2.12 ~Eeer Incremental fuel cost.

'ncremental transmission losses.

Incremental labor cost.

Incremental maintenance cost.

. Incremental taxes.

Miscellaneous incremental operating costs.

Section 3 - Inadvertent Interchange 3 ' Inadvertent interchange for each Group is the difference between net actual energy flow and net scheduled energy flow. Inadvertent interchange shall be accumulated as a credit or a debit and shall be repaid in kind.

3.2 Each Group shall endeavor to balance continuously its generation against its load so that the net loading of all its tie lines agrees with the scheduled net deliveries or receipts plus or minus its frequency bias or other obligation.

3.3 Inadvertent interchange accumulated during "on-peak" hours shall be repaid during "on-peak" hours; and, similarly, inadvertent interchange accumulated during "off-peak" hours shall be repaid during "off-peak" hours'he specific hours to be classified as "on-peak" or "off-peak" shall be determined from time to time by the Operating Commi.ttee.

r Section 4 - Control of Kilovar Exchange 4.1 Neither Group shall be obligated to deliver kilovars for the benefit of the other. Neither Group shall be obligated to receive kilovars when to do so might introduce objectionable .operating conditions on its system.

Subject to the foregoing, the Operating Committee shall establish from time to time (a) voltage levels to be maintained and (b) operating procedures for establishing and maintaining an equitable distribution of reactive power.

SCflEDULE 7. 02 (REPLACING SCHEDULE 7.01)

TO INTERCONNECTION AGREEl KNT BETWEEN THE APS GROUP AND THE PZif GROUP Issued November 14, 1974 Effective December 16, 1974 SHORT TERM POWER Section 1.8 of this Agreement provides that the APS Group and the PJM Group shall set forth additional schedules to this Agreement to provide for special services to be rendered in furtherance of the intent of this Agreement.

This Schedule 7,02 replaces Schedule 7.01 as one such additional schedule.

Short Term Power shall be considered to be electric power that is scheduled on a weekly basis between the Groups to meet the needs of a deficient Group from a Group having excess or from others with which it has similar agreements. Schedules may be established for one or more weeks and as used herein the term "week" shall mean any seven consecutive days.

Section 1 - Services to be Rendered 1..1 Either Group may arrange to reserve from the other, for periods of one or more weeks, such Short Term Power whenever, in the sole judgment of the party requested to reserve the same, such power is available. Upon request the supplying party shall furnish to the reserving party estimates of loads, capacities, and other relevant data by means of which the reserving I

party can assess the availability of such power.

1.11 Prior to each reservation of Short Term Power, the number of megawatts to be reserved, the period of reservation, and the source of the power if the supplying party is in turn reserving power from another system, or the ultimate destination of the power if the reserving party is in turn reserving power for another system, shall be determined by

Schedule 7.02 the parties. Such determination shall be confirmed in writing.

1.12 If the reservation is supplied from the supplying party' system, it may be reduced only when during such period conditions arise that could not have been reasonably foreseen at the time of the reservation and cause the reservation to be burdensome to the supplying party' system. If the reservation is transmitted by the supplying party from another system, it may be reduced only when and to the extent reduced by such other system or when during such period conditions arise that could not have been reasonably foreseen at the time of the reservation and cause the trans-mission to be burdensome to the supplying party'. system.

The supply or transmission of the reservation shall be considered burdensome if continuation: would jeopardize service to firm customers on the supplying party's system or interrupt prior commitments by the supplying party for the delivery of similar commitments to 'another system or systems.

Any reduction in reservation shall be confirmed in writing by the supplying party and shall specify the amount of megawatts reduced and the period of reduction.

1~ 13 During each period that Short Term Power has been reserved, the party that has agreed to supply such power shall upon call provide operating capacity ("Short Term Operating Capacity" ) of up to and including the number of megawatts then reserved and deliver electric energy ("Short Term Energy" )

to the reserving party at a rate during each hour of,up to and including such number.

w3w Schedule 7.02 Section 2 - Com ensation 2.1 The reserving party shall pay the supplying party for any r

period that Short Term Power is reserved.

2.11 $ 450 per megawatt reserved per week to be supplied from the supplying party's system less, for each day (other than Sunday) during any part of which the amount of such Short Term Power from the supplying party's system is reduced by the supplying party, one-sixth of said $ 450 per megawatt of the reduction; plus 2.12 for each megawatt of the reserved Short Term Power purchased by the supplying party from another system (a) the amount paid therefor by the supplying party plus (b) for each week such Short Term Power is reserved $ 125 per megawatt less, for each day (other than Sunday) during any part of which the amount of such Short Term Power is reduced by the supplying pa'rty for reasons as set forth in 1.12, one-sixth of said $ 125 per megawatt of the reduction; plus 2.13 110% of the cost of providing Short Term Operating Capacity called for under Subsection 1.13 of this Schedule that is related to the Short Term Power provided on the supplying party's own system and 110% of the amount paid by the supplying party for all other such Short Term Operating Capacity; plus 2.14 110% of the cost, adjusted for transmission losses, of supplying Short Term Energy called for under Subsection 1.13 of this Schedule that is related to the Short Term Power provided on the supplying party's own system and 110% of the amount paid by the supplying party, adjusted for transmission losses, for all other such Short Term Energy.

4 Schedule 7.02

. Section 3 - Termination 3.1 Either party upon one year prior written notice to the other may terminate this Schedule.

SCHEDULE 9.01 TO INTERCOiVNECTIOiV AGREEMENT BETWEEN THE APS GROUP AViD THE PS) GROUP Issued November 14, 1974 Effective December 16, 1974 NON-REPLACEMENT ENERGY TRANSACTIOVi S Section 1.8 of this Agreement provides that the APS Group and the PJM Group shall set forth additional schedules to this Agreement to provide for special services to be rendered in furtherance of the intent of this Agreement. This Schedule 9.01 is one such additional schedule.

The Parties recognize that from time to time occasions may arise when it may be impracticable to arrange Economy Energy transactions as provided for under Section 2 of Schedule 4.02 and at the same time one Group may have electric energy

("Non-Replacement Energy" ) which it is willing to make available from its own system or from sources outside its own system, or both, that can. be utilized advantageously for short intervals by the other Croup. Either Group may schedule from the other Non-Replacement Energy whenever, in the sole judgment of the Group requested to supply the same, such energy is available. Prior to each delivery of Non-Replacement Energy, the amount and time of delivery shall be determined by the Parties.

Non-Replacement Energy supplied by one Group shall be charged to and paid for by the other Group on the basis of the cost of gener'ating it and the amount paid for it to such systems not a.party to this Agreement, all adjusted for transmission losses, plus ten percent (10%) of such cost and amount as so adjusted.

APS-P JH INTERCONNECTIOiN AGREEtKilT STATEMENT OF THE BASIS OF THE FIXED RATES FOR EXTENDED EMERGENCY AND SHORT TERM POWER SERVICES AND SUPPORTING COMPUTATIONS The fixed routes for Extended Em rgency and Short Term Power services specified in the APS-PJM Interconnection Agreement can be supported on a

'ost basis. These rates are:

1 The additional capacity charge of $ 35 per megawatt per day specifi'ed in Schedule 5.02 and associated with the supply of Extended Emergency Service; and

2. The capacity charge of $ 450 per megawatt per week specified in Schedule 7.02, Section F 11 and associated with the supply of Short Term Power; and

3. The charge related to the delivery to or from third parties of certain capacity services of $ 21 per megawatt per day specified in 5.02 and $ 125 per megawatt per week speci. fied in Schedule 7.02.

CAPACITY CHARGE IN SCHEDULE 5.02 II The $ 35 per MW-day is a negotiated rate, intended to compensate t;he suppliers of Extended Emergency Service for some part of their fixed costs for investment in generating and transmission facilities. Out-of-pocket or variable costs are other-wise provided for in the charges for operating, capacity and energy.

In the determination of the rate, it was recognized that it should be less than (approximately half of) the full capacity cost as determined for Short Term Power on the premise that the supply of Extended Emerg'ency Service often results in a, sharing of reserves and the dependence of one Group on the other for reserve capacity, and, consequently, the rate for such sergei.ce should recognize a sharing of the benefits.

CAPACITY CHARGE IN SCHEDULE 7.02 The $ 450 per MW-week is a negotiated. rate intended to compensate the supplier of Short Term Power for full fixed annual costs for investment in generating and transmission facilities, prorated for the period of the reservation, on the basis that Short Term Power is available capacity reserved by the supplying system for the deficient system for periods of one or more weeks and constitutes a firm capacity transaction. Out<<of-pocket or variable costs are otherwise provided for in the charges for Short Term Operating Capacity and Short Term Energy.

DELIVERY CHARGES IN SCHEDULES 5.02 AND 7-02 The charge for delivery of capacity to or from a third party is also a negotiated rate that is less than the full cost, based on average transmission investment per unit of system peak load.

I

SUPPORTING COMPUTATIONS - PJM BASIS PJM costs necessarily represent a composite of various company costs, based on different capitalizations, different service lives, different methods of tax accounting, and different state and local tax obligations. On a representative

( basis, however, the PJM costs are above the amounts necessary to support the proposed rates. Consequently, the compromises involved in the determination of

~

estimated costs on a PJM basis are not of critical importance. For further explanation of computations, see notes which follow on next page.

Since Extended Emergency and Short Term Power services will most often be supplied 1

~

by combustion turbines, costs have be"n determined on the basis of such supply.

Ratio Combustion Turbines S stem Transmission (12-31-73) Current Cost) (Imbedded Cost)

Bonds 51% 6 8.5 ~ 4.34% 8 6.25 = 3.19%

Preferred 14/ 8 8.5 = 1.19% 8 7.25 ~ 1.01/

Common equity 35% 812.0 ~ 4.20% 812.0 = 4.20/

Return 9.73% 8.40%

Income Tax.Com utation Return 9. 73% 8. 40%

Deductions - interest -4.34 -3. 19 Levelized excess of DDB tax depr. for 30 yr. life over SLM for 40 yr. life -1.48 Basis for taxes t

5.39 3. 73 Income tax ~ 1.125 x Basis ,6.06% 4. 20/

Investment .. $ /KW ~/mr Gross plant $ 110.00 $ 51.00 Accrued depreciation (3 yrs. for CT's) <<14.75 -8.00+ b=:-."-

Accrued deferred taxes -5. 75 Net plant $ 89.50 $ 43.00 Annual Char es ~lmrVR $ /mr/YR On net plant- Return + Income tax

+ 1% Other taxes (16.79%) $ 15.03 (13. 60%) $ 5. 85 On gross plant - Depreciation ( 4.44%) 4.88 ( 2.50/) 1.28 Operation and Maintenance 0. 50 ( 2.00'/) 1.02 Total $ 20.41 $ 8. 15 Credit for operating capacity and energy benefits retained by owning company $ -1. 20 Net annual cost 19.00 8 8.00 Ca acitv Char e for Extended Fmer)7enc Service Net annual cost - capacity $ 19 transmission 8

$ 27/KW/YR x 1000 = $ 74/MW/day x 50% ~ $ 37/MW/day 365 days Proposed Charge = $ 35/MW/day Ca acit Char e for Short Term Power a

Same as above ~ $ 27/KW/YR x 1000 ~ $ 519/MW/week 52 week Proposed Charge ~ $ 450/MW/week kate for Deliverv to or from Third Parties Net annual cost - transmission $ 8/KW/YR x 1000 ~ $ 154/MW/week 52 weeks Proposed Charge ~ $ 125/MW/week

• Not Applicable One<<sixth ~ $ 21/MW/day

~s 3 es SUPPORTING COMPUTATIONS - PJM BASIS (CONT'D)

Notes r

1 Capacity costs are based on the current average PJM companies'nvestment cost for combustion turbine installations, which amounts to $ 110/KW.

Because the current average age of CT's in PJM is only about 3 years, it is appropriate to consider carrying charges based on current rates for debt and preferred stock. The nature of the transactions involved is such that it is appropriate to consider income taxes as being normalized.

Book lifo for CT's (20 and 25 years in several companies) is considered to be 22,5 years, this being the same as the ADR life used for tax p<<poseO ~

2 Transmission costs are based on 1973 FPC Form 1 total transmission plant investments for PJH companies ($ 2,140 million), adjusted to exclude the estimated investment ($ 563 million) in facilities used for, or related to step-down transformation to voltages below 110 KV, divided by the 1973 PJM peak load of 30,993 MW, which amounts to $ 51/KW. Such trans-mission has a greater current average age than the CT's Return on that transmission investment is, therefore, based on representative imbeddeg costs; and the income tax computation provides for a deduction representing the levelized difference between tax and book depreciation.

3. Computer income taxes are those applicable in Pennsylvania, where the composite rate is 53%, which is equal to the state rate of 9.5/ plus 48/e (100-9.5). Other taxes are assumed to be a nominal 1/ of depreciated plant, which is less than the rate applicable in some parts of PJM, other than Pennsylvania.

