The Honorable Kimberly D. Bose Secretary 888 First Street ... · 10/30/2017 · The Honorable Kimberly D. Bose Responses to Deficiency Letter October 30, 2017 Page 6 number of times

PJM Interconnection, L.L.C.2750 Monroe BoulevardAudubon, PA 19403

Jacqulynn B. HugeeAssociate General CounselT: (610) 666-8208 | F: (610) [email protected]

October 30, 2017

The Honorable Kimberly D. BoseSecretaryFederal Energy Regulatory Commission888 First Street, NEWashington, DC 20426

Re: PJM Interconnection, L.L.C, Docket No. ER17-2218-000Proposed Revisions to Joint Operating Agreement between PJM and MISOResponses to Deficiency Letter

Dear Secretary Bose:

PJM Interconnection, L.L.C. (“PJM”) hereby responds to the letter of the Federal Energy

Regulatory Commission’s (“Commission”) Office of Energy Market Regulation (“OEMR”)

issued on September 28, 20171 seeking additional information concerning the proposed revisions

to the Joint Operating Agreement Between the Midcontinent Independent System Operator, Inc.

and PJM Interconnection, L.L.C. (“JOA”) PJM submitted on August 1, 2017.2 PJM appreciates

the opportunity to further clarify the proposed revisions.

I. BACKGROUND

In the JOA Filing, PJM and the Midcontinent Independent System Operator, Inc.

(“MISO”) proposed revisions to the JOA as part of an ongoing effort to address challenges posed

by Pseudo-Ties. The proposed revisions seek to improve the administration and coordination of

1 PJM Interconnection, L.L.C., Deficiency Letter, Docket No. ER17-2218-000 (Sept. 28, 2017) (“Deficiency Letter”). OEMR issued a similar letter to MISO in Docket No. ER17-2200-000 in which MISO filed corresponding proposed revisions to the JOA. PJM and MISO jointly drafted answers to the questions, and MISO will separately file its answers in Docket No. ER17-2200-000.

2 PJM Interconnection, L.L.C., Proposed Revisions to Joint Operating Agreement between PJM and MISO for Pseudo-Tie Implementation and Operation, Docket No. ER17-2218-000 (Aug. 1, 2017) (“JOA Filing”).

The Honorable Kimberly D. BoseResponses to Deficiency LetterOctober 30, 2017Page 2

Pseudo-Ties3 between MISO and PJM (PJM and MISO are jointly referred to herein as “the

RTOs”) by incorporating into the JOA standard definitions, rules, and responsibilities between

the two RTOs. MISO concurrently filed the same revisions in Docket No. ER17-2200.

PJM also has pending at the Commission a filing in which it proposed revisions to the

Tariff and Operating Agreement, including the incorporation of two pro forma Pseudo-Tie

agreements for generator Pseudo-Ties into the PJM Region.4

II. RESPONSE TO DEFICIENCY LETTER

Issue 1: Pseudo-tie Coordination

1. Proposed JOA section 11.3.5 states that the Native Reliability Coordinator can commit, de-commit, or redispatch a pseudo-tied unit for local System Operating Limits or Interconnection Reliability Operating Limits pursuant to the PJM-MISO pseudo-tied Units Operating Procedure and Safe Operating Mode.

a. Please describe the conditions where a System Operating Limit or Interconnection Reliability Operating Limit would cause the Native Reliability Coordinator to commit, de-commit, or redispatch a pseudo-tie unit. Please include at least one specific example.

3 All capitalized terms that are not otherwise defined herein have the meaning as defined in the JOA, PJM Open Access Transmission Tariff (“Tariff”), Amended and Restated Operating Agreement of PJM Interconnection, L.L.C. (“Operating Agreement”), and Reliability Assurance Agreement Among Load Serving Entities in the PJM Region (“RAA”).

4 PJM Interconnection, L.L.C., Tariff and Operating Agreement Revisions Regarding Dynamic Transfers, Docket No. ER17-2291-000 (Aug. 11, 2017) (“PTA Filing”). The two proposed pro forma Pseudo-Tie agreements are referred to herein collectively as the “Pro Forma Pseudo-Tie Agreements.” One of the Pro Forma Pseudo-Tie Agreements requires the Native Balancing Authority to be a party, and will be utilized when there is no existing agreement between PJM and the Native Balancing Authority for the implementation and operation of Pseudo-Ties as between the two Balancing Authorities. The second Pro Forma Pseudo-Tie Agreement does not require the Native Balancing Authority to be a party, and will be utilized when there is an existing agreement between PJM and the Native Balancing Authority for the implementation and operation of Pseudo-Ties as between the two Balancing Authorities. If the Commission accepts the proposed JOA revisions filed by PJM in this proceeding, and filed by MISO in Docket No. ER17-2200-000, the second version of the Pro Forma Pseudo-Tie Agreement will be utilizedfor all Pseudo-Ties out of the MISO Balancing Authority Area and into the PJM Balancing Authority Area. If the Commission does not accept the proposed JOA revisions, the first version of the Pro Forma Pseudo-Tie Agreement will be utilized for such Pseudo-Ties.


b. Please describe any PJM-MISO coordination procedures associated with commitment, de-commitment, or redispatch of a pseudo-tied unit by the Native Reliability Coordinator under proposed JOA section 11.3.5.

c. Please explain the limitations, if any, on the duration or output of the unit that is subject to such an action and how this will relate to the calculation of Performance Assessment Hours.

PJM Response 1.a.: Under most conditions, PJM-MISO Market-to-Market (“M2M”)

processes effectively manage System Operating Limit (“SOL”) or Interconnection Reliability

Operating Limit (“IROL”) exceedances. The Native Reliability Coordinator would commit, de-

commit or redispatch a pseudo-tied generator for local SOL or IROL exceedances only when an

M2M flowgate is not available to resolve a given operating issue. Such conditions generally

would arise for localized thermal issues, voltage issues, or islanding events in which the M2M

process is not available or not adequately addressing the concern, or when internal security

constrained economic dispatch fails to resolve the issue and dispatch of the pseudo-tied generator

will help mitigate the congestion.

