June 13, 2017 Kerry Stroup PJM Interconnection, LLC 2750 Monroe Blvd. Audubon, PA 19403 Dear hir. Stroup, Thank you for your comments regarding the Zero Emissions Nuclear Resource Program currently under consideration in the Ohio legislature. We value your input as we work to consider legislation that would support Ohio?s two nuclear power plants and the vital environmental, economic, fuel diversity and security, grid resiliency and other bene?ts they deliver to the people of our state. As we work to ensure the needs of Ohio citizens are met, it is our belief that nuclear energy is an important component of our statewide energy goals. Davis?Besse and Perry provide 90 percent of our carbon?free electricity, employ thousands of Ohio residents and deliver hundreds of millions in tax revenues and other economic impacts. We are deeply concerned about the potential impacts of nuclear plant closures to our state and its people. I know PJM shares our commitment to ensuring safe, reliable and affordable electricity service to Ohio residents and businesses. The challenge is no doubt a complex one, and we appreciate the effort your organization has put towards identifying solutions that preserve our region?s valuable baseload assets. As you are aware, our legislative process is well underway at this point, and time is of the essence for taking action to preserve the state?s nuclear assets. in order to better understand how approach might complement policy solutions currently under consideration in Ohio, we have .outlined'our questions in the attached document. We look forward to your response by June 30, 2017 so that we may consider your perspective as we continue this important work. Sincerely? {7 enator John Eklund Ohio 18th District Senator Frank LaRose Ohio 27th District Representative Bill Seitz 0hj0'30?h?Dist?riet??" Representative Anthony DeVitis Ohio 36th District Harmonizing State Public Policy Objectives with PJM Wholesale Electricity Markets 1. Does PM agree that not all PlM-states have to be in agreement for a regional approach? a. Does PJM have a threshold number of states that should agree to a regional approach? Is 2 0k? Is 8 the right number? h. Could two or more regional solutions co?exist? What are the chances for getting a regional agreement? d. Have any other attempted to craft a regional solution? Were they successful? or ls PJM- aware of any states that have even agreed to work on a regional solution? 2. What is the process for getting to a regional solution and how much time does PJM estimate that it would take to get a regional solution implemented? 3. Has PJM identi?ed any speci?c state laws that would need enacted or amended to effectuate a regional solution? a. If so, can PJM provide those laws, and explain the process to make that happen? b. How long does PJ estimate that it will take to enact or amend these state laws? C. Is the same process needed in Ohio as in other states? 4. How would a regional approach impact Ohio? 5. Can PJM provide guarantees that any regional solution would be a net bene?t to Ohio? 6. Can PJM provide guarantees that a regional solution would preserve Ohio jobs, taxes and economic development? 7. Does PIM plan to develop a regional approach in an equitable way? Would there be any reconciliation/reallocation process for states that bene?t more from a solution? 8. Can explain how the border adjustment would work? We?ve heard from an economist that this can be very challenging. 9. Do you have any illustrative examples on how this would work? 10. Is this a practical theory? There are still numerous details that are unknown which creates a cloud of uncertainty. Can we assure Ohioans that this is a viable solution? a. We were told that Capacity Performance was the answer to properly compensating resources, and that hasn?t workEl as well as many had hoped. Why should we expect that this new theory will? 11. How will PJM ?ensure protection for Ohio from the impacts of public policy initiatives undertaken by neighboring states that have not been endorsed and adopted by Ohio policymakers?? a. What form will these protective measures take?? b. Is PM promising every state this same protection even though they may all have or will have adopted diverse policies? 12. Are there other market design issues that has not addressed or resolved? When were 13. 14. 15. 16. 17. 0. Since you note endorsements by state policy makers, do you expect that those policymakers will have a voice in stating whether any PJ solution does in fact protect its interests? What is the recourse if states do not agree? these issues ?rst noticed? When will they be ?xed? a. Does PM have plans to address the arbitrage issue in incremental auctions that FERC has found may not be just and reasonable? b. Does Pl have any plans to address price certainty in capacity auctions? Does PJM have any plans to address resilience in the capacity market? d. Does PM have any plans to address fuel security in the capacity market? e. Does PM have any plans to address price formation in the energy/ capacity market? . f. Does have any plans to address external capacity rules/requirements in the capacity market? What approvals need to occur for a PJM?regional solution to be irnplernented Pl stakeholders, quorum of states, PJM Board, FERC, federal courts, etc)? If FERC approval is required, does Pl have a proposed process and estimated timeline for approval? a. Does PJM believe that FERC is amenable to a proposed regional solution? b. Does PJM have any insight on what the new FERC Commissioners think about a regional solution? Does PJM have a plan for when a regional solution is challenged in federal court? PJM notes that it manages the reliability of the transmission system for all of Ohio. Isn?t it true that 1?le jurisdiction does not cover municipal-owned systems and rural cooperatives, of which there are over 20 in Ohio? a. Is PJM aware of any other state by state exclusions or interests that should be considered? PJM notes its study that highlighted new risks (resilience risks) growing with the increased dependency on natural gas delivery infrastructure. In estimation, how and when will these resilience risks be resolved and ensure that Ohio has the long?term - . . ?15/3161: (?14 mm ?-r'frD-rl {'5qu Lulu an unIUL?Evou . 18. a. What assurance can PJM provide that guarantees that Ohio will bene?t from the integration of an unknown regional solution and an unknown resiliency solution? PJM states that ?generation resources that no longer needed to rely on wholesale electricity markets to recover all of their costs are enabled and incented to submit lower than cost offers?. a. If this is a PJM concern, would regulated generators raise similar concerns? If this is a PIM concern, do renewable that receive federal tax credits raise similar concerns? If this is a PJM concern, do renewable resources that receive REC payments raise similar concerns? If this is a PI concern, would gas plants that receive property tax abatement and other economic development incentives raise similar concerns? Has PJM established criteria by which resources receiving out-of~market revenues will be singled out? If so, please provide. 19. separate initiative regarding how marginal prices are formed is also expected to have some bearing on the proposed bills, according to PJM. 3? When does PJM plan to have the initiative on marginal prices completed and implemented? Does PJ have an established process for that initiative? What guarantees can PJM provide that the outcome on the marginal pricing initiative will integrate well with Ohio?s objectives and bene?t Ohioans? if neither the regional solution, the marginal price solution or the resiliency solution are known, how could any state possibly agree to any one of them, in good faith? 20. In your letter alone, PJM has noted 3 signi?cant problems with unknown solutions for integrating state policies, marginal pricing and resiliency. a. b. C. What else does PJM believe that Ohio is missing? What engineering principles should PJM consider in deveiOping solutions? Is PJM performing any additional studies to identify and understand unknown solutions and proactively manage appropriate outcomes?