The Commission issued a couple of orders in PJM last week:

PJM,s Load Response Program:  FERC approved implementation of two load 
response pilot programs proposed by PJM which will be effective June 1, 2001 
through May 31, 2002.  Under the first program, referred to as the &Emergency 
Option,8 a PJM member may sign up to be a participant in the program and will 
be paid the higher of the relevant zonal LMP or $500/MWh for the actual kWh 
relief provided when the PJM member nominates load reduction in response to a 
request from PJM.  Under the second option, referred to as the &Economic 
Option,8 the PJM member will be able to reduce load in response to economic 
signals, regardless of whether emergency conditions exist.  PJM will bill the 
LSE serving the end-use customer the LMP that would have been charged absent 
the reduction.  PJM will then refund to the LSE the retail generation and 
transmission charges that the LSE would have received had the load not been 
reduced.  The difference between the amount billed and refunded to the LSE 
will be paid to the end-user.

Several customers opposed PJM,s programs, particularly the Economic Option.  
However, FERC found that both programs allow end use customers to see prices 
and respond to them when it is economically beneficial for them to do so.  
FERC noted that because PJM's current market structure does not communicate 
wholesale prices to retail customers in real time, they have no incentive to 
reduce demand when prices increase.  FERC finds that PJM's plan will, in 
part, fix this flaw in its market structure.  PJM is required to file a 
report with FERC by the end of the year evaluating the effectiveness of the 
program.

Changes to PJM's Reliability Assurance Agreement (RAA):  FERC also approved 
PJM's proposed changes to its RAA, effective June 1.  PJM had requested FERC 
authorization to change the RAA by i) adjusting the time period over which an 
LSE must commit generation resources to PJM to meet its capacity obligations 
under the RAA, from a daily to a seasonal commitment; ii) adjusting the 
deficiency charge provisions to provide for a seasonal, rather than a daily, 
penalty for LSEs; and iii) requiring generation owners to commit excess 
capacity to PJM seasonally, rather than daily, in order to participate in any 
distribution of revenues from capacity deficiency charges paid by LSEs.  EPMI 
supported PJM's changes, stating that although the ICAP requirement should be 
eliminated entirely, the proposed changes are a step in the right direction 
in resolving the delisting problem.

In approving the changes, FERC stated that moving from daily to seasonal 
deficiency charges discourages generators from delisting capacity during the 
summer and gives LSEs the incentive to meet their capacity obligations, 
thereby helping PJM to meet its short-term and long-term reliability goals.  
FERC also said that PJM's Market Monitoring Unit will be able to monitor 
generator gaming behavior and take appropriate action if necessary.