Proposal for Pro Forma Pseudo-Tie and Dynamic Schedule Agreements

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1 Proposal for Pro Forma Pseudo-Tie and Dynamic Schedule Agreements Jacqulynn Hugee Associate General Counsel Markets and Reliability Committee June 21, 2017

2 Why Do We Need Pro Forma Agreement? Ensures compliance with all NERC and FERC requirements, i.e. no tagging Ensures all parties involved know who is responsible for ACE, operational control and re-dispatch Will allow for uniformity among the Pseudo-Tie and Dynamic Schedule requirements Increase awareness, transparency, and efficiency to stand up a robust Pseudo-Tie and Dynamic Schedule implementation process 2

3 Here s Where We Are PJM does not have a FERC-approved standard agreement for use to request and implement a Pseudo-Tie or Dynamic Schedule The lack of a standard agreement has resulted in multiple variations of a form agreement for each different Pseudo-Tie and Dynamic Schedule There is a lack of uniformity among the requirements for the Pseudo-Ties and Dynamic Schedules Allows for the potential for confusion as to the appropriate operating procedure for Pseudo-Ties and Dynamic Schedules when they may all vary slightly Difficulty obtaining agreement with other BAs on terms of Pseudo-Tie agreement 3

4 Here s Where We Need to Be One standard pro-forma Pseudo-Tie agreement approved by FERC Addresses congestion management with entities for which PJM does not have congestion management agreements Ensures impacts are recognized in market flows, where applicable, utilizing CMP market flow calculation methodology Requirement to honor firm status for the Pseudo-Tie transfer Requirement to utilize IDC re-dispatch mechanism to control impacts Standard set of applicable rules for all Pseudo-Ties Require agreement by every party involved in the electrical movement of energy from outside of PJM into PJM pursuant to the Pseudo-Tie, including PJM, Native BA, Intermediate BA, Other RCs and Other TOPs 4

5 Here s Where We Need to Be One standard pro-forma Dynamic Schedule agreement approved by FERC Standard set of applicable rules Transparency up front regarding requirements Modeled after pseudo-tie agreement, but changes made that are specific to dynamic schedules versus pseudo-ties Require agreement by PJM and entity seeking to dynamically schedule Only require Native BA to acknowledge aware of dynamic schedule since Native BA is still operationally responsible for the dynamically scheduled resource 5

6 Impact Process may take longer because agreement by several parties aside from PJM and company are required PJM will not approve any Pseudo-Ties and Dynamic Schedules that do not have sign-off by all required entities All impacted parties know in advance of the requirements and presumably this will lead to better decision-making with respect to whether to pursue a Pseudo-Tie or Dynamic Schedule 6

7 Reimbursement Agreement PJM has an existing form of Pseudo-Tie reimbursement agreement that requires a deposit for studies that need to be completed before PJM can determine whether a requested Pseudo-Tie into PJM can be implemented The reimbursement agreement should be in the PJM Tariff The form of agreement has been revised to make it more robust Added administrative fee to cover review costs Clarified process Clarified invoice and late payment provisions Require FERC filing and approval 7

8 Governing Agreement Revisions Tariff, Att. K-Appendix and Operating Agreement, Schedule 1, section 1.12 need to be revised to: require execution of pseudo-tie agreement for pseudo-ties make clear that PJM is not required to implement a pseudotie, i.e. PJM reserves the right to deny the request to pseudotie a resource if it doesn t satisfy the applicable criteria 8

9 Relevant Happenings Since March 2017 MRC PJM commenced discussions with MISO regarding PJM MISO JOA revisions for pseudo-tie implementation and operation; PJM and MISO are very close to agreement on JOA revisions PJM offered to discuss with NYISO revisions to PJM NYISO JOA for pseudo-tie implementation and operation substantive discussions have not commenced FERC issued two deficiency notices MISO pro forma pseudo-tie agreement; MISO filed responses PJM external capacity resource rule changes; PJM requested additional time to file responses 9

10 Operating Committee First read December 2016 Second read January 2017 Vote February 2017 Markets and Reliability Committee First read January 2017 Second read February 2017 Third read March 2017 Fourth read and vote June 2017 Members Committee Vote July 2017 FERC Filing July/August/September 2017 Timing Timing depends on when PJM and MISO are able to come to agreement on JOA revisions, and PJM obtains approval for any additional Tariff or OA revisions, if any 10