By Amanda Durish Cook
MISO and PJM plan to unveil rule changes late this summer that will better synchronize how they manage incremental auction revenue rights (IARRs) along their seam.
Speaking during a May 30 Joint and Common Market meeting, PJM Senior Market Simulation Analyst Brian Chmielewski said the RTOs are working to clarify and improve their current IARR coordination process, particularly where it concerns PJM’s customer-funded options.
Both RTOs offer IARRs, which represent additional auction revenue rights created by transmission upgrades that increase capability on their transmission facilities. IARR megawatts are awarded for the additional capability created for the life of the upgrade or 30 years, whichever is less, and valued each year based on annual financial transmission rights auction clearing prices.
However, PJM’s process provides an additional option that allows a specified IARR to be awarded when a customer agrees to fund transmission upgrades necessary to support the new ARR request.
MISO and PJM coordinate studies of IARR requests when there is a potential impact on flowgates operated by either RTO, but they say there are gaps in the current process designed to coordinate IARRs between them.
Chmielewski said the RTOs need to ensure they are properly transferring firm flow entitlements on the impacted flowgates of an IARR to make sure FTR revenue remains adequate. Because PJM is also obligated to guarantee at least 80% of IARR megawatts, the RTO may have to require “some guarantee” from MISO on future firm flow entitlement allocations, Chmielewski said.
Chmielewski also said all of PJM’s capabilities from upgrades might not be reflected in firm flow entitlement allocation between the two RTOs, and that current, non-active flowgates that could be activated in the future may impact the viability of IARRs.
The RTOs said they’ve met for several discussions on the issue since November and will present proposed revisions at the Aug. 29 JCM meeting.
Chmielewski said MISO and PJM could unveil joint operating agreement revisions by November, with a new process rolled out in the first quarter of 2019.
