State Of California's Energy Bill

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1 2750 Monroe Boulevard Valley Forge Corporate Center Audubon, PA James M. Burlew Counsel Telephone: (610) Fax (610) Address: December 15, 2015 The Honorable Kimberly D. Bose Secretary Federal Energy Regulatory Commission 888 First Street, N.E. Room 1A Washington, D.C Re: PJM Interconnection, L.L.C., Docket No. ER Coordinated Transaction Scheduling Between Midcontinent Independent System Operator, Inc. and PJM Interconnection, L.L.C. Dear Secretary Bose: Pursuant to Section 205 of the Federal Power Act 1 ( FPA ) and Part 35 of the regulations of the Federal Energy Regulatory Commission ( FERC or Commission ), 2 PJM Interconnection, L.L.C. ( PJM ) hereby submits to the Federal Energy Regulatory Commission ( Commission ) a proposal to implement Coordinated Transaction Scheduling ( CTS ) between PJM and the Midcontinent Independent System Operator, Inc. ( MISO ), comprising proposed revisions to (1) the Joint Operating Agreement between MISO and PJM ( JOA ), (2) Schedule 1 of the Amended and Restated Operating Agreement of PJM Interconnection, L.L.C. ( Operating Agreement ), and (3) the parallel provisions of Attachment K-Appendix of the PJM Open Access Transmission Tariff ( Tariff ). 3 PJM respectfully requests that the Commission issue an order accepting these proposed revisions by no later than April 15, 2016, approximately 120 days from the date of this filing. PJM requests an effective date of March 1, To allow for an 1 16 U.S.C. 824d C.F.R. Part The revisions to the JOA proposed herein are being filed separately by both PJM and Midcontinent Independent System Operator, Inc. ( MISO ) in their respective etariff systems.

2 Kimberly D. Bose, Secretary December 15, 2015 Page 2 implementation date later than 120 days from the date of this filing, PJM further requests a waiver of the applicable notice requirements of Section 35.3(a)(1) of the Commission s regulations. 4 The implementation of CTS between MISO and PJM will increase the efficiency of transactions across the MISO-PJM border and builds on the successful experience to date of implementation of CTS between PJM and the New York Independent System Operator, Inc. ( NYISO ). I. BACKGROUND The MISO and PJM systems are interconnected through various facilities under the operational control of MISO and PJM. Attachment 3 (Interregional Coordination Process) of the JOA governs coordination between the two Regional Transmission Organizations ( RTOs ) to maintain joint system reliability and promote efficient market operations across the MISO-PJM interface. NYISO and PJM developed and implemented CTS between the NYISO and PJM systems in 2013 and During the same time period, MISO and PJM explored a similar initiative to develop an interchange optimization proposal for consideration by MISO and PJM stakeholders. In April 2014, MISO and PJM held the first of three joint stakeholder meetings to discuss CTS C.F.R. 35.3(a)(1). 5 On December 13, 2013, in Docket No. ER , PJM submitted to the Commission proposed tariff revisions to implement CTS with NYISO. On February 20, 2014, the Commission issued an order conditionally accepting the proposed tariff revisions, subject to further information and compliance filings. PJM submitted the required information filing on July 10, 2014 in Docket No. ER and the required compliance filing on October 16, 2014 in Docket No. ER CTS between PJM and NYISO went into effect on November 4, 2014, pursuant to a letter order issued on November 19, 2014 in Docket No. ER MISO and PJM held joint stakeholder meetings, or workshops, regarding CTS on April 18, 2014, June 10, 2014, and November 11, 2014.

3 Kimberly D. Bose, Secretary December 15, 2015 Page 3 The purpose of CTS is to improve overall interchange scheduling efficiency between MISO and PJM, thereby increasing price convergence at the market boundaries. Specifically, CTS improves scheduling efficiency by: 1. allowing market participants to submit a single bid for a real-time interchange transaction that is used by both RTOs in a coordinated clearing process that enables market participants to access the least-cost source of power within the two regions and helps lower the combined energy production cost of the two RTOs; 2. reducing net interchange schedules from the high-priced RTO to the low-priced RTO (i.e., counter-intuitive flow) by explicitly incorporating projected price differences between the two markets into interregional scheduling decisions; and 3. increasing the utilization of available transfer capability between the RTOs by decreasing a market participant s economic risk associated with having two bids for a single interchange transaction between the RTOs economically evaluated separately by each RTO. CTS will be an optional scheduling product. Upon CTS implementation, market participants will have multiple scheduling options across the MISO-PJM interface, as follows: (1) intra-hourly traditional price-taking locational marginal price ( LMP ) bids and offers, including wheel-through transactions (existing); (2) hourly evaluations of traditional dispatchable LMP bids and offers (existing); and (3) intra-hourly evaluations of CTS Interface Bids (new). 7 A CTS Interface Bid will consist of offers to schedule coordinated buy-sell transactions across the MISO-PJM interface when projected price differences between the MISO 7 Item numbers one and two are scheduling products currently available to market participants in PJM.

