On October 3, 2017, FERC conditionally approved proposed revisions to the Midcontinent Independent System Operator, Inc. (“MISO”) and PJM Interconnection, L.L.C. (“PJM”) Joint Operating Agreement (“JOA”) to create a new category of small interregional transmission projects, termed target market efficiency projects (“TMEPs”), intended to address congestion along both regional transmission organizations’ (“RTOs”) seams. FERC approved the RTOs’ proposal, but required further revisions to ensure that the RTOs’ stakeholders receive adequate information regarding how each RTO evaluates proposed TMEP projects and determines their value as a solution to identified congestion points. In a concurrent order released the same day, FERC approved MISO’s proposed plan for the assignment of TMEP costs within its region.

Originally, the proposed revisions to the JOA were conditionally accepted by delegated letter order during the period when FERC lacked a quorum. The revisions were suspended for a period, were subject to refund and the approval was contingent upon a further FERC Order once a quorum was restored. The delegated order deferred action on protests and comments made regarding these revisions until that time.

Now with the requisite quorum, FERC issued its formal order accepting the proposed JOA revisions. In the order, FERC found that the creation of the TMEPs was consistent with the openness, coordination, and transparency rules in Order No. 890; however, FERC stated that the revisions were missing one key detail: there was no guarantee that stakeholders would receive information about why the RTOs decided to recommend or not recommend a TMEP to their board of directors. FERC wrote that stakeholders needed this data in order to “play a meaningful role in the TMEP process.” FERC added that “failure to present this information…may lead to more frequent after-the-fact disputes regarding the TMEP planning process.”

FERC ordered the RTOs to make a compliance filing proposing additional edits to the JOA adding the requirement that MISO and PJM each provide supporting explanations as to why: (1) they did not evaluate whether a potential TMEP could economically address congestion on a particularly congested flowgate and (2) a potential TMEP that was evaluated was not recommended to the RTOs’ respective board of directors and to the Inter-Regional Planning Stakeholder Advisory Committee. Further, FERC required clarifying edits to the JOA ensuring that MISO and PJM will provide stakeholders with additional information regarding how they evaluate congestion points and whether a potential TMEP would be a viable solution to address such congestion.

In its concurrent order, the Commission approved MISO’s plan to allocate its share of the costs of a TMEP to transmission pricing zones based on MISO’s contributions to the congestion that would be relieved by the project. MISO’s allocation plan also guarantees that no transmission pricing zone will be charged for benefits if those benefits are less than or equal to $5,000 or less than 1% of MISO’s share of the JOA’s costs. FERC found that MISO’s allocation method and charging scheme were just and reasonable.

The order addressing the MISO-PJM JOA can be found here. Approval of MISO’s cost allocation proposal can be found here.