On August 27, 2020, FERC directed further briefing and established a technical conference in the proceedings arising from two complaints in which American Electric Power Service Corporation (“AEP”) and the City of Prescott, Arkansas each alleged that they were subject to overlapping or duplicative congestion charges on load that is pseudo-tied out of the Midcontinent Independent System Operator, Inc. (“MISO”) into Southwest Power Pool, Inc. (“SPP”). FERC’s August 27 order responded to additional briefing by the parties ordered in September 2019, and held that even after the additional briefing, the record was inadequate to determine whether: (1) mechanisms including virtual transactions, Financial Transmission Rights, and firm flow entitlements are sufficient to remedy any potential for overlapping congestion charges; or (2) the Regional Transmission Organizations (“RTOs”) must make changes to their Joint Operating Agreement (“JOA”) and/or their individual tariffs to remedy the causes of overlapping or duplicative congestion charges. The August 27 order therefore required additional briefing, and directed Commission staff to hold a technical conference after further briefs are filed.
As reported in the September 25, 2019 edition of the WER, in a pair of orders issued in September 2019, FERC granted in part separate complaints filed by AEP and the City of Prescott, finding that, to the extent that pseudo-tie transactions between MISO and SPP are subject to overlapping or duplicative congestion charges by the RTOs, such charges are unjust, unreasonable, unduly discriminatory, or preferential. However, FERC found that it did not have sufficient information in the record before it to identify the provisions or practices that may cause these charges, or to discern the extent to which such charges had been assessed. FERC therefore ordered additional briefing on these issues (“Briefing Order”).
In response to the Briefing Order, MISO and SPP argued that, although the potential for congestion overlap on pseudo-ties between MISO and SPP exists, market mechanisms including virtual transactions, Financial Transmission Rights, and firm flow entitlements are available to counter any overlapping congestion charges on pseudo-tied load. By contrast, AEP argued that no market products can eliminate the overlapping congestion charges. AEP therefore requested that FERC direct MISO and SPP to amend their tariffs to remedy overlapping congestion charges and refund the duplicative charges.
After concluding that the record was still inadequate, FERC’s August 27 order required additional briefing to, among other things:
- Further explain the scope of overlapping congestion charges at the MISO/SPP interface;
- Provide step-by-step hypothetical or historical examples of when an assessment of overlapping congestion charges to pseudo-tied loads and resources would occur, and how such loads and resources can avail themselves of offsetting mechanisms to eliminate such overlapping charges;
- Explain in detail why the RTOs’ existing offsetting mechanisms might be inadequate to address an increase in the number and volume of pseudo-ties, and at what increased level of number and volume of current offsetting mechanisms would become inadequate;
- Explain whether the number and volume of pseudo-ties between MISO and SPP are relevant to determining whether additional remedies are needed to address the potential for overlapping congestion charges;
- Explain whether grandfathered treatment of certain pseudo-tied resources is a viable solution to remedy duplicative congestion charges; and
- Explain whether there are additional changes that MISO and SPP could implement to eliminate the potential for overlapping pseudo-tie congestion charges at the MISO/SPP interface.
FERC also directed Commission staff to hold a technical conference after further briefs are filed to provide an opportunity for staff and the parties to discuss the responses to the questions in the Briefing Order and the responses to the questions in the August 27 order.
FERC’s August 27 order can be found here.