SOL or IROL exceedances also might arise as a result of planned transmission outages,

forced transmission outages or during periods of heavy system transfers. When they occur,

pseudo-tied generation output may need to be adjusted in order to mitigate the SOL or IROL

exceedance. Redispatch of pseudo-tied generators is facilitated by the PJM-MISO M2M process

when an available flowgate is activated by the Native Balancing Authority and Attaining

Balancing Authority in their respective market redispatch tools. Once a flowgate is activated by

the Balancing Authorities, impactful pseudo-tied generators will be redispatched to help alleviate

SOL and IROL exceedances. However, if an M2M flowgate is not available the Native

Balancing Authority could direct impactful pseudo-tied generators to readjust output to alleviate


the SOL and/or IROL exceedance. The PJM-MISO M2M Interregional Coordination Process is

detailed in JOA, Attachment 3. JOA, section 1.1 specifically details requirements for creating

and using coordinated M2M flowgates in place of internal PJM and MISO security constrained

economic dispatch protocols.

Some other examples of conditions under which the Native Reliability Coordinator might

commit, de-commit or redispatch a pseudo-tied generator include: (1) a local voltage issue

occurs in which a pseudo-tied generator is needed to be brought online to provide local reactive

support to help resolve the voltage issue; (2) a pseudo-tied generator has a significant impact on

a constraint, which does not qualify for M2M coordination, and needs to be redispatched to

resolve the constraint; and (3) a pseudo-tied generator is located in an electrical island in the

Native Reliability Coordinator’s area.

Finally, the RTOs’ treatment of the Native Reliability Coordinator’s ability to commit, de-

commit, or redispatch a pseudo-tied generator to address local issues is consistent with the North

American Electric Reliability Corporation’s (“NERC”) draft Pseudo-Tie Coordination Reference

Document.5 This NERC document provides the following guidance related to the importance of

preserving the Native Reliability Coordinator’s ability to address local issues as needed:

The Native RC/Transmission Operator (TOP), if needed, may coordinate with the Attaining BA/RC of a pseudo-tied generator to dispatch the pseudo tied generator to a level that is deemed reliable to 39 manage congestion in a local area issue. The Native RC may need to request commitment modifications to manage congestion in a local area.

5 NERC, Pseudo-Tie Coordination Reference Document, available at http://www.nerc.com/comm/OC/ReferenceDocumentsDL/Pseudo-Tie_Coordination_v1.pdf.


The Native RC and/or TOP should retain the right to issue operating instructions to the pseudo-tied unit to modify unit output if needed to resolve a local transmission reliability issue.6

PJM Response 1.b.: The procedures PJM and MISO use to coordinate the commitment,

de-commitment or redispatch of a pseudo-tied generator by the Native Reliability Coordinator

that is referenced in proposed JOA, section 11.3.5 are described in detail in the PJM – MISO

Pseudo-Tied Units Operating Procedure RTO-PTU-OP1-r0, sections 3.2, 3.3 and 3.4,7 a copy

of which is also attached hereto. Specifically, the procedure provides:

Authority clarity for pseudo-tied units. The Native Reliability Coordinator and Native Transmission Operator are responsible for any transmission related issues for pseudo-tied units and the Attaining Reliability Coordinator and Attaining Transmission Operator are responsible for any energy balancing or capacity-related issues for pseudo-tied units.

Guidelines and conditions for when pseudo-tied units may be committed, de-committed, or redispatched by the Native Reliability Coordinator.

Communication expectations.

PJM Response 1.c.: There is no limit on the number of times or hours a pseudo-tied

generator could be subject to commitment, de-commitment or redispatch under the PJM-MISO

M2M coordination process or by a Native Reliability Coordinator and Native Transmission

Operator since the applicable NERC Reliability Standards, IRO-001-4 and TOP-001-3, provide

that Reliability Coordinators and Transmission Operators have the responsibility to act and direct

entities to act to maintain reliability of its Transmission Operator area, but does not limit the

6 Id. at lines 38-44.

7 PJM – MISO Pseudo-Tied Units Operating Procedure RTO-PTU-OP1-r0, sections 3.2, 3.3 and 3.4, Effective Date February 08, 2016, Review Date September 1, 2016, available at http://www.pjm.com/-/media/etools/oasis/special-notices/pjm-miso-pseudo-tied-units-operating-procedure.ashx?la=en.


number of times that could occur.8 Limitations on the duration or output of a pseudo-tied

generator that is a PJM Generation Capacity Resource, because it was committed, de-committed

or redispatched by a Native Reliability Coordinator during a Performance Assessment Hour,

have no impact on the calculation of Performance Assessment Hours. PJM will not change how

it calculates Performance Assessment Hours applicable to the pseudo-tied generator because that

generator, as a Capacity Resource, is committed to provide megawatts of energy to PJM when

PJM calls upon the resource. If the generator is unable to provide the megawatts of energy to

PJM during a Performance Assessment Hour, nor find a replacement Capacity Resource to fulfill

its capacity obligation for that hour, the Capacity Market Seller of the pseudo-tied generator, or

an internal generator for that matter, will be assessed a Non-Performance Charge for that hour

consistent with Tariff, Attachment DD, section 10A which requires that Non-Performance

Charge be assessed to a Capacity Market Seller for each of its Capacity Resources that has a

Performance Shortfall for a Performance Assessment Hour.