4 Kimberly D. Bose, Secretary December 15, 2015 Page 4 and PJM Balancing Authority Areas are greater than the amounts specified in the bid. Scheduling processes will remain the same, but ramp will be modified to accommodate the submission of interface bids. A CTS Interface Bid will have up to ten different price and MW quantity pairs for each 15-minute scheduling interval of the clock hour. CTS Interface Bids must be submitted 75 minutes before the start of the scheduling interval. Intra-hourly schedules will be established every 15 minutes for the target time 30 to 45 minutes from when the system information is collected by the dispatch software. CTS Interface Bids will be evaluated, and transactions scheduled, based on the projected price differences between the MISO and PJM Balancing Authority Areas. The proposed scheduling process will leverage PJM s existing Intermediate Term Security Constrained Economic Dispatch ( ITSCED ) application, which has a two-hour forecasting capability. Projected price information from PJM s most recent ITSCED run will be used to establish both intra-hour schedules and forward-looking advisory schedules. Information from the advisory schedules will be used in subsequent PJM ITSCED runs, forming a feedback loop that ensures close coordination of interchange schedules across the MISO-PJM interface. MISO is developing and creating an application that will forecast interface prices two hours in advance and clear CTS offers ( MISO CTS Engine ). Similar to PJM s ITSCED, the MISO CTS Engine will establish both intra-hour schedules and forward-looking advisory schedules. CTS offers and information from the advisory schedules will be used in subsequent MISO CTS Engine runs. MISO will post forecasted interface prices for comparison with MISO real-time, ex-post LMPs.

5 Kimberly D. Bose, Secretary December 15, 2015 Page 5 A CTS Interface Bid, to be accepted, will require an Open Access Same-time Information System ( OASIS ) transmission reservation and a North American Energy Standards Board ( NAESB ) electronic tag ( e-tag ) for both the MISO and PJM transmission systems. All CTS Interface Bids will be submitted through PJM s application for interchange transaction scheduling and made immediately available to MISO via PJM-MISO data exchange processes. 8 CTS Interface Bids must be submitted at least 75 minutes before the start of the desired scheduling interval and may not be modified after such time. The two RTOs will coordinate on the clearing process to determine the net interchange schedule for each 15-minute scheduling interval of the clock hour. PJM and MISO will individually clear the transactions in the ITSCED application and MISO CTS Engine, respectively. Prior to clearing the transactions, the RTOs will exchange advisory schedules as well as binding schedules. Each RTO will clear transactions based on these schedules, the RTO s forward price projections, and the market participant s bid in the RTO s respective application. A CTS Interface Bid will clear if the projected price difference is greater than the submitted bid value, subject to capacity and reliability limits. The common set of cleared transactions between the RTOs represents the final cleared transactions that will remain scheduled. The megawatt amounts for the final set of cleared transactions will be available in each RTO s application for interchange transaction scheduling and the related e- Tags will be adjusted to match. 9 8 The PJM application for interchange transaction scheduling is ExSchedule. 9 The MISO application for interchange transaction scheduling is webtrans. As stated above, the PJM application for interchange transaction scheduling is ExSchedule.

6 Kimberly D. Bose, Secretary December 15, 2015 Page 6 All CTS transactions will be subject to a credit screen. Because a credit exposure equal to the full purchase cost of the energy lies on the export side of the transaction, PJM will perform a credit screen on any CTS Interface Bid that would result in an energy export from PJM to MISO. All PJM market participants that submit CTS Interface Bids must establish a credit limit for their export activity. If a transaction would cause the market participant s total export exposure to exceed the credit limit, then the transaction will be curtailed by setting the e-tag megawatt value to zero. With an e-tag megawatt value set to zero, MISO and PJM will exclude the transaction from the clearing process. MISO and PJM will settle the CTS transactions on each side of the MISO-PJM interface based on actual LMPs, not the projected prices. In other words, although the market clearing process for CTS Interface Bids will use projected prices, the market settlement process for CTS transactions will use actual real-time prices. II. PROPOSED REVISIONS In this filing, PJM proposes to (1) revise sections 2.1 (Abbreviations and Acronyms) and 2.2 (Definitions) of the JOA, (2) incorporate a new section on CTS in Attachment 3 (Interregional Coordination Process) of the JOA, (3) revise section 1.3 (Definitions) of Schedule 1 of the Operating Agreement, and (4) revise section 1.3 (Definitions) of Attachment K- Appendix of the Tariff. 10 These proposed revisions and additions are shown below in underlined text. PJM proposes to revise section 2.1 of the JOA by renumbering the existing list of acronyms and adding the acronyms CTS, CTSD, and ITSCED, as follows. 10 Where PJM refers herein to provisions in Schedule 1 of the Operating Agreement, those references also are intended to encompass the identical, parallel provisions in Attachment K-Appendix of the Tariff.

7 Kimberly D. Bose, Secretary December 15, 2015 Page a CTS CTS shall mean Coordinated Transaction Scheduling b CTSD CTSD shall mean Coordinated Transaction Scheduling Dispatch a ITSCED ITSCED shall mean Intermediate Term Security Constrained Economic Dispatch. PJM proposes to revise section 2.2 of the JOA by renumbering the existing definitions and adding definitions for Coordinated Transaction Scheduling, Coordinated Transaction Scheduling Dispatch, and Intermediate Term Security Constrained Economic Dispatch, as follows a Coordinated Transaction Scheduling or CTS Coordinated Transaction Scheduling or CTS shall mean the market rules that allow real-time transactions to be scheduled based on a market participant s willingness to purchase energy from a source in either the Midwest ISO Balancing Authority Area or PJM Balancing Authority Area and sell it at a sink in the other Balancing Authority Area if the forecasted price at the sink minus the forecasted price at the corresponding source is greater than or equal to the dollar value specified in the bid b Coordinated Transaction Scheduling Dispatch Coordinated Transaction Scheduling Dispatch shall mean Midwest ISO s algorithm that performs various functions, including but not limited to forecasting dispatch and market clearing prices based on current and projected system conditions for up to several hours in the future.