4. Fixed 0 & M expenses are estimated at $ 0 '0/KW/YR for CT's and 2% of gross plant for transmission. A credit against expense is indicated for the CT's, this representing certain benefits retained by the owning, company, and hence -a reduction in the net cost of the capacity made available to others.

SUPPORTING COMPUTATIONS - APS BASIS 1973 SERVICE CHARGE COST ANALYSIS Plant Alle hen Power S stem Production Plant ($ 000) 930,690 Plant Capacity (MW) 5, 742 Plant pqr Ktf Capacity ($ /KW) 162. 08 Plant at. 15%+ Carrying Charges ($ /KW/YR) 24.31 Plant ($ /KW/WK) .47 Transmission Bulk Transmission Plant ($ 000) 267>899 Load (MW) 4,230 Bulk Transmission per KW load ($ /KW) 63.33 Bulk Transmission at 17/P Carrying, Charges '$

/KW/XR) 10.76 Bulk Transmission ($ /KW/WK) 0.207

• See Page 5; 15% is used for production plant for short-term schedule computations since operation and maintenance expenses for production plant are included in the computation of energy costs.

SUPPORTING COMPUTATIONS - APS BASIS (CONT'D)

ANNUAL RATE OF CARRYING CHARGES

~corn anent Ran e of Values Cost of Money (55% debt) 8.0 10.0 Federal Income Tax 2.6 3~7 Depreciation on Sinking Fund Basis a.c e9 Other Taxes and Insurance (Based on actual experience)

Operation and Maintenance 2.1 2,1 (Based on actual experience)

TOTAL 15. 2 17. 8 The above shows a range of values based on embedded and incremental costs.

Taking into account our best estimate of future conditions, an annual rate of 17/ (including operation and maintenance) has been used in this study. Where inclusion of operation and maintenance charges is not appropriate 15% has been used. When considered over the entire life of the agreement, the above figures are of necessity approximations of the components. It is not intended'o in-dicate that each such component will or should be fixed, at all times, at any given figure. The 17% and 15% figures it is believed, under all the circum-stances and taken in the aggregate, will provide a fair return over the life of the agreement and with the recognition that particular components may vary some-what from time to time during the life of the agreement.

Cg UNITED STATES OF AMERICA FEDERAL POWER COMMISSION APS Group - PJM Group ) Dockot No. N-Interconnection Agreement ) Date NOTICE OF INTERCONNECTION AGREEMENT Take notice that on November , 1974 the Allegheny Power System Group (APS Group)

I and the Pennsylvania-New Jersey-Maryland Group (PJM Group) tendered for filing proposed Schedules 1.06, 4.02, 5.02, 6.02, 7.02 and 9.01, all dated November 14, 1974, to the Interconnection Agreement between them dated April 26, 1965, which is filed with the Commission under the following Rate Schedule designations:

Rate Schedule West Penn Power Company FPC No. 18 The Potomac Edison Company 26 ~

Monongahela Power Company ~

22 PGblic Service Electric and Gas Company 36 Philadelphia Electric Company 27 Pennsylvania Power 6 Light Company 41 Baltimore Gas and Electric Company 17 Potomac Electric Power. Company

'I 21 Pennsylvania Electric Company 45 Metropolitan Edison Company 25 Jersey Central Power 6 Light Company 21 The proposed Schedules clarify the wording of the Agreement; bring it more nearly in conformance with other agreements; increase certain charges to a more equitable basis or to more nearly cover present costs of service, and provide charges for new services and services involving third parties.

0 I No new facilities will be installed nor will existing facilities be modified I in connection with the proposed Schedules. lt is requested that the proposed Schedules become effectiv'e on December 16, 1974.

Any person desiring to be heard or to make any protest wi.th reference to the subject matter of this Notice should, on or before file with the Federal Power Commission, 825 North Capitol Street, N.E., Washington, D.C. 20426, petitions to intervene or protest in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 1.8 or 1.10). All protests filed with the Commission will be considered by it in determining the appropriate action to be taken but will not serve to make the protestants parties to the proceeding. Persons wishing to participate as a party in any hearing therein must file petitions to intervene in accordance with the Commission's Rules. The documents referred to herein are on file with the Commission and available for public inspection.

Secretary

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Att:enti oli: l'lr. i(ann: th E. Plu..ib, Secretary.

Gent 1 en!en:

There is fi. 1<.d her el~1 th I on belie 1 f of the foll owing 1 is ted compan i >><:,

proposed Scil cdu 1 e 8. 03 to t l e Xn tet:connection A8reeineiit botwe< n 'i li<. Clove land Elec tric Ill>>I,lineti n8 Company (C>Ei ) an<I the penney lv<inis-i<>ew Jersey-l lory l. ar <l Group (PJil) dated Septenfber 30, 1965, as supp).<.men to<i (The Agf,c<,ment.), lr '. i cli i

is on f le with the Cornnlis sion under the fol lowl tf, i',ate Schedu le <le..i."nations:

l'PC Rate Sclicdul >> H.II'>b< r Tile Cleveland Electric I 1 ltfntina ting Company kcf orred to as Ctrl Public Service Electric and Gas Company 38 Pili la<le lplii a Elec ti ic Conip<<riy. 29 Pennsylvani.a Power 6 Light Ccmpany 44 Hal timorc Gas and Elect:ric Company 19 Jersey Central Power <r. Lir>>lit Company 24 lletropo lit:cn Edison Company 29 tr Penna y lvani a El<. c ic Company 49 Pot:omac Elect:ric Poi<cr Company 24 Peferred to collect:ively <> connec t:ion with tliis fi 1 in8:

Six (6) copies of t:his lettcr-

?. Eightc<>n ( 18) cop i < s of propo ed Schedu le 8. 03.

3~ Six (6) copies of st..tement s (!st tacltments I <<nd 1 1 ) of t!ic ba: is for tlie f ixed rates for ervice pro;io ed in Scliedu le 8.03 and compuL'ations i.n support of t)ic e rates.

pl>hite so>vier> Lrlnctrtc nnd ccs con<pony Gonvrcl P<>nile U>>lilies Cori>vrctto>s Phil ~ dclpl<io i.lcctric Cnmpnny Jersey Cvntrst Power I Lignt Cornpcny

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Pennsylvsnls Pov>cr 5 Lll<t C >mpcny hlotropolttvn Edison < o>npcr>y pcnnsytvc>>>>r Llvclr>c omtrcny Oattl>nnro <>cs cnd electric Cn>

my I'OlvrnCC. L>I>rot>le I'ower'o>> deny ~ 8 -c. Six C' <, ICi)> cop cs <>fl. a lor>9 t Uf i'o'. e of m public:ion in Lhe 1'cdc>>ai. I!'<<gisLcr ~ ~ ~ A,,s < anent sui table fo>

5. h check covcrin<; th<. rcruired filing f<<c.

In vici" of t!>e strike by coal miners v<hirli advc>'l.y affects >lie:.iipp) y of coal to tl>e parties, ard in kc< ping hand i:itli the 0>'dcr of thc I'<'.Jara). I>>e> ".I kvi.u)atorv CosL',is>>ion unde: 'ockct F~'I!-'>>> 2, thc Part)<'. t>< >'Q<.m<.!>t ll'ive p>.'< "sic<I L I< ~ )>rop s<.d Sch<du)e 8.03, >'hich prov> dr. for t)>c L>.ansf<>r of r:.r >',:, beL":< cii >!:e ~ A> 'L L'~ du i:ig an e argy c:::erg ncy Tiie Sc)iedul c,i) o;>: ovi <in.. th<. f I e.". ih.'. ': y Lo )>'ar'".>' traiis i'e>'s o ' >nr"v 'to f 0' ate>. s 1 1'-'rc<~nne or ' ~~ ~ "1 t i Cii > ) ro: o":<:" Sc,>e."'.ulc b.('3 replaces Sche<'ul<'.02 wiiicii c><pire<i wi Dec<.:rbc> 3) . 1975 ~ In v:<w <if th<. fcrcgoing, trans ctions to conserv>> coal >>ay n<c>I t<>L> use c~f t<<e proposed ~c)!edu'.c. C' 1 TI>ercforc, it is res)>cctLL>11'y>>u)'ll\ tted >hat ood cau' <'Fists Co> waiver of 'nor ice of rcquiremeriLs al>J t)!e Co...::>>>sion i>> li;r< ii ~ rcqu stud, p'":sua:>t to Section 35.11 of its Itcgulatio;>s, to ~;.aivc not) c< r<:<.ui>:c-menl.-s and or<i;=. t)ie p:opo cd Sc!>edulc to be <ffcctivc as o. )'<'brua>) )6 I 7u ~ It is propose<) that the Schedule >'ill terminate on D<c<mb<.r 31, 1978 unless e<tc:><ie<! 'by n"tual agreemcnt. Propo.,cd Scl>e<iule 8.03 is not intended to and wi,ll not take t)ie place of existi.ng Schedules. T)ie Schedule provides that, for t)ie purpose of con:..e>ving energy resource, either Gil nr PJH may arrange >o obtain fro the oL'lier con- > '>'crv" ion energy >;I>cn, in tlic other's judgment, it ha the capability and fuel resources to provide the same. Such arrangcmcnts are to bc scheduled for periods of'ne or more we<.ks. The arrangements, including the number. of >aegaw, tL's I)er hour to be supp'lied, the period of supply, the source and destination, and t)ie estiuated cost, as ><all as r>odifications thereto, ) arc Msubject ~ + to r>>>tuel a;recmcnt s ~ >>y >.n advaiice of: supply. The Schedule also provides thc method for determini ig com-pensation for such service. hll of tlie signatories to the Agree>>>cnt have approved tliis filing and have recciv d copies thereof. This filing is being made on behalf of sucli signatories by t):c unders'gncd in accordance wit)i the authorix<>tion conta>ncd in Section 5.6 of t)m Agrecmcnt. Xn response to Section 35.13(a) of the Co>;a>ission's Regu)ations, it is point<.d out tl>at Subsection 2.1 of the proposed Schedule provides that the cliarge for con-servation energy gcneratcd on the supplying Group'ysteai will be 110'; of thc out-of-pocket replacement cost of generating the energy, plus a generation service charge of 3.75 r>ills-pcr-ki)owatthour. Subsection 2.3 of >he Sclicdule defines repl "cement co.,t of generating the energy as out-oi-pocket co. t of generating said energy, plus or minus an adjustment (to be <<>ade hy supplcmcni:al bil'I.) to reflect increases or decreases, if any, in thc cost of fu<.1, ori a >)Lu basis, between the mont)> )n i<hie)i ttie energy is delivered arid the second mont)i aCL'er sucli month of delivery. Thc 3. 75 mill per kilo> at thour charge is ! ntc idcd to assure tliat con-scrvaLion energy service do< s not advc; sc)y affect thc financi'>1 capabi) ity of the supply>ng system or re ult in discrimination to lb.. custo;>era. The c)><>rgc will cover standbv a>>d extra maintenance costs and i.s i>>tended to provide a reascnabl<. coiitribution to the carrying charges on t<<e feei).ities involved in gene-..ating and trans...itti:>g conscrvatio>> <.nergy. Thc d<>vclopi",.cnt of t)icse charges is stioi:n on Attachments I and II lierero. Subsection 2-2 of tl>c proposed Sci>cdul< provi<)cs fo: a scrvicc clia:gc (1.5 >ail la per ki iowa<.tliour by C=I and 1.75 >ills per kilowatthour by L>ie PJII Crou ) for c cliveries o'. conserv'>Lion <nergy f>'o".i sys em<> intercoiinected wit)i C>'I Or PJi) ~ Tlii . c>>arltc is intend>>(. t:o c<iv<r. loss,s, <i<!:;! nisrr.)Liv<<c<<. ts, <!<I ot:h. v <<:>i,vs ~ oL <<v) <<.>;.;i>>g fo) and <;>>li'ering cons<<vv,)tion un< )".'; f P<.", Li<< I>:L<)co:>!:..etc<) ~ sys" cn:s and to 1 <:1 .c av('aso!1;ihlc cori.1. bution to Lh<<carr> i)i~ cliar<;<'." <! I'lia tva!).))ni):sinn faciliti<.s rcqu'r<.d to!nake I:li<<. t:ran<act.iona pu s'bl.c. 'flic. dvv(:lo")cent of Lhis cliavgc is shoi~n on httachn)enLs I a!id II li>>rcto. Tn resp<>nse to Section 35.13,h) of the Con n)salon)'s Pc<))la J(ui'> it: la l>oi!;t((t nut t:hat b':cause of'. t:)ic ui)cert'a'nty of tll< (.0'il ini!i)'< ~ 't.' ke <>v P t'll<<). vi:1:" s 'r.'.)).c)i n:ig'lt c>>L>>) I) l)>c L'lli !!cc(l foi: co "1< crv;!Li<>li !'n>>rgv i',v )ns) >.1'5 <'!ld ~ ~ l>eca)) sc 0( i'i!ria ) <<oi>er<2'tin". ). Q<)L)'1 c L'ioi) 1!1 th(! <<v('n'.ic L'raus (irs a!'e ~ ) <<ilui. Pci est-l.'.. '>>s of t.'ll 'tv<in ". t <) s a!)d cvcviiiesi LI!')<Ic ',hc l)) O'Iii> 'cd .">che('.:)1>> liave not: been:i:adc. To "h c:<tc:)t: t.hat: SecLion .">5.13th)() ) ~ of t!:e Co;".....! ss!nn's Rc<;()i<)tions is d< cn:<> to t)iis filini, "alvci of t:h:it: reru. ". on is ac<)ucstcd based on tlic fovcgoi:ig. Copies of thi>> letter a>>d its cnclosuvcs !<ill he furnishc<l pvon!!>t)y to the =lc);))latory Co~nissions of 0?iio. Pennsylvania> Ile'. Jersey, )l<)ryland> D<<la::ar( > Virginia, and the District oi'o).un)bia, for, Llieir 1:)fnrn)ation. A check in the anount of $ P>00.00 is enclos<<1 l>uv.uarit to S(ctinn 36,2(f) of tlie Co);<nission's Pwegulation>> '!'.0 cove) the filing iec <lctcrniin(<l as folio;:s: $ 500 for a n)oderatcly con)plex rate schedule for one Party a)d $ 100 for concurrence by the other Party. Very truly yours, till)ncr S. Kleinbac)i l)anagcr TRIS)) par, Enclosures (:) lpi,. ~ .Is-~ ~ <<lu".I.iI-. I Pl&-.t'".) 'v) jp2)3lio r)7(3 (2) ) ) l.>3.'t (3) 1'12. 0:) ~ (ll ) i:-) ~ ~ ~ ~ 4 (6) '""::Isl:Assion Pl'-'lit (,)) y(() (7) g'Ao)'I t ~y gtl ( ~ 1 %4 bIt f ( (ll) ) (.I( I 3)1 )C 'p I lO (f:) gli )o 03, (") I (il 3.0,00'i, l'.. 4 "2 3'.0,0,"i7 (1O). > (11) y(it.;3. 1".;-', in'.cst:"CI:<.g (12) A'C.;=1,~.:: -.1 "--.-.=.""'-': (~) l'3) (>>)(3)+ + . 244..1o 91. 3o

