PJM plans to change its definition of the PJM-MISO interface to eliminate double counting that can inflate congestion calculations in market-to-market transactions.
Transactions overestimate congestion when they settle with both RTOs because both RTOs are pricing its full effect on the constraint.
PJM’s Rebecca Carroll officials told the Market Implementation Committee last week that PJM’s definition puts the interface too far west of the congestion and that a revised definition — comprised of 10 generator pnodes that account for 80% of tie line flows — will move it closer to the RTOs’ seam. PJM ran simulations with these 10 pnodes, using transactions from December and January, and found lower prices, though the decreases were often relatively small.
PJM officials said they would like MISO to agree to a common definition. However MISO’s Market Monitor, Potomac Economics, which identified the problem, has proposed a different solution. It would eliminate the double payment by basing the settlement entirely on the monitoring RTO’s shadow price.
If the two RTOs are unable to agree, PJM Vice President of Markets Stu Bresler said he sees no reason PJM can’t change its definition unilaterally. PJM would like to see the changes implemented by June 1, he said.
On a related issue, PJM will stop using the slice-of-system method for calculating market flows with MISO. It will begin using the marginal zone participation factor (MZPF) method, which is already used in firm flow entitlements and the interchange distribution factor.PJM and MISO are expected to jointly file the language for inclusion in their Joint Operating Agreement in March, and PJM plans to implement the changes on June 1.