8 Kimberly D. Bose, Secretary December 15, 2015 Page a Intermediate Term Security Constrained Economic Dispatch Intermediate Term Security Constrained Economic Dispatch shall mean PJM s algorithm that performs various functions, including but not limited to forecasting dispatch and LMP solutions based on current and projected system conditions for up to several hours into the future. PJM also proposes to add new section 9 to Attachment 3 of the JOA for CTS, as follows. 9 Overview of Coordinated Transaction Scheduling Coordinated Transaction Scheduling or CTS are market rules implemented by Midwest ISO and PJM that allow real-time transactions to be scheduled based on a market participant s willingness to purchase energy at a source (in the PJM Balancing Authority Area or the Midwest ISO Balancing Authority Area) and sell it at a sink (in the other Balancing Authority Area) if the forecasted price at the sink minus the forecasted price at the corresponding source is greater than or equal to the dollar value specified in the bid. CTS transactions are ordinarily evaluated on a 15-minute basis consistent with forecasted real-time prices from Midwest ISO s Coordinated Transaction Scheduling Dispatch run and the forecasted price information from PJM s Intermediate Term Security Constrained Economic Dispatch solution. Coordinated optimization with CTS improves interregional scheduling efficiency by (i) better ensuring that scheduling decisions take into account relative price differences between the regions, and (ii) moving the evaluation of bids and offers closer to the time scheduling decisions are implemented. Midwest ISO and PJM may suspend the scheduling of CTS transactions when Midwest ISO or PJM are not able to adequately implement schedules as expected due to: (1) a failure or outage of the data link between Midwest ISO and PJM prevents the exchange of accurate or timely data necessary to implement the CTS transactions; (2) a failure or outage of any computational or data systems preventing the actual or accurate calculation of data necessary to implement the CTS transactions; or (3) when necessary to ensure or preserve system reliability. In order to distinguish CTS with NYISO from CTS with MISO, PJM proposes to amend section 1.3 (Definitions) of Schedule 1 of the Operating Agreement and Attachment K-Appendix of the Tariff by revising the definition for CTS Enabled Interface, as follows.

9 Kimberly D. Bose, Secretary December 15, 2015 Page B.02C CTS Enabled Interface. CTS Enabled Interface shall mean an interface between the PJM Control Area and an adjacent Control Area at which the Office of the Interconnection has authorized the use of Coordinated Transaction Scheduling ( CTS )., The CTS Enabled Interfaces between the PJM Control Area and the New York Independent System Operator Inc. Control Area shall be designated in Schedule A to the Joint Operating Agreement Among and Between New York Independent System Operator Inc. and PJM Interconnection, L.L.C. (PJM Rate Schedule FERC No. 45). III. STAKEHOLDER REVIEW MISO and PJM have worked together and with their stakeholders since the beginning of 2014 to conceptualize, draft and win stakeholder consensus for the CTS proposals outlined in this filing. MISO and PJM conducted three joint stakeholder workshops in 2014, beginning with the April 18 Interchange Optimization Workshop. 11 Both MISO and PJM have discussed, solicited comments on, and presented revisions to CTS at stakeholder committee meetings during 2014 and At PJM s February 26, 2015 Markets and Reliability Committee ( MRC ) meeting, PJM presented the proposed revisions provided herein, which stakeholders endorsed by acclamation with no objections and two abstentions. 12 At the March 26, 2015 Members Committee meeting, PJM presented these same proposed revisions, which Members approved and endorsed by acclamation with no objections and no abstentions. 13 Stakeholder approval of JOA revisions is 11 Presentation available at See Meeting Minutes of February 26, 2015 Markets and Reliability Committee, Agenda Item No. 3 ( See Meeting Minutes of March 26, 2015 Members Committee, Agenda Item No. 3 (

10 Kimberly D. Bose, Secretary December 15, 2015 Page 10 not required. However, PJM reviewed with stakeholders the JOA revisions proposed herein at the joint stakeholder meetings of April 18, 2014, June 10, 2014, and November 11, 2014, and at the MRC meeting of January 22, IV. IMPLEMENTATION PLANS, WAIVER REQUEST, AND EFFECTIVE DATE PJM requests and effective date of March 1, 2017 for the revisions proposed herein. Therefore, PJM respectfully requests Commission acceptance of these proposed revisions by April 15, 2016, approximately 120 days from the date of this filing. To allow for a CTS implementation date later than 120 days from the date of this filing, PJM respectfully requests a waiver of the applicable notice requirements of Section 35.3(a)(1) of the Commission s regulations. 15 Good cause exists to grant this waiver in order to provide the lead-time necessary to develop, test, and finalize the complex software and process changes associated with the implementation of CTS. V. REQUEST FOR WAIVER PJM submits that the requirements of Section of the Commission's regulations that have not been specifically addressed herein are inapplicable to this filing. To the extent that the Commission determines any of these sections to be applicable to this filing, PJM respectfully requests waiver of the requirements of such sections. 14 PJM and MISO delayed submitting the filing until now to allow each RTO to complete its respective stakeholder process C.F.R. 35.3(a)(1).