Issue 2: Termination Provisions

2. Proposed JOA section 11.3.9(a) states that “The Balancing Authority seeking to terminate the pseudo-tie of a PJM Generation Capacity Resource, for any reason other than the reasons described in subsection (b) below, shall give the other Balancing Authority and the entity that pseudo-tied the unit” notice at least forty-two months prior to the commencement of a PJM Delivery Year.9

8 NERC Reliability Standard IRO-001-4, available at http://www.nerc.com/pa/Stand/Reliability%20Standards/IRO-001-4.pdf (Purpose: To establish the responsibility of Reliability Coordinators to act or direct other entities to act.); NERC Reliability Standard TOP-001-3, available at http://www.nerc.com/pa/Stand/Reliability%20Standards/TOP-001-3.pdf (Purpose: To prevent instability, uncontrolled separation, or Cascading outages that adversely impact the reliability of the Interconnection by ensuring prompt action to prevent or mitigate such occurrences.); NERC Reliability Standard IRO-009-2, available at http://www.nerc.com/pa/Stand/Reliability%20Standards/IRO-009-2.pdf(Purpose: To prevent instability, uncontrolled separation, or cascading outages that adversely impact the reliability of the interconnection by ensuring prompt action to prevent or mitigate instances of exceeding Interconnection Reliability Operating Limits (IROLs)).

9 See proposed JOA section 11.3.9(a).


a. Please explain the rationale for requiring at least forty-two months’ notice to terminate a pseudo-tie of a PJM Generation Capacity Resource.

b. Please explain whether, and to what extent, the grounds for termination of a pseudo-tie under proposed JOA section 11.3.8 differ from the grounds for termination listed under section 18 of PJM’s pro forma pseudo-tie agreements, which are pending in Docket No. ER17-2291-000.

c. Please also explain any circumstances under which a Balancing Authority would terminate a pseudo-tie other than those described in the JOA and be required to provide the notice described above.

d. What steps will PJM and MISO take to coordinate if a pseudo-tied resource attempts to contest a termination by a Balancing Authority?

PJM Response 2.a.: The forty-two (42) month advance notice requirement was

proposed to be consistent with the same notice requirement reflected in Pro Forma Pseudo-Tie

Agreements submitted in the PTA Filing. In that filing, PJM stated:

PJM proposes to require forty-two (42) months’ notice of a request to terminate if there is no reliability concern driving the desire to terminate but another reason such as new regulations or legal requirements that make it difficult for PJM to continue operating the Pseudo-Tie. In such case, when there is no system reliability concern, PJM believes that termination should have the least impact on the Company, particularly if it has committed the generator in PJM’s capacity market, which commitment occurs up to three years prior to the Delivery Year in which the energy from that generator must be offered into PJMs’ energy markets. To lessen the impact on a Company having such a capacity commitment, the notice provided should give the Company time to notify PJM and the Independent Market Monitor for PJM (“IMM”) that it can no longer offer the MW from its external generator as a Generation Capacity Resource in PJM’s capacity market, before they have to commit themselves to the RPM Auction for another Delivery Year, and to give PJM’s planning engineers sufficient time to take into consideration the impact of the termination of the Pseudo-Tie of the generator in the determination of the


RPM planning parameters that must be posted by February 1. The forty two (42) month period10 is appropriate because it is consistent with the notice requirement that a Capacity Market Seller must give to PJM when it intends to deactivate a generator.11

There is no guarantee in the Tariff every generator will always clear PJM’s RPM capacity

market. In fact, history has proven that many generators do not clear the capacity market

auctions. Giving entities 42 months to terminate a Pseudo-Tie for a reason other than the reasons

described in Section 11.3.9(b) (a system reliability problem) is giving them sufficient time to

ensure that it does not enter into a capacity obligation for another Delivery Year. Again, PJM

does not expect to utilize this option to seek to terminate a Pseudo-Tie often. However, when it

does, the entity with the Pseudo-Tie can object to that termination with a filing to the

Commission and if the Commission determines the termination would not be just and reasonable,

PJM would have to comply with the Commission’s order and allow the Pseudo-Tie to remain in

place.

10 The forty two (42) month notice requirement will not apply to existing Pseudo-Ties for which PJM or the entity with the Pseudo-Tie has already given notice of termination prior to the effective date of the proposed pro formaagreements being filed herewith, nor will it apply to existing Pseudo-Ties that are transitioning out of the PJM capacity market because they can’t satisfy the more stringent requirements for Capacity Performance Resources. That is because such resources won’t be able to qualify to be a Capacity Performance Resource as of June 1, 2020, and as of that date the only Generation Capacity Resources that PJM will allow to participate in its markets are those that are capable of being Capacity Performance Resources.

11 PTA Filing at 26-27. See also PJM Interconnection, L.L.C., Tariff, Attachment DD, section 6.6(g) (Requires a Capacity Market Seller seeking to obtain an exception to its RPM must offer requirement due to the proposed Deactivation of a generator to submit a preliminary exception request to PJM and the IMM by the September 1st that last precedes the Base Residual Auction for the applicable Delivery Year (44 months in advance), and demonstrate to PJM and the IMM that it has met the requirements to obtain such an exception by the December 1st that last precedes the Base Residual Auction for the applicable Delivery Year (41 months in advance).) The rationale for these notice requirements was to give PJM’s planning engineers have sufficient time to take into consideration the impact of the Deactivation of the generator in the determination of the RPM planning parameters that must be posted by February 1, and to allow developers time to react to, and make business decisions based on, the Deactivation and determine whether to develop new generation in the Zone or LDA from which the resource is being retired. See PJM Interconnection, L.L.C., RPM Must Offer Exception Deadline for Generator Deactivation, Docket No. ER13-2140-000 (filed Aug. 9, 2013). The Commission found these deadlines to be appropriate because they “give PJM the time it needs to evaluate the impact of deactivation on its system prior to the date it is required to post its capacity market planning parameters and will give new entrants the time they need to consider their investment options.” PJM Interconnection, L.L.C., 145 FERC ¶ 61,035 , P 34 (2013).


PJM Response 2.b.: There is no difference in the grounds for termination of a Pseudo-

Tie under proposed JOA section 11.3.8 and the grounds for termination listed under section 18 of

the Pro Forma Pseudo-Tie Agreements. Proposed JOA, section 11.3.8 indicates that PJM has the

right to terminate a Pseudo-Tie between the PJM Balancing Authority Area and the MISO

Balancing Authority Area in accordance with PJM’s Tariff and the notice provisions of proposed

JOA, section 11.3.9. Since the reasons PJM can terminate a Pseudo-Tie are the reasons reflected

in the Tariff, the provisions are consistent since the JOA merely indicates that the grounds for

termination that are reflected in the Tariff.

