If PJM Interconnection and the Midwest Independent Transmission System Operator (MISO) can fully implement protocols related to seams-related coordination efforts, those protocols will likely minimize the potential to game the differences between locational prices, the market monitors for both regional transmission organizations (RTOs) conclude in a new joint report filed at FERC.

The July 28 filing made by David Patton, MISO’s market monitor, and Joe Bowring, PJM’s monitor, responded to a directive included in a FERC order issued in late May.

The Commission ordered the MISO and PJM market monitors to make a joint filing to address specific problems raised by Patton in an April 30 report to the Commission. The problem raised was that generation located within and dispatched by one RTO will have a substantial effect on flowgates that are located within the other RTO. The potential effects of this include inefficient prices and dispatch decisions, as well as excessive uplift payments.

FERC said that the joint filing should explain the seams issues, how and when they are expected to be resolved and who is taking leadership of the seams process.

In their joint filing, Patton and Bowring said that PJM-MISO seams-related coordination efforts have taken two paths: (i) a “market-to-non-market” agreement between the grid operators and (ii) a “market-to-market” agreement between the RTOs.

The market-to-non-market interface involves developing rules that allow:

These procedures will operate during the initial period when PJM is operation a locational marginal pricing (LMP) market and MISO is not.

The market-to-market interface procedures address the longer run when PJM and MISO will both be operating LMP markets in the Midwest. “The fundamental philosophy of the PJM/MISO market-to-market interface is to establish procedures to allow any transmission constraints that are significantly impacted by generation dispatch changes in both markets to be jointly managed in the security-constrained economic dispatch models of both RTOs,” Patton and Bowring said.

This joint management of transmission constraints near the market borders will provide the “most efficient and least costly” transmission congestion management and will also provide coordinated pricing at the market boundaries, the market monitors reported.

Bowring and Patton said that they have reviewed the progress of MISO and PJM in developing detailed protocols for handling the coordination for both the market-to-non-market and market-to-market scenarios.

“If these protocols are fully implemented, we are optimistic that they will minimize the potential for inefficient locational prices and will, therefore, minimize the potential to game the differences between locational prices that do not reflect the underlying electrical reality,” they said.

At the same time, the monitors acknowledged that the challenges facing the RTOs are significant. Bowring and Patton said that MISO and PJM need to commit to establish a process for quickly finalizing a joint operating agreement, including developing the market-to-market protocols to a level of detail comparable to the detail on the market-to-non-market protocols.

“This will be necessary to ensure that revisions to the markets software completed to implement the protocols prior to MISO’s March 2004 market start up date.”

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