11 Kimberly D. Bose, Secretary December 15, 2015 Page 11 VI. DOCUMENTS ENCLOSED Along with this transmittal letter, PJM submits the following attachments: 1. Attachment 1: an electronic version of the redlined sections of the JOA with the revisions proposed herein (Marked Tariff); and 2. Attachment 2: an electronic version of the clean sections of the JOA with the revisions proposed herein (Clean Tariff). VII. CORRESPONDENCE AND COMMUNICATIONS individuals: Correspondence and communications regarding this filing should be sent to the following Craig Glazer Vice President Federal Gov t Policy PJM Interconnection, L.L.C G Street, N.W. Suite 600 Washington, D.C (202) craig.glazer@pjm.com James M. Burlew Counsel PJM Interconnection, L.L.C Monroe Boulevard Valley Forge Corporate Center Audubon, PA (610) james.burlew@pjm.com VIII. SERVICE PJM has served a copy of this filing on all PJM Members and on all state utility regulatory commissions in the PJM Region by posting this filing electronically. In accordance with the Commission s regulations, 16 PJM will post a copy of this filing to the FERC Filings section of its Web site, located at with a specific link to the newly filed document, and will send an on the same date as this 16 See 18C.F.R 35.2(e) and (f)(3).

12 Kimberly D. Bose, Secretary December 15, 2015 Page 12 filing to all PJM Members and all state utility regulatory commissions in the PJM Region 17 alerting them of the filing and its availability on PJM s Web site. PJM also serves the parties listed on the Commission s official service list for this docket. Notwithstanding the foregoing, if the document is not immediately available by using the referenced link, it will be available within 24 hours of the filing. A copy of this filing will also be available on the Commission s elibrary Web site located at in accordance with the Commission s regulations and Order No IX. CONCLUSION Wherefore, for the foregoing reasons, PJM respectfully requests that the Commission accept the attached JOA revisions for filing. Respectfully submitted, Craig Glazer Vice President Federal Gov t Policy PJM Interconnection, L.L.C G Street, N.W. Suite 600 Washington, D.C (202) craig.glazer@pjm.com James M. Burlew Counsel PJM Interconnection, L.L.C Monroe Boulevard Valley Forge Corporate Center Audubon, PA (610) james.burlew@pjm.com 17 PJM already maintains updates and regularly uses lists for all PJM members and affected state commissions.

13 Attachment 1 Revisions to the MISO-PJM JOA (Marked/Redline Format)

14 2.1 Abbreviations and Acronyms AC AC shall mean alternating current AFC AFC shall mean Available Flowgate Capability a APC APC shall mean Adjusted Production Cost ARR ARR shall mean Auction Revenue Rights BA BA shall mean Balancing Authority BAA BAA shall mean Balancing Authority Area a CBBRP CBBRP shall mean Cross-Border Baseline Reliability Project b CBMEP CBMEP shall mean Cross-Border Market Efficiency Project CBM CBM shall mean Capacity Benefit Margin CFR CFR shall mean Code of Federal Regulations CIM CIM shall mean Common Information Model a CTS CTS shall mean Coordinated Transaction Scheduling b CTSD CTSD shall mean Coordinated Transaction Scheduling Dispatch DC DC shall mean direct current DFAX DFAX shall mean transfer distribution factors. Page 1

15 EHV EHV shall mean Extra High Voltage. Page 2

16 EMS EMS shall mean the respective Energy Management Systems utilized by the Parties to manage the flow of energy within their RC Areas ERAG ERAG shall mean the Eastern Interconnection Reliability Assessment Group that is charged with multi-regional modeling FERC (or Commission ) FERC shall mean the Federal Energy Regulatory Commission or any successor agency thereto FTR FTR shall mean financial transmission rights GLDF GLDF shall mean Generation-to-Load Distribution Factor ICCP, ISN and ICCP/ISN ICCP, ISN and ICCP/ISN shall mean those common communication protocols adopted to standardize information exchange IDC IDC shall mean the NERC Interchange Distribution Calculator used for identifying and requesting congestion management relief IPSAC IPSAC shall mean Inter-regional Planning Stakeholder Advisory Committee IROL IROL shall mean Interconnection Reliability Operating Limit ISC ISC shall mean the Inter-RTO Steering Committee a ITSCED ITSCED shall mean Intermediate Term Security Constrained Economic Dispatch JRPC JRPC shall mean the Joint RTO Planning Committee kv kv shall mean kilovolt of electric potential LBA LBA shall mean Local Balancing Authority. Page 3

