By Tom Kleckner

LITTLE ROCK, Ark. — SPP and MISO staff told stakeholders last week that the market-to-market process across their seam worked well in its first year and that a memorandum of understanding between the two RTOs will solve most remaining problems.

In a meeting at SPP’s headquarters Tuesday, staff said that the process has worked as intended since it began in March 2015. M2M is designed to improve price convergence on flowgates along the RTOs’ 1,200-mile seam. They compensate each other for re-dispatching generation to reduce congestion in a way that reduces overall costs.

“For the most part, it has generally worked very well and as designed,” SPP’s Gerardo Ugalde said. “We had a few issues … and a few procedures were eliminated.”

Through Feb. 15, the RTOs have had 1,075 M2M events (343 requiring settlements), which resulted in $9.5 million changing hands, according to a review of the first year. Two-thirds of the M2M payments came from three SPP flowgates in Nebraska. The RTOs’ analysis showed the shadow prices are generally within $30 of each other.

“[Those] 1,200 miles are, by far, the largest seam of any RTO we’re aware of,” said SPP’s David Kelley, director of interregional relations. “It has become a lot more complex with the integration of the Integrated System.”

Ugalde said shadow prices and price convergence remain the biggest issues along the seam. “The majority of the time, we’re able to [keep prices] under $500” per megawatt-hour, he said. “For the most part, we tend to price converge.”

MISO and SPP told stakeholders they are continuing their development of an MOU to “ensure cost-effective solutions for both markets.” The MOU, they said, will address ineffective real-time coordination on some flowgates, correct calculation errors in settlements and improve some settlement rules.

Seven Principles

Staff has developed a list of seven principles for the MOU. Among them: excluding reciprocal coordinated flowgates from the M2M process based on a threshold test for generators that affect it; recalculating firm-flow entitlements (FFE) due to changes in facility ratings; and capping FFEs to the system operating limits (SOL) for M2M flowgates.

Another principle would give the non-monitoring RTO the ability to switch from controlling market flows to total flow control. MISO’s Ron Arness said he hoped controlling all transmission on a flowgate rather than just market flows will help moderate some of the price and power swings he has seen on the SPP side. He said new processes on the PJM seam have addressed similar situations.

“What we’ve seen with the SPP flowgates is the [swings] are more severe [than PJM’s],” Arness said. “We need to tweak that process.”

Kelley said SPP’s stakeholders are “not comfortable” with exchanging ownership of flowgates. “It’s really who has the more efficient, effective generation to control the constraint,” he said. “There’s no way you can control the SOL when MISO has 900 MW of generation flowing.”

In response to a question by American Electric Power’s Kip Fox, Ugalde said the MOU will solve “60 to 70%” of the M2M problems.

Ugalde said some of the MOU’s provisions will require JOA changes be filed at FERC, while others will necessitate software changes. The RTOs will continue to evaluate the day-ahead exchange of FFEs and settlements.

MISO’s Beibei Li shared an analysis she and others at the RTO have conducted with PJM on interface pricing. Li said the results indicate a common interface method has “merit” in resolving pricing issues.

Adam McKinnie, chief utility economist for the Missouri Public Service Commission, questioned the analysis. “A lot of time and treasure has been spent between MISO and PJM discussing these various options, but you’ve never been able to say how much this will save,” he said.

Li hedged her response by noting congestion varies from year to year. “Compared to the ideal — where we want to be and where we were — we have identified $2 million in improvement opportunities,” she said.

“I wonder whether you’ve already spent the savings on analysis,” McKinnie responded.

‘Freeze Date’

Work is also continuing through the Congestion Management Process Council, which includes SPP, MISO and PJM, to update the 2004 “freeze date” used in determining CMP allocations and FFEs, based on pre-market firm flows. Arness said the council’s members have agreed there is a need to work on freeze-date alternatives, with the goal of making a Tariff filing by year’s end.

“We would like to have an indication we can move forward by the end of the year,” Arness said. “We’ve heard this will be tough, but we’re still working on it.”

Arness said the CMPC has approved guiding principles for firm-flow allocation calculations and a procedure to calculate market-flow impacts associated with external pseudo-tied resources.

However, the council has not been able to move forward with using long-term auction revenue rights to develop M2M FFEs. The RTOs have compared each other’s ARR nomination process and discovered similarities and differences.