On May 16, 2019, FERC issued four orders on related complaints against the Midcontinent Independent System Operator, Inc. (“MISO”) by Tilton Energy LLC (“Tilton”), American Municipal Power, Inc. (“AMP”), and Dynegy Marketing and Trade, LLC/Illinois Power Marketing Company (“Dynegy Companies” or “Dynegy”), as well as a complaint against PJM Interconnection, L.L.C. (“PJM”) by AMP and the Northern Illinois Municipal Power Agency (“NIMPA”). The complaints alleged that MISO’s and PJM’s assessment of congestion and other costs for resources physically located in MISO but pseudo-tied into PJM violated MISO’s and PJM’s Tariffs by imposing duplicative charges. The complaints also alleged that MISO and PJM subjected the complainants to unjust and unreasonable duplicative congestion charges. FERC’s orders denied arguments that MISO’s and PJM’s assessment of congestion and other charges violated their respective Tariffs, but found that MISO and PJM may have assessed duplicative congestion charges prior to FERC’s acceptance of revisions to the MISO-PJM Joint Operating Agreement (“JOA”) to address such charges beginning in July 2018. After consolidating the proceedings, FERC’s orders established hearing and settlement procedures to determine appropriate refunds.

Tilton and AMP, which own generating facilities physically located in MISO but pseudo-tied into PJM, brought complaints against MISO in August and December 2016, respectively. The complaints alleged that MISO’s assessment of congestion costs on resources pseudo-tied from MISO to PJM is unjust, unreasonable, and unduly discriminatory because it results in duplicative charges for congestion costs and administrative fees as well as real-time congestion costs that would not be assessed if the generation were physically located within PJM. Tilton and AMP each argued that they should not be charged for congestion and administrative costs by MISO because they do not participate in MISO’s markets. They requested that FERC require MISO to cease assessing these charges and to refund all congestion charges assessed by MISO since Tilton and AMP established pseudo-ties with PJM.

The Dynegy Companies filed a similar complaint against MISO in March 2017, alleging that MISO’s imposition of charges for congestion and losses on Dynegy resources pseudo-tied into PJM resulted in duplicative congestion charges. The Dynegy Companies requested that FERC order MISO to refund all duplicative congestion charges, effective the date that Dynegy filed its complaint, and that FERC establish settlement and hearing procedures for purposes of calculating refunds.

Finally, in December 2016 and January 2017 respectively, NIMPA and AMP each filed a complaint against PJM alleging that PJM deviated from the provisions of its Tariff by assessing congestion charges on facilities physically located in MISO but pseudo-tied into PJM starting at the nodal point of their facilities within the MISO region, rather than at the interface between MISO and PJM. NIMPA and AMP argued that this method of calculating congestion charges is unjust, unreasonable, and unduly discriminatory because it results in duplicative congestion costs associated with overlapping transmission service from MISO into PJM, and requested that FERC order PJM to refund all improperly calculated congestion charges.

FERC’s May 16 orders denied the allegations that MISO’s and PJM’s assessment of congestion and other costs for pseudo-tied resources violated the Regional Transmission Organizations’ respective Tariffs. FERC found that MISO’s assessment of congestion and other costs to Tilton, AMP, and Dynegy did not violate the MISO Tariff, explaining that Tilton, AMP, and Dynegy are MISO Transmission customers taking service under Schedule 7 (Long-Term Firm Point-to-Point Transmission Service) to facilitate their pseudo-tie transactions, and that they were thus required to pay all applicable charges set forth in MISO’s Tariff, including congestion, administrative, and loss charges. FERC also noted that pseudo-tie transactions that utilize MISO’s transmission system cause real-time congestion costs, which are properly settled as part of the MISO real-time market. With respect to the complaints against PJM, FERC found that PJM’s calculation of congestion charges from the nodal point within MISO for pseudo-tied resources does not violate the PJM Tariff, explaining that the nodal point, wherever it may be, is a permissible point for PJM to begin calculating congestion charges.

While FERC found that both the MISO-PJM JOA and other provisions of MISO’s and PJM’s Tariffs were just and reasonable, FERC agreed that MISO and PJM may have assessed duplicative congestion charges prior to FERC’s acceptance of revisions to the MISO-PJM JOA that addressed duplicative congestion charges beginning in July 2018. FERC therefore granted Tilton’s, AMP’s, and Dynegy’s complaints against MISO in part, and also granted NIMPA’s and AMP’s complaint against PJM in part. FERC then consolidated the proceedings and set the matter for hearing and settlement procedures to determine the appropriate refunds for the potential congestion overcharges, with refunds to be effective the date each complaint was filed.

FERC’s order on Tilton Energy’s complaint against MISO is available here.

FERC’s order on AMP’s complaint against MISO is available here.

FERC’s order on the Dynegy Companies complaint against MISO is available here.

FERC’s order on NIMPA’s and AMP’s complaints against PJM is available here.