9. GG 1 (9 (1:) . 003'2. . 0:IlpO (1~>) 0-p

.(,/'ii.v1 g>> >" < fcvr"('( 31lvid.n(t CosI. D:;nrcci" cio>>) F (t-r-".1 unco:a T..:;cs, ".::6 Hctul.n on Co::U:on E..uity. Sou"ccs 0 ~ 0, (a) P-~c lOl, L'in~ 15 Co3.u.".i ((,) (b) Pac'a 4~2 Linc 9 (Hul."."!ntion oi St arl PlvJI'~s) (c) Pa~c i>17) Lin() 20 r!inus Line .'i::Iinu'.":iab3.c tv=Cion oZ Linc 3.v~ ir'nic'n is inclu(1 k in Out-of'-Poc.'. t; Costs (6) B>>'. 402) Linc p3 Coin"., i (p) (e) P .>e ~ f31) Lin 3a Co3.urn {b) (:) r:.:= 418, L. nc o9 (c) 3--= -19, 1).t a)3.'.I p~c '222 il 2 Lillc p~? Col'I:.LI (i ) . 'luz ('.ivid.='" 403 LinD c3 I'.ll! coal. !I ces" arx! 7 r "I~ra... ('I'It COVi)O ite a Oli ) <ia!S C(a l'l'".ll'O..ta,  !'i.!.'Ieaa On (1) i'!'('I'Qa'lt t. t'.:;:a'. or c(instruct) on,:'! I L .;,nt <<a:Ii:::!.::.:ILIann, <<rre)" e .': !:;i.l ii(a!I!I Oi I.i!:a alice(i(ll>i <<n': i:I".:I (i), I I Ql't Stai',u ! Ol'L le I.'I 'Iaa+':C 0', ieai'u! ': a" a '.,.', <i! '." ~ ' a ",~ ri.ili. 1 i). Ona~ "ii g'aae g) r ~ '4". ~~e fo" gene, ".L') 0:: Sic)"Vice ia  !)a.<(ad Oii I i',e I O. IO'r.'i: ~' il,':.::,)".I(:ll: ill~ (a) 71:e leveli;:ed ani.ual cost oi' cur! Ql,t installa'o:) or. co:,.I)u tion turbine,::I!i ci! is tI!>> ."-.I::: a!)PI oecI! ul,ed for installed cai)ccity cI!."..";;..s )nLern:.1 to PJ.'I (I:oc.(e iso. H.""77-301). ).';".e annual cost ior Llie co:I;b'ne(! investr;.Qnt<;, or Lh(; P:j!1 co!apanies ir. tra!!slai!'sio;I f'aici'tius 110 K" 7!nad a!)ove. Since such i,nva~s t. lea t (')Qx Q I iadQ over a s') ' oa.'("! I' the 1QL'urn 1;ate used is ba=ed on averag;>> Qlailedried cosL's. (a) CO! VDUaa 710.'> +IrggiL I iU Il I TI!/aaa.ia1! S."a ION Current Average Plant Investment $ 163/KII (1) Gross $ 63-50 (2) L Net 50.10 I.if(. in Years - Bool(/7a~.' 23/16 'a';0/30 Carrying; Ci)arpe Rate l.evel 14.5"i (3) 15.7'7. (Il) Annual. Cost- - $ /I:Il/YR Carr@i;1. Cnarge $ 23. G'1 $ o.c!6 (5) 1 ixe~! a.) (aa I'I E) )Q!ls(!s esLllas ted r)0 1...7 (6) Total $ 2/I. 1C( $ 10. /3 Unit Co..t.. - ncr I".)I!2 2.76 mills 1.22 mill.", Comb!.ned Totaal 3.9Q raill. IIa go t ia te(! At 3.75 !I!i ll,s ( h.t l:!a' a)l l: <<nstn! ss ) <, 'l,aa'rv "a! EI.! f i~ed) C.!.".ri! for l.):an."::!issiol'! service i:: ba::i d ! n tl).: fo! Iv in.i ~ (a) '!n a!.:" al ('ost r)air I'.I !IIR i or system I-!v(.site<<l!a. in l ia' "ss )n foci I, iLi<<s 1 )0 Ia a)t!;I .a)I ()vc (si.nli. ais (i)) f('e I ..='! i): 1 an . ervi.ca') a 7 . a! 2 !"! S (b': ('st, a.i.r" e ~ i a ei a)<a~aaa'ea( ~ <!<!LC- a!) "ii'<a i <!O'! l. ~ ia C'!L"tc Cc 1 'cr l: 19 /6 (,"i' .) I') Ca a/ b" .r;!::;::;.)!!!:t va. ~ ~:  !:e - i:!"crc)()n",e(l in 7976 'I t;:< cn.3.". Co::.)ani".s (u!<I 0 ") 17'" (c) a (.', c ccst p r I( a:I a ~ a to \!')pl.y i.(:" Lio:1".7. i a Sa ' SSataai ~ OSi'i<<S (I('a(' a!aid l ) l" '.l, ' I 'rn ~ a ~ )"<'c )nc) (iaa a ).!a I o" ~ i f oa:ilr) oa! s )o) e t.:vns:.Ors acroa s .'.:.-I (~;..) by tl!c <!stit:!Aa cd i!!crc-;cntal cost 'o a"cncratc ucll 3O'scs (2? r)ills). 0. GC>>.".i 1 7." COlt! D inc(l )'0 a',l! 1 2.13 ra:117.s Iael;Ot i (t t: cd At 1.,75) !sill" Cost !acre cstim,.ted by each PZi'I con:pany Lo inst:!33, can its ..ystcm for service in 1977 a si:npl.c. cycle 50 al'.>> combustion turbine. TI)ese cost.s vary among; the companies depending on site conditions and cnvironm<<ntal Z C q u ).? ('ma e n L' P "a })I, PI BC C~! U PEP P Ta ~ /a,V'":I 135 125 225 19". 17.7 125 I. 63 (2) T".ansmission co ts,.re based on t.')!e 19/6 I'PC Form 7. total tx-.ansmission plant invest!a!!>>ts for PJ~I co:npanics adjuste<I to cr( ludc the e" timated 'investments in faci.li ties u..< d for, o= rel;)tcd to, step-do n't).ansforrt()tio:) to vo7.tag< bclo!~ 1.10 I'I). usa!i, on n (...t ....nt I'Jii I'cal( load prior to l2/31//6 30,9')3,000 I:li Accu::;ulate(I deI)reclati.on pcr, boo!(s (?1.17.) g13./)n/;;;a bet plant investment $ 50 10i i;a (3) I'.": to.;,~ 'L'..':CLJ to (>evelo ) I CL<L<1 c:il.'>" .", c<'1::1'"o ):o<': ! e;! f0 < 1 10;.": ( O -i.) < > (<: I': ". i 23 Ir J<Ol't<'1 ity ill<: >"..O' " ).O 1 }! ' CQ < I}<.J) s (.(. L P-. 1 I!',!<1 D) I< '(, ~ / Sale;",e 0 I!L'.<O'.O'<<' 1 0 <<e<>) tg'.<'1:<<<) <.e 0 1:..vet(t::.el)t C;c(}it I).'Ltc ) <'}'i. CO.}ll ! LOG I I ..<. (1:! t(: 0 Rffective l>}co'.!.e '.i'}:i !!ol.e 52 ng, I ( t()> 1< }tote (See ~ )e lo(! f'c}': (}..;ve lo!)t:<'ll t) 10. 7'i; 0"'J)e<I" TQ es 1 0'io I"i elk:)ed Ca):ryi.:)p, CoatJ;e,}l-t.. P3())< t fr!<!i} \ ) ) ><(\ ('<< ~ a ',, >'1)'/ 'i,!'< )) T<> ~ < } ~ ~ ~ 12/3I.I'tL} >< 1 p<'<! ~ >< }<}g <<g <<<1 >', y <<'! < ~,g<%< p gg(<<>\(<} L) '8 C<, ~ CAP XTA1.TZAT1 G.') l).() J'.J: AC<". I'Xl'.A!!ClilG Fi'. F..C GJ>l} c v C0! !}0S rT". 48 51 51 50 53 54 5)1 8.7 =- 4.4(p D.".Bl'i!i FJ'.P.~' lr> - 14 18 12 12 12 14 8 9.3 = l. 30 CO< i<'10<A 38 35 3J 38 3 34 35 8 14-2 =. 4 97 10'. 77. L..-.e 10.7 FXJ:.>'<cJCD'G COST 8 5 9 ~ () /.8 0 0 9 0 85) 8 I 9.0 n 6.5 I.G. 0 9.5 9;0 9.3 Cv ..'! )'>. 0 14.0 14'. 5 13.5 . 15).0 '4.2 I>>C'I~, ~ ril i. O ~ >>>> ( ~ )C>>>>>> I)C" I C) I f C)>>':(VC! I '",<<)In ) ~ .I, /.):) )!.cu ti(I >>)I li>> I,>> I: >>t ( ' L)Qlc)) -3>>. 70 Gi'l)r "c.f,. ~ ~~ I '>> ~ t 'il Ioi: 3:f ": ) ~ 1 zic! ((i.) 5)-~..::,) - j.:)5 D....i J fr r i ncc;:>>, ~ ta:c. !i.!,(i'i Ti.vo:)IP f.>><<Hei~) I" I>>'I n>> 2 le ] 2: I. n>> )<>'; I c; )" ..);-..I)',, 3) C;",~',"~ 0-. CI, ),",'I' / i'-'I i i)) V."i)f ] C Pl )3I ~ (>>)')li /) VC. BE 0']l 6 7'; 7. 7(i 7. 77, 6. /8 7 ~ 60 6). 96 7. 26 1),"i'I;R!!2,") 7. 03 7 ~ 71 8.5)3 / 36 8.50 7.86 /. f33 AV]",))h.G!: C/) 13,"A'.f."..I U'" C(" "'0')'")'r: DED7 51'i (9 7. 26 3. /0 ))REY Chili;D 1(I 0< 7. 83 l. 10 CO) fi')ON 35 8 1/I-2 0.97

