On September 10, 2024, FERC issued an Order denying two complaints. The first complaint was filed on January 23, 2023 by Montana-Dakota Utilities Company (“MDU”) against Midcontinent Independent System Operator, Inc. (“MISO”) and Southwest Power Pool, Inc. (“SPP”). The second complaint was filed on March 8, 2024 by MISO against SPP. Both complaints stem from the same underlying dispute relating to the application of the market-to-market coordination process under the MISO-SPP Joint Operation Agreement (“JOA”) to the Charlie Creek Flowgate, a transmission facility in North Dakota.
SPP and MISO’s JOA addresses seams issues which include, among other things, Congestion Management Processes (“CMP”) and Interregional Coordination Processes (“ICP”). The CMP establishes a process for coordinating flowgates between SPP and MISO. It also details a method for calculating new market flows and firm allocation rights, which are utilized in market-to-market settlements as firm flow entitlements. Under the CMP, an operating entity will perform sensitivity studies to identify which flowgates are significantly affected by the flows within the operating entity’s control zones. The ICP enhances the coordination process provided in the CMP by, among other things, specifying how MISO and SPP will display shadow prices (i.e., the economic value of a binding constraint) to identify the most cost-effective option for reducing congestion in the MISO and SPP real-time and day-ahead energy markets. The Charlie Creek Flowgate, which is owned and operated by the Western Area Power Administration (“WAPA”), is a modeling representation of the Charlie Creek to Patent Gate 345 kV line and the Charlie Creek to Watford City 230 kV line near Williston, North Dakota. The Charlie Creek to Patent Gate line serves as the main import transmission path from the south, facilitating the transfer of electricity to meet the area’s load demands. Under the market-to-market coordination process, SPP acts as the monitoring RTO and conducts monthly reviews to determine whether to retain the Charlie Creek Flowgate in the market-to-market coordination. In July 2019, MISO and SPP classified the Charlie Creek Flowgate as a market-to-market flowgate under section 1.1 of the ICP.
In September 2023, MISO requested the termination of market-to-market coordination on the Charlie Creek Flowgate. On October 12, 2023, MISO formally requested a market-to-market coordination resettlement to recover the market-to-market coordination charges it paid to SPP starting from April 1, 2023. On November 14, 2023, SPP rejected MISO’s requests, and on December 22, 2023, MISO initiated a formal dispute under the JOA.
On January 23, 2024, MDU filed a formal complaint against SPP and MISO regarding the market-to-market coordination of the Charlie Creek Flowgate. According to MDU’s complaint, in February 2023, the Atlas Power Data Center (“Atlas Load”) was commissioned in Williston, North Dakota, which is in the Northwest North Dakota region (“NWND”) Load Pocket. MDU claims that, at the time of the commissioning, the Atlas Load was about 90 MW, but, by April 2023, the Atlas Load had grown to about 200 MW. MDU asserts that by August 2023, it began experiencing a spike in congestion costs from both SPP and MISO, which MDU claims was a result of the addition of the Atlas Load and the market-to-market coordination. MDU asserts that MISO and SPP breached the JOA and SPP Open Access Transmission Tariff by engaging in unwarranted market-to-market coordination on the Charlie Creek Flowgate. As a remedy, MDU requested FERC issue an order that: (1) directs SPP and MISO to stop market-to-market coordination on the Charlie Creek Flowgate; (2) directs MISO to refund to MDU duplicative payments for market-to-market coordination on the Charlie Creek Flowgate; and (3) directs SPP to refund payments that MISO made to SPP for market-to-market coordination on the Charlie Creek Flowgate. Additionally, MDU argues that ICP section 1.3.4 is unjust and unreasonable because it allows a JOA party to demand continued market-to-market coordination of a flowgate, even when such coordination is ineffective in managing congestion on that flowgate.
On March 8, 2024, MISO initiated a complaint against SPP confirming that its complaint arises from the same underlying dispute as MDU’s. According to MISO, although the Charlie Creek Flowgate continued to pass Study 1 and Study 2 based on generation units owned and operated by MDU, SPP violated the JOA by conducting improper market-to-market coordination. MISO requested FERC issue an order directing SPP and MISO to stop market-to-market coordination on the Charlie Flowgate, and direct SPP to refund payments that MISO made to SPP for market-to-market coordination beginning on April 1, 2023. Additionally, similar to MDU, MISO argued that ICP section 1.3.4 was unjust and unreasonable, and asked FERC to issue an order terminating the market-to-market coordination and directing SPP and MISO to develop just and reasonable replacement provisions.
In its Order, FERC denied both complaints citing MDU and MISO’s failure to satisfy their respective burdens under FPA section 206. First, in addressing MDU and MISO’s claim that SPP conducted improper market-to-market coordination on the Charlie Flowgate, FERC found that MDU and MISO failed to demonstrate that SPP violated the ICP given that there is no requirement for determining the eligibility of a market-to-market flowgate. Additionally, FERC declined to address MDU and MISO’s arguments that market-to-market coordination on the Charlie Creek Flowgate addresses a local issue because under the ICP there is no requirement for determining the eligibility of a market-to-market flowgate.
Second, FERC disagreed with MDU and MISO’s assertion that market-to-market coordination of the Charlie Creek Flowgate is no longer effective, inconsistent with good utility practice, and violates the JOA. Citing Charlie Creek Flowgate passing Study 1, Study 2, and meeting the criteria of ICP section 1.1, FERC found that MDU and MISO failed to demonstrate that that market-to-market coordination is inconsistent with exercising good utility practice under the JOA. Third, FERC found that MDU failed to demonstrate that it incurred duplicate congestion charges as a result of improper of market-to-market coordination, citing Charlie Creek Flowgate passing Study1, Study 2, and meeting the criteria under ICP section 1.1. Further, FERC found that MDU failed to demonstrate that SPP and MISO violated ICP section 3.4. Lastly, FERC disagreed with MDU and MISO arguments that ICP section 1.3.4 is unjust and unreasonable. Instead, FERC found that section 1.3.4 of the ICP provides SPP and MISO reasonable discretion on an equal basis to mutually agree to add or remove market-to-market flowgates without any conditions or requirements. Ultimately, FERC concluded that MDU and MISO have not adequately demonstrated that SPP acted unreasonably in declining to grant consent to remove the Charlie Creek Flowgate from the market-to-market coordination process.
A copy of FERC’s Order, issued in Docket No. EL24-61-000, can be accessed here.