In addition, the Pro Forma Pseudo-Tie Agreements specify the limited situations in which

a Pseudo-Tie could be terminated, which for the most part are tied to a situation in which a

Pseudo-Tie is causing instability on the bulk power system or raising or causing reliability

concerns. As a Balancing Authority, Reliability Coordinator and Transmission Operator, it is

PJM’s ultimate responsibility to ensure the reliability of the bulk power system for which it is

responsible. This ability of system operators to address transactions which are causing instability

in the system is not a new feature being proposed by PJM. Indeed for years the Commission has

recognized the use of Transmission Loading Relief (“TLR”) as an essential reliability tool that

can override contractual transmission rights.12 NERC has opined that “Dynamic transfers must

not affect reliability adversely.”13

12 Were the Commission to limit the ability of PJM operators to respond to system conditions by adopting IMEA’s argument, PJM would be forced to re-examine, from a reliability perspective, whether its recognition of pseudo-tie arrangements to satisfy capacity obligations is itself causing a sufficient reliability risk that outweighs the benefits of such arrangements to individual stakeholders.

13 NERC, Dynamic Transfer Reference Document, v. 3 (May 2016), at 4, http://www.nerc.com/comm/OC/ ReferenceDocumentsDL/Dynamic_Transfer_Guidelines_V3_Approved_20160608.pdf (“NERC Dynamic Transfer Guidance”).


Proposed Pro Forma Pseudo-Tie Agreement, section 18, authorizes termination under the

following circumstances and with the referenced amount of notice:

18. Termination. Any Party shall have the right to terminate thisAgreement, in its sole discretion, upon forty-two (42) months’ noticeprior to the commencement of a Delivery Year, subject to receiving allnecessary regulatory approvals for such termination, if any. In addition, PJM shall have the right to terminate this Agreement, upon sixty (60) days’ notice to Company and Native Balancing Authority, and the filing of a notice of cancellation with the Commission if required, if PJM experiences an emergency or other unforeseen condition which may impair or degrade the reliability of the Transmission System, a transmission constraint that impairs the reliability of PJM’s or another transmission provider’s system, or any adverse condition(s) or if the emergency condition causes the Facility to become undeliverable or unable to be restored, such as a major long-term transmission outage for example, and as a result in each case reliability issues arise such that the referenced Pseudo-Tie of the Facilityraises concerns with regional reliability coordinators or NERC, or if Company no longer satisfies the PJM Governing Document requirements for Pseudo-Ties, criteria for participation in PJM’s markets as an external resource, or other applicable regulatory, legal or reliability requirements, or Company commits a material default under this Agreement or has failed to cure any breach of this Agreement in accordance with section 14 above, upon acceptance of such notice of cancellation by the Commission if required. If PJM suspends this Agreement for failure of the Company to provide real-time Pseudo-Tie MW values in a timely manner two times within a thirty (30) day period, as addressed in section 17 above, upon mutual agreement, PJM and Native Balancing Authority shall have the right to terminate this Agreement, upon sixty (60) days’ notice to each Party, and the filing of a notice of cancellation with, and acceptance by, the Commission if required; provided, however, that the Party seeking to exercise this right to terminate must provide notice of such termination within one hundred eighty (180) days of the second suspension. Except as otherwise expressly permitted under the PJM Governing Documents, the termination of this Agreement shall not relieve the Company of any of its obligations owed to PJM, specifically including but not limited to, any energy market or RPM must-offer requirements or any capacity obligations for which it has committed the Facility to PJM in an RPM Auction or FRR Capacity Plan. (emphasis added)

Finally, Tariff, Attachment K-Appendix, section 1.12(e), and the identical provisions of

Operating Agreement, Schedule 1, section 1.12(e) indicates that PJM can terminate a Pseudo-Tie


when it determines, in its sole discretion, that a Market Participant has not cooperated with it “to

ensure that changes in the Dynamic Transfer value do not adversely impact PJM’s management

of the PJM Area Control Error in a manner unacceptable to PJM.”14

PJM believes it must retain the authority to suspend or terminate a Pseudo-Tie in those

limited circumstances where necessary to address immediate threats to the reliable operation of

the bulk power system. The intent of the termination provisions is to ensure reliable operations

even during unusual operating conditions, and to provide for coordination of Pseudo-Ties

between the Native Balancing Authority and Attaining Balancing Authority. If continued

operation of the pseudo-tied unit compromises system reliability in the Native Balancing

Authority then operation of the unit must be discontinued.

The provisions allowing PJM to terminate a Pseudo-Tie for failure to provide real-time

data to PJM is an important provision that must be maintained. PJM is responsible for ensuring

the reliability of the bulk power system. If a pseudo-tying entity or the Market Participant for the

external generator fails to satisfy this real-time data and communication issue, PJM could

experience reliability or stability problems if continued operation of the pseudo-tied unit

negatively impacts System Operator situational awareness tools such as the Energy Management

System (“EMS”). State Estimator solutions which support downstream EMS applications such

as contingency analysis can be compromised by consistent bad unit telemetry which can place

System Operators in an unknown operating state. Under this condition, System Operators will

not have visibility of actual and simulated flows on the system which, if the condition persists for

an extended period of time, could negatively impact system reliability because System Operators

14 Tariff, Attachment K-Appendix, section 1.12(e); Operating Agreement, Schedule 1, section 1.12(e).


lose the ability to see SOL and IROL exceedances and therefore their ability to take actions to

alleviate the exceedances. That being the case, it is of utmost importance that PJM receive the

required real-time data to ensure system reliability.