9. //

u.,ci 9.75 (5) Xcnnsinl c'.:err,c.: '" -~1 ~A/KE) On net p).,".nt $ 50.10 z 15.7/. /. 87 Dc:preciation on pro '; f)lant $ 63.50 x 2.5'i. l. ~9 9./I 6 (6) 2i of Croa.". Pl.nnt Sccticl! !aa8 cf1)is Ir);c(.": a; .: p "ovi<!c'hat C! '- .. Ll c VJ:1 Gr.I.AI> "."11 C a Or a ~ ~ 3 1! c> 'a>i Ll Ol ~ 1 'l",(au> (:S L)a'? a I), I'a" (.. 'Ant: i()r Sl>'i C, 1 3 a) Vi Cae 'el)dered ai "al:tl)"r." .a. of'!le 3)! tcnL'f this I ~ ac".ac)3'. ai'h! S I'( I rr(h! I r! beco"...cs e 'cca.i"c accordi-':. to tcr::Ls o" th.. Acc(otc;! fiiin" "A(1 ) <'>>1::cc" Sch(".1 !c 8.G."', l;.!'ich e l>:red on Deco:.".ber 31> 19/5. Cons'rvaL'ioal Ener>y shall be considcrcd to 1>e (lect) i<<(A)c"",y 'hat scl> "dulcd bet!; cn CET a)ld the PJH G).oup sol.cly fol thc pur >osc of !acct:lla:l ere:3gy shortage;c which is caused l>y cu1taii>acnts of (nergy sou;ces wl)icl) r(sul t fr.oa fuel ur>avai.lal>i.lity, govcr.nl.",ental actions or widesp 'cl?( di 'astc):s a)3 on(. of which is beyond control of. thc Parties hereto, mal(ing it necessary f: or. "he deficient 1'arty to cons(.rv energy resources ovo". an c>:tcndcd peti.o(1 of time. T.)= fol,lolaii)g Are thc tc"rls and conditions governin" thc-. g< A(.ration ",)ld;u;>ply of such Ene"gy by one Party for. thc oL'hcr> and also thc transali.ss on of Con erv-tioll Energy to and from systems interconnected with CEI o Lhe PJI~f Grouu. As used he):ein thc t rm "weel'" shall clean any seven collsccutive (!ays. Section 1 - Sctviccs to b.. !lender. d 1.1 Ei ther, CEX or thc. PJ'If Group may arrange: wi th thc othcl > for 1> rio s cf one o1 more wc(1(s, for. the (.cl.'..cry of Co:)s(.ryaL'(A EA<<r"y. The Part'.=; shaLl d:.t<<'mine tj)c nu"..:be'(af lac".,a;:attra p(:r. 1)our to bc suppli(.d> th>> pc.r iod of suit;>ly, thc c. t i!".') ted cost:.Ad th sol)x('aa OI. '>>i> 1" 1 ta)e Sau:f>1! I l>>a 1 a't'a. a'I> 28 turn Oar tail>i l~ 1'L'ln:l aalaa>IL'a>( ~ .; sy& t .Il 0 'l)Q ut.t,'.ll'I">;I drtsL l Il:lt3 on i.L a a':.'.)'ty is t,l! tltlA 'll lan '),A, c I 'ir)!7" ca !1 \'< CI( .x pc "ic ( Cc>r i: ii cli Cons(:7"'at).on !;Il:r',y i'I: been arrai:)",cd, thc I'arLy t.liat hns (!~~re ill, 1!Pol'! ca> ) J > der,vcl'i!Ugii! ilt'L !o!li's ~ L'0 tl!ci 'i.( co) v), 'i'>1 1~< t$ 1, ~ >0!;,')i!Ii ! ~ l !) ~ to i!nd 1)!c U'ng L'I!c lil!'::bc)'C mc>~J',:at t'!!ours> ('(>!!el o t.ile 17!;,O<iue L c! t:lic p='riot> of ':ipply in ):our!> <<:)d th(: nul!bcr nf r:.e,",aicatts the>> a>);an>;<.d fol > at' ),:Le of <1(!1 v" ly i;liicll 1s < grceahle to l)otll I'al't Jca. />'er i 1 li i'-: 'i> ~ ~ ' >'ts Cor Co ! ><', eat ) oli I'>ie) . v I'ave lie<'n t.)dc Lhi'c'1 )>'1 '!i)v be rc- ii c'"!lv T,>h '. Co)) !it ': s arise L)la't coU ' n'>t h ivc l)c(.1'. ) e >so>i b fore..<cn ..t the time! of tho ar);an(,e>a:ent) <<>>d cause Lhc arr..ng<:.-.cnL t:o bc bUrdcns< U:>" to t'i supp lying > i. Qcc 'ii'!g > o'r t.'r >ll '>>).tt:Q) ~ sy. LC!!ls. Sec tip:) 2 - Corno<unction 2.1 I'hc receiving Part:y shall pay tl e supplying Palty for each I(ilo-i.-atthour cf Conservation Encr"y supplic..d from th supplyin~ Party's syst<m an amount equal to 110/. of tlie out-oC pocl'et rcp)accment costs of generating such oner".y plus 3.75 mills pcr Icilovatthour. 2.2 The receiving Party sliall pay t:hc si!pplying Party for each I:i)o- ):atthour nf Conservation liner"y pi!re )c)sed by t:h supplying Part'y Cro!1 anot:lier system for deiivery t:o ti)e rec(:iving'ParL'y, Llie amoiint paid tlicrc:- for by t: he supplying Party pt.us a transmission service charge of 1.50 mills per I;i)o)-.atthour i:hen CEI is th supp)) in~ Party;nd 1.7a mill" pcr. I(i.lo<< l'atthour ):hen the PJH Group i.s the sui)p)yinl; Part:y. 2.3 For purposes of tiiis Sc))e<lulc, out-of-I)oci(ct replace:cnt cost oC supp ) in: Con sc:rva "ion I:nc).gy slia ) 1 m<! in out-of -poci(e t cos t: of gcncra tinp such ".-.nc:r"y plus ol'li )U ait;!djustmc;it: (Lo be !sade by supple!".cntal bill) to ref lect ncreases or deer.ases in t:h" co=t OC fu(.1 on a I!I:u ba i'< ti;ccn t hc cost: o'oe 1 at t>>e st.a".i ons froe! 7:hi ch l::)c )'. ~ ! 'rgy ici:s delivered ci'! ri>>~', th nor Lh 'n vhich thc,.';!cr.,) i;!s <Iclivcred and t'e c'.Ost of iicli fuel for '.cc),l ""k aft' ch:".; nt'> ol.'! ~ 1>v )"..;; ".: > ~ ',! 1 ~ >s. >. ~ ~ circus:st a:;"e". in >.'!>ic'h t'i'e su>;)i))yin,, Par'.y an "ic',":>r"s ti:-L it: >>11)>>. un:>bi>, o si)'tc di li(cnt (.fforts> to asccrta)n the >.(Place)sent. cost (.. fuel until a d,>t(! subse(iuent to t'hc>>coon(l r!o-!(i) after ti:e ao:.t)> of deliv',ry> cn(> not.if 'c; tion i'rovided in >:r) ti!)"., 1>y Li:e su,n)yin: 1';.: ".: Lo the rccc vi >g, FarL> > such a(lj>)stt:crt s.>all 'e >na<ic by>>u;)')len:!r>'t>>1 bill >'i>enuvr.r such replace:nent cost.'i fue). bcconlcs >v >i 1 blc, ct( c <<los> t i 1 1 'ow ~ st>rl )>(~>') l>i 1 1 L> for t.>>e ci>arf (>s >";or servi cc .". sul>p 1'd ' <<ccorda>>ca >;.i t 1> t;!)i., Schedule ct>ring c>(!ch )no)>t!'i>>>ill bc. rcn(lured by t:l>c tent:) (li>y o'i t;h>> fo lo>.in>, >no>>tl>>>nd >(i).1 be payable on t: he fi 'st bank(i>!~ da> co-'::.on t.o t.he Partic hereto foi o>>in@ ti> nlnct"c >th cay oi t:hc n:onth in ')ic 1 they are rendered, e.".re>it tl>at supp)e!tent'.al bi).l>> sl>a)) i>e due an>d p;>yable on the fifteenth day folio>ring rc:ccipt: of b'll. Interest: or! unp" id an:ounLs on any bill rendered un(ier thi>> Schedu).c shall,.ccruc at L'c>> pere(>n>t (,10i') per annum fro:n tl>c dat:e due until thc dat:c upon >i>k>icl> pay)ncnt i>> n:ade. Section 4 - Ter>nination This Sch. dule sha).l rc..ain in cf>"cct until December. 3)., 197(> u >less e>(tended b': mutual af'rccn>enL of') I and L'he P.) > Gz(>u!)> e>(ccpt t:hc tern>>> of Section 2 and Section 3 shall conti>>u(. in effect unt:il all bi).ls for Conservation Energy arc rendered and pay!nent made t.hercfor.. h FEDERAL POWER COMMISSION Washington, D. C. 20426 . IH REPLY RFFFR TOc PHR-RC Docket Ko. ER76"254 fPennsylvania-New Jersey-Maryland Interconnection Attention: Mr. Wilmer S. Kleinbach Manager 955 Jefferson Avenue Valley Forse Industrial Park Norristown, Pennsylvania 19401 Your Re! laments letter dated November 12, 1975, submitting for filing revised schedules to the PJM Int:erconnection with The Cleveland Electric Illus].na ting Company. Gent The above rate filing submitted by your company has been accepted for filings to become effective December 15, 1975, and bas been designated as follows! See Attachment for Designations Hotice of the filing vas issued on December 1, 1975, with conmcntsc protests, or petitions to intervene due on or before December Sc 1975 Ho commcntsc protests or Interventions have been filed. This acceptance for filing does not constitute approval of any service, rate> charge, classifica-tion> or any rule> regulationc contract, or practice affecting such rate or service provided for in the above-designated rate schedule(s)i nor shall such acceptance be deemed as recognition of any claimed contractual right or obligation affectirg or relating to such service or ratei and such acceptance is without prejudice to any findings or orders which have been or may hereafter be made by the Commission In any proceeding nov pending or hereafter instituted by or against your company. This acceptance for fi'ling terminates Docket Ho. ER76-254 ~ Very truly yoursc Kenneth F. Plumb The Cleveland Electric Illuminating Company Secretary Attention: Mr. Victor F. Greenslade, Jr. Principal Counsel P, 0, Box 5000 Cleveland, Ohio 44101 FPC Form 391 Rev (3-73) httachment Docket No. ER76-2.'ated: November 12, 1975 Filed: November 14, 1975 Desi xa t ion (1) $ upplement No. 4 Schedule 1.02 (2)- Supplement No. 5 Schedule 4.02 (3) Supplement No. 6 Schedule 5.02 (4) Supplement No. 7 ScheduIe 6.02 (5) supplement No. 8 Schedule 7.02 (supersedes,Supplement No. 1) (6) Supplement No. 9 Schedule 9.01 The above-designated supplements belong to each of the following rate schedules: Cleveland Electric Illuminating Co. FPC No. 4 Public Service Electric and Gas Co. FPC No. 38 Philadelphia Electric Co. FPC No. 29 Pennsylvania Power 6 Light Co. FPC Nc. 44 Baltimore Gas and Electric Co. FPC No. 19 Potomac Electric Power Co. FPC No. 24 Pennsylvania Electric Company FPC No. 49 Hetropolitan Edison Company. FPC No. 29 Jersey Central Power 6 Light Company. FPC No. 24 UNITED STATES OF AMERICA FEDERAL POWER COMMISSION Cleveland Electric Ilium nating Company ) Docket No. ER76-254 and The Pennsylvania-New Jersey-Maryland. Groups ) NOTICE OF SUPPLEMENTS TO INTERCONNECTION AGREEMENT (December 1, 1975) Take notice that on November 14, 1975, the Cleveland Electric Illuminating Company (CEI) and the Pennsylvania-New Jersey-Maryland Group (PJM Group) tendered for filing pro-posed Schedules 1.02, 4.02, 5.02, 6.02, 7.02, and 9.01, all dated November 12, 1975, to the Interconnection Agreement between them dated September 30, 1965, which is filed with the Commission under the following Rate Schedule designations: Rate Schedule The Cleveland Electric Illuminating Company FPC No. Public Service Electric and Gas Company 38 Philadelphia Electric Company 29 Pennsylvania Power & Light Company 44'9 Baltimore Gas and Electric Company Potomac Electric Power Company 24 Pennsylvania Electric Company. 49 Metropolitan Edison Company 29 Jersey Central Power 5 Light Company 24 CEI and the PJM Group state that the proposed Schedules clarify the wording of the Interconnection Agreement; bring into closer conformity with other agreements; increase certain i charges in order to cover present costs of service, and provide charges for new services and services involving third Parties. In their filing CEI and the PJM Group state further that no new facilities will be installed nor will existing facilities be modified in connection with the proposed Schedules. It is re-quested that the proposed Schedules become effective on December 15, 1975. DC-13 Any person desiring to be heard or to protest said filing should file a petition to intervene or protest with the Federal Power. Commission, 825 North Capitol Street, N. E., Washington, D. C. 2042$ , in accordance with Sections 1.8 and 1.10 of the Commission's Rules of Practice and Procedure (18 CFR 1.8, 1.10). All such petitions or protests should be filed on or before December 8, l975. Protests will be'"considered by the Commission in determining the appropriate action'to be taken, but serve to make protestants parties to the proceeding. Any person vill not wishing to become a party must file a petition to intervene. Copies of this filing are on file with the Commission and are available for public inspection. I Kenneth F. Plumb Secretary ~f g~w %U PENNSYl VANIA-NEW JERSEY" MARYLAND INTERCONNECTION Public Service Dectric entt Gas Company Baltimore Gas and Electric Company New Jersey Power g, Light Company Philadelphia ElectriC Company Pennsytvania Electric Company Jersey Central Power g Light Company Pennsylvania Power g Light Company Metropolitan Edison Company Potomac Electric Power Company 955 JEFFERSON AVENUE VAI.LEYFORGE INOUSTRtAL PARK NORRISTOWN. PENNSYLVANIA 19401 l215) 666 7560 November 12, 1975 P JM MANAGEMENT COMMITTEE ALSO TO: Messrs. C. H. Ho ffman Mr. J ~ R..Guy, Manager W. C. Astley System Operation and Test Department H. L. Collins The Cleveland Electric Illuminating Company J. W. Gore, Jr. P. O. Box, 5000 R. H. Sims Cleveland, Ohio 44101 E F. Mitchell Gentlemen: FILING OF NEW AND REVISED SCHEDULES TO

THE CEI - PJM GROUP AGREEMENT Enclosed is one copy of each of the documents mailed today to the.