17 LBAA LBAA shall mean Local Balancing Authority Area LMP LMP shall mean Locational Marginal Price MMWG MMWG shall mean the Multi-regional Modeling Working Group MTEP MTEP shall mean Midwest ISO Transmission Expansion Plan MVAR MVAR shall mean megavolt amp of reactive power MW MW shall mean megawatt of real power MWh MWh shall mean megawatt hour of energy NAESB NAESB shall mean North American Energy Standards Board or its successor organization NERC NERC shall mean the North American Electricity Reliability Corporation or its successor organization a NLP NLP shall mean Net Load Payment NSI NSI shall mean net scheduled interchange OASIS OASIS shall mean the Open Access Same-Time Information System required by FERC for the posting of market and transmission data on the Internet OATT OATT shall mean the applicable open access transmission tariff OTDF OTDF shall mean Outage Transfer Distribution Factor PMAX Page 4

18 PMAX shall mean the maximum generator real power output reported in MWs on a seasonal basis PMIN PMIN shall mean the minimum generator real power output reported in MWs on a seasonal basis PSS/E PSS/E shall mean Power System Simulator for Engineering PTDF PTDF shall mean Power Transfer Distribution Factor QMAX QMAX shall mean the maximum generator reactive power output reported in MVARs at full real power output of the unit QMIN QMIN shall mean the minimum generator reactive power output reported in MVARs at full real power output of the unit RC RC shall mean Reliability Coordinator RCF RCF shall mean Reciprocal Coordinated Flowgate RCIS RCIS shall mean the Reliability Coordinator Information System RTEP RTEP shall mean PJM Regional Transmission Expansion Plan RTO RTO shall mean regional transmission organization SCADA SCADA shall mean Supervisory Control and Data Acquisition SDX System SDX System shall mean the system used by NERC to exchange system data SOL SOL shall mean System Operating Limit TCUL TCUL shall mean tap-changing-under-load. Page 5

19 Page 6

20 TFC TFC shall mean Total Flowgate Capability TLR TLR shall mean Transmission Loading Relief TOP TOP shall mean Transmission Operator TRM TRM shall mean Transmission Reliability Margin UDS UDS shall mean Unit Dispatch Systems VAR VAR shall mean volt ampere reactive. Page 7

21 2.2 Definitions. Any undefined, capitalized terms used in this Agreement shall have the meaning given under industry custom and, where applicable, in accordance with good utility practices a & b multipliers a & b Multipliers shall mean the multipliers that are applied to TRM in the planning horizon and in the operating horizon to determine non-firm AFC. The a multiplier is applied to TRM in the planning horizon to determine non-firm AFC. The b multiplier is applied to TRM in the operating horizon to determine non-firm AFC. The a & b multipliers can vary between 0 and 1, inclusive. They are determined by individual transmission providers based on network reliability considerations Affected System Affected System shall mean the electric system of the Party other than the Party to which a request for interconnection or long-term firm delivery service is made and that may be affected by the proposed service Agreement Agreement shall mean this document, as amended from time to time, including all attachments, appendices, and schedules American Electric Power American Electric Power shall mean the American Electric Power Company Available Flowgate Capability Available Flowgate Capability shall mean the rating of the applicable Flowgate less the projected loading across the applicable Flowgate less TRM and CBM. The firm AFC is calculated with only the appropriate Firm Transmission Service reservations (or interchange schedules) in the model, including recognition of all roll-over Transmission Service rights. Non-firm AFC is determined with appropriate firm and non-firm reservations (or interchange schedules) modeled Balancing Authority Balancing Authority shall mean the responsible entity that integrates resource plans ahead of time, maintains load-interchange-generation balance within a Balancing Authority Area, and supports interconnection frequency in real-time. For Midwest ISO references to a BA may be applicable to a BA and/or an LBA Balancing Authority Area Balancing Authority Area shall mean the collection of generation, transmission, and loads within the metered boundaries of the BA. The BA maintains load-resource balance within this area. For Midwest ISO references to a BAA may be applicable to a BAA and/or an LBAA. Page 8

22 2.2.8 Bulk Electric System Bulk Electric System shall mean the electrical generation resources, transmission lines, interconnections with neighboring systems, and associated equipment, generally operated at voltages of 100 kv or higher. Radial transmission facilities serving load with only one transmission source are generally not included in this definition Commonwealth Edison Commonwealth Edison shall mean the Commonwealth Edison Company Confidential Information Confidential Information shall have the meaning stated in Section Congestion Management Process Congestion Management Process means that document incorporated herein as Attachment 2 to this Agreement hereto as it exists on the Effective Date and as it may be amended or revised from time to time Coordinated Flowgate Coordinated Flowgate shall mean a Flowgate impacted by an Operating Entity as determined by one of the four studies detailed in Section 3 of the attached document entitled Congestion Management Process. For a Market-Based Operating Entity, these Flowgates will be subject to the requirements under the Congestion Management portion of the Congestion Management Process (Sections 4 and 5). A Coordinated Flowgate may be under the operational control of a Third Party Coordinated Operations Coordinated Operations means all activities that will be undertaken by the Parties pursuant to this Agreement Coordinated System Plan Coordinated System Plan shall have the meaning stated in Section a Coordinated Transaction Scheduling or CTS Coordinated Transaction Scheduling or CTS shall mean the market rules that allow realtime transactions to be scheduled based on a market participant s willingness to purchase energy from a source in either the Midwest ISO Balancing Authority Area or PJM Balancing Authority Area and sell it at a sink in the other Balancing Authority Area if the forecasted price at the sink minus the forecasted price at the corresponding source is greater than or equal to the dollar value specific in the bid b Coordinated Transaction Scheduling Dispatch Coordinated Transaction Scheduling Dispatch shall mean Midwest ISO s algorithm that performs various functions, including but not limited to forecasting dispatch and market clearing prices based on current and projected system conditions for up to several hours in the future. Page 9

