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2009 State of the Market Report

Transmission Congestion

assumed in the day-ahead market (both of which reduce the transmission capability available for real-time market). These reductions in transmission capability can compel the Midwest ISO to incur real-time congestion costs to reduce the flow on constrained facilities from the day ahead to real time, which is recovered through uplift charges.

For example, if a transmission interface is fully scheduled in the day-ahead market and is congested, no additional congestion costs will be collected in the real-time market. The cost of congestion may increase or decrease (i.e., the price differences may be larger or smaller in real- time than they were day ahead) but there will be no additional real-time settlement unless the flow over the interface changes in real time from the amount scheduled day-ahead. However, if the limit falls (the interface is derated) or loop flow increases over a congested interface, the Midwest ISO will incur real-time congestion costs to achieve the required reduction in real-time flows over the interface. Figure 50 shows the real-time congestion costs from 2007 to 2009. 17

Congestion Cost ($ Millions)

Figure 50: Real-Time Balancing Congestion Costs 2007 – 2009

$30

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J F MAMJ J AS ONDJ F MAMJ J AS ONDJ F MAMJ J AS OND

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2008

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Real-time congestion costs caused by increased use of the Midwest ISO’s transmission capability by PJM are reimbursed under the JOA. Hence, the net market-to-market payments are included in the figure.

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