The document outlines PJM's role in the Eastern Interconnection, detailing key statistics such as a capacity of 158,448 megawatts and service to over 58 million people. It discusses demand response (DR) evolution, the integration of energy efficiency, and the implementation of smart grid technologies for reliable electricity management. Additionally, it highlights market rules and resources related to demand response and energy efficiency.

1. America’s Sustainable Future Susan Covino Senior Consultant, Market Strategy Smart Grids and Microgrids Philadelphia, PA June 15, 2011

2. PJM as Part of the Eastern Interconnection with ATSI Integration KEY STATISTICS PJM member companies 700+ millions of people served 58 peak load in megawatts 158,448 MW of generating capacity 180,400 MW of Load Management 11,822 miles of transmission lines 61,200 GWh of annual energy 794,335 generation sources 1,365 square miles of territory 211,000 area served 13 states + DC Internal/external tie lines 142 24% of generation in Eastern Interconnection 27% of load in Eastern Interconnection 19% of transmission assets in Eastern Interconnection 20% of U.S. GDP produced in PJM As of 6/1/2011

3. Components of Reliable Electricity Provided by DR Energy Real time flow of electrons where demand = supply $2,933,761 paid to DR in 2010 for Economic Capacity 3 year forward market to assure capacity adequacy $512,300,658 paid to DR resources in 2010 Synchronized Reserve 10 min. reserves when largest unit trips off-line $5,319,120 paid to DR resources in 2010 Regulation 5 min. reserves maintain frequency at 60 herz $0 paid to DR resources in 2010

4. Energy Efficiency Participation in the Capacity Market Permanent, non-dispatchable and measureable reduction in the site’s peak load Performance hours are 2:00 p.m. through 6:00 p.m. summer weekday afternoons (6/1-8/31) Energy Efficiency Resource (EE) must exceed building codes and appliance standards known at time of commitment Revenues paid to EE for maximum of 4 planning years (EE then reflected in auction forecast) End-use site may have one CSP for EE and another CSP for DR

5. Smart Grid – Two-way Communications and Control Generation Transmission & Sub-transmission Distribution Customer Smart Metering, Demand Response, PHEV , Energy Conservation and Distributed Resources Substation Automation Distribution Automation SCADA and Phasor Measurements The Smart Grid is realized by merging data from these areas of automation to achieve a total end-to-end systems view by integrating information technology and operational technology. Energy Storage System Operator

6. Evolution of Demand Response to Price Responsive Demand Interruptible load was DR 1.0 No response at all to prices, but response as the retail supplier/distributer needed it as a capacity resource Treats DR as supply-side from planning perspective Currently wholesale/retail paradigm is DR 2.0 Responses to wholesale market prices and emergency events = supply-side resource Little integration and coordination with actions at the retail level as CBL and LMP act as a proxy for dynamic retail rates Price Responsive Demand is DR 3.0 Integrates wholesale and retail prices Treats DR as a demand-side participant www.pjm.com

7. Smarter Grid - Summary

8. Demand Response and Energy Efficiency Reference Material Market rules for Demand Response Manuals 11 and 18 (RPM/capacity market) http://www.pjm.com/documents/manuals.aspx http://www.pjm.com/markets-and-operations/rpm/rpm-auction-user-info.aspx Market rules for Energy Efficiency participating in RPM – Manual 18B Monthly Load Response Activity Report http://www.pjm.com/markets-and-operations/demand-response/dr-reference-materials.aspx Susan Covino, 610-666-8829, [email_address]