Under the current rules for Balancing Operating Reserve (BOR) deviation calculations, deviations are netted by transaction type (INC, DEC, import, export, internal bilateral purchase or sale) at the location where there transaction occurred (ie Hub, Zone, Interface, Aggregate, bus). This rule was retained on a locational basis when the package of BOR changes was implemented in December of 2008 in order to recognize that deviations at differing locations on the system can impact BOR costs. PJM has identified and documented activity by market participants whereby Internal Bilateral Transactions (IBTs) may have been submitted in order to inappropriately avoid BOR charges. PJM believes the potential for using IBTs in this manner extends beyond the behavior that PJM has already identified. PJM therefore recommends that stakeholders revisit the netting rule and explore potential improvements to eliminate the potential for inappropriate use of IBTs.