The New York Independent System Operator and PJM Interconnection have filed revisions to their joint operating agreement with FERC.
NYISO has also proposed revisions to its market administration and control area services tariff to remove a congestion management pilot program that will be superseded when the market-to-market coordination process (M2M) takes effect.
The RTOs requested a flexible effective date for the joint operating agreement (JOA) and other tariff revisions proposed, noting that they will use best efforts to deploy and be prepared to implement the M2M by the end of 2012. “In no event will implementation occur later than Jan. 15, 2013,” the RTOs said.
The fundamental philosophy behind the M2M transmission congestion coordination process that is set forth in the RTOs’ proposed JOA revisions is to allow transmission constraints that are significantly affected by generation dispatch changes in the NYISO and PJM markets or by the operation of the “Ramapo” phase angle regulators (PARs) to be jointly managed in the real-time security-constrained economic dispatch models of both RTOs.
“This joint real-time management of transmission constraints near the market borders will provide a more efficient and lower cost transmission congestion management solution, and facilitate price convergence at the market boundaries,” the RTOs added.
M2M focuses on real-time market coordination to manage transmission limitations that take place on designated M2M flowgates in a more cost-effective manner. Coordination between the RTOs will include joint redispatch and will incorporate coordinated operation of the Ramapo PARs that are located at the NYISO-PJM interface.
“This real-time coordination will result in a more efficient economic dispatch solution across both markets to manage the real-time transmission constraints that impact both markets, focusing on the actual flows in real-time to manage constraints,” the RTOs added.
M2M entitlements are the equivalent of financial rights that will be granted to PJM and NYISO to use each other’s transmission system within the confines of the M2M process. Whatever level of M2M entitlements are agreed to will be used as a baseline to provide compensation to either PJM or NYISO, depending on how the actual level of each others’ market flows compares to the level of M2M entitlements, the RTOs added.
The RTOs said they worked together to develop a preliminary M2M entitlement determination method, noting that they are using prototype market flow calculator systems in order to produce indicative values of what the M2M entitlements would be in production.
As for the tariff revisions, the RTOs said they propose to add a new schedule to the JOA that will specify the rules for implementing M2M.
NYISO has also proposed to add certain definitions to the JOA, including “shadow price,” which means the marginal value of relieving a constraint that is determined by the reduction in production cost that would result from an incremental relaxation of that constraint.
The RTOs also propose to revise the procedures that will be used for resolution of M2M coordination disputes, in addition to disputes that arise under other provisions of the JOA. The proposed additional provisions will, for instance, allow the RTOs’ senior officers to agree to continue to work together to resolving disputes.
The RTOs also propose to remove the 10-year term and provide that the JOA continue in full force and effect unless terminated.
Among other things, the RTOs said the first market-to-market coordination process was implemented by PJM and the Midwest Independent Transmission System Operator (MISO), noting that PJM and MISO operate contiguous, intertwined, control areas with sinuous borders that are hundreds of miles long.
The border between NYISO and PJM is different from the MISO/PJM border. Since there are PAR controls at the NYISO/PJM border that can, and do, provide a significant, cost-effective regional congestion management resource, the expected operation of the PARs at the PJM/NYISO border needs to be incorporated into the RTOs’ implementation of M2M.
Failure to incorporate PAR operations into M2M could, among other things, preclude the use of available, cost-effective congestion management resources. In other words, failure to incorporate PAR operations into M2M could produce inefficient results that could increase system costs and reduce or eliminate the benefits that M2M can provide, the RTOs added.