On March 19, 2019, FERC conditionally accepted the Midcontinent Independent System Operator, Inc.’s (“MISO”) proposed tariff revisions to: (1) clarify how market participants with pseudo-ties outside of MISO can use virtual transactions to align Financial Transmission Rights (“FTRs”) and transmission usage charges; and (2) reduce the administrative charges assessed to market participants with a pseudo-tie of generation or load out of MISO.

In its proposal, MISO explained that the proposed revisions would clarify that market-participants with pseudo-ties can use day-ahead virtual transactions and align transmission usage charges with FTRs and reduce Schedule 17 administrative fees for market participants so that market participants with pseudo-ties out of MISO will be charged for administrative costs similarly to market participants using physical transactions. The proposed revisions followed a July 31, 2018 FERC order that accepted certain revisions to the MISO and PJM Interconnection, L.L.C. (“PJM”) Joint Operating Agreement. The revisions to the Joint Operating Agreement were a step in MISO’s and PJM’s stated goal of addressing the market and reliability challenges posed by the increased number of resources that have sought to pseudo-tie from MISO into PJM.

In its order, FERC found the revisions, with some minor modifications, just and reasonable and not unduly discriminatory or preferential, and FERC largely rejected challenges raised by intervening parties. In doing so, FERC found that the proposed revisions would reduce administrative fees for market participants with resources or load pseudo-tied out of MISO when they use virtual transactions to hedge against real-time congestion, such that these resources would be charged similarly to market participants using physical transactions. Furthermore, FERC found that MISO’s proposal clarified that pseudo-tied resources could use virtual transactions as a hedging mechanism like other market participants.

Some intervening parties protested what they saw as MISO’s inclusion of pseudo-tie transactions in the types of interchange schedules. However, in one of MISO’s deficiency responses, it stated that the challenged section of the MISO revisions was not intended to include pseudo-ties as a type as interchange schedule but was rather intended to clarify that market participants with pseudo-tie transactions should coordinate the pseudo-tie transactions with MISO. FERC accepted MISO’s explanation and directed MISO to amend its proposal in order to clarify that pseudo-tie transactions are not included as interchange schedules.

FERC also found against claims that a rebate mechanism would be a more appropriate mechanism to eliminate the overlapping congestion charge issues. FERC stated that it was not obligated to consider preferred alternative solutions, and that the revisions proposed by MISO did not make the MISO revisions unjust and unreasonable or unduly discriminatory or preferential.

The proposed revisions were given an effective date of March 1, 2019, provided that MISO submits a compliance filing addressing FERC’s raised concerns within 30 days of the order.

FERC’s order is available here.