23 a Cross-Border Baseline Reliability Project Cross-Border baseline Reliability Project shall have the meaning stated in Section b Cross-Border Market Efficiency Project Cross-Border Market Efficiency Project shall have the meaning stated in Section Cross-Border Grandfathered Projects Cross Border Grandfathered Projects shall mean the Cross-Border Grandfathered Projects document incorporated herein as Attachment 4 to this Agreement, hereto as it exists on the Effective Date and as it may be amended or revised from time to time. Page 10

24 Economic Dispatch Economic Dispatch shall mean the sending of dispatch instructions to generation units to minimize the cost of reliably meeting load demands Effective Date Effective Date shall have the meaning stated in Section Emergency Energy Transactions Emergency Energy Transactions shall mean the Emergency Energy Transactions document incorporated herein as Attachment 5 to this Agreement, hereto as it exists on the Effective Date and as it may be amended or revised from time to time Extra High Voltage Extra High Voltage shall mean 230 kv facilities and above stations with voltage regulating capabilities Facilities Study Facilities Study shall mean a study conducted by the Transmission Service Provider, or its agent, for the interconnection customer to determine a list of facilities, the cost of those facilities, and the time required to interconnect a generating facility with the transmission system or enable the sale of firm transmission service Feasibility Study Feasibility Study shall mean a preliminary evaluation of the system impact of interconnecting a generating facility to the transmission system or the initial review of a transmission service request Firm Flow Firm Flow shall mean the estimated impacts of Firm Transmission Service on a particular Coordinated Flowgate. Page 11

25 Firm Flow Limit Firm Flow Limit shall mean the maximum value of Firm Flows an entity can have on a Coordinated Flowgate, based on procedures defined in Sections 4 and 5 of the Congestion Management Process Flowgate Flowgate shall mean a representative modeling of facilities or groups of facilities that may act as significant constraint points on the regional system Hold Harmless Issues Hold Harmless Issues shall have the meaning given in Section 4.3. Page 12

26 Governing Documents Governing Documents shall mean the PJM Open Access Transmission Tariff, the PJM Operating Agreement, the PJM Consolidated Transmission Owners Agreement, the PJM Reliability Assurance Agreement, the Midwest ISO Open Access Transmission and Energy Markets Tariff, the Agreement of Transmission Facilities Owners To Organize The Midwest Independent Transmission System Operator, Inc., A Delaware Non-Stock Corporation, or any other applicable agreement approved by the FERC and intended to govern the relationship by and among PJM and the Midwest ISO and any of their respective members or market participants Intellectual Property Intellectual Property shall mean (i) ideas, designs, concepts, techniques, inventions, discoveries, or improvements, regardless of patentability, but including without limitation patents, patent applications, mask works, trade secrets, and know-how; (ii) works of authorship, regardless of copyright ability, including copyrights and any moral rights recognized by law; and (iii) any other similar rights, in each case on a worldwide basis Interconnection Service Interconnection Service shall mean the service provided by the Transmission Service Provider associated with interconnecting the generating facility to the transmission system and enabling it to receive electric energy and capacity from the generating facility at the point of interconnection, pursuant to the terms of the generator interconnection agreement and, if applicable, the tariff Interconnection Study Interconnection Study shall mean any of the following studies: the interconnection Feasibility Study, the interconnection System Impact Study, and the interconnection Facilities Study, or the restudy of any of the above, described in the generator interconnection procedures Interconnection Reliability Operating Limit Interconnection Reliability Operating Limit shall mean a System Operating Limit that, if violated could lead to instability, uncontrolled separation(s) or cascading outages that adversely impact the reliability of the Bulk Electric System a Intermediate Term Security Constrained Economic Dispatch Intermediate Term Security Constrained Economic Dispatch shall mean PJM s algorithm that performs various functions, including but not limited to forecasting dispatch and LMP solutions based on current and projected system conditions for up to several hours into the future Interregional Coordination Process Interregional Coordination Process shall mean the market-to-market coordination document incorporated herein as Attachment 3 to this Agreement, hereto as it exists on the Effective Date and as it may be amended or revised from time to time Inter-regional Planning Stakeholder Advisory Committee Page 13

