By Rory D. Sweeney

PJM’s proposal to create standardized contracts for establishing dynamic transfers with other balancing authority areas has provoked opposition from market participants, a neighboring ISO and the Independent Market Monitors for both PJM and MISO.

Critics of the proposed pro forma agreements for pseudo-tied resources filed protests with FERC over the past week — each with a different complaint (ER17-2291).

PJM and MISO both received stakeholder endorsement for their plan to establish agreements that would impose standard requirements on external units seeking to deliver power into PJM. The grid operators filed relevant revisions to their joint operating agreement on Aug. 1 (ER17-2218, ER17-2220).

MISO received conditional approval of its agreement from FERC on Aug. 9, although the plan has since been protested by American Municipal Power. PJM’s proposal includes separate agreements for pseudo-ties and dynamic schedules and was filed with FERC on Aug. 11. (See MISO-PJM Markets Meeting Addresses Seams Issues.)

‘Adverse’ Impacts

In its protest, NYISO said it “is prepared to work with PJM to develop a mutually acceptable alternative,” arguing that the current proposal “will likely cause adverse reliability impacts” and “exacerbate interregional seams.” It said PJM’s proposed pseudo-tie rules, which would require all dispatch control to be transferred to PJM from the RTO or ISO where the unit is located, “are fundamentally incompatible” with several NYISO practices, including financial transmission reservations, generator scheduling market rules and reliability operating standards. The rules would also conflict with the grid operators’ interregional agreement and NYISO’s Tariff, the ISO said.

The New York grid operator said PJM shouldn’t be allowed to standardize pseudo-tie requirements. Any agreement should be “sufficiently flexible to accommodate regional differences at its borders” and require approval from the native balancing authority, it said. Under PJM’s current plan, the native BA would only have to acknowledge awareness of the agreement between PJM and the unit but wouldn’t have to be a party to it.

At recent stakeholder meetings, PJM staff have said they attempted to develop the agreements with input and endorsement from NYISO, but that the neighboring ISO refused to cooperate. Staff decided to move forward without NYISO’s involvement.

IMMs Weigh In

While recognizing that PJM has attempted to address previous concerns, MISO Monitor David Patton contended that the plan still creates “substantial economic and reliability harm to the customers in [MISO and PJM] areas and [provides] no countervailing benefit that cannot be achieved by other means.”

PJM’s requirement of operational control creates a problem, he said, because the BA “most impacted by the generator and responsible for the generator interconnection and local impacts loses control of commitment and dispatch.”

PJM Monitor Joe Bowring also filed comments opposing PJM’s plan for operational control — but for the opposite reasons. He called the proposal “an improvement over the existing rules” but said it “needs to be substantially strengthened” because issues the Monitor has pointed out before “remain and are amplified.”

Bowring reiterated an argument he’s brought up repeatedly at stakeholder meetings: that the rules should be designed so that pseudo-tied units can serve as “complete substitutes” for capacity resources within the RTO’s footprint. As such, he argued, the native BA should not be able to recall the unit. Otherwise, pseudo-tied units shouldn’t be eligible to be capacity resources. The agreement would allow native BAs to supersede PJM’s control during two emergency conditions.

Bowring’s filing requests removal of that exemption, along with allowances for suspension or termination of a pseudo-tie.

The provisions create “substantial uncertainty as to whether a pseudo-tied external capacity resource can be available and under the dispatch control of PJM when needed. As a result, pseudo-tied external capacity resources cannot be considered a complete substitute for internal capacity resources,” he said. “If external capacity resources cannot be full substitutes for internal capacity resources, they are inferior products and should not be permitted in the PJM capacity market because they will suppress the price for internal resources and result in an inefficient market outcome.”

Other Protests

Several municipal power organizations, cooperatives and transmission companies also filed protests. Like Bowring, Cogentrix Energy Power Management supports standardizing pseudo-tie rules but opposed the suspension and termination provisions.

“PJM should not be permitted to suspend or terminate a pseudo-tie on any lesser basis than it may suspend or terminate an internal generator’s interconnection rights,” Cogentrix wrote.

The generator, which owns a pseudo-tied unit in Tilton, Ill., also took issue with what it believes is an insufficient transition period and argued that a pseudo-tie should have just one comprehensive agreement among RTOs. PJM’s proposal — which stemmed from the inability for PJM and MISO to agree on terms — would require a unit to obtain separate agreements with each grid operator for the same pseudo-tie.

The Illinois Municipal Electric Agency argued that the proposal is the most recent in a series of changes that has made it “increasingly more difficult and more costly” for IMEA to use its generation units in MISO to self-supply its customers in PJM. The border situation developed in 2004 when Commonwealth Edison migrated from MISO to PJM.

“Like erosion at a beach caused by a succession of waves, each new set of restrictions imposed by PJM, culminating with the current pseudo-tie ‘wave,’ contributes to the erosion of IMEA’s statutory protections,” IMEA staff wrote.

IMEA also contended that its type of pre-existing exception should be grandfathered.

The Northern Illinois Municipal Power Agency said that units with existing pseudo-ties shouldn’t be subject to PJM’s proposed administrative fees in signing the standardized agreement. The agency serves load in PJM but has an ownership stake in a generation resource in MISO that is partially pseudo-tied.

AMP’s protest acknowledged that it endorsed a previous version of the proposal, but that the filed version doesn’t resolve all pseudo-tie issues as it purports to. The utility criticized the filing as “one more piecemeal effort to address these issues” and requested several changes on indemnification, agreement termination and authority to determine payments.

North Carolina Electric Membership Corp. took issue with PJM “unmooring” the agreement from the RTO’s Tariff definition of long-term firm point-to-point transmission service. PJM has previously attempted to impose a five-year service requirement for pseudo-tied units that goes beyond the one-year requirement in the Tariff, and the co-op expressed concerns the RTO might use the agreement to lengthen the requirement if it is not linked to the Tariff definition.

Several intervenors urged deferring a decision on the agreements until other dockets focused on pseudo-ties have been addressed. Patton estimated there are “at least” 10 such proceedings and seconded MISO’s request for a technical conference on the issue.

“Determinations by the commission in those other dockets will invariably affect evaluation of the changes proposed in this proceeding,” he wrote.

Several of those dockets are complaints regarding double assessment of congestion management charges (EL16-108, EL17-29, EL17-31). PJM and MISO have developed a solution that they believe addresses the problem and will be seeking stakeholder endorsement in two phases.