On February 5, 2018, FERC conditionally accepted a proposal by the PJM Interconnection, L.L.C. (“PJM”) to amend its Open Access Transmission Tariff (“OATT”) and Amended and Restated Operating Agreement (“Operating Agreement”) to accommodate additional pseudo-tied and dynamically scheduled resources into the PJM region. FERC accepted the proposal and provided an effective date of November 9, 2017, provided that PJM submits a compliance filing addressing FERC’s limited concerns in the order.

In its proposal, which PJM submitted on August 11, 2017 and amended on December 7, 2017, PJM described its efforts in recent years to incorporate dynamically transferred resources that are physically located outside of its system. As PJM explained, dynamic transfers include dynamic schedules and pseudo-ties — mechanisms whereby, in relevant part, the output of a generator located in an external balancing authority is transferred into PJM and under PJM’s operational and dispatch control (a “pseudo-tied” resource) or under the external balancing authority’s operation and dispatch control (“dynamic scheduled” resource). According to PJM, as part of broader capacity market reforms in 2015, PJM saw pseudo-tied resources increase from 560 MW to 5,577 MW, which presented operational challenges, especially for resources that are physically located far away from PJM’s system. PJM filed its proposal to improve the dynamic transfer process and more clearly delineate the roles and responsibilities of all parties involved, particularly those attempting to pseudo-tie resources into PJM.

In particular, PJM’s proposal revises its OATT and Operating Agreement to (1) clarify that PJM is not required to permit a dynamic schedule or pseudo-tie just because one has been requested; and (2) require that a mutually agreeable interregional congestion management agreement is in place before PJM will permit a dynamic transfer. PJM also proposed two pro forma agreements to help ensure uniformity in the pseudo-tie process as well as a pro forma reimbursement agreement to address PJM’s recovery of costs associated with studying and modeling a pseudo-tie request.

Various parties intervened in support and protest of PJM’s proposal. Of note, the New York Independent System Operator (“NYISO”) complained that PJM’s pro forma agreements would result in inefficient scheduling and was incompatible with a joint operating agreement signed by both PJM and NYISO. Other parties challenged proposed language allowing PJM to terminate or suspend a pseudo-tied resource. Another party, Cogentrix Energy Power Management, LLC (“Cogentrix”), pointed out that certain defined terms within the Reimbursement Agreement were unclear.

FERC largely rejected the challenges raised by the intervening parties. In response to NYISO’s concerns, FERC found that PJM’s filing placed no burdens on NYISO or any other neighboring balancing authority and that other seams problems could be addressed in the future. FERC also rejected complaints that the termination and suspension provisions were unjust and unreasonable because, as FERC found, those provisions appropriately provided PJM with the ability to address system reliability or compliance concerns related to pseudo-tied resources. FERC underscored PJM’s commitment that such suspension or termination would not be used absent reliability concerns.

FERC otherwise accepted PJM’s proposal as just and reasonable subject to the condition that, within 30 days of the order, PJM revise and refile its Reimbursement Agreement to address the confusion noted by Cogentrix.

A copy of FERC’s order can be found here.