PJM Response 2.c.: The RTOs would only terminate a Pseudo-Tie under the

circumstances described in their respective tariffs. That is because proposed JOA, section 11.3.8

indicates that PJM has the right to terminate a Pseudo-Tie between the PJM Balancing Authority

Area and the MISO Balancing Authority Area in accordance with their respective tariffs and the

notice provisions of proposed JOA, section 11.3.9. The specific circumstances in which a

Pseudo-Tie could be terminated are not defined fully in the JOA, but rather the JOA merely

directs that the grounds for termination are reflected in the RTOs’ tariffs.

PJM Response 2.d.: NERC has stated in its guidance on the topic that: “The native,

attaining, and intermediate BAs must carefully coordinate many aspects related to dynamic

transfers. Failure to do so may result in the creation of reliability problems for the

Interconnection, may create after-the-fact energy accounting and billing problems, and may

cause violations of industry standards.”15 Therefore, it is of utmost importance that the RTOs

coordinate with each other with regard to the implementation, operation, suspension and

termination of a Pseudo-Tie.

Before a pseudo-tied resource is terminated, MISO and PJM will collaborate extensively

with each other and the pseudo-tying entity in an effort to resolve any issues that put a pseudo-

tied generator at risk of termination per the JOA or tariff provisions. For example, the Native

Balancing Authority and Attaining Balancing Authority will coordinate on resolving metering or

15 NERC Dynamic Transfer Guidance at 5.


modeling issues before initiating termination, consistent with their ongoing requirement to

exchange operating data “to facilitate effective coordination of operations and to maintain

regional system reliability.”16

The specific steps the RTOs will take if a pseudo-tied generator contests a notice to

terminate the Pseudo-Tie will be case specific based on the underlying reason for termination.

For example, if the RTOs seek to terminate the Pseudo-Tie because it is causing significant

system reliability problems and earlier collaboration with the pseudo-tying entity did not yield a

resolution, the RTOs would first suspend the Pseudo-Tie in an effort to preserve bulk power

system stability and reliability. However, if the RTOs seek to terminate a Pseudo-Tie because

the pseudo-tying entity consistently fails to timely provide the real-time megawatt values as

required by the JOA and their respective tariffs, or because a new law or regulation has been

implemented that requires them to do so, the RTOs would suspend the Pseudo-Tie while they

await a determination from the Commission whether the notice to terminate or cancel the

Pseudo-Tie has been accepted.

Termination is an action of last resort for the Balancing Authorities, and an indication

that efforts to cure non-compliances have failed. A resource can also re-establish the Pseudo-Tie

by meeting all JOA, Tariff and PJM manual requirements. The RTOs expect that terminations

initiated by them will be very exceptional events.

Issue 3: Suspension Provisions

3. Proposed JOA section 11.3.7 (Suspension) states, in part:

PJM and MISO reserve the right to suspend a pseudo-tie if the entity that pseudo-tied the unit no longer satisfies the PJM or MISO requirements for

16 JOA, Article IV, section 4.1.


pseudo-ties, criteria for participation in the Attaining Balancing Authority’s markets as an external resource, or other applicable requirements (as detailed in respective PJM and MISO tariffs and manuals), if the entity that pseudo-tied the unit commits a material default under its pseudo-tie agreement or has failed to cure any breach of such agreement, or if PJM or MISO reasonably determines that the pseudo-tie poses a risk to system reliability or risk of violation of established reliability criteria, by giving immediate notice of suspension. Suspension shall be coordinated between PJM and MISO and may include but not be limited to decommitting the unit or requiring the unit to follow manual dispatch instructions. During any suspension period, the pseudo-tied generating unit shall remain under the operational control of the Attaining Balancing Authority and shall not be under the operational control of Native Balancing Authority.

a. What is the meaning of the term “suspension” under proposed JOA section 11.3.7? How is suspension different from termination?

b. Please explain whether, and to what extent, the grounds for suspension of a pseudo-tie under proposed JOA section 11.3.7 differ from the grounds for suspension listed under section 17 of PJM’s pro forma pseudo-tie agreements, which are pending in Docket No. ER17-2291-000.

c. What steps will PJM and MISO take to coordinate if a pseudo-tied resource attempts to contest a suspension by a Balancing Authority?

PJM Response 3.a.: The word “suspension” in proposed JOA, section 11.3.7 means the

temporary period of time during which PJM and/or MISO have determined the pseudo-tied

generator must not operate utilizing the Pseudo-Tie (unless the Attaining Balancing Authority

directs the generator to operate to mitigate an emergency condition) or participate in the

Attaining Balancing Authority’s markets, based on specified conditions and until the conditions

are rectified or deemed to be un-rectifiable in which case PJM and/or MISO could seek to

terminate the Pseudo-Tie. The RTOs may seek to suspend a Pseudo-Tie if the external generator

is not being operated consistent with the RTO’s tariffs or business rules, or if required data is not

being provided and could impact system operations. During the period of suspension, the RTOs

will work with the pseudo-tying entity to resolve all underlying issues that causes it to be out of


compliance with the RTO’s governing documents or that caused the system stability or reliability

problem. A suspension results when a reliability issue from the pseudo-tied generator is not

being resolved. Suspension is different from termination in that a suspension is temporary (short

term or long term), but a termination results in the permanent removal of the Pseudo-Tie.

Suspension is a temporary state in which MISO and PJM collaborate with a resource in

an effort to resolve an operational issue to avoid escalation to termination of the Pseudo-Tie.

During suspension, manual instructions will be given to the generator by the Attaining Balancing

Authority with regard to commitment and dispatch. The pseudo-tied generator’s MW value will

be coordinated with the Native Balancing Authority so both Balancing Authorities are operating

to the same value. This value may be zero (when a unit is off-line) or a non-zero value. During

suspension, the pseudo-tied unit itself remains in the EMS and commercial models as a Pseudo-

Tie. All energy from the pseudo-tied unit is injected into the Attaining Balancing Authority’s

Balancing Authority Area. For termination, the pseudo-tied generator is removed from the EMS

and commercial models as a Pseudo-Tie. All energy from the previously pseudo-tied unit is

injected into the Native Balancing Authority’s Balancing Authority Area.