Federal Power Commission in connection with the filing of new and revised schedules to the CEI-PJM Group Interconnection Agreement. The filing letter states that copies of that letter and its enclosures will be furnished promptly to the Regulatory Commissions. Accordingly, two additional copies of such documents are also enclosed to those listed 'below for transmittal to each of the Commissions as 'indicated. Messrs H. L. Collins Pennsylvania C. H. Hoffman New Jersey J. W. Gore, Jr. Maryland W. C. Astley Delaware E F. Mitchell Virginia and District of Columbia J. R. Guy Ohio By copies of this letter all interested representatives of CEI and the PJM companies are informed of this filing. Very truly yours, Wilmer S. Kleinbach Manager TPW:cab Enclosures cc: W. N. Bingham D. Kovar'. J. Lester E. S. Loane PJM Operating Committee PJM Operating Arrangements Committee PJM Planning and Engineering Committee PENNSYl VQQIA"NEW JERSEY-MARYt AND lNTERQQNNFC7lON a a Public Service Electric gng gas Company Battitnore Gas end Electric Company New Jersey Posrer S Light Company Philadelphia EleCtriC Company Peensytvanta Oectric Company Jersey Central Power g l.ight Company Pennsylvania Power 4 Lighl Company MelrOpolitan Edison Company Potomac Electric Power Company 955 JEFFERSON AVENUE VALL.EY FORGE INDUSTRIAL PARK NORRISTOWN. PENNSYLVANIA 19401 t215) 455 7500 November 12, 1975 Federal Power Commission 825 North Capitp). Street, N.E. Washington, D. C. 20426 Attention: Mr. Kenneth F. Plumb, Secretary Gentlemen: There are filed herewith, on behalf of the following listed companies, eighteen (18) copies of proposed Schedules to the Interconnection Agreement between The Cleveland Electric Illuminating Company (CEI) and the Pennsylvania-New Jersey-Maryland Group (PJM Group) dated September 30, 1965 as supplemented (Agreement), whgch is on file with the Commission and is identifieu by the Rate Schedule Ntynbers shown for each listed company. a ~Cnm an FPC Rate Schedule Number 'The Cleveland Electric Illuminating Company 4 Public 'Service Electric and Gas Company 38 Philadelphia Electric Company 29 Pennsylvania Power & Light Company 44 Baltimore Gas and Electric Company 19 Potomac Electric Power Company 24 Pennsylvania Electric Company 49 Metropolitan Edison Company 29 Jersey Central Power & Light Company 24 The documents accompanying this letter include:

1) Proposed Schedules 1.02, 4.02, 5.02, 6.02, 7.02 and 9,01, all dyted November 12, '1975.

2) A summary of Schedule revisions and additions.

3) A statement of the basis for the fixed rates for services provided in the Agreement and computations in support of these routes.

4) A check covering the required, filing fee.

5) Three copies of a form of Notice of Agreement suitable for publication in the Federal Register, 'in accordance with the requirements of Section 35.8 (a) of the Commission's Regulations.

