On July 15, 2010, FERC conditionally approved the New York Independent System Operator, Inc.’s (“NYISO”) report on solutions to the Lake Erie region loop flow problems. 

The Commission previously found that no market manipulation had occurred during specified transactions occurring in 2008 where power was scheduled into PJM Interconnection, L.L.C. (see July 24, 2009 edition of the WER).  The Commission ordered market operators in New York and the surrounding regions to come up with long-term solutions to the “market distortions and increased congestion” as a result of these transactions.  The Commission approved NYISO’s temporary solutions on August 21, 2008, and on July 16, 2009, required NYISO to continue work on solutions. 

NYISO developed the report along with other Regional Transmission Organizations, Independent System Operators and the North American Electric Reliability Corporation.  It includes different items to address loop-flow concerns, installation of Michigan-Ontario phase angle regulators (“PARs”) and long-term market solutions.  The report indicates that the PARs can alter flow paths to better follow the contract path and influence the amount of circuitous flows.  The report also deals with the issue of cost allocation for the Michigan-Ontario PARs and states that NYISO and its stakeholders do not want to pay the International Transmission Company’s (“ITC”) costs for the PARs as they were not the result of a Commission-approved regional planning process. ITC is in charge of installing the Michigan-Ontario PARs. In its conditional approval, the Commission seeks additional information from ITC about how it would operate the PARs without this funding from parties outside ITC. 

The report also recommends implementing four market initiatives: (1) the buy-through congestion proposal; (2) the congestion management/market-to-market coordination proposal; (3) interface pricing revisions; and (4) enhanced interregional transaction coordination.  Commenters challenged the buy-through congestion proposal as an “all or nothing” proposal that would leave market participants without the ability to limit congestion payments to keep their transactions flowing.  The buy-through congestion proposal is the subject of further Commission inquiry. 

The Commission conditionally accepted the NYISO report, with the condition that the parties answer questions set forth by the Commission regarding PAR funding, Buy-Through Congestion and other issues.

A copy of the Commission’s order can be found here.