The Commission has accepted similar Pseudo-Tie suspension provisions such as what are

proposed in the JOA.17 In its filing letter, California Independent System Operator advised the

Commission that its rationale for needing to be able to suspend or terminate a Pseudo-Tie was

that Pseudo-Tie of a generator could cause the ISO to violate reliability standards, and may

17 See California Independent System Operator, Inc., 136 FERC ¶ 61,239 (2011), accepting California Independent System Operator, Inc., Tariff Amendment to Modify Tariff Provisions Regarding Dynamic Transfers, Docket No. ER11-4161-000 (July 29, 2011). See also California Independent System Operator Corporation, Tariff, Appendix B.16 Pseudo-Tie Participating Generator Agreement, section 3.2.1, available at http://www.caiso.com/Documents/ConformedTariff_asof_Jul10_2017.pdf.


create reliability concerns in some circumstances that are not known at the time the Pseudo-Tie

is implemented and would require intervention by the Native Balancing Authority.18 The RTOs

have the same concerns and same underlying rationale for why they must have the ability to

suspend or terminate a Pseudo-Tie. The RTOs expect suspensions and terminations to be very

exceptional events.

PJM Response 3.b.: The grounds for suspension of a Pseudo-Tie under proposed JOA

section 11.3.7 and the grounds for termination listed under section 17 of the Pro Forma Pseudo-

Tie Agreements are virtually identical, with one exception. Both proposed JOA, section 11.3.7

and proposed Pro Forma Pseudo-Tie Agreement, section 17 state that PJM can suspend a

Pseudo-Tie (a) that no longer satisfies its requirements for Pseudo-Ties, (b) that no longer

satisfies the criteria for participation in PJM’s markets as an external resource, (c) that no longer

satisfies other applicable requirements (although section 17 specifies that those applicable

requirements must be regulatory, legal or reliability requirements and section 11.3.7 says those

applicable requirements are detailed in the respective RTO’s tariff and manuals), (d) if the

pseudo-tying entity commits a material default under its Pseudo-Tie agreement or has failed to

cure a breach of that agreement, (e) if PJM (and MISO under section 11.3.7) reasonably

determines that the Pseudo-Tie poses a risk to system reliability or risk of violation of

established reliability criteria. The only grounds for suspension specified in the proposed Pro

Forma Pseudo-Tie Agreements, section 17 that is not specifically called out in proposed JOA,

section 11.3.7 is the suspension of Pseudo-Tie when the pseudo-tying entity “fails to provide

real-time Pseudo-Tie MW values in a timely manner pursuant to applicable tariff or business

18 California Independent System Operator, Inc., Tariff Amendment to Modify Tariff Provisions Regarding Dynamic Transfers, Docket No. ER11-4161-000 (July 29, 2011), at pp. 21-22.


rule requirements of the Native Balancing Authority and/or PJM Balancing Authority, upon

mutual agreement of the Native Balancing Authority and PJM Balancing Authority.” This is

acceptable because the JOA does not allow for broader suspension provisions than PJM’s Tariff

permits.

Again, PJM believes it must retain the authority to suspend a Pseudo-Tie in those limited

circumstances where necessary to address immediate threats to the reliable operation of the bulk

power system. The intent of the suspension provisions is to ensure reliable operations even

during unusual operating conditions, and to provide for coordination of Pseudo-Ties between the

Native Balancing Authority and Attaining Balancing Authority. As indicated above with regard

to termination of a Pseudo-Tie, if continued operation of the pseudo-tied generator compromises

system reliability in the Native Balancing Authority then operation of the unit must be

discontinued.

The provisions allowing PJM to suspend a Pseudo-Tie for failure to provide real-time

data to PJM is an important provision that must be maintained. PJM is responsible for ensuring

the reliability of the bulk power system. If a pseudo-tying entity or the Market Participant for the

external generator fails to satisfy this real-time data and communication issue, PJM could

experience reliability or stability problems if continued operation of the pseudo-tied generator

negatively impacts System Operator situational awareness tools such as the EMS. State

Estimator solutions which support downstream EMS applications such as contingency analysis

can be compromised by consistent bad unit telemetry which can place System Operators in an

unknown operating state. Under this condition, System Operators will not have visibility of

actual and simulated flows on the system which, if the condition persists for an extended period


of time, could negatively impact system reliability because System Operators lose the ability to

see SOL and IROL exceedances and therefore their ability to take actions to alleviate the

exceedances.

The primary concern is a consistent PJM EMS State Estimated solution is used to support

downstream congestion awareness and control applications. Consistent and accurate real-time

telemetry is used to support and validate the State Estimator solution. Bad telemetry or telemetry

failures can cause incorrect or failed State Estimator solutions which can cause real-time analysis

tools such as contingency analysis to diverge or fail. System Operators rely on these tools to

provide system awareness and support controlling actions implemented to mitigate system

congestion (SOL and IROL exceedances). The State Estimator solution is also used to support

PJM’s Dispatch Tools which are used to redispatch generation (including pseudo-tied

generators) in coordination with MISO under the M2M process. That being the case, it is of

utmost importance that PJM receive the required real-time data to ensure system reliability.

PJM Response 3.c.: Similar to a termination, the RTOs will collaborate with the

pseudo-tying entity in an effort to avoid a suspension. A suspension results when a reliability

issue from the pseudo-tied generator is not being resolved. When suspension occurs, the RTOs

will collaborate with the pseudo-tying entity in an effort to resolve the operational issue and

return the pseudo-tied generator to normal status. The RTOs expect suspensions to be very

exceptional events.

As noted above in response to question 2(d), NERC has underscored the importance of

coordination between Native Balancing Authorities and Attaining Balancing Authorities in order


to prevent reliability problems.19 Similar to PJM’s response to question 2(d), PJM reiterates that

it is of utmost importance that the RTOs coordinate with each other with regard to the

implementation, operation, suspension and termination of a Pseudo-Tie. The RTOs will

implement a suspension of a Pseudo-Tie in a coordinated fashion so as not to disrupt the reliable

operation of the bulk power system.

