ARR Allocation Clause Samples

ARR Allocation. For the 2007/2008 planning period, the annual ARR allocation process was revised to include Long Term ARRs that would be in effect for 10 consecutive planning periods.18 Stage 1A ARRs can give LSEs the ability to offset their congestion costs, through the return of congestion revenues, on a long-term basis. Stage 1B and Stage 2 ARRs provide a method for ARR holders to have additional congestion revenues returned to them in the planning period over their Stage 1A allocation, but may be prorated. ARR holders can self schedule ARRs as FTRs during the Annual FTR Auction.19 Each March, PJM allocates annual ARRs to eligible customers in a three stage process: • Stage 1A. In the first stage of the allocation, network transmission service customers can obtain ARRs, up to their share of Zonal Base Load, which is the lowest daily peak load in the prior twelve month period increased by load growth projections. The amount of Stage 1A ARRs a participant can request is based on generation to load paths that reflect generation resources that had historically served load, or their qualified replacements if the resource has retired, in the historical reference year for the zone. The historical reference year is the year prior to the creation of PJM markets, which is 1999 for the original zones, or the year in which a zone joined PJM. Firm, point to point transmission service customers can obtain Stage 1A ARRs, up to 50 percent of the MW of firm, point to point transmission service provided between the receipt and delivery points for the historical reference year. Stage 1A ARRs cannot be prorated. If Stage 1A ARRs are found to be infeasible, transmission system upgrades must be undertaken to maintain feasibility.20 • Stage 1B. Transmission capacity unallocated in Stage 1A is available in the Stage 1B allocation for the planning period. Network transmission 18 See 2006 State of the Market Report (March 8, 2007) for the rules of the annual ARR allocation process for the 2006 to 2007 and prior planning periods.

ARR Allocation. For the 2007 to 2008 planning period, the annual ARR allocation process was revised to include Long Term ARRs that would be in effect for 10 consecutive planning periods.36 Long Term ARRs can give LSEs the ability to hedge their congestion costs on a long-term basis. Long Term ARR holders can self schedule their Long Term ARRs as FTRs for any planning period during the 10 planning period timeline. Each March, PJM allocates ARRs to eligible customers in a three-stage process: the cost responsibility for upgrades included in the PJM RTEP. PJM calculates IARRs for each Regionally Assigned Facility and allocates the IARRs, if any are created by the upgrade, to eligible customers based on 35 PJM. “Manual 6: Financial Transmission Rights,” Revision 12 (July 1, 2009), pp. 31 and “IARRs for RTEP Upgrades Allocated for 2011/2012 Planning Period,” <▇▇▇▇://▇▇▇.▇▇▇.▇▇▇/~/media/ markets-ops/ftr/annual-arr-allocation/2011-2012/iarrs-rtep-upgrades-allocated-for-2011-12- planning-period.ashx>. 36 See the 2006 State of the Market Report (March 8, 2007) for the rules of the annual ARR allocation process for the 2006 to 2007 and prior planning periods. • Stage 1A. In the first stage of the allocation, network transmission service customers can obtain Long Term ARRs, up to their share of the zonal base load, after taking into account generation resources that historically have served load in each control zone and up to 50 percent of their historical nonzone network load. Nonzone network load is load that is located outside of the PJM footprint. Firm, point- to-point transmission service customers can obtain Long Term ARRs, based on up to 50 percent of the MW of long-term, firm, point-to-point transmission service provided between the receipt and delivery points for the historical reference year. Stage 1A ARRs cannot be prorated. If Stage 1A ARRs are found to be infeasible, transmission system upgrades must be undertaken to maintain feasibility.37 • Stage 1B. ARRs unallocated in Stage 1A are available in the Stage 1B allocation for the following planning period. Network transmission service customers can obtain ARRs, up to their share of the zonal peak load, based on generation resources that historically have served load in each control zone and up to 100 percent of their transmission responsibility for nonzone network load. Firm, point-to-point transmission service customers can obtain ARRs based on the MW of long-term, firm, point-to-point service provided between the recei...