By Michael Kuser

RENSSELAER, N.Y. — Lots has changed since 1993, when members of the New York Power Pool and several transmission owners in PJM agreed to split the cost on two phase angle regulators (PARs) at Consolidated Edison’s Ramapo substation.

The power pool was succeeded by NYISO, PJM grew west to Chicago and FERC issued Order 1000, which set new cost allocation rules.

Those changes are now complicating efforts by the ISO and PJM to come up with a new cost-sharing agreement for the PARs, which control flows on the 500-kV Branchburg-Ramapo 5018 transmission line between New York and PJM.

On Tuesday, staff and stakeholders from both grid operators met at NYISO’s headquarters for a nearly daylong meeting to discuss ways to evaluate the value of the PARs and who should pay for them. The grid operators said they were pleased with the discussion and will meet again at PJM headquarters May 24 to continue talks.

And Then There was One

The need for better interface management originated in the great Northeast blackout of November 1965, which left 30 million people without power. Con Ed installed two PARs at Ramapo in 1988 and only five years later did the New York grid operator and PJM agree to split the entire costs 50/50 — purchase, installation and operation.

The original PARs both had a life expectancy of 40 years, but one was replaced after failing in 2013. The second original unit was destroyed in a substation fire last June. (See PAR Wars: A Struggle for Power.)

Con Ed is willing to purchase the replacement PAR but wants to be assured of repayment. Both sides estimate that it costs about $200,000 per month to run the two PARs.

Two-Track Approach by NYISO

“It all keeps coming back to the criteria” for determining benefits, Wes Yeomans, the ISO’s vice president for operations, said at the discussion April 18.

NYISO is taking a two-track approach: It is preparing to file a proposed Tariff revision with FERC to allocate the costs among all its load-serving entities and, at the same time, discussing with PJM how to share the costs.

The plan would promise to reimburse New York LSEs found to have overpaid their shares when the interregional cost allocation issues are resolved.

“Delay in reaching agreement on interregional cost allocation should not be permitted to indefinitely delay the installation of a second PAR at Ramapo,” the ISO said.

PJM says, however, that “cost allocation will only apply to transmission facilities that are approved in writing by all parties in advance of installation.”

Brian Wilkie, counsel for the New York Power Authority, suggested that “this discussion might be easier if PJM adopted NYISO’s practice of applying costs across all LSEs.”

Stan Williams, PJM director of performance compliance and market settlements, said, “I agree, but a lot of this is holdover from the 1993 JOA, which predates a lot of us, which is part and parcel of why we’re here.”

The 1993 Ramapo PAR agreement allocated 50% of the costs to the NYPP and 50% to the PJM group — which included only TOs in PJM’s Mid-Atlantic control zone.

Measuring the PARs’ Benefits

Any cost-sharing arrangement between NYISO and PJM will have to abide by FERC Order 1000’s guiding principle that transmission upgrades be “allocated in a way that is roughly commensurate with benefits.”

PJM and NYISO have yet to determine what reliability and economic criteria to use in their analysis. For example, are the effects on production costs more important than implications for reliability?

NYISO evaluates transmission upgrades under three separate planning processes: reliability, public policy and economic.

The ISO says the PARs provide reliability benefits during extreme contingencies or restoration following outages.

They also have market efficiency benefits: Without the PARs, NYISO’s ability to import lower-cost power from PJM is reduced. Those imports also have allowed the ISO to operate with smaller installed reserve margins and locational capacity requirements.

The ISO can import 1,700 MW from PJM in summer with both PARs and 1,400 MW with one. With neither PAR, the summer import limit drops to 1,000 MW.

Yeomans estimated the installed capacity benefits are about $75 million but would not elaborate on how he got that number, saying it came from two separate analyses, both made under non-disclosure agreements with third parties.

PJM’s list of suggested planning criteria included the impact of a second Ramapo PAR on revenue for holders of financial transmission rights — called “transmission congestion contracts” in NYISO. But Jane Quin, director of energy policy and regulatory affairs for Con Ed, objected to including such revenues as evaluation criteria, saying “that’s not how we treat” other similar facilities in NYISO.

DFAX Methodology

She also said Con Ed would opposed use of the distribution factor (DFAX) cost allocation method, as proposed by Public Service Enterprise Group, for evaluating benefits provided by the PAR.

Con Ed’s complaint over its $91 million bill for PSEG’s Bergen-Linden Corridor upgrade in North Jersey was one of the factors that led the utility to cancel use of the Con Ed-PSEG wheel.

The DFAX method also has been a flashpoint on the Artificial Island stability project in South Jersey. PJM has said that DFAX works well in many cases but can result in anomalous allocations. (See Board Restarts Artificial Island Tx Project; Seeks Cost Allocation Fix.)

Stan Williams, PJM director of compliance and settlements, said that “the PJM-MISO interface is a lot more complicated than [PJM-NYISO], with lots of nodes and contact points, whereas the major part in the NYISO interface is in the extreme Northeast, around New York City.” He added that the Ramapo PARs also play a wider role in the region, for example, contributing significantly to mitigating Lake Erie loop flows on the Michigan/Ontario interface.

PJM’s Chuck Liebold said that while PJM had reached no conclusions, when jointly planning the two grid operators normally look to the Northeast Protocol — the three-party agreement of NYISO, PJM and ISO-NE. Liebold suggested two options: They could establish a new type of interregional transmission project under the Northeast Protocol, or establish new planning provisions under their joint operating agreement.

Howard Fromer, director of market policy at PSEG Power New York, said, “If we’re devoting more money to this issue with the people in the room now than the cost of the project, we should develop a process applicable to many issues.” He added that the quantifiable benefits should include effects on emissions.

Timeline

New York’s timeline calls for May votes in the Business Issues and Management Committees on the changes, June approval by the NYISO Board, FERC filing immediately thereafter and Con Ed installing the second PAR in Fall 2017. The group hopes to have a proposal for PJM Markets and Reliability Committee to review in July.

Officials asked stakeholders to provide written comments to PJM and NYISO on the options by May 12.