©2003 PJM 1 Presentation to: Maryland Public Service Commission May 16, 2003

©2003 PJM 2 ã Scheduled Capacity ã Projected Peak Demand and Capacity ã Reserves ã Bulk Power Purchases/Sales ã Unavailable capacity ã Summer Overview ã PJM Load Response Programs ã Emergency Procedures ã Reserve Shortages: Generation Loading & Pre-Arranged Load Reductions ã Reserve Shortages: Load Relief Procedures ã Transmission System Events ã Assistance from neighboring systems ã Emergency Procedures Summary ã Grid Control Security - Second by Second Preparedness ã Market Growth Initiative- Backbone Transmission Systems Agenda

©2003 PJM 3 ãBetween June 1, 2002 and April 1, 2003 PJM RTO’s summer generating capacity increased by a net of 2,125 MW to 74,175 MW (2,075 MW east, 50 MW west) ãAn additional 1,275 MW is expected by June 1, 2003 (in the PJM Classic footprint) ãAll nuclear units are expected to be in service and at full capacity (13,203 MW) at the time of the peak ãPJM has begun recognizing Intermittent Capacity Resources by extending capacity factor values to Wind Turbine installations. 130MW over four separate installations can now apply. Scheduled Capacity

©2003 PJM 4 Projected Peak Demand & Capacity ã The 2003 RTO Summer forecast net peak demand is 64,301 MW ã The 2003 forecast is 539 MW higher than the actual PJM RTO all-time summer peak of 63,762 MW that occurred on August 14, ã This forecast includes effects of Active Load Management (interruptible demand and load management capabilities) estimated to be 1,273 MW ã The Winter 2003/2004 PJM RTO forecast load is 52,622MW.

©2003 PJM 5 ã The PJM installed reserve margin is expected to be 17.3% as of June 1, 2003 ã Additionally, 925 MW of generating capacity is expected to be added throughout the summer demand period raising the installed reserve margin to 18.8% ã Installed reserve margin is based on “Iron-in-the- Ground” capacity resources and does not include the impact of external purchases or sales. Reserves

©2003 PJM 6 Bulk Power Purchases / Sales ã At the present time, PJM has 698 MW of firm transmission service in place for energy sales out of PJM through the summer peak period ã Presently, the transactions above are not capacity backed and therefore can be curtailed in the event of a PJM capacity emergency ã Historically, approximately 1200 MW of the reserved firm transmission service has been used to transfer capacity out of PJM on peak summer days, and can therefore decrease the capacity margin by 1.3%

©2003 PJM 7 ã During the summer peak period, 6.41% of PJM capacity is historically forced out of service ã Planned outages are not permitted during the summer peak period ã Scheduled maintenance is coordinated to minimize peak period impacts Unavailable Capacity

©2003 PJM 8 Summer Overview Period Forecast Load (MW) Total Forecast Load (MW) (less Load Mgmt & Contractually Interruptible) Actual Load (MW) Summer ,30163,028 To be Determined Summer ,02361,22563,762 All-Time Summer Peak: 63,762 on 8/14/02

©2003 PJM 9 PJM Load Response Programs EMERGENCYECONOMIC Designed to provide an incentive to customers or curtailment service providers to reduce consumption when PJM LMP prices are high Two options: Day Ahead Option Real Time Option Designed to provide a method by which end-use customers may be compensated by PJM for voluntarily reducing load during an emergency event.

©2003 PJM 10 Sites and MW Volume EMERGENCY ECONOMIC 2002 u 61 Registered Sites u 548 MW u Payments $177, u To be Determined ECONOMIC 2002 u 116 Registered Sites u 337 MW u Payments $895, u 5 New Registered Sites u 26 MW u Payments $13,000 Total Sites: 182 Total MW: 911 MW 911 MW is approximately 1.4 % of the 2003 Peak Demand

©2003 PJM 11 ã Solicit emergency energy through marketers ã Recall energy sales out of PJM ã Purchase emergency energy ã Load maximum emergency generation ã Initiate load management programs and require load reductions by interruptible service customers under contract Emergency Procedures During Reserve Shortages: Generation Loading & Pre-Arranged Load Reductions

©2003 PJM 12 ã If additional load reduction is necessary the following procedures will be implemented in sequence as required: ã Radio and TV load curtailment appeal ã Curtailment of non-essential utility load ã 5% voltage reduction ã Voluntary customer load curtailment ã Rotating short-duration load shedding During Reserve Shortages: Load Relief Procedures Emergency Procedures

©2003 PJM 13 ã Close coordination between transmission outages and expected generation patterns ã Operator action to control flow patterns ã Coordination of generation and transmission patterns in PJM to maintain a reliable and secure transmission grid ã Congestion management system using LMP ã Coordination of interregional actions ã Rotating short-duration load shedding implemented in the most effective areas During Transmission System Events Emergency Procedures

©2003 PJM 14 Assistance ãAn integral part of bulk power supply reliability ãAllows lower installed reserve margins ãThis summer, no assistance will be required if: ãWeather is normal ãUnits perform as expected ãIf required, assistance from neighboring systems should be available Assistance from Neighboring Systems

©2003 PJM 15 Emergency Procedures Summary

©2003 PJM 16 Grid Control Security - Second by Second Preparedness Primary Control Center n Transmission n Simulation of Loss of Each Transmission Line and Generator and Protection of Actual Problems Once Every Minute. n Generation n Reserves Scheduled and Operated to Cover Loss of Major Generators. n Information Transfer n Redundant Telecommunications n Planned Intrusion (Hacking) Tests n Market Operations n Back-up System Automatically Live in 10 Minutes, if Needed. n Business Rules for Price Calculation if Data not Viable n Alternate Options for Bid Submission Back -Up Control Center n Security Programs for Physical Facilities Provided by Owners or Operators n Over 20,000 Data Points of Live Information from Transmission Lines, Generating Stations, Switching Stations, and Tie line Meters is Sent to Both Primary and Back-Up Control Centers every 2-14 Seconds Normal Operating Procedures 7x24

©2003 PJM 17 Market Growth Initiative

©2003 PJM 18 Phone (610) FAX (610) Internet site If you have questions... Contact PJM Customer Relations Questions