By Amanda Durish Cook

PJM and MISO said Tuesday they plan to partner on an extra study to better coordinate their incremental auction revenue rights (IARRs) processes, although details have yet to be sketched out.

The RTOs will perform a preliminary transmission upgrade study to ensure that transmission allocations are granted to developers “to the extent they cause no harm to existing transmission allocations” to participants in their congestion management process, which include neighboring balancing authorities. The new study would rely on the same topology assumptions found in planning studies for IARRs and seek to ensure that proposed upgrades will produce the requested firm flow entitlements.

“Admittedly, we’ve not put pen to paper to write out the study process,” PJM Manager of Market Simulation Brian Chmielewski said during an Aug. 28 Joint and Common Market conference call.

MISO and PJM first signaled that they would seek to improve ARR coordination in May. (See MISO, PJM Seek Incremental ARR Coordination.) Both RTOs offer IARRs, which are created by transmission upgrades that allow additional capability. IARR megawatts are awarded for the additional capability created for the life of the facility or 30 years, whichever is less, and valued each year based on annual financial transmission rights auction clearing prices. However, PJM offers an additional option that allows IARRs to be awarded when “any party” agrees to fund transmission upgrades necessary to support them. PJM and MISO coordinate studies of IARR requests when they impact flowgates.

Chmielewski said the proposed study contains the risk that preliminary results will diverge from final study results of firm flow entitlements because of timing, given that the final transmission upgrade study is performed only after upgrades are put in service.

“That’s a risk that we’re aware of and we’re working through,” Chmielewski said.

MISO and PJM staff say there’s another sticking point: PJM’s requirement to guarantee that least 80% of ARR megawatts are available even when the MISO system is impacted. MISO said the “potential risk to value” for its stakeholders precludes it from making guarantees on future firm flow entitlement allocations.

PJM Director of Energy Market Operations Tim Horger said PJM must be careful not to over-allocate rights based on the 80% requirement, and that it’s possible PJM won’t be able to guarantee the 80% share if upgrades affect the MISO system. He said one such upgrade affecting the MISO system has already occurred, and though the RTOs were able to coordinate it to satisfy PJM’s requirement, future upgrades could be trickier.

MISO and PJM staff plan to return to the JCM in November to discuss draft revisions to the joint operating agreement to incorporate the study, Chmielewski said.