Under PJM’s current business rules, transactions can be scheduled to an interface based on a contract transmission path, but pricing points are developed and applied based on the electrical impact of the external power source on PJM tie lines, regardless of contract transmission path. PJM establishes prices for transactions with external balancing authorities by assigning interface pricing points according to the NERC Tag. Assigning prices in this manner is an adequate method for ensuring transactions receive or pay the PJM market value of the transaction based on expected flows, but this methodology does not fully address loop flow issues. The issue is that the current interface pricing methodology does not provide PJM’s Real-Time Market software applications an accurate forecast of the expected actual flows at its interfaces. Not having an accurate forecast results in a less than optimal economic dispatch solution. The issue is also that the current interface pricing methodology does not address the situation in which market participants break transactions into smaller segments to defeat the interface pricing rule and receive higher prices.