Specific actions may vary based on the circumstances of a given suspension. For

example, if the Attaining Balancing Authority expects the suspension to be long term and will

ultimately result in a termination of the Pseudo-Tie, the Attaining Balancing Authority would

return dispatch control of the generator back to the Native Balancing Authority. Commission

approval is not required to suspend the Pseudo-Tie and the RTOs could implement the

suspension over the objection of the pseudo-tying entity, in favor of ensuring the reliability of the

bulk power system.

If the pseudo-tying entity is able to resolve the issues that caused the RTOs to suspend

the Pseudo-Tie, within the referenced time period required by the RTOs’ respective tariffs, the

RTOs may permit the Pseudo-Tie to reactivate on a schedule mutually agreed upon by the

pseudo-tying entity and the RTOs. If the pseudo-tying entity is not able to timely resolve the

issues that caused the RTOs to suspend the Pseudo-Tie, and that entity contests the suspension

through a Commission filing, the Pseudo-Tie would remain suspended for the duration of the

period during which the Commission is considering the filing and until the Commission issues an

order that requires the RTOs to reactivate the Pseudo-Tie. The RTOs will not terminate the

19 See NERC Dynamic Transfer Guidance at 5.


Pseudo-Tie during this waiting period but instead will keep the Pseudo-Tie in suspension status

until Commission resolution.

III. DOCUMENTS ENCLOSED

With this transmittal letter, PJM submits the following attachments:

In addition to this Transmittal Letter, this submission includes:

Attachment E: PJM – MISO Pseudo-Tied Units Operating Procedure.

IV. CORRESPONDENCE AND COMMUNICATIONS

Correspondence and communications regarding this filing should be sent to the following

individuals:

Craig GlazerVice President–Federal Gov’t PolicyPJM Interconnection, L.L.C.1200 G Street, N.W.Suite 600 Washington, D.C. 20005(202) [email protected]

Jacqulynn B. HugeeAssociate General CounselPJM Interconnection, L.L.C.2750 Monroe BoulevardAudubon, PA 19403(610) [email protected]

V. SERVICE

PJM has served a copy of this filing on all PJM members and on all state utility

regulatory commissions in the PJM Region by posting this filing electronically. In accordance

with the Commission’s regulations,20 PJM will post a copy of this filing to the FERC filings

section of its internet site, located at the following link: http://www.pjm.com/documents/ferc-

manuals/ferc-filings.aspx with a specific link to the newly-filed document, and will send an e-

mail on the same date as this filing to all PJM members and all state utility regulatory

20 See 18 C.F.R. §§ 35.2(e) and 385.2010(f)(3).


commissions in the PJM Region21 alerting them that this filing has been made by PJM and is

available by following such link. PJM also serves the parties listed on the Commission’s official

service list for this docket. If the document is not immediately available by using the referenced

link, the document will be available through the referenced link within 24 hours of the

filing. Also, a copy of this filing will be available on the FERC’s eLibrary website located at the

following link: http://www.ferc.gov/docs-filing/elibrary.asp in accordance with the

Commission’s regulations and Order No. 714.

VI. CONCLUSION

Wherefore, for the foregoing reasons, PJM requests that the Commission accept this

response to the Commission’s Deficiency Letter, and grant the proposed effective date of

October 1, 2017.

Respectfully submitted,

/s/ Jacqulynn B. HugeeCraig GlazerVice President–Federal Gov’t PolicyPJM Interconnection, L.L.C.1200 G Street, N.W.Suite 600 Washington, D.C. 20005(202) [email protected]

Jacqulynn B. HugeeAssociate General CounselPJM Interconnection, L.L.C.2750 Monroe BoulevardAudubon, PA 19403(610) [email protected]

21 PJM already maintains, updates and regularly uses e-mail lists for all PJM members and affected state commissions.

Attachment A

PJM – MISO Pseudo-Tied Units Operating Procedure RTO-PTU-OP1-r0,

Effective Date February 08, 2016, Review Date September 1, 2016.

PJM – MISO Pseudo-Tied Units Operating Procedure

RTO-PTU-OP1-r0 Effective Date: 02/08/2016

Review Date: 09/01/2016

Page 1 of 5

1. Purpose The purpose of this procedure is to address operational concerns due to multiple generating units that have pseudo-tied out of one Balancing Authority (BA) and into another BA yet physically reside in the Reliability Footprint of the original (native) area. This procedure will:

• Provide PJM and MISO System Operators with guidance regarding dispatch of the pseudo-tied units.

• Document RC, TOP, and BA authority for pseudo-tied units. • Document actions and expectations when the transmission system is congested.

o M2M process o Local congestion, non-M2M process

2. References 2.1 Rate Schedule 05 MISO-PJM JOA and CMP 2.2 PJM’s Manual 3: Transmission Operations 2.3 MISO’s RTO-AOP-012 Safe Operating Mode with PJM Procedure 2.4 NERC Standard TOP-001.1a, R1, R2, and R7.3.

3. Procedure Description 3.1. Authority:

3.1.1. Authorities for Pseudo-Tied Units into PJM:

• MISO will be the native RC, responsible for transmission related congestion (SOLs and IROLs) on the transmission system where the pseudo-tied units are connected. PJM will be the attaining RC, responsible for the capacity and dispatch of the pseudo-tied units physically within the MISO RC footprint.

• Transmission Operators within the MISO RC Footprint will be TOP for the pseudo-tied units that are physically located within their respective TOP area.

• PJM will be the BA for all pseudo-tied units. • During restoration activities when the pseudo-tied unit is within the impacted

area (i.e. when the TOP has implemented its System Restoration Plan), the TOP will work with MISO to determine dispatch requirements for the pseudo-tied unit and will communicate directly with the Asset Owner of the unit. MISO will communicate the units dispatch to PJM. PJM and MISO will work together with the impacted TO(s)/TOP(s) to determine at what stage




Page 2 of 5

during restoration that the impacted units can be reliably pseudo-tied into the attaining BA.

