MISO and PJM said last week they’re ready for the March 1 transfer of 300 MW of MISO pseudo-tied resources to PJM, and a 2,000-MW transfer set for June 1. The transitions will result in the creation of 80 new flowgates.
The 2,300 MW PJM and MISO will pseudo-tie over the 2016/17 planning year is a big jump from the 156 MW in pseudo-tied resources added in 2015/16.
MISO has said it wants to address price convergence and congestion management issues resulting from pseudo-ties before the June 1 transfer. MISO staff say there is little language on pseudo-ties in their Tariff.
During a Joint and Common Market meeting on Thursday, MISO proposed requiring the host RTO to provide capacity, schedule the firm exports, abide by a day-ahead must-offer requirement and provide resource status information. It also said that both RTOs should have a say in approving planned outages.
While PJM did not provide its own proposal, multiple PJM stakeholders criticized MISO’s plan, saying it was too similar to one proposed by MISO in 2012 and later scrapped. When some stakeholders suggested that the RTOs back a policy fix rather than an operational fix on capacity flows, Stu Bresler, PJM’s vice president of market operations, said a policy solution may exist, but it’s “much, much bigger than this group.”
“Our main concern was to ensure reliability. And to do that, we needed two things in place: good modeling … and an operating agreement,” Andy Witmeier, MISO’s senior manager of reliability coordination, said at a Feb. 10 Reliability Subcommittee meeting.
Witmeier said some details will not be resolved in time for the March and June implementation. “We are continuing to develop a compensation mechanism for use when unit commitment is needed for local congestion and cannot use [market-to-market],” he said. In the meantime, Witmeier said, “Safe Op Mode” will be used to compensate such units.
MISO Senior Director of Regional Operations David Zwergel said other commercial issues could arise as a result of the additional resources. MISO officials have said they do not expect full implementation of new pseudo-tie market rules before the 2017/18 planning year.
Regions Begin FFE Exchanges
PJM’s Tim Horger said the first day-ahead exchange of firm flow entitlements took place on Jan. 28, with the transfer of about 40 MW from MISO to PJM. About seven exchanges have occurred since, he said. A firm flow entitlement is the amount of firm flow on a flowgate an entity is entitled to use based on historical usage.
“I don’t think it was substantial as far as dollars are concerned, but it was the first one,” Horger said. “We think this is going to be very beneficial. We’re going to keep doing exchanges as long as it’s efficient for the markets. I think it’s good news here.”
Horger said the RTOs will monitor FFE exchanges and report on their progress during upcoming JCM meetings.
No Consensus on Interface Pricing
MISO and PJM said they have not reached a compromise on their interface pricing rules, so current rules will remain in place for at least a year.
Discrepancies in the RTOs’ interface pricing methodologies can result in double counting congestion, causing a revenue imbalance and uplift. The RTOs said the issue would be put on hold until mid-2017 while MISO conducts an analysis that uses data from December.
Jason Barker of Exelon said traders won’t use coordinated transaction scheduling without common interface pricing in place first.
MISO had proposed a solution using a “centroid-to-centroid” approach, with the non-monitoring RTO excluding a transaction’s impact on the constraint while PJM preserved its 10-bus common interface definition. (See “MISO-PJM Interface Pricing Project Heads to Final Four,” MISO Market Subcommittee Briefs.)
PJM, however, said that approach would have an “adverse impact on PJM market-to-market constraints” because the approach only accounts for half of the misplaced incentive for transactions and fails to eliminate the pricing overlap that exists in the RTOs’ current interface.
JOA Work not Done
FERC approved the RTOs’ revised joint operating agreement just last month, but officials concede there’s more work to be done on the pact (ER15-2613, et al.).
“If you look at the language in the JOA today, it’s cumbersome. We don’t think it makes a lot of sense for these quick-hit, targeted studies. … Some have said that there’s too many hurdles to interregional projects,” said Paul McGlynn, PJM’s senior director of system planning.
MISO is considering revising the JOA to give consideration to projects with lower voltage than the current 345-kV limit. McGlynn said he’d be interested in eliminating “undue thresholds” from the cross-border project approval process. Currently, interregional projects between MISO and PJM require both regional and interregional approval, and the RTOs use different evaluation metrics.
The new JOA includes rules for coordinating outages of pseudo-tied units and stipulates that a market-to-market approach should be followed when dispatching pseudo-tied generation for capacity and congestion.
It also establishes communication protocols between host balancing authorities (the physical location of the pseudo-tied generator), attaining balancing authorities (the region importing the generator’s output), transmission operators and market participants.
In approving the agreement, FERC praised the addition of FFEs, noting they “increase efficiencies in the day-ahead market, better align the operations of the day-ahead and real-time markets, and enhance revenue adequacy for other markets, such as financial transmission rights.” It was a marked change in tone from a year ago, when FERC expressed exasperation over PJM and MISO’s boundary disputes. (See Impatient FERC Hints at Action on PJM-MISO Seams Disputes.)
On Feb. 5, FERC also approved the RTOs’ request to remove their $20 million threshold on interregional market efficiency projects (ER16-488 and ER16-490).
The RTOs are soliciting stakeholder feedback for an annual issues review in April.
— Amanda Durish Cook
