By Amanda Durish Cook
FERC on Thursday rejected a trio of complaints from American Municipal Power over how MISO and PJM address their pseudo-tied generation.
American Municipal Power was unsuccessful in arguments against MISO’s new pro forma pseudo-tie agreement and the first and second phases of the RTOs’ solution to eliminate overlapping congestion charges on pseudo-tied generation (ER18-1899-004, ER18-136-004 and ER18-1730-001).
The Ohio-based corporation sought rehearing on the three items, arguing that the RTOs’ phased-in pseudo-tie solution constituted prohibited “piecemeal” ratemaking. AMP said FERC failed to examine the “end result” of the solution when it deemed the RTOs’ measures to remedy the duplicative charges as reasonable. There can be no phased solution, AMP argued, when the charges are “overlapping and unauthorized.”
The company also said MISO and PJM admitted that the first phase didn’t “fully resolve” the issue. The RTOs should file “a single complete solution to the problem of unhedgeable risk of excessive congestion charges,” AMP said, and proposed that the RTOs be prohibited from collecting the charges altogether. AMP is itself pseudo-tied from MISO to PJM.
But FERC said the first phase addressed the majority of the overlapping congestion charges, making it a reasonable fix. Moreover, a solution doesn’t have to be perfect or implemented in one fell swoop, it said.
The commission also said it didn’t examine rate components in isolation when considering the solution. It added that its authority to review proposed rates “is limited to the question of whether the proposed rate is just and reasonable and does not extend to determining whether a proposed rate schedule is more or less reasonable than alternative rate designs.”
MISO and PJM in 2018 agreed to first make limited software changes to account for pseudo-tie transactions in their respective day-ahead markets, then filed separate, second-phase solutions to stymie the double-charging. While PJM now provides rebates for deviations from day-ahead commitments and created a new transaction type to hedge exposure to financial risk, MISO added interchange schedules to allow pseudo-tied resources to use the day-ahead market to hedge against real-time congestion. (See FERC Approves MISO Pseudo-tie Proposal.)
In a separate docket, the RTOs’ three-year practice of double-charging pseudo-tied generation for congestion fees is being put to a refund determination. (See Refund Hearing Ordered in Pseudo-Tie Complaint.)
AMP also cried foul over PJM’s hedging mechanism being available only to market participants that pseudo-tie out of PJM into MISO. But FERC said PJM’s side of the solution “does not become unjust and unreasonable because it does not address congestion on the MISO system.”
‘Clear Standard’
AMP additionally took issue with the suspension and termination provisions laid out in MISO’s pro forma agreement, arguing that FERC should compel the RTO to first suspend a pseudo-tie before it initiates termination. The company also said MISO’s emergency termination provision didn’t contain a “clear standard” for suspensions or terminations during emergency conditions.
FERC brushed aside the argument, continuing to assert that MISO had achieved a “sufficient degree of specificity and clarity” when it proposed the suspension and termination requirements.
“We rely on MISO, in its role as the transmission provider, to appropriately identify risks to its reliable operation of the bulk power system and take necessary actions to safeguard against such risks, including those that may be posed by pseudo-tie arrangements,” FERC said, while emphasizing an expectation that the RTO first experience a “reliability concern” before revoking pseudo-ties for emergency reasons.
The commission also said that while it encourages MISO to first use a suspension before a termination, it would not require it to do so in every situation.
