2009 State of the Market Report
Payments from PJM to the Midwest ISO decreased by 12 percent in 2009, while payments from the Midwest ISO to PJM decreased nearly 30 percent. Payments were more uniform in 2009 than in 2008. As in 2008, net payments were made by PJM to the Midwest ISO in each month in 2009, even though more PJM constraints than Midwest ISO constraints are active in a number of the months. These settlement results are due in part to the fact that the Midwest ISO generally provides more flow relief on PJM constraints than PJM does on Midwest ISO constraints.
In April 2009 the Midwest ISO identified an issue with PJM’s market flow calculations that understated PJM’s market flows and affected settlements from 2005 until June 2009. Though PJM did not retain the data necessary to correct the settlements for the entire period, PJM and the Midwest ISO agreed on a methodology using an available data and PJM estimated the underpayment of the most recent two years, which totaled $65 million. Figure 69 above shows the monthly values using this methodology, which peaked at close to $15 million in June 2008.
The Midwest ISO and PJM stakeholders met and attempted to reach a settlement of this issue but were unable to do so. The Midwest ISO and then PJM each filed complaints on this and other market-to-market issues and these matters are now before the Commission. At the same time, the RTOs are improving their processes to provide additional auditing and validation of the market-to-market settlements to minimize future errors, but there is still room for improvement.
In addition to this error, other issues regarding coordination under the JOA have arisen. We have made two tariff compliance referrals to FERC regarding PJM’s implementation of the JOA since the JOA is a tariff attachment in both RTOs. Additionally, the JOA lacks clarity in a number of areas that have resulted in disagreements between the RTOs on the obligations and settlements under the JOA. We recommend that the RTOs work together to clarify the JOA in these areas, including:
Use of the monitoring RTO’s marginal value limits during coordination;
Pre-positioning on coordinated constraints;
Use of proxy flowgates;
The obligation to activate a coordinated constraint; and
The obligation to test new constraints.