United States: FERC Approves SPP/MISO Protocols Aimed At Managing Seams Congestion

On January 22, 2015, the Commission conditionally approved Southwest Power Pool's ("SPP") proposed "Market-to-Market" coordination protocols with the Midcontinent Independent System Operator ("MISO"), and, among other things, made determinations on several key issues relating to the protocols that were examined during a technical conference held in September.

On October 18, 2012, the Commission issued an order conditionally accepting proposed amendments to SPP's Open Access Transmission Tariff in order the implement an Integrated Marketplace in the SPP footprint. As part of that order, the Commission required SPP to negotiate with MISO to develop a "Market-to-Market" coordination process for managing congestion across the seam between MISO and SPP. The Commission further directed SPP to file the agreed-upon Market-to-Market coordination process as part of the MISO-SPP Joint Operating Agreement, by June 30, 2013, with the clarification that SPP and MISO would not be required to implement the Market-to-Market coordination process until one year following commencement of the SPP Integrated Marketplace (which began on March 1, 2014). Accordingly, on June 28, 2013, SPP submitted the proposed Market-to-Market Protocols, requesting an effective date of March 1, 2015, one year following the commencement of the Integrated Marketplace.

In response to a July 11, 2014 Commission order, stakeholders and FERC staff held a technical conference on September 22, 2014 to explore three issues related to the proposed Market-to-Market Protocols:

  1. the coordination of methodologies for implementation of Interface Bus Pricing—in essence the methods by which each RTO will calculate the value of power imported and exported across the seam between them.
  2. the limitations on Market-to-Market "flowgate" creation. A "flowgate" is a point on a transmission system through which an Interchange Distribution Calculator (a device that helps track power flows) calculates the flow from interchange transactions—transactions that cross Balancing Authority boundaries. Flowgates can assist in managing transmission congestion between two RTOs like SPP and MISO, but they can also complicate how congestion charges are allocated and distributed between those RTOs.
  3. the deferral of implementation of a day-ahead, firm flow entitlement ("FFE") exchange process. FFEs relate to the economic rights of an RTO to utilize transmission on its neighbor's system.

In its January 22, 2015 order, the Commission conditionally accepted SPP's proposal, and, among other things, made several key determinations on the issues examined during the September 22, 2014 technical conference.

  1. With respect to the coordination of Interface Bus Pricing methodologies, the Commission accepted the language in SPP's proposed protocol, which imposed a general requirement that SPP and MISO coordinate the methodologies each use to calculate Interface Bus Prices. However, the Commission, noting the potential technical challenges in identifying the appropriate pricing methodologies, and the complexity of the issue, directed SPP to submit an informational report every six months until SPP and MISO reach agreement on their respective methodologies.
  2. With respect to the Market-to-Market flowgate creation issue, the Commission noted that SPP and MISO had agreed to new language during their post-technical conference comments, which addressed some of the lingering concerns of each party. These new provisions specify conditions under which one RTO will be compensated by the other RTO for costs incurred due to the designation of a new Market-to-Market flowgate by the second RTO. Accordingly, the Commission rejected SPP's originally proposed sections addressing this issue, and ordered SPP to submit a compliance filing within 30 days inserting the new agreed-upon sections.
  3. Regarding the day-ahead FFE exchange process, the Commission accepted SPP's proposed protocol language, which included language deferring implementation of a day-ahead FFE exchange process until both parties agree that the benefits of implementing the exchange process exceed the costs. The Commission directed SPP to work with MISO to assess on an ongoing basis whether the implementation of an exchange process outweighs its costs, and to submit an informational report every six months until the exchange process is implemented, detailing the outcome of those assessments.

A copy of the Commission's order is available here and in Docket No. ER13-1864-000.

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