27 Inter-regional Planning Stakeholder Advisory Committee shall have the meaning given under Section Page 14

28 Inter-RTO Steering Committee Inter-RTO Steering Committee shall have the meaning given in the Joint and Common Market Agreement Joint and Common Market Joint and Common Market shall mean, a group of initiatives that are intended to result in achievement of the following objectives: (i) Provide the highest level of inter-regional reliability; (ii) Deliver the lowest cost energy and ancillary services to load across the combined Midwest ISO and PJM Markets; and (iii) Plan, build and operate the combined Midwest ISO and PJM transmission facilities for maximum joint benefit across the markets Joint and Common Market Agreement Joint and Common Market Agreement shall mean the Agreement Concerning Interregional Coordination, Including Development of Joint and Common Market, executed by the Parties on or about February 12, Joint Coordinated System Plan Joint Coordinated System Plan shall have the meaning given under Section Local Balancing Authority Local Balancing Authority shall mean an operational entity which is: (i) responsible for compliance to NERC for the subset of NERC Balancing Authority Reliability Standards defined for its local area within the Midwest ISO Balancing Authority Area, and (ii) a party (other than the Midwest ISO) to the Balancing Authority Amended Agreement which, among other things, establishes the subset of NERC Balancing Authority Reliability Standards for which the LBA is responsible Local Balancing Authority Area Local Balancing Authority Area shall mean the collection of generation, transmission, and loads that are within the metered boundaries of an LBA Locational Marginal Price or LMP Locational Marginal Price or LMP shall mean the market clearing price for energy at a given location in a Party s RC Area, and Locational Marginal Pricing shall mean the processes related to the determination of the LMP LMP Contingency Processor LMP Contingency Processor shall mean that Locational Marginal Price pricing computer program referred to in Section Market-Based Operating Entity Market-Based Operating Entity shall mean an Operating Entity that operates a security constrained, bid-based economic dispatch bounded by a clearly defined market area. Page 15

29 Market Flows Market Flows shall mean the calculated energy flows on a specified Flowgate as a result of dispatch of generating resources serving market load within a Market-Based Operating Entity s market (excluding tagged transactions) Market Monitor Market Monitor shall monitor market power and other competitive conditions in the Markets and make reports and recommendations as appropriate Midwest ISO Midwest ISO has the meaning stated in the preamble of this Agreement NERC Compliance Registry NERC Compliance Registry shall mean a listing of all organizations subject to compliance with the approved reliability standards Network Upgrades Network Upgrades shall have the meaning as defined in the Midwest ISO and PJM tariffs Notice Notice shall have the meaning stated in Section Operating Entity Operating Entity shall mean an entity that operates and controls a portion of the bulk transmission system with the goal of ensuring reliable energy interchange between generators, loads, and other operating entities Outages Outages shall mean the planned unavailability of transmission and/or generation facilities dispatched by PJM or the Midwest ISO, as described in Article VII of this Agreement. Page 16

30 Party or Parties Party or Parties refers to each party to this Agreement or both, as applicable PJM PJM has the meaning stated in the preamble of this Agreement a Project Cost Project Cost shall mean all costs for Network Upgrades, as determined by the RTOs to be a single transmission expansion project, including those costs associated with seeking and obtaining all necessary approvals for the design, engineering, construction, and testing the Network Upgrades. Project Cost will include costs classified by the Transmission Owners and ITCs as transmission plant using the Uniform System of Accounts or equivalent set of accounts for any Coordinating Owner, where Transmission Owners, ITCs, and Coordinating Owner have the meanings as defined under the PJM and Midwest ISO OATTs Purchasing-Selling Entity Purchasing Selling Entity shall mean the entity that purchases or sells, and takes title to, energy, capacity, and interconnected operations services Reciprocal Coordination Agreement Reciprocal Coordination Agreement shall mean an agreement between Operating Entities to implement the reciprocal coordination procedures defined in the Congestion Management Process Reciprocal Coordinated Flowgate Reciprocal Coordinated Flowgate shall mean a Flowgate that is subject to reciprocal coordination by Operating Entities, under either this Agreement (with respect to Parties only) or a Reciprocal Coordination Agreement between one or more Parties and one or more Third Party Operating Entities. An RCF is: A Coordinated Flowgate that is (a) (i) within the operational control of a Reciprocal Entity or (ii) may be subject to the supervision of a Reciprocal Entity as a RC, and (b) affected by the transmission of energy by the Parties or by either Party of both Parties and one or more Reciprocal Entities; or A Coordinated Flowgate that is (a) affected by the transmission of energy by one or more Parties and one or more Third Party Operating Entities, and (b) expressly made subject to CMP reciprocal coordination procedures under a Reciprocal Coordination Agreement between or among such Parties and Third Party Operating Entities; or A Coordinated Flowgate that is designated by agreement of both Parties as a RCF. Page 17

31 Reciprocal Entity Reciprocal Entity shall mean an entity that coordinates the future-looking management of Flowgate capability in accordance with a reciprocal agreement as described in the Congestion Management Process a Regionally Beneficial Project Regionally Beneficial Project shall have the meaning defined under Attachment FF of the Midwest ISO OATT Reliability Coordinator Reliability Coordinator shall mean that party approved by NERC to be responsible for reliability of an RC Area Reliability Coordinator Area or RC Area Reliability Coordinator Area or RC Area shall mean the collection of generation, transmission, and loads within the boundaries of the Reliability Coordinator. Its boundary coincides with one or more Balancing Authority Areas SCADA Data SCADA Data shall mean the electric system security data that is used to monitor the electrical state of facilities, as specified in NERC reliability standard TOP State Estimator State Estimator shall mean that computer model that computes the state (voltage magnitudes and angles) of the transmission system using the network model and realtime measurements. Line flows, transformer flows, and injections at the buses are calculated from the known state and the transmission line parameters. The state estimator has the capability to detect and identify bad measurements System Impact Study System Impact Study shall mean an engineering study that evaluates the impact of a proposed interconnection or transmission service request on the safety and reliability of transmission system and, if applicable, an Affected System. The study shall identify and detail the system impacts that would result if the generating facility were interconnected or transmission service commenced without project modifications or system modifications System Operating Limit System Operating Limit shall mean the value (such as MW, MVAR, Amperes, Frequency, or Volts) that satisfies the most limiting of the prescribed operating criteria for a specified system configuration to ensure operation within acceptable reliability criteria Third Party Third Party refers to any entity other than a Party to this Agreement Third Party Operating Entity Page 18

