Emissions Tracking in the Generation Attribute Tracking System

Presentation Overview • GATS Functionality - What is GATS? Design Overview Certificate Creation Emissions Data Sources Certificate Trading Period PJM-EIS Web Site Public Reports • RGGI Enhancements © 2008 PJM EIS 2

What is GATS? • GATS - a regional environmental registry and information system that will track the environmental and fuel attributes of generation. • The system will: • assist LSEs in their compliance with applicable emissions and fuel disclosure requirements and with state-level Renewable Portfolio Standard (RPS) regulation or renewable policy • enable voluntary bilateral markets and marketing claims for renewables. • provide state agencies with reporting and verification • provide renewable generators with a means to monetize their renewable attributes and qualification © 2008 PJM EIS 3

Needs of the PJM States / Market • PJM initiated the GATS project in response to state regulatory commission inquiries and effected stakeholders - Fuel Mix and Emissions Disclosure • Delaware: fuel mix • Pennsylvania: fuel mix • Maryland: fuel mix and emissions • New Jersey: fuel mix and emissions • Ohio: fuel mix and emissions • Virginia: fuel mix and emissions • Illinois: fuel mix and emissions • District of Columbia: fuel mix and emissions - Renewable Portfolio Standards • New Jersey: began in 2004. • Maryland: requirements in effect in 2006 • Pennsylvania: requirements in effect in 2007 • District of Columbia: requirements in effect in 2007 • Delaware: requirements in effect in 2007 © 2008 PJM EIS 4

Design Overview • All MWhs of PJM generation are tracked. • A certificate market separate from energy is enabled for renewable generation. - Certificates (i. e. , credits) traded separate from energy - Certificates can have different value depending on their attributes (e. g. , fuel type, location, date of generation, etc). • It is a single information system that will support a range of reporting, verification, and compliance requirements (e. g. , disclosure, RPS, voluntary retail markets, etc). • It is a regional system that will enable PJM states and market participants to support varying needs and priorities. • A system that is flexible enough to meet evolving state requirements. © 2008 PJM EIS 5

Design Overview • GATS is designed to be policy-neutral to the greatest extent possible • The system accommodates: - banking certificates to accommodate varying certificate life spans as determined by state policy or regulation - enabling varying state programs and their definitions of preferred attributes: - wind, solar, biomass, etc. - energy efficiency - waste coal - pumped storage generation - moving certificates to non-LSEs for bilateral voluntary markets, i. e. direct sales to retail entities - a bulletin board to facilitate bilateral trades - behind the meter generation, imports and exports © 2008 PJM EIS 6

Certificate Creation Each MWh is given a unique electronic certificate This certificate may contain any information relevant to market participants and capable of being tracked by GATS. Certificate No. 123456789 Acme Generating Station Pollutant lbs NOx SO 2 0. 0 - Certificates’ data will be compiled using PJM generation and publicly available data from EPA and EIA. 0. 0 CO 2 0. 0 1 MWh - Where data do not exist or are faulty, generators may choose to update their information based on agreed upon best practices. Fuel: Wind Location: Example, MD. Tier I: Yes - Default assumptions will be developed as a last resort for generators with faulty or no data who choose not to update their information. © 2008 PJM EIS 7

Certificate Creation • Account Holder Review Period spans from the 10 th business day to the day before certificates are created • Certificates created monthly, on the last business day of the following month © 2008 PJM EIS 8

Emissions Data Sources • Emissions data tracked in GATS: - • Carbon dioxide Nitrogen oxides Sulfur dioxide Emissions data comes from a hierarchy of sources: 1) 2) 3) 4) © 2008 PJM EIS Entered by the generation owner during the Account Holder Review Period (in lbs) Emission rate (lbs/MWh) calculated by PJM-EIS using EPA unit-level annual emissions for generators in the Acid Rain Program. Preliminary 2007 date is currently available. EPA Emissions & Generation Resource Integrated Database (e. GRID) emission rate (lbs/MWh). e. GRID 2006 Version 2. 1 contains 2004 data. Fuel Type Default (lbs/MWh) 9

Updating Emissions Information Once the facility has been “Approved” Emissions information may be updated

Updating Emissions Information Update/change emissions information for each fuel type if necessary Note: Default

Certificate Trading Period • Certificates created monthly to increase flexibility and accommodate differing state reporting periods • Preliminary reports issued each quarter • Annual settlement in late February for the preceding calendar year • RPS-eligible certificates can be “banked” any time prior to the annual settlement date so that they can continue to be traded. © 2008 PJM EIS 12

PJM-EIS Website For more information on GATS, access the PJM-EIS website at: www. pjm-eis. com The PJM-EIS website provides links to the “GATS Operating Rules” and “GATS Terms of Use” for your reference Link to the GATS Login Page © 2008 PJM EIS 13

GATS Login Page Public Reports © 2008 PJM EIS 14

GATS Public Reports Sample Public Report: PJM System Mix © 2008 PJM EIS 15

GATS PJM System Mix Report 2007 PJM SYSTEM MIX © 2008 PJM EIS 16

Enhancements to Support RGGI © 2008 PJM EIS

RGGI Enhancements • New Generator Attributes - RGGI-affected unit - Unaffected small fossil fuel-fire unit - RGGI-region unit • Infer net “imports” into RGGI portion of PJM - “Imports” = difference between load and generation in the RGGI portion of PJM - Environmental attributes of net “imports” will be based on non-RGGI PJM residual mix • New Reports - • Total PJM load subject to RGGI Total PJM generation in RGGI-region “RGGI emissions mix” “RGGI residual mix” “Unaffected small fossil fuel-fired RGGI-region unit emissions mix” For details on these calculations refer to: - “Initial Report of the RGGI Emissions Leakage Multi-State Staff Working Group” dated 3/14/2007: http: //www. rggi. org/docs/il_report_final_3_14_07. pdf • Enhancements will be implemented by end of 2008 © 2008 PJM EIS 18