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PJM, MISO find some common ground on pseudo-ties

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PJM, MISO find some common ground on pseudo-ties

The PJM Interconnection and Midcontinent ISO pitched changes to their joint operating agreement Tuesday to establish rules for the operation of generators within MISO that seek to participate in PJM's capacity market and make clear each grid operator's duties in administering those so-called pseudo-ties.

Pseudo-ties, which allow control of a generating unit to be transferred in real-time from the balancing authority where the unit is physically located to a balancing authority in a different location that has purchased the unit's capacity, have generally been managed on a case-by-case basis by PJM and MISO as they were few in number, not warranting extensive policies or procedures.

But market rule changes in PJM over the past two years have led to a spike in pseudo-tied volumes out of the MISO balancing authority area and into the PJM BAA, growing from about 155 MW in June 2015 to around 2,160 MW in June 2017, the grid operators said in simultaneous filings (FERC dockets ER17-2218, ER17-2220) with FERC. Further, new pseudo-tie requests are coming from generation and load located farther from the seam, where PJM has less visibility into the MISO system, creating reliability concerns for both grid operators.

While a number of factors could dampen further growth in pseudo-tied volumes, most signs point to increases rather than declines.

PJM in May reported that 3,997.2 MW of external generation cleared its latest three-year forward capacity auction for delivery year 2020-21, an increase of 121.3 MW from the imports that cleared in the 2019-20 auction. PJM said all of the cleared external generation met its capacity import limits exception, and the majority of it came from resources located west of PJM — presumably, MISO.

At the same time, MISO has stepped up complaints that pseudo-ties boost costs for all concerned and has pushed for them to be eliminated.

Step toward resolving reliability issues

The grid operators filed separate but identical changes to each of their versions of the JOA Tuesday that address modeling, interchange schedules and general pseudo-tie coordination. The revisions are intended to "provide greater clarity on the roles between the two [regional transmission organizations] and the specific actions that should or may be taken to ensure reliability," the filings said.

The current JOA lacks "clear and specific rules" on how to implement and operate pseudo-ties between the RTOs, and many of the specific roles and responsibilities laid out in the JOA revisions "to date had not been formally agreed to in the JOA, joint operating guide or any other agreement," the grid operators said.

In addition to providing needed clarity and flexibility that enable PJM and MISO to effectively respond to varying operational conditions, the proposal is consist with applicable reliability standards, the near-identical filings said.

The changes also complement the proposed procedures that PJM will soon be filing to incorporate two pro forma pseudo-tie agreements into its tariff and the proposed procedures that MISO filed earlier this year to incorporate a pro forma pseudo-tie agreement into its tariff, they said.

PJM noted that concerns it raised in a protest to MISO's pro forma pseudo-tie agreement would be alleviated through the JOA revisions and that it would withdraw that protest if FERC accepted the revisions. Both urged FERC to accept the tariff revisions as just and reasonable with an Oct. 1 effective date.

The proposed JOA revisions and pro forma pseudo-tie agreements are part of a broader, comprehensive effort by PJM and MISO to resolve reliability issues concerning pseudo-ties and remedy overlapping congestion charges.

In terms of reliability, limited modeling capability, especially for pseudo-tied generation located farther from the seam, "could cause PJM to unknowingly and unintentionally overload MISO's transmission lines when dispatching a pseudo-tied unit," the grid operators said.

MISO and PJM customers have also grown frustrated, filing several complaints in the past year "asserting that various MISO and PJM procedures applicable to specific generation pseudo-tied out of MISO to PJM are deficient," they added.

Six pseudo-tie complaints are pending against MISO (FERC dockets EL16-108; EL17-29; EL17-54) and PJM (FERC dockets EL17-31; EL17-37; EL17-62). Generally, the complaints argue that pseudo-tied generators are being charged twice for congestion fees by MISO and PJM.

Separately, MISO on May 26 asked FERC to conduct a technical conference to address a bevy of pseudo-tie proposals and complaints. Submitting the JOA revisions wraps up one of two milestones the grid operators agreed should be completed before FERC decides whether to schedule that technical conference. The other milestone would be a prospective solution to address congestion overlap between the two RTOs.

Jasmin Melvin is a reporter for S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.