It .is requested that the proposed Schedules become effective on December 15, 1975. All of the Parties to the Agreement have approved this filing and have received copies thereof. This filing is being made by the Manager of the Office of the PJM Interconnection on behalf of all the Parties, under the authorization contained in Section 5.6 of the Agreement. Copies of this letter and all enclosures will be furnished promptly to the Regulatory Commissions of Pennsylvania, New Jersey, Maryland, Delaware, Virginia, Ohio and the District of Columbia for their information. The revisions are proposed (1) to clarify the wording of the Agreement, (2) to bring it more nearly in conformance with other agreements, (3) to increase certain charges to a more. equitable basis or to more nearly cover present costs of service, and (4) to provide for charges for new services and services involving third Parties. The reasons for the several changes involving pricing are more specifically described as follows: Extended Emer enc Service - Proposed Schedule 5.02 provides that, under certain specified conditions, an additional charge of $ 35 per megawatt per day, or alternatively, when the service is not provided directly but from third Paities, a charge of $ 21 per megawatt per day, be applied in connection with the s'upply of emergency service. The $ 35 represents about half of a reasonable fixed charge for installed capacity service, i.e., about half of the fixed charge for Short Term Power ($ 500 per megawatt per week is equivalent to $ 71.00 per megawatt per day). The Extended Emergency Service is to be supplied when it is not possible or not appropriate to arrange for a Short Term Power transaction. Because the added charge is applied automatically and for short periods and results from the mutual assistance'hat one Party provides for the other, it is appropriate that the rate be at such level (approximately 50% of the full capacity charge) that there is a sharing of benefits of the reduction in capacity that results from interconnected operation. Short Term Power - The rate for Short Term Power that is provided in Schedule 7.02 is increased and the conditions of supply are more completely defined. The increase is to bring the price in line with present costs and other agreements of CEI. The better definition of the service conditions is necessary if greater reliance is to be placed on such transactions and if they are to be effectively used in reducing the overall costs of providing capacity. The present agreement provides for a charge of $ 0.06 per kilowatt per day; based on a 5-day week this is equivalent to $ 300 per megawatt per week. The revision increases this charge to $ 500 (based on a 6-day week); it also provides that a charge of $ 125 per megawatt per week be. applied when the Short, Term Power is delivered by either Party.to or from another aiea. There were, no Short Term Power transactions between CEI and the PJM Group during the twelve months immediately preceding the date on which the proposed increase in rate provided in Schedule 7.02 is to become effective. Hence, no comparison of revenues is possible. - Rates are proposed for new services including Extended Emergency Service, and delivery of Short Term Power or Extended Emergency Service by either Party to or from a third Party. Because of the 't uncertainty of the needs of either Party or others for the services provided for, is impossible to predict the transactions and revenues under the proposed Schedules. The proposed pates for Short Term Power are similar to rates previously filed by CEI, and the proposed rates for Extended Emergency Service are similar to rates previously filed by the PJH Group in interconnection agreements with the Allegheny Power Syst: em Group and the New York Power Pool except that in the latter agreement the service was identified as "Supplemental Operating Capacity". Support for the several proposed rates is provided in the enclosed statement. No facilities are required to be installed or modified in order to provide the services covered by the proposed revisions. A check in the amount of $ I,300 is enclosed to cover the filing fee in accordance with the Commission's Regulations determined as follows: $ 500 for a moderately complex Rate Schedule for one Party pursuant to Section 36.2 (f) and $ 100 for each additional submittal for each of the other Parties to the Agreement pursuant to Section 36.2 (e). I Very truly yours, W.lmer S. Kleinbach Manager TPM:cab Enclosures cc: The Cleveland Electric Illuminating Company CEI-PJM INTERCONNECTION AGREEMENT Summar of Schedule Revisions and Additions Schedule 1'.02 Introductory paragraphs provide that subsequent revisions to the list of metering points will not require further supplements to the Agreement, but instead will be entered routinely into the records'f the CEI-PZi Operating Committee. A new paragraph is included which provides for metering tests and accounting procedures should metering equipment fail or register incorrectly. 4.02 Present Schedule 4.01 covers OPERATING CAPACITY TRANSACTIONS and the revised Schedule covers ECONOHY OPERATING CAPACITY AND ENERGY TRANSACTIONS+ 5.02 Present Schedule 5.01 covers ENERGY TRANSACTIONS and the revised Schedule covers EHERGENCY OPERATING CAPACITY AND ENERGY TRANSACTIONS. 4.02 6 The texts of present Schedules 4.01 and 5.01 have been 5.02 rearranged to form the revised Schedules covering economy and emergency interchange, respectively; a'nd that 'part of 5.01* which dealt with Inadvertent Interchange is now included in revised Schedule 6.02. Revised Schedule 5.02 also includes new provisions for additional fixed service charges for "Extended Emergency Service". 6.02 Present Schedule 6.01 has been rearranged with new subheadings', and the 'text on Inadvertent Interchange now in present Schedule 5.01 and a new section on Control of Kilovar Exchange are added. 7.02 The obligations involved in Short Term Power transactions under present Schedule 7.01 have been clarified; the demand rate applicable to the amount of reserved power is increased; a charge for services involving third parties applicable under certain conditions is included, and the provision for a "Reactivation and Deactivation Charge" is deleted. 9.01 This is a new Schedule covering Non-Replacement Energy Transactions. SCHEDULE 1.02 (REPLACING SCHEDULE 1.01) TO INTERCONNECTION AGREEMENT BE'1VEEN CEI AND THE PJH GROUP Issued November 12, 1975 Effective December 15, 1975 DELIVERY AND METERING POINTS Section 3.6 of this Agreement provides that delivery and metering points between CEI and the PJM Group be set forth in this Schedule. Listed below is the only delivery and metering point as of the above effective date. Section 2.2 of this Agreement provides that the Operating Cormittee shall act in operating and accounting matters in connection with this Agreement. This listing of delivery and metering points shall be maintained current by the Operating Committee and revisions hereto shall be recorded in the records of that Committee. Interconnection Deliver Point Heterin Point ~Volta e KV Ashtabula Power Plant (The Cleveland Electric Illuminating Co.) 'to Erie West Substation Erie West (Pennsylvania Electric Co.) Pa.-Ohio State Line Substation 345 The metering equipment shall be tested by the owner at suitable intervals and its accuracy of registration maintained in e accordance w'ith good practice. ~ tC A't the request of any Party, a special test shall be made, but if less than one percent i inaccuracy is found, the requesting Party shall pay for the test. Representatives e of the Parties may be present at all routine or special tests and whenever any readings for purposes of settlements are taken from meters not having an automatic record- If any test of metering equipment discloses an inaccuracy exceeding one . percent, the accounts of the Parties shall be adjusted for the period, not exceeding 30 days, that such inaccuracy is estimated to have existed. Should any metering equip-ment fail to register properly, the amounts of energy delivered shall be estimated from the best available data. SCHEDULE 4.02 (REPLACING SCHEDULE 4.01) TO INTERCONNECTION AGREEMENT BETWEEN CEI AND THE PJM GROUP Issued November 12, 1975 Effective December 15, 1975 ECONOMY OPERATING CAPACITY AND ENERGY TRANSACTIONS Section 1.4 of this Agreement provides for interchange of operating capacity and energy on an economy basis. Such interchange shall be defined and accounted for as outlined below. Section 1 - Econom Oneratin, Ca acit 1.1 An economy operating capacity transaction is a scheduled transaction wherein one Party supplies operating capacity for the other Party to replace higher cost operating capacity of such other Party. 1.2 Economy operating capacity supplied by one Party shall be charged to and paid for by the other Party on the basis of the cost of such supply and the amount paid for capacity obtained for this purpose from other systems not Signatories to this Agreement, plus one>>half the difference between (1) the sum of the said cost and the amount paid, and (2) what it would have cost the other Party to have operated the capacity replaced. Section 2 - Econom Ener 2.1 An economy energy transaction is a scheduled transaction wherein one Party supplies energy to the other Party to replace higher cost energy of such Y other Party. 2.2 Economy energy supplied by the one Party shall be charged to and paid for by the other Party on the basis of the cost of generating it and the amount paid for it to other systems not Signatories to this Agreement, plus one-half the difference between (1) the sum of the said cost and amount paid, and (2) what it would have cost the other Party to have generated the energy replaced. All costs shall be adjusted for transmisssion losses. SCHEDULE 5 02 (REPLACING SCHEDULE 5 Ol) TO INTERCONNECTION AGREEMENT BETWEEN CEI AND THE PJM GROUP Issued November 12, 1975 Effective December 15, 1975 EMERGENCY OPERATING CAPACITY AND ENERGY TRANSACTIONS .Section 1.5 of this Agreement provides for emergency operating capacity and emergency energy transactions. Such emergency transactions shall be defined and accounted for as outlined below. Section 1 Emer enc 0 eratin Ca acit 1.1 An emergency operating capacity transaction is a scheduled trans-action wherein one Party supplies operating capacity for the other Party which said other Party cannot supply in its own system. 1.2 Emergency operating capacity supplied by one Party shall be charged to and paid for by the other Party on the basis of the cost of such supply and the amount paid for capacity obtained for this purpose from other systems not Signatories to this Agreement, plus ten percent (10%) in each case. When a Party supplies such emergency operating capacity to the other Party from generating capacity not specifically operated for such supply, the cost of the supplying Party shall be the weighted average cost of its highest cost marginal capacity in operation at the time which is equal in amount to such emergency operating capacity. Section 2 - Emer enc Ener 2.1 An emergency energy transaction is a scheduled transaction wherein one Party supplies energy to the other Party which said other Party cannot supply in 'its own system. <<2 Schedule 5.02 2.2 Emergency energy supplied by one Party shall be charged to and paid for by the other Party on the basis of the cost of generating it and the amount paid for it to systems not Signatories to this Agreement, all adjusted for transmission losses, plus ten percent (10/) of such cost and amount as so adjusted. Section 3 Extended Emer enc Service 3.1 whenever emergency operating capacity or emergency energy is supplied by one Party to the other Party for a period exceeding two f calendar days, the above charges and payments shall be increased by an additional capacity charge of $ 35 per megawatt per day based on the maximum hourly supply of capacity or energy, so long as the capacity and energy so supplied is supplied directly by the supplying Party from its own capacity. To the extent the maximum capacity or energy supplied exceeds the capacity or energy which could have been supplied directly, an additional transmission charge of $ 21 per megawatt per day shall be substituted for the $ 35 per megawatt. 3.2 In the event the emergency operating capacity-or energy supplied by one Party to the other is scheduled for delivery to a system not a Signatory to this Agreement, the above mentioned additional charges shall be applied on the- first day of such supply and all subsequent days thereafter. SCHEDULE 6.02 (REPLACING SCHEDULE 6.01) TO INTERCONNECTION AGREEMENT BETWEEN CEI AND THE PJM GROUP Issued November 12, 1975 Effecti've December 15, 1975 SCHEDULING AND ACCOUNTING Section 1.6,of this Agreement provides for the establishment of operating capacity and energy schedules between the Parties and the accounting for the resulting interchange transactions. Section 1 - Records 1.1 Energy associ.ated with various transactions, including electrical losses associated therewith, shall" be accounted for each clock hour. 1.2 Operating capacity associated with various transactions shall be accounted for on the basis of the period of time such capacity is scheduled. 1 3 Each Party shall keep such log sheets and other records as may be needed to afford a clear history of the various interchanges of capacity and energy. In maintaining such records, the Parties shall provide such detail as may be needed in connection with the .settlements under this Agreement. Section 2 '- Com onents of Cost 2.1 The following components of cost, whenapplicable, shall be included for operating capacity 'and energy transactions: 2.11 Operatin Capacit Start-up and. shut-down cost (boiler and turbine). No load cost (boiler and turbine). additional maintenance cost (boiler 'ssociated and turbine). Charge (or credit) for increased (or decreased) cost of energy generated by the Group associated with such operating capacity transactions. Incremental labor costs. Incremental taxes. Miscellaneous incremental operating costs Schedule 6.02 2 12 ~Ener Incremental fuel cost. Incremental transmission losses. Incremental labor cost. Incremental maintenance cost. Incremental taxes. Miscellaneous incremental operating costs. Section 3 - Inadvertent Interchange 3.1 Inadvertent interchange for each Party is the difference between net actual energy flow and net scheduled energy flow. Inadvertent interchange shall be accumulated as a credit or a debit and shall be repaid in kind. 3.2 Each Party shall endeavor to balance continuously its generation against its load so that the net loading of all its tie lines agrees with the scheduled net deliveries of receipts plus or minus its frequency bias or other obligation. 3.3 Inadvertent interchange accumulated during "on-peak" hours shall bo repaid during "on-peak" hours; and, similarly, inadvertent interchange accumulated during "off-peak" hours shall be repaid during "off-peak" hours. The specific hour5 to be classified as "on-peak" or "off-peak" shall be determined from time to time by the Operating Committees Section 4 - Control of Kilovar Exchan e 4.1 Neither Party shall be obligated to deliver kilovars for the benefit of the other. Neither Party shall be obligated to receive kilovars when'to do so might introduce objectionable operating conditions on its system. Subject to the foregoing, the Operating Committee shall establish from time to time (a) voltage levels to be maintained and (b) operating procedures for establishing and maintaining an equitable distribution of reactive power. SCHEDULE,7. 02 (REPLACING SCHEDULE 7.01) TO INTERCONNECTION AGREEMENT BETWEEN CEI AND THE PJM GROUP Issued November 12, 1975 Effective December 15, 1975 SHORT TERM POWER Section 1.8 of this Agreement provides that CEI and the PJM Group shall set forth additional schedules to this Agreement to provide for special services to be rendered in furtherance of the intent of this. Agreement. This Schedule 7.02 replaces Schedule 7.01 as one such addit,ional schedule. Short Term Power shall be considered to be electric power that is scheduled on a weekly basis between the Parties to meet the needs of a deficient Party from a Party having excess or from others with which it has similar agreements. Schedules may be established for one or more weeks.and as used herein the term "week" shall mean any seven consecutive days. Section 1 - Services to be Rendered 1.1 Either Party may arrange to reserve from the other, for periods of one or more weeks, such Short Term Power whenever, in the sole judgment of the Party requested to reserve the same, such power is available. Upon request the supplying Party shall furnish to the reserving Party estimates of loads, capacities, 'and other relevant data by means of which the reserving P Party can assess the availability- of such power. 1'.ll Prior to each reservation of Short Term Power, the number of megawatts to be reserved, the-period of reservation, and the source of the, power if the supplying Party is in turn reserving power from another system, or the ultimate destination of the power if the reserving Party is in turn reserving power for another system, shall be determined by Schedule 7.02 'he Parties. Such, determination shall be confirmed in writing. 1.12 If the reservation is supplied from the supplying Party' system, it may be reduced only when during such period con-ditions arise that could not have been reasonably foreseen at the time of the reservation and cause the reservation to . be burdensome to the supplying Party's system. If the reservation is transmitted by the supplying Party from another system, it may be reduced only when and to the extent reduced by such other system or when during such period conditions arise that could not have been reasonably foreseen at the time of the reservation and cause the transmission to be burdensome to the supplying Party's system. The supply or transmission of the reservation shall be considered burdemsome if continuation would jeopardize service to firm customers on the supplying Party's system or interrupt prior corznitments by the supplying Party for the ddlivery of similar commitments to another system or systems. The supplying Party shall notify the receiving Party promptly of any reduction in reservation and shall specify the amount of megawatts reduced and the period of reduction. Such notification shall be confirmed in writing. 1.13 During each period that Short Te'rm Power has been reserved, the Party that has agreed to supply such power shall upon call ~ provide operating capacity ("Short Term Operating Capacity" ) of up to and including th'e number ofI megawatts then reserved and deliver electric energy ("Short Term Energy" ) to the reserving Party at a rate during each hour of up to and including such number. ~ 03<< Schedule 7.02 Section 2 - Com ensation 2.1 The reserving Party shall pay the supplying Party for any ~ 'eriod that Short Term Power is reserved. 2.11 $ 500 per megawatt reserved per week to be supplied from the supplying Party's system less, for each day (other than Sunday) during any part of which the amount of such Short Term Power from the supplying Party's system is reduced by the supplying Party, one-sixth of said $ 500 per megawatt of the reduction; plus 2.12 for each megawatt of the reserved Short Term Power purchased by the supplying Party from another system (a) the amount paid therefor by the supplying Party plus (b) for each week such Short Term Power is 'reserved $ 125 per megawatt less, for each day (other than Sunday) during any part of which the amount af such Short Term Power is reduced by the supplying Party k for reasons as set forth in 1.12, one-sixth of said $ 125 per megawatt of the reduction; plus 2.13 110% of the cost of providing Short Term Operating Capacity called for under Subsection 1.13 of this Schedule that is related to the Short Term Power provided on the supplying 'arty's own system and 110% of the amount paid by the supplying Party for all other such Short. Term Operating Capacity; plus 2.14 110% of the cost, adjusted for transmission losses, of supplying Short Term Energy called for under Subsection 1.13 of this Schedule that. is related to the Short Term Power provided on the supplying Party's own system and 110% of the amount paid by the supplying Party, adjusted for transmission losses, for all other such Short Term Energy Schedule 7.02 Section 3 - Termination 3.1 Either Party upon one year prior written notice to the other may terminate this Schedule. SCHEDULE 9.01 TO INTERCONNECTlON AGREEiKNT BETWEEN CEI AND THE PJM GROUP Issued November 12, 1975 Effective December 15, 1975 NON REPLACEMENT ENERGY TRANSACTIONS Section 1.8 of this Agreement provides tl>at CEI and the PJM Group shall set forth additional schedules to this Agreement to provide for special services to be rendered in furtherance of the intent of this Agreement. This Schedule 9.01 is one such additional schedule. The Parties recognize that from time to time occasions may arise when it may be impracticable to arrange Economy Energy transactions as provided for under Section 2 of Schedule 4.02 and at the same time one Party may have electric energy I ("Non-Replacement Energy" ) which it is willing to make available from its own system or from sources outside its own system, or both, that can be utilized advantageously for short intervals by the other Party. Either Party may schedule from the other Non-Replacement Energy whenever, in the sole judgment of the Party requested to supply the same, such energy is available. Prior to each delivery of Non-Replacement Energy, the amount and time of delivery shall be determined by the Parties. Non-Replacement Energy supplied by one Party shall be charged to .and paid for by the other Party on the basis of the cost of generating \ it and the amount paid for it to such systems not a Signatory to this Agreement, all adjusted for transmission losses, plus ten percent (10%) of such co t and amount as so adjusted. tg CEI-PZif INTERCONNECTION AGREE/KNT STATEMENT OF THE BASIS OF THE FIXED RATES FOR EXTENDED EMERGENCY AND SHORT TERH POWER SERVICES AND SUPPORTING COHPUTATIONS The fixed rates for Extended Emergency and Short Term Power services specified in the proposed Schedules to the CEI-PJM Interconnection Agreement can be supported on a cost basis. These rates are:

1. The additional capacity charge of $ 35 per megawatt per day specified in Schedule 5;02 and associated with the supply of Extended Emergency Service; and

2. The capacity charge. of $ 500 per megawatt per week specified in Schedule 7.02, Section 2.11 and associated with the supply of Short Term Power; and

3. The charge related to the delivery to or irom third parties of certain capacity services of $ 21 per megawatt per day specified in 5.02 and $ 125 per megawatt per week specified in Schedule 7.02.

CAPACITY CHARGE IN SCHEDULE 5.02 The $ 35 per N4-day is a negotiated rate, intended to compensate the suppliers of Extended Emergency Service for some part of their fixed costs for investment in generating and transmission facilities. Out-of-pocket or variable costs are other-wise provided for in the charges for operating capacity and energy. In the determination of the rate, it was recognized that it should be less than (approximately half of) the full capacity cost as determined for Short Te~ Power on the premise that the supply of Extended Emergency Service often results in a sharing of reserves and the dependence of one Party on the other for reserve capacity, and, consequently, 'the rate for such service. should recognize a sharing of the benefits. CAPACITY CHARGE IN SCHEDULE 7.02 r The $ 500 per HM-week is a negotiated rate intended to compensate the supplier of Short Term Power for full fixed annual costs for investment in generating and transmission facilities, prorated for the period of the reservation, on the basis that Short Term Power is available capacity reserved by the supplying system f'r the deficient system for periods of one or more weeks and constitutes a firm capa'city transaction. Out-of-pocket or variable costs are otherwise provided for in the charges for Short Term Operating Capacity and Short Term Energy. DELIVERY CHARGES IN SCHEDULES 5.02 AND 7.02 t The charge for delivery of capacity to or from a third party is also a negotiated rate that is less than the full cost, based on average transmission investment per unit of system peak load. SUPPORTING C041PUTATIONS P Jt i BASIS PJH costs necessarily represent. a composite of various company costs, based on different capitalizations, different service lives, differ'ent methods of tax accounting, and different state and local tax obligations. On a representative basis, however, the PJH costs are above the amounts necessary to support the proposed rates. Consequently, the compromises involved in the determination of estimated costs on a PJM basis are not of critical importance. For further explanation of computations, see notes whi.ch follow on next page. Since Extended Emergency and Short Term Power services will most often be supplied by combustion turbines, costs have been, determined on the basis of such supply Rat to Combustion Turbines S stem Transmission Ca italization (12-31-'73) Current Cost) (Imbedded Cost) Bonds 51/. '8 8.5 = 4.34% 6 6. 25 = 3. 19% Preferred 14% 6 8.5 = 1.19% 8 7.25 = 1.01/ Common equity 35/ 612.0 = 4.20/. 612.0 = 4-20% Return 9.73% 8.40% Income Tax Com utation Return 9. 73% 8. 40% Deductions - interest -4. 34 -3.19 Levelized excess of DDB tax depr. for '-1. 48 . 30 yr. life over SL~41 for 40 yr. life Basis for taxes 5.39 3.73 Income tax = 1.125 x Basis 6.06% 4.20% Investment $ /104 Gross 'plant $ 110.00 Accrued depreciation (3 yrs. for CT's) -14.75 -8. 00(per hooR. Accrued deferred taxes 5e 75 Net plant $ 89.50 $ 43.00 Annual Charades $ /mZ/YR 44/)0///2288 On ne t plant- Return +,Income tax 5.85 + 1% Other taxes (16.79%) $ 15.03 (13.60%) $ On gross plant - Depreciation ( 4.44%) 4.88 ( 2.50%) 1.28 Operation and Maintenance 0.50 ( 2.00/) 1.02 Total $ 20.41 $ 8. 15 Credit for operating capacity and energy benefits retained by owning company ~1. 20 (rounded) Net annual cost $ 159.00 $ 8.00 Ca acit Charac for Extended Emer encv Service Net annual cost - capacity $ 19 transmission 8 $ 27/KW/YR x 1000 = $ 74/kM/day x 50% = $ 37/N4/day 365 days Proposed Charge = $ 35/t "4/day Char .e for Short Term Power Same as above = $ 27/KV/YR x 1000 = $ 519/ghM/week 52 week Propoeeg Charge = $ 500 /tg'/wetew Rate for Deliver to or from Third Parties Net annual cost - transmission $ 8/IQC/YR x 1000 = $ 154/N4/week 52'eeks Proposed Charge = $ 125/Ye"7/week One-sixth = $ 21/Yiil/day -"Not Applicable SUPPORTING COMPUTATIONS - PJM BASIS (CONT'D) r Notes

1. Capacity costs are based on the current average PJM companies'nvestment cost for combustion turbine installations, which amounts to $ 110/KW.

