On October 6, 2017, FERC approved the New York Independent System Operator, Inc. (“NYISO”) and PJM Interconnection, L.L.C.’s (“PJM”; together with NYISO, “RTOs”) revisions to their Joint Operating Agreement (“JOA”), and NYISO’s revisions to its Market Administration and Control Area Services Tariff (“Tariff”), that address interchange schedule and Market-to-Market (“M2M”) coordination at the ABC and JK Interfaces on the border of northern New Jersey and southeastern New York.  Specifically, FERC found that the RTOs’ proposal to implement a wheeling arrangement over a newly formed PJM-NY AC Proxy Bus and to establish an Operational Base Flow (“OBF”) over the Interfaces was just and reasonable. Prior to the RTOs’ filing, the JOA for M2M coordination of the ABC and JK Interfaces included operating protocols established pursuant to a settlement agreement.  The settlement agreement also included firm transmission service agreements (“TSAs”) that permitted Consolidated Edison Company of New York (“ConEd”) to wheel power over the JK Interface in northern New Jersey for delivery back to ConEd over the ABC Interface to southeastern New York.  On April 28, 2016, ConEd notified PJM that it elected not to exercise the rollover provisions of the TSAs, thereby terminating the wheeling arrangement and rendering the operating protocols obsolete.

On January 31, 2017, as a result of the termination of the wheeling arrangement, the RTOs filed proposed revisions to the JOA, and NYISO filed proposed revisions to its Tariff, to combine the ABC and JK Interfaces with the 5018 transmission line and Western intertie into an aggregate PJM-NY AC Proxy Bus.  According to the RTOs, this wheeling arrangement would allow the RTOs to manage congestion over the interchange by reviewing offers and scheduling transactions over the PJM-NY AC Proxy Bus.  In addition, due to natural system flows that occur over the ABC and JK Interfaces, the RTOs proposed to include an OBF over the Interfaces when scheduling interchange and determining target flows.  In doing so, the RTOs argued that the OBF is needed to resolve short-term system reliability issues in northern New Jersey and to maintain historical interface transfer limits.

In its order, FERC found that the RTOs’ proposal is just and reasonable.  In particular, FERC found that the proposed revisions will manage congestion and enable efficient economic interchange between northern New Jersey and southeastern New York through interface pricing based on the PJM-NY AC Proxy Bus and M2M coordination at the ABC and JK Interfaces.  Moreover, FERC found that the OBF would resolve short-term reliability issues in northern New Jersey, and that without the proposed revisions, congestion issues and reliability concerns would require the RTOs to reduce economic transfer capability between the RTOs.  Additionally, in rejecting various protests to the proposal, FERC found, among other things, that: (1) the OBF is just and reasonable because it is necessary for the implementation of aggregate interchange schedules across the PJM-NY AC Proxy Bus and because it will enable efficient economic interchange; (2) the OBF should be a daily requirement, so that market participants can predict when the OBF will take effect; (3) the OBF will not entitle ConEd to firm transmission service or rollover rights; and (4) the RTOs’ proposal to set a single price for the PJM-NY AC Proxy Bus is just and reasonable.

FERC’s order can be found in Docket No. ER17-905.  A copy of FERC’s order is available here.