Unable to resolve the disputes themselves, PJM last week asked the Federal Energy Regulatory Commission to settle its standoffs with MISO and NYISO over cross-border reliability projects.

PJM and MISO parted ways in separate Order 1000 interregional compliance filings. PJM balked at the MISO’s request to remove cross-border Baseline Reliability Projects (BRPs) from the cost allocation provisions of the PJM-MISO Joint Operating Agreement.

PJM also said it was unable to reach agreement with the New York ISO on a process to address cross-border tie-in facilities needed for reliability. As a result, it said, “the RTOs have not fully satisfied their Order 1000 compliance requirements.”

PJM did reach agreement with members of the Southeast Region Transmission Planning region (SERTP) on an “avoided cost” mechanism for funding cross-border reliability projects.

MISO Proposal

MISO told FERC (ER13-1943) says its request to amend the JOA is justified by FERC’s March 22 Order 1000 compliance order, in which the commission accepted MISO’s proposal to remove regional cost allocation for BRPs and assign all BRP costs to the pricing zone where the project is located. The change took effect June 1.

Since BRPs are no longer subject to regional cost allocation, cross-border BRPs cannot be eligible for interregional cost allocation, MISO says.

Instead, MISO proposes that tie lines between MISO and PJM transmission owners be designated as cross-border BRPs. Ownership and responsibility for any upgrades would be shared by the transmission owners — essentially preserving their rights of first refusal (ROFR) on cross-border reliability projects. According to PJM, there are 83 tie lines ranging from 69kV to 765 kV between the two RTOs.

MISO said reliability problems can be addressed through cross-border Market Efficiency Projects, for which interregional cost allocation would continue.

PJM and its transmission owners referred to the dispute only indirectly in their filings with FERC last week, leaving MISO to provide details. The PJM transmission owners “have informed MISO that they do not agree … [that MISO’s request] would be compliant with the requirements of Order No. 1000,” MISO Vice President for Transmission Jennifer Curran said in written testimony included with MISO’s filing.

In a meeting with MISO stakeholders in January, PJM officials and transmission owners made clear their opposition to MISO’s plan. Craig Glazer, PJM vice president of federal government policy, told MISO stakeholders that their proposal was not consistent with Order 1000. “I don’t think that dog’s gonna hunt,” he said. “…You’re doing this because you want to protect the ROFR rights.”

A MISO representative responded that broad cost allocation of reliability projects was not justified because the benefits of such projects are primarily local. In an earlier filing, MISO told FERC that in 80% of its Baseline Reliability Projects since 2006, at least 75% percent of costs were allocated to the local pricing zone.

PJM: MISO Can’t Unilaterally Change JOA

In its compliance filing last week (ER13-1944), PJM told FERC that it should reject MISO’s proposal because the JOA is a contract which can only be changed by mutual consent of the two RTOs. PJM said it would be “damaging” for FERC to “wrest one provision out of this carefully negotiated integrated agreement.”

The 2008 Joint Operating Agreement allocates the costs of cross-border reliability and market efficiency projects between the two regions based on the benefits each expects to receive. Although the two RTOs have had an interregional cost allocation provisions in force since 2005, no cross-border projects have been approved for cost allocation under the JOA, Curran said.

The Order 1000 dispute is one of several points of friction between the two RTOs. On June 20, the RTO officials appeared before FERC to make their cases in a dispute over the way PJM models cross border transmission deliverability, which MISO says is unfairly limiting its generation from competing in PJM’s capacity market. (See: PJM and MISO: Best of Frenemies)

NYISO

PJM also left it to FERC to sort out a dispute with the NYISO.

PJM said the Northeastern ISO/RTO Planning Coordination Protocol, which outlines its relationship with NYISO and ISO-NE, does not provide a mechanism for one region to link to its neighbor’s transmission facilities to solve one region’s reliability need. “These tie-ins are especially critical given the highly intertwined nature of the NYISO and PJM regions, and the unique nature of the NYISO/PJM seam,” PJM told FERC (ER13-1947).

PJM rejected NYISO’s proposal that PJM be subject to the NYISO tariff as a merchant transmission developer or a NYISO transmission owner under the NYISO Transmission Expansion Process. PJM said NYISO’s proposal was unworkable because those market-based processes don’t apply to baseline reliability facilities and would violate commission precedent that coordination between RTOs “should be done at the RTO level.”

PJM asked FERC to order the two RTOs to amend their JOA to add provisions for reliability transmission tie-ins. “Such a directive would help end what has been unproductive debate as to the relationship of this issue to Order No. 1000’s requirements,” PJM said.

SERTP

In a separate filing (ER13-1927), the PJM transmission owners said they reached agreement with the members of the Southeast Region Transmission Planning region (SERTP) to add a new schedule to the PJM Tariff governing cost allocation for interregional transmission expansions. Signing the agreement on behalf of SERTP were Duke Energy, Louisville Gas & Electric/Kentucky Utilities, Ohio Valley Electric Corp. and Southern Co.

The proposal calculates the benefits of an interregional project based on avoided costs — “the cost savings achieved by replacing higher cost regionally-planned transmission projects with the more efficient and cost-effective proposed interregional project,” the PJM transmission owners said.

They acknowledged that the commission previously ruled that the avoided cost methodology does account for economic or public policy benefits of transmission projects. However, they noted, “Order No. 1000 does not require the consideration of public policy or economic benefits at the interregional level.”