Because the current average age of CT's in PJM is only about 3 years, it is appropriate to consider carrying charges based on current rates for debt and preferred stock. The nature of the transactions involved is such that it is appropriate to consider income taxes as being normalized Book life. for CT's (20 and 25 years in several companies) is considered to be 22.5 years, this being the same as the ADR life used for tax purposes.

2. Transmission costs are based on 1973 FPC Form 1 total transmission plant investments for PJM companies ($ 2,140 million), adjusted to exclude the estimated investment ($ 563 million) in facilities used for, or related to step-down transformation to voltages below 110 KV, divided by the 1973 PJM peak load of 30,993 MW, which amounts to $ 51/KM. Such trans-mission has a greater current average age than the CT's. Return on that transmission investment is, therefore, based on representative imbedded costs; and the income tax computation provides for a deduction representing the levelized difference between tax and book depreciation.

3. Computed income taxes are those applicable in Pennsylvania, where the composite rate is 53%, which is equal to the state rate of 9.5% plus 48% (100-9.5). Other taxes are assumed to be a nominal 1% of depreciated plant, which is less than the rate applicable in some parts of PJM, other

'han Pennsylvania.

4. Fixed 0 6 M expenses are estimated at $ 0.50/lQ</YR for CT's and 2% of gross plant for transmission. A credit against expense is indicated for

.the CT's, this representing certain benefits retained by the owning company, and hence a reduction in the net cost of the capacity made available to others. , These supporting computations for PJM are identical 'with those submitted'o the Federal Power Commission in 1974 in support of rates contained in revisions to the APS-PJM Agreement (Docket E-9111) and in the new NYPP-PJM Agreement (Docket E-8876). Both submittals were accepted for filing. The same computations are submitted here-with because changes in-pertinent financial data since the previous'ilings are such that the computed costs would not be significantly different using later data. The computed costs shown above adequately support the rates proposed in this submittal which are identical with those o'f the previous filings except the proposed rate for Short Term Power is $ 500 per megawatt per week instead of $ 450., ' 4 SVPPORTING COMPUTATIONS - CEI BASIS THr CM~rLAND ~CTRIC ILLUlQMTING COMPA1'JY SHORT TERM DEMAND COST RATE 1 4 FPC-1

1. Steam Production Plant ($ )(a) 400,724,632

2. ?Tet Demonstrated. Capability-Steam (YiÃ)(b) ~ 3,561

3. Production Plant/E0 ($/E5f) 135.00

4. 1974 Related. Steam Production Expense ($ )( 13,166,501

5. Steam Production Expense/lan (9/KH/Yr.) 2.74

6. Transmission Plant ($ ) (~d,) 237~520@601

7. De-onstrated. Capability (MN) . 2,934

8. Transmission Plant/M< ($/KW) 80.95

9. 1974 Transmission Expense ($ )( 7,432,428

10. T ansmission Expense/IM ($/ZN/Yr) 2.53 11., Total Production and. Transmission Plant/KH 215.95

'(3) +.(8)

12. Total Production and. Transmission Lcpense/KH 5-27 (5) (10)

13. Demand Ra e/Ial 'ileek ($ ) .50

14. Demand. Bate/la/ Yr ($ ) 26.00

15. Yearly Demand Rate less Production and, 20.73 Transmission Rcpense (14) - (12) ($ )

.16. Line (15) divided by Line (ll) 9 60'p~

17. Insurance and. Taxes other thon Federal 2.62 '~

Income Taxes J 18, Line (16) minus Line (17) = Remainder Available for Bnbedded 6.9P~ or Incremental Interest and. Preferred. Dividend Costs, Depreciation, Federal Income Taxes and. Return on Common Equity h Sour"es for Short Term Service Cost Analysis (a) 1974 FEC-l, p. 401, line 15 (b) 1974 FPC-1, p. 432, line 9, summation of steam plants (c) 1974 FPC-1, p. 417, (line 20 variable portion of line 19 which is include( in Cut-of-,Pocket Costs (d.) 1974 FPC-1, p. 402, line 53 (e) 1974 FPC<<1) p. 431 (f) 1974 FPC p. 417-418 UNITED STATES OF AMERICA FEDERAL POWER COMMISSION CEI - PJM Group ) Docket No. E-Interconnection Agreement ) Date NOTICE OF SUPPLEMENTS TO INTERCONNECTION AGREEMENT Take notice that on November , 1975 The Cleveland Electric Illuminating Company (CEI) and the Pennsylvania-New Jersey-Maryland Group (PJM Group) tendered for filing 'proposed Schedules 1.02, 4.02, 5.02, 6.02, 7.02 and,9.01, all dated November 12, 1975, to the Interconnection Agreement between them dated September 30, 1965, which is filed with the Commission under the following Rate Schedule designations: Rate Schedule The Cleveland Electric Illuminating Company FPC No. Public Service Electric and Gas Company 38 Philadelphia Electric Company 29 Pennsylvania Power 6 Light Company 44 Baltimore Gas and Electric Company 19 Potomac Electric Power Company 24 Pennsylvania Electric Company 49 Metropolitan Edison Company 29 Jersey Central Power 6 Light Company 24 The proposed Schedules clarify the wording of the Interconnection Agreement; bring it into closer conformity with other agreements; increase certain charges in order to cover present costs of service, and provide charges for new services and services involving third Parties. No new facilities will be installed nor will existing facilities be modified in connection with the proposed Schedules. It is requested that the proposed Schedules become effective on December 15, 1975. Any person desiring to be heard or to make any protest with reference to the subject matter of this Notice should, on or before file with the Federal Power Commission, 825 North Capitol Street, N.E., Washington, D.C. 20426, petitions to intervene or protest in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 1.8 or 1.10). All protests filed with the Commission will be considered by,it in determining the appropriate action to be taken but will not serve to make the protestants parties to the proceeding. Persons wishing to participate as a party in any hearing therein must file petitions to intervene in accordance with the Commission's Rules. The documents referred to herein are on file with the Commission and available for public inspection. Secretary F'ENNSYLVANIA-NEVtfJERSEY-MARYLAND INTERCONNECTION Public Service Electric and Gas Company Baltimore Gas and Electric Company New Jersey Power 6 Light Company Philadelphia ElectriC Company Pennsylvania Electric Company Jersey Central Power 6 Light Company Pennsylvania Power 6 Light Company Metropohtan Edison Company Potomac Electric Power Company 055 JCFF ERSON AVENUE VALLEYFORCE INDUSTRIAL PARK NORRISTOWN. PENNSYLVANIA 19401 t2I5) 666 7560 December 11, 1974 Federal Power Commission 825 North Capitol Street, N.E. 'rfashington, D.C. 20426 Attention: Mr. Kenneth F. Plumb, Secretary Gentlemen: Enclosed herewith for filing with the Commission are eighteen (18) copies of proposed Schedule 8.02 replacing Schedule 8.01 of the Interconnection Agreement .between The Cleveland Electric Illuminating Company (CEI) and the Pennsylvania-New Jersey-Maryland (PJM) Group dated September 30, 1965, as supplemented (the Agreement), which is on file with the Commission and is identified by the Rate Schedule numbers shown for each listed company. ~Com an FPC Rate Schedule Number The Cleveland Electric Illuminating Company 4 Public Service Electric and Gas Company 38 Philadelphia Electric Company 29 Pennsylvania Power & Light Company 44 Baltimore Gas and Electric Company 19 Potomac Electric Power Company 24 Pennsylvania Electric Company 49 Metropolitan Edison Company 29 Jersey Central Power & Light Company 24 By Order of the Commission under Docket RM74-22 (Page 30), the utilities in the Middle Atlantic region were requested to continue to develop appropriate rate schedule supplements for the generation of electric energy as they may be capable of generating to help coal burning utilities should the latter experience fuel supply emergencies. Pursuant to that request, proposed Schedule 8.02 has been prepared by the Parties to the Agreement to expand the provisions for Fuel Conservation Energy transactions contained in Schedule 8.01 dated April 5, 19?4 which became effective January 1, 1974 as part of the Order under Docket RM74-22. Present Schedule 8.01 provides only for the delivery by CEI to the PJM Grottp of Fuel Conservation. Energy. Proposed Schedule 8.02 includes the same provisions and rate as contained in present Schedule 8.01 and also includes provision for the generation of Fuel Conservation Energy by the PJM Group for CEI and the delivery by the PJM Group to CEI of such energy from other'systems. Because of the effect of the recent miners'trike on the coal supply situation, it is respectfully submitted that good cause exists for waiver of notice requirements and the Commission is herePy requested, pursuant to Section 35.11 of its Regulations, to waive notice requirements and order the proposed Schedule to be effective as of December 1, 1974. It is proposed that Schedule 8.02 remain in effect until December 31, 1975, unless extended by mutual agreement of the Parties. All of the signatories to the Agreement have approved this filing and have received copies thereof. This filing is being made on behalf of such signatories by the undersigned in accordance with the authorization contained in Section 5.6 of the Agreement. In response to Section 35.12 (a) of the Commission's Regulations, it is pointed out that the fixed rates proposed in Section 2 for generating Fuel Conservation Energy, and for delivery of such energy from other systems, were arrived at through negotiation and are intended to make a reasonable contribution to the fixed charges and expenses, other than fuel, associated with the generation and transmission facilities required to make the transactions possible, and to cover the cost of average transmission system losses, administrative and other costs of arranging for and delivering Fuel Conserve'ation Energy. For PJM, such costs are in excess of the generation rate of 3.0 mills per kilowatthour in Section 2.1 and the delivery rate of 1.75 mills per kilowatthour in Section 2.2, as shown in the attached state-ment. The CEI delivery rate of 1.25 mills per kilowatthour in Section 2.3 is the same rate specified in present Schedule 8.01 and CEI's costs are in excess of that rate. In response to Section 35.12 (b) of the Commission's Regulations,'t is pointed out that because of the uncertainty of the availability of fuels, both coal and oil, operating restrictions, and the capability of the supplying party, estimates of the transactions and revenues under the proposed Schedule are impossible to predict. No new facilities will be installed or modified in order to supply the service. In response to Section 35.8 (a) of the Commission's Regulations, there are enclosed three copies of a form of Notice of Agreement suitable for publication in the Federal Register. A check in the amount of $ 500 is enclosed pursuant to Section 36.2 (f) of the Commission's Regulations to cover the filing fee. ~ 1 Copies of this letter and its enclosures will be furnished promptly to the Regulatory Commissions of Ohio, Pennsylvania, New Jersey, Maryland, Delaware, Virginia, and the District of Columbia for their information. Very truly yours, L Wilmer S. Kleinbach Manager Enclosures cc: T A Phillips D. D. Journey SCHEDULE 8.02 OF THE CEI-PJM INTERCONNECTION AGREEMENT PJM STATEMENT OF THE BASIS OF THE FIXED RATES FOR GENERATION AND DELIVERY OF FUEL CONSERVATION ENERGY AND SUPPORTING COMPUTATIONS The PJM fixed rates for generation and delivery of Fuel Conservation Energy specified in Section 2.1 and 2.2 in Schedule 8.02 of the CEI-PJM Interconnection Agreement are negotiated rates intended to make a reasonable contribution to the fixed annual charges and expenses, other than fuel, associated with the generation and transmission facilities required to make the transactions possible, and to cover the cost of average transmi'ssion system losses, administrative, and other costs of arranging for and delivering Fuel Conservation Energy. These rates can be supported on a cost basis as shown on page 2. The cost data used in support of these rates is the same as submitted by PJM in support of other fixed rates specified in the NYPP-PJM Interconnection Agreement dated April 9, 1974 which was tendered for filing on June 27, 1974 and assigned Docket No. E-8876, and in proposed revised Schedules to the APS-PJM Interconnection Agreement which were tendered for filing on November 15, 1974 and assigned Docket No. E-9111. The capacity cost data, shown was developed for combustion turbines because the services provided for in the Agreements listed in the second paragraph above will most often be supplied by such equipment. It is recognized that Fuel Conservation Energy will most likely be supplied from fossil-fired steam units which would have higher investment costs. Because the proposed fixed rate for generating Fuel Conservation Energy is less than the costs shown for combustion turbines, no effort was made to develop the higher costs for fossil-fired steam units. The transmission cost data excludes that portion of total transmission plant investments below 110 KV because such lower voltage facilities would generally not be involved in;bulk power transfers. The transmission losses were determined by load flow analysis using off-peak system loads and reasonable transfers of Fuel Conservation Energy in both directions - east to west transfers for coal conservation and west to east transfers for oil conservation. Although the magnitude of the losses was different depending on the direction of the transfer, the cost to supply the losses was also different. One off-set the other, with 'the result that the cost of supplying average system losses 'for transfers in either direction was essentially the same. The administrative component was determined by dividing the annual expenses of operating the PJM Interconnection Office in 1973 by the quantity of energy interchanged among PJM systems and between PJM and adjacent systems. PJM SUPPORTING COMPUTATIONS PJM costs necessarily represent a composite of various company costs, based on different capitalizations, different service lives, different methods of tax accounting, and different state and local tax obligations. On a representative basis, however, the PJH costs are above the amounts necessary to support the proposed rates. Consequently, the compromises involved in the determination of c:atimated costs on a PJH basis are not of critical importance. For further explanation of computations, see'otes which follow on next page. Ratio Combustion Turbines S stem Transmission Ca italization (12-31-73) (Current Cost) Imbedded Cost) Bonds 51% 8 8.5 = 4.34% 9 6.25 = 3.19/ Preferred 14% 8 8.5 = 1.19% 9 7.25 = 1.01% Common equity 35% 812.0 ~ 4.20% 812.0 ~ 4.20'/ Return 9.73% 8.40% Xncom Tax Computation Return 9. 73% 8.40/ Deductions - interest 4.34 -3. 19 Levelized excess of DDB tax depr. for -30 yr. life over SLH for 40 yr. life * -1.48 Basis for taxes 5 39 3 73 Income tax = 1.125 x Basis . 6.06% 4. 20% Investment '/m ~/vu Gross plant $ 110.00 $ 51.00 Accrued depreciation (3 yrs for CT's) -14. 75 -8.00+ b Accrued deferred taxes -5.75 Net plant $ 89.50 $ 43.00 Annual Charges ~/KW/YR /Ia~/YR On net plant- Return + Income tax + 1/. Other taxes (16.79%) $ 15.03 (13.60/) $ 5.85 On gross plant - Depreciation ( 4.44%) 4.88 ( 2.50/) 1..28 Operation and Raintenance . ~ 0. 50 ( 2.00%) 1.02 Total $ 20.41 $ 8. 15 Credit for operating capacity and energy benefits retained by owning company $ -1.20 Net annual cost $ 19. 21 $ 8. 15 Fixed Rates - Fuel Conservation Ener Transactions MILLS/K!ttH For Generation Net hourly cost - capacity $ 19.21 - transmission 8. 15 $ 27.36/8760 hours 3.12 Proposed rate in Section 2.1 3.0 For Deliver from Other Systems Net hourly cost - transmission $ 8.15/8760 hours 0.93 Cost of supplying transmission system losses 0.68 Administrative cost - $ 4.4 million/13.7 billion KMH 0.32 1.93 Proposed rate in Section 2.2 1.75