32 Third Party Operating Entity shall refer to a Third Party entity that operates and controls a portion of the bulk transmission system with the goal of ensuring reliable energy interchange between generators, loads, and other operating entities Total Flowgate Capability Total Flowgate Capability shall mean the maximum amount of power that can flow across that interface without overloading (either on an actual or contingency basis) any element of the Flowgate. The Flowgate capability is in units of megawatts. If the Flowgate is voltage or stability limited, a megawatt proxy is determined to ensure adequate voltages and stability conditions Transmission Loading Relief Transmission Loading Relief shall mean the procedures used in the Eastern Interconnection as specified in NERC reliability standard IRO-006 and the NAESB business practice WEQ-008. Page 19

33 Transmission Operator Transmission Operator shall mean the entity responsible for the reliability of its local transmission system, and that operates or directs the operations of the transmission facilities Transmission Owner Transmission Owner shall mean a Transmission Owner as defined under the Parties respective tariff Transmission Reliability Margin Transmission Reliability Margin shall mean that amount of transmission transfer capability necessary to ensure that the interconnected transmission network is secure under a reasonable range of uncertainties in system conditions Transmission Service Provider Transmission Service Provider shall mean the entity that administers the transmission tariff and provides transmission service to transmission customers under applicable transmission service agreements Transmission System Emergencies Transmission System Emergencies are conditions that have the potential to exceed or would exceed an IROL Unit Dispatch Systems Unit Dispatch Systems shall mean those dispatch systems utilized by the Parties to dispatch generation units by calculating the most economic solution while simultaneously ensuring that each of the boundary constraints is resolved reliably. Page 20

34 Voltage and Reactive Power Coordination Procedures Voltage and Reactive Power Coordination Procedures are the procedures under Article XIX for coordination of voltage control and reactive power requirements. Page 21

35 Preface Midwest ISO & PJM Market to Market Interregional Coordination Process Table of Contents 1 Overview of the Market-to-Market Coordination Process 2 Interface Bus Price Coordination 3 Real-Time Energy Market Coordination 3.1 Real-Time Energy Market Coordination Procedures 3.2 Real-Time Energy Market Settlements 4 Day-Ahead Energy Market Coordination 4.1 Day-Ahead Energy Market Coordination Procedures 4.2 Day-Ahead Energy Market Settlements 5 Auction Revenue Rights Allocation/Financial Transmission Rights Auction Coordination 6 Coordination Example 7 When One of the RTOs Does Not Have Sufficient Redispatch 8 Appropriate Use of Market-to-Market Process 9 Overview of Coordinated Transaction Scheduling Appendix A: Definitions Page 22

36 9 Overview of Coordinated Transaction Scheduling Coordinated Transaction Scheduling or CTS are market rules implemented by Midwest ISO and PJM that allow real-time transactions to be scheduled based on a market participant s willingness to purchase energy at a source (in the PJM Balancing Authority Area or the Midwest ISO Balancing Authority Area) and sell it at a sink (in the other Balancing Authority Area) if the forecasted price at the sink minus the forecasted price at the corresponding source is greater than or equal to the dollar value specified in the bid. CTS transactions are ordinarily evaluated on a 15-minute basis consistent with forecasted real-time prices from Midwest ISO s Coordinated Transaction Scheduling Dispatch run and the forecasted price information from PJM s Intermediate Term Security Constrained Economic Dispatch solution. Coordinated optimization with CTS improves interregional scheduling efficiency by (i) better ensuring that scheduling decisions take into account relative price differences between the regions, and (ii) moving the evaluation of bids and offers closer to the time scheduling decisions are implemented. Midwest ISO and PJM may suspend the scheduling of CTS transactions when Midwest ISO or PJM are not able to adequately implement schedules as expected due to: (1) a failure or outage of the data link between Midwest ISO and PJM prevents the exchange of accurate or timely data necessary to implement the CTS transactions; (2) a failure or outage of any computational or data systems preventing the actual or accurate calculation of data necessary to implement the CTS transactions; or (3) when necessary to ensure or preserve system reliability. Page 23

37 Attachment 2 Revisions to the MISO-PJM JOA (Clean Format)

38 2.1 Abbreviations and Acronyms AC AC shall mean alternating current AFC AFC shall mean Available Flowgate Capability a APC APC shall mean Adjusted Production Cost ARR ARR shall mean Auction Revenue Rights BA BA shall mean Balancing Authority BAA BAA shall mean Balancing Authority Area a CBBRP CBBRP shall mean Cross-Border Baseline Reliability Project b CBMEP CBMEP shall mean Cross-Border Market Efficiency Project CBM CBM shall mean Capacity Benefit Margin CFR CFR shall mean Code of Federal Regulations CIM CIM shall mean Common Information Model a CTS CTS shall mean Coordinated Transaction Scheduling b CTSD CTSD shall mean Coordinated Transaction Scheduling Dispatch DC DC shall mean direct current DFAX DFAX shall mean transfer distribution factors. Page 1