Midwest ISO, PJM file settlement agreement with FERC to resolve market-to-market issues

Source: Midwest ISO, PJM Interconnection

The Midwest ISO and the PJM Interconnection have jointly filed a settlement agreement with the Federal Energy Regulatory Commission (FERC) that allows the two regional transmission organizations (RTOs) to resolve disputed market-to-market transactions that occurred from 2005 into 2009. The agreement, if accepted, will improve seams management between the markets and will ensure reliable and efficient delivery of power on the organizations’ communal borders.

“Since 2005 we’ve worked closely with PJM to help reduce congestion and achieve the lowest costs for the delivery of power,” said Midwest ISO president and CEO John Bear. “This strengthened, inter-regional approach will deliver the most value to all the stakeholders in both the Midwest ISO and PJM,” he said.

“The settlement reflects the cooperative spirit that has characterized the Joint Operating Agreement, which has and continues to be integral to the protection of the reliability and economic efficiency at the interface between the two transmission organizations,” added Terry Boston, PJM’s president and CEO.

The agreement comes after 10 months of negotiation and three legal filings over issues with the Joint Operating Agreement between Midwest ISO and PJM. The Midwest ISO made two filings in March 2010, while PJM made a filing in April 2010. The FERC consolidated all three in June 2010 and subsequent discussions led to the current agreement that is before FERC. The proposed agreement, if accepted by the Commission, will end all further hearings and proceedings on the filings and will release the two organizations from any claims or damages on the issue.

In addition, the agreement sets forth a process to review existing procedures and future changes to seams management between Midwest ISO and PJM. Specifically, it will set up an initial baseline review of their existing joint operating agreement by an independent third-party. The review will be followed by continual biennial reviews of any changes to the seams management process. And, it will create a change management process if modifications to the agreement are needed.

In addition, the agreement provides for greatly enhanced data sharing to prevent similar disputes from occurring again. Access to this data will enable each RTO to independently verify the results of the calculations that determine market-to-market settlements.

“This agreement will foster more information exchange and greater transparency between Midwest ISO and PJM,” said Bear.

With broad agreement among the settlement parties on the new filing, the FERC is expected to review the details of the arrangement and issue a ruling early this year.

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