By Amanda Durish Cook

Refunds appear imminent in a three-year dispute over MISO and PJM’s past practice of double-charging pseudo-tied generation for congestion fees after FERC last week ordered settlement proceedings to determine how much the RTOs must remit to address the redundant costs incurred from 2016 onward (EL16-108).

The issue stretches back three years to when Tilton Energy lodged a complaint against the RTOs for assessing overlapping congestion charges on pseudo-tied resources. American Municipal Power, Northern Illinois Municipal Power Agency, Dynegy and Illinois Power Marketing soon filed similar complaints. FERC consolidated the proceedings.

The RTOs introduced a temporary rebate program in 2017, then began including pseudo-ties in the day-ahead scheduling process in 2018 to end redundant congestion costs. (See MISO, PJM Pursue Pseudo-Tie Double-Charge Relief.) In March, MISO got FERC approval for a second piece of the solution, where participants with pseudo-tied resources can use the day-ahead market to hedge against real-time congestion.

In its order, FERC noted that it has already accepted two filings apiece from MISO and PJM to address overlapping charges and has since discovered that those proposals have eliminated the congestion overlap. But those corrections come too late for the transmission customers already assessed those charges, FERC said.

“We find that the potential for overlapping or duplicative charges for congestion existed prior to the effective dates of the revisions,” the commission said.

As such, FERC established settlement procedures to determine the appropriate refunds owed to owners of pseudo-tied generation. The commission said if the involved parties don’t settle, a settlement judge will decide the case by May 18, 2020. FERC set a refund effective date of Aug. 25, 2016.

FERC: MISO Congestion and Admin Charges Appropriate

However, the refunds will not include the costs of MISO’s non-duplicative congestion and administrative charges that Tilton also challenged.

Tilton claimed MISO violated its Tariff by erroneously using financial schedules to assess charges on pseudo-tied generation, arguing the schedules are meant to represent contracts between two market participants and that the RTO is not a counterparty to the pseudo-tie transactions.

The company said MISO circumvented a Tariff provision and implemented Business Practices Manual language when it used its financial schedules to record transmission transactions for pseudo-tied generation “despite the nonexistence of a bilateral transaction that is a prerequisite for the use of a financial schedule.”

Tilton also argued that MISO’s assessment of real-time congestion costs against generation pseudo-tied from MISO to PJM is improper because the charges cannot be hedged and are “inconsistent with market fundamentals.” The company asked FERC to put a stop to MISO’s assessment of congestion and administrative charges.

In response, MISO argued that Tilton failed to show the RTO was acting counter to its Tariff and said the complaint should be thrown out. It also said Tilton failed to initiate dispute resolution procedures prior to filing the complaint, a break with commission precedent.

“Although Tilton has purchased long-term firm transmission service from MISO to PJM, paying for transmission service does not exempt Tilton from paying for congestion and losses,” the RTO explained.

The commission sided with MISO, ruling that Tilton must pay to use the RTO’s system.

“We conclude that MISO’s assessment of congestion costs and administrative charges on Tilton does not violate the MISO Tariff. Specifically … we find that the MISO Tariff authorizes MISO to assess congestion costs and administrative charges on pseudo-tie transactions. We also find that it was not a violation of the MISO Tariff for MISO to use financial schedules as a vehicle for imposing congestion and administration charges on Tilton,” FERC said.

The commission pointed out Tilton is a MISO transmission customer taking transmission service “to facilitate its pseudo-tie transactions” and is thus required to pay applicable charges.

Pseudo-tie transactions that use the the RTO’s system nevertheless contribute to its real-time congestion, FERC added.