FERC Decision Reaffirms PJM's Reliability Pricing Model, Supports Competition

Business Wire, Sept 18, 2008

Ruling encourages Exelon and others to continue development of clean, low-carbon generation

CHICAGO -- Exelon said a Federal Energy Regulatory Commission (FERC) decision today to dismiss complaints about the Reliability Pricing Model reaffirms the model and supports competitive markets.

The Reliability Pricing Model, or RPM, is a program administered by PJM, a 13-state organized power market, to ensure that electric system reliability is maintained at the lowest possible price. It works by promoting investment in both existing and new generation to ensure a continued, reliable supply of electricity to customers.

"We commend FERC's continued support for RPM and competitive markets," said Betsy Moler, executive vice president, Government and Environmental Affairs and Public Policy, Exelon. "FERC's recommendation for a technical conference complements Exelon's active participation in the ongoing stakeholder process to continue to review and improve RPM."

RPM is delivering a variety of benefits to customers by attracting more reliable, environmentally friendly energy sources. For example, Exelon is pursuing development of a 650-megawatt combined-cycle natural gas power plant in the PJM territory. The company said RPM provided the transparent price signals needed to encourage development of the new plant.

"This FERC ruling provides even greater certainty to power companies like Exelon that are considering building or upgrading clean, low-carbon generating plants," said Joseph Dominguez, senior vice president and general counsel, Exelon Generation. "We hope that this decision will receive the same high level of attention among policymakers, market participants and industry players as the unsubstantiated complaints did."

Exelon's efforts to bring more clean, low-carbon electricity into the marketplace are a key part of Exelon 2020: A Low Carbon Roadmap, the company's plan to reduce, offset or displace more than 15 million metric tons of greenhouse gas emissions per year by 2020.

In addition, RPM has generated more financial support for renewable power projects, such as solar and wind energy, as recently recognized by a leading environmental group in Pennsylvania, Penn Future. RPM also has tripled growth of customer "demand response" programs, which help reduce energy consumption at times of peak usage.

The dismissed complaints included allegations of price manipulation and accusations that the RPM prices were unjust and unreasonable. However, PJM has extensive oversight to ensure fairness and accuracy. Notably, last week, the Independent Market Monitor for PJM confirmed that the results of the fifth RPM auction were competitive, just as he had approved the results of all four previous auctions. Additionally, the Brattle Group in its recently completed independent study of RPM found the program had fulfilled its objectives of ensuring reliability at just and reasonable prices and recommended several enhancements.

Exelon Corporation is one of the nation's largest electric utilities with nearly $19 billion in annual revenues. The company has one of the industry's largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately 5.4 million customers in northern Illinois and Pennsylvania and natural gas to 480,000 customers in the Philadelphia area. Exelon is headquartered in Chicago and trades on the NYSE under the ticker EXC.