• Not Applicable

PJH SUPPORTING COi~fPUTATIONS Notes 1~ Capacity costs are based on the current average PJii1 companies'nvestment cost for combustion turbine installations, which amounts to, $ 110/KW. Because the current average age of CT's in PWi is only about 3 years, it is appropriate to consider carrying charges based on current rates for debt and preferred stock. The nature of the transactions involved is such that it is appropriate to consider income taxes as being normalized. Book life for CT's (20 and 25 years in several companies) is considered to be 22 5 years, this being the same as the ADR life used for tax purposes. 2 Transmission costs are based on 1973 FPC Form 1 total transmission plant investments for PJM companies ($ 2,140 million), adjusted to exclude the estimated investment ($ 563 million) in facilities used for, or related to step-down transformation to voltages below llOKV, divided by the 1973 PJM peak load of 30,993 bM, which amounts to $ 51/KA. Such trans-mission has a greater current average age than the CT's. Return on that transmission investment is, therefore, based on representative imbedded costs; and the income tax computation provides for a deduction representing the levelized difference between tax and book depreciation. 3 Computed income taxes are those applicable in Pennsylvania, where the composite rate is 53%, which is equal to the'tate rate of 9.5% plus .48% (100-9.5). Other, taxes are assumed to be a nominal 1% of depreciated plant, which is less than the rate applicable in some parts of PJH, other than Pennsylvania.

4. Fixed 0 6c 11 expenses are estimated at $ 0.50/KU/YR for CT's and 2% of gxoss plant for tiansmission. A credit against expense is lndicated for the CT's, this representing certain benefits retained by the owning company, and hence a reduction in the net, cost of the capacity made available to others.

UNITED STATES OF iQKRICA FEDERAL POMER COMMISSION CEI - PJM Group ) Docket No. E-Inteiconnection Agreement ) Date NOTICE OF INTERCONNECTION AGREEMENT Take notice that on December , 1974 The Cleveland Electric Illuminating Company (CEI) and the Pennsylvania-New Jersey-Maryland Group (PJM Group) tendered for filing proposed Schedule 8.02 dated 1974, to the Interconnection Agreement between them dated September 30, 1965, which is filed with the Commission under the following Rate Schedule designations: ~tom an FPC Rate. Schedule The Cleveland Electric Illuminating Company FPC No. 4 Public Service Electric and Gas Company 38 Philadelphia Electric Company 29 Pennsylvania Power & Light Company 44 Baltimore Gas and Electric Company 19 Potomac Electric Power Company 24 Pennsylvania Electric Company 49 Metropolitan Edison Company 29 Jersey Central Power & Light Company 24 The proposed Schedule expands the provisions for Fuel Conservation Energy transactions by making provision and specifying charges for the generation of Fuel Conse'rvation Energy by the PJM Group for CEI and the delivery by the PJM Group to CEI of such energy from other systems. The proposed fixed charges for such services were'rrived at through negotiation and are the same as specified in other Energy filings by the PJM Group. Because of the current uncertainty of Fuel'onservation fuel supplies and the possibility that transactions will be required imminently under the proposed Schedule, the Parties have requested that the Commission waive its notice requirements and that the proposed Schedule become effective December 1, 1974. It shall remain in effect until December 31, 1975 unless extended by the Parties. No new facilities will be installed nor will existing facilities be modified in connection with the proposed Schedule. Any person desiring to be heard or to make any protest with reference to the subject matter of this Notice should, on or before file with the Federal Power Commission, 825 North Capitol Street, N.E., Washingtin, D.C. 20426, petitions to intervene or pr'otest in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 1.8 or 1.10). All protests filed with the Commission will be considered by it in determining the appropriate action to be taken but will not serve to make the protestants parties to the proceeding. Persons wishing to participate as a party in any hearing therein must file petitions to intervene in accordance with the Commission's Rules. The documents referred to herein are on file with the Commission and available for public inspection. Secre tary SCHEDULE 8.02 (REPLACING SCHEDULE 8.01) TO INTERCONNECTION AGREEMENT BETWEEN CEI AND THE PJM GROUP Issued December 11, 1974 Effective December 1, 1974 FUEL CONSERVATION ENERGY Section 1.8 of this Agreement provides that CEI and the PJM Group shall set forth in additional schedules the arrangements for specific services to be rendered in furtherance of the intent of this Agreement. This Schedule 8.02> which replaces Schedule 8.01, has been agreed to by the Parties in accordance therewith. Fuel Conservation Energy shall be considered to be electric energy that is scheduled between the Parties during off-peak hours as defined in this Schedule, solely for the purpose of conserving fuel inventories. The following are the terms and conditions govexning the generation and supply of such Energy by the PJM Group for CEI, and also the transmission of Fuel Conservation Energy to and from systems interconnected with CEI or the PJM Group. Section 1 - Services to be Rendered 1.1 CEI may arrange with the PJM Group for periods of one or more weeks for I the generation and supply of Fuel Conservation Energy whenever, in its sole judgment, the PJM Group has the capability and the fuel resources to make such Energy available. Either Party may arrange with the other for the delivery of Fuel Conservation Energy to and from other systems interconnected with CEI or the PJM Group. 1 ll Prior to such arrangement for Fuel Conservation Energy, the number of megawatts to be supplied, the period of supply, the estimated cost, and the sources, of supply if the supplying Party is in turn obtaining it from another system, or the ultimate destination if a Party is in turn arranging for the supply for another system, shall be determined by the Parties. Such determination shall be confirmed in writing, if requested. by either Party. 1.12 If such Energy is supplied from the PJM system, it may be reduced only when during such period conditions arise that could not have been reasonably foreseen at the time of the arrangement and cause the arrangement to be burdensome to the PJM system. If the Energy is transmitted by the supplying Party from another system, it may be reduced only (1) when and to the extent reduced by such other system or (2) when during such period conditions arise that could not 'ave been reasonably foreseen at the time of the arrangement and cause the transmission of the Energy to be burdensome to the supplying Party's system or (3) when a transmission or other limitation in the system of the receiving Party or another system (other than the receiving Party) interconnected directly or indirectly with the system of the receiving or supplying Party makes it impracticable, as a technical matter, to receive or deliver such Energy. The supply or transmission of the Energy shall be considered burdensome if continuation would jeopardize service to firm customers of the supplying Party's system. 1 ~ 13 For the purpose of this Schedule, off-peak hours shall be defined to be between the hours of 10:00 p.m. and 7:00 a.m. Eastern Standard Time or Eastern Daylight Saving Time (which-ever Time is in legal force on the system of the supplying Group) 'n any day other than Sunday, and certain legal holidays, and during any hour on Sunday and such legal holidays. 1~ 14 During each weekly period that Fuel Conservation Energy has been arranged to be generated and supplied by the PJM Group, the PJM Group shall upon call deliver megawatthours to CEI in amounts up to and including the number of megawatthours equal to the product of seventy-two (72) hours and the number of megawatts then arranged for ("CEI's Entitlement" ). 1.15 During the period of the arrangement, the PJM Group and CEI may arrange, as dictated by operating conditions, available generating capability and fuel resources, to deliver and to take, respectively, (1) amounts of Fuel Conservation Energy at a rate of delivery exceeding the number of megawatts then arranged for during the hours specified in Subsection 1.13 or, (2) CEI's Entitlement or some portion thereof, in part during the hours specified in Subsection 1.13, and in part during other hours. Section 2 - Com ensation 2.1 CEX shall pay the PJM Group for each kilowatthour of Fuel Conservation Energy supplied from the PJM Group's system an amount equal to 110/ of the out-of-pocket replacement cost of generating such Energy plus three (3.0) mills per kilowatthour. 2.2 CEI shall pay the PJH Group for each kilowatthour of Fuel Conservation Energy purchased by the PJM Group from another system and supplied to CEI during the period of the arrangement the amount paid therefore by the PJM Group plus one and three-quarter (1.75) mills per kilowatthour. 2.3 The PJM Group shall pay CEI for each kilowatthour of Fuel Conservation Energy purchased by CEI from another system and supplied to the PZi Group during the period of the arrangement the amount paid therefore by CEI plus one and one-quarter (1.25) mills per kilowatthour. 2.4 For purposes of this Schedule, out-of-pocket replacement cost of supplying Fuel Conservation Energy shall mean out-of-pocket cost of generating such Energy plus or minus an adjustment (to be made by supplemental bill) to reflect increases or decreases in the cost of fuel on a Btu basis between the cost of fuel at the stations from which the Energy was delivered during the month in which the Energy was delivered and the cost of such fuel for the second month after such month of delivery. Section 3 - Billin s and Pa ents Bills for the charges for services supplied in accordance with thi,s Schedule during each month will be rendered by the tenth day of the following month and will be payable on the first banking day common to the parti'es hereto following the bills shall be due and payable on the fifteenth day following receipt of bill. Interest on unpaid amounts on any bill rendered under this Schedule shall accrue at ten percent (10%) per annum from the date due until the date upon which payment is made. Section 4 - Termination This Schedule shall terminate December 31, 1975 unless extended by mutual agreement of the parties. I