3.1.2. Authorities for Pseudo-Tied Units into MISO:

• PJM will be the native RC, responsible for transmission related congestion (SOLs and IROLs) on the transmission system where the pseudo-tied units are connected. MISO will be the attaining RC, responsible for the capacity and dispatch of the pseudo-tied units physically within the PJM RC footprint.

• PJM or PJM’s Transmission Owners (in the case of AEP) will be TOP of pseudo-tied units that are physically located within their TOP zone.

• MISO will be the BA for all pseudo-tied units. • During restoration activities when the pseudo-tied unit is within the impacted

area (i.e. when the PJM has implemented it System Restoration Plan), PJM will determine dispatch requirements for the pseudo-tied unit and will communicate directly with the Asset Owner of the unit. PJM will communicate the units dispatch to MISO. PJM and MISO will work together with the impacted TO(s)/TOP(s) to determine at what stage during restoration that the impacted units can be reliably pseudo-tied into the attaining BA.

Note: TOP authority is referenced in NERC Standard TOP-001-1a, Requirements 1, 2, and 7.3.

3.2. Congestion Management:

3.2.1. M2M Process:

• PJM and MISO will follow all existing M2M processes to bind on existing M2M flowgates to redispatch pseudo-tied units via their respective SCED algorithms to relieve congestion.

• PJM and MISO will perform flowgate tests on an “as-needed” basis to accommodate new flowgates. o Outage Coordination procedures will be followed to determined new

temporary M2M flowgates due to planned outages. o PJM and MISO will make every effort to proactively create flowgates

resulting from planned outages for inclusion in respective Day-Ahead Markets.

o Critical M2M Flowgate Request Process is available for creating flowgates in real time.

o PJM and MISO should avoid the use of substitute flowgates. Limited use is outlined in Section 8.1.5 of the CMP.

• If volatility occurs on M2M flowgates and is significantly impacted by pseudo-tie units, PJM and MISO will investigate the use of shadow price




Page 3 of 5

and market flow relief overrides prior to implementation of Safe Op Mode (SOM).

• As a last resort, SOM will be available for use in those cases where pseudo-tied units have an appreciable impact on facilities without an existing flowgate. Existing SOM procedures will be followed in these cases.

3.2.2. Local Congestion Mitigation: The following local congestion process will be followed to mitigate non-M2M constraints (thermal or voltage / actual or post-contingency) within the native RC’s footprint for which the native RC does not have any internal dispatch options and requires support from pseudo-tied units.

3.2.2.1. Units Pseudo-Tied into PJM: o Pseudo-tied unit is on line and MISO (or a MISO TOP) needs to

redispatch the unit for a localized, non-M2M constraint: MISO will contact PJM to request unit be redispatched and will

provide a specific output target PJM will log the unit as running for MISO MISO will contact PJM to end redispatch MISO (or MISO TOP) will pay for applicable PJM deviation

charges and MISO reactive charges once settlement process is established

o Pseudo-tied unit is off-line and was not picked up in PJM’s Day-Ahead market:

MISO will request unit operation for next day PJM will log the unit as running for MISO MISO will request PJM release unit when it is no longer needed MISO (or MISO TOP) will pay unit start up plus applicable PJM

deviation charges and MISO reactive charges once settlement process is established

3.2.2.2. Units Pseudo-Tied into MISO: o Pseudo-tied unit is on line and PJM (or a PJM TO) needs to redispatch

the unit for a localized, non-M2M constraint: PJM will contact MISO to request unit be redispatched and will

provide a specific output target MISO will log the unit as running for PJM PJM will contact MISO to end redispatch PJM (or PJM TO) will pay for applicable MISO deviation charges

once the settlement process is established o Pseudo-tied unit is off-line and was not picked up in MISO’s Day-Ahead

market:




Page 4 of 5

PJM will request unit operation for next day MISO will log the unit as running for PJM PJM will request MISO release unit when it is no longer needed PJM (or PJM TO) will pay unit start up plus applicable MISO

deviation charges once the settlement process is established

3.3. Communication: Exceptions to this communication process will occur during restoration activities as noted above.

• For pseudo-tied units into PJM all communications from a MISO TOP to PJM shall include MISO

• For pseudo-tied unit into MISO all communications from a PJM TO to MISO shall include PJM

• For pseudo-tied units into PJM, all pseudo-tie generation instructions should come from PJM o MISO RC and MISO TOPs can direct units to take action in extreme

emergency conditions to preserve public safety, personnel safety, and/or prevent equipment damage.

• For pseudo-tied units into MISO, all pseudo-tie generation instructions should come from MISO o PJM RC and PJM TOs can direct units to take action in extreme

emergency conditions to preserve public safety, personnel safety, and/or prevent equipment damage.

3.4. Outage Coordination: • PJM and MISO pseudo-tie generation planned outages are submitted in

advance with respect to PJM and MISO outage submittal rules. • MISO and PJM respective transmission outages shall be coordinated with

PJM and MISO respective pseudo-tied generator outages with respect to PJM and MISO outage submittal rules.

• PJM and MISO shall work together to accommodate all outages, however, as a last resort, conflicting outages will be rescheduled based on First-In, Last-Out approach.

• M2M Flowgate creation and unit commitment needs for planned outages will be addressed as noted in the processes above. o PJM and MISO will make every effort to proactively create flowgates

resulting from planned outages for inclusion in respective Day-Ahead Markets.

o PJM and MISO should avoid the use of proxy flowgates. Limited use is outlined in Section 8.1.5 of the CMP.




Page 5 of 5

4. Revision History

Issue No Reason for Issue Revised By Issue Date

Effective Date

Annual Review

Date RTO-PTU-OP1-r0 Procedure Creation Andy Witmeier 2/15/16 2/8/16 9/1/2016

5. Procedure Approvals

Revision: r0 Name Title Approval Date

MISO Approver: Andy Witmeier Sr. Manager Central Region Reliability Coordination 2/2/2016

PJM Approver: Phil D’Antonio Manager, Reliability Engineering 2/8/2016