UNITED STATES OF AMERICA
BEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

PJM Interconnection, LLC)Docket No. ER17-2291-000

MOTION TO INTERVENE AND PROTEST OF

THE NEW YORK INDEPENDENT SYSTEM OPERATOR, INC.

Pursuant to Rules 211, 212, and 214 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission the (“Commission”), 18 C.F.R. §§ 385.211 and 385.214 (2016), the New York Independent System Operator, Inc. (“NYISO”) hereby moves to intervene and to protest in this proceeding. This filing addresses the PJM Interconnection, LLC’s (“PJM”)
August 11 filing proposing “Tariff and Operating Agreement Revisions Regarding Dynamic Transfers” (the “August Filing”).1 The August Filing proposes revisions to PJM’s Open Access Transmission Tariff (“PJM OATT”) and to the Amended and Restated Operating Agreement of PJM Interconnection, L.L.C. (“PJM Operating Agreement”).2

PJM’s August Filing proposes to move toward cementing PJM’s pseudo-tie requirements
as the exclusive avenue by which generators that are directly interconnected to other Balancing
Authority Areas’ transmission systems can become PJM “Capacity Performance Resources”3
that are excepted from PJM’s “Capacity Import Limit.”4 The NYISO submits this protest
because it cannot accommodate a number of PJM’s proposed pseudo-tie requirements and cannot

1 PJM Interconnection, L.L.C., Tariff and Operating Agreement Revisions Regarding Dynamic Transfers, Docket No. ER17-2291-000 (August 11, 2017).

2 For convenience, throughout this pleading the PJM OATT, the Reliability Assurance Agreement Among
Load-Serving Entities in the PJM Region (“RAA”) and the PJM Operating Agreement are referred to collectively as
PJM’s “tariff.”

3 “Capacity Performance Resource” is defined in Article 1 of the RAA and Attachment DD of the PJM

OATT.

4 “Capacity Import Limit” is defined in Article 1 of the PJM RAA. The definition also prescribes the

criteria that resources external to PJM must satisfy in order to obtain an exception from the Capacity Import Limit.

reasonably be expected to overhaul its tariffs and change its market design to do so. The NYISO is responsible for maintaining reliable service in the New York Control Area (“NYCA”).5 As explained below, allowing generators that are directly interconnected to NYCA transmission
facilities to follow PJM’s dispatch instructions will likely cause adverse reliability impacts in the NYCA and would exacerbate interregional seams. PJM’s pseudo-tie rules are fundamentally
incompatible with the NYISO’s financial transmission reservations, generator scheduling market rules and reliability operating practices. Finally, PJM’s proposed tariff revisions also conflict
with the established interregional agreement governing the NYISO/PJM interface and with the NYISO’s tariffs.6 The NYISO previously raised these concerns in its attached March 31, 2017 filing in pending Docket No. ER17-1138 (“March Protest”).7

The NYISO is prepared to work with PJM to develop a mutually acceptable alternative
that will allow generators that are directly interconnected to NYCA transmission facilities to sell
their capacity to PJM. However, because the NYISO and PJM have not yet engaged in anything
beyond the most preliminary discussions, this protest states NYISO’s concerns with PJM’s
proposed Form of Pseudo-Tie Agreement for Generator Pseudo-Ties into the PJM Region When
No Joint Operating Agreement Addresses Pseudo-Tie Operation and Implementation (“pro

5 Section 3 of the Agreement Between the New York Independent System Operator and Transmission

Owners (“ISO-TO Agreement”) makes NYISO ultimately responsibility for controlling, operating, and maintaining the reliability of the NYS Power System.

6 PJM’s proposed tariff revisions in this proceeding are fundamentally different from those that the

Commission accepted in ISO New England, Inc. and New England Power Pool Participants Committee, et, al., 157
FERC ¶ 61,025 (2016). In the ISO New England case, the Commission declined to delay the implementation of
proposed tariff revisions that the NYISO did not contend were unjust and unreasonable, but that triggered an
acknowledged inefficiency in the NYISO’s own market design. See 157 FERC ¶ 61,025 at P 31. By contrast, in
this proceeding PJM’s proposed tariff revisions are unjust and unreasonable. There is no underlying flaw in the
NYISO’s rules or markets.

7 See New York Independent System Operator, Inc., Motion to Intervene One Day Out of Time and Protest, Docket No. ER17-1138-000 (March 31, 2017). The NYISO’s March Protest addressed a different set of proposed PJM tariff revisions that are also intended to cement PJM’s pseudo-tie requirements as the exclusive avenue by
which generators that are directly interconnected to other Balancing Authority Areas’ transmission systems can be excepted from PJM’s Capacity Import Limit. The NYISO’s March Protest is included as Attachment A hereto, and is incorporated by reference herein.

forma pseudo-tie agreement”).8 The NYISO does not agree that PJM’s proposed pro forma
pseudo-tie agreement “is acceptable as a just and reasonable ‘starting point to facilitate
negotiation of pseudo-tie arrangements’”9 between PJM and the NYISO. The terms and
conditions PJM proposes in its pro forma pseudo-tie agreement are unjust and unreasonable as applied to New York.10

The Commission should not permit PJM to prescribe generally applicable, one-size fits
all, pseudo-tie requirements in its tariffs and require all neighboring Balancing Authorities to
accommodate PJM’s rules in order for generators in their areas to have the opportunity to sell
capacity to PJM. Instead, PJM’s rules should be sufficiently flexible to accommodate regional
differences at its borders. PJM should incorporate more detailed and specific requirements for
cross-border sales of capacity into its interregional agreements with each of its neighbors, as
PJM has done with MISO.11

At a minimum, the Commission should require PJM to make explicit in its tariffs that
pseudo-tie arrangements can only occur if the native Balancing Authority agrees and elects to
execute a pseudo-tie agreement with PJM and the applicable generator. This requirement would
codify in PJM’s tariff the Commission’s finding in prior proceedings.12 The NYISO requests
that the Commission condition its acceptance of PJM’s March and August filings on PJM’s
submission of tariff rules that do not mandate the use of pseudo-ties at all of its borders and that

8 Proposed new Attachment MM to the PJM Tariff.

9 August Filing at 5, quoting Southwest Power Pool, 123 FERC ¶ 61,062 at P17 (2008).

10 This protest does not address the justness and reasonableness of the proposed pro forma pseudo-tie rules as applied to other Balancing Authority Areas.

11 See PJM’s filing of Proposed Revisions to Joint Operating Agreement Between PJM and MISO in
Docket No. ER17-2218-000 and MISO’s simultaneous filing in Docket No. ER17-2220-000 (August 1, 2017).

12 See June 2015 Order at P 96.

Robert E. Fernandez, General Counsel
*Raymond Stalter, Director of Regulatory Affairs *Alex M. Schnell, Assistant General Counsel/

Registered Corporate Counsel

New York Independent System Operator, Inc.

10 Krey Boulevard

Rensselaer, N.Y. 12144 Tel: (518) 356-6000

Fax: (518) 356-4702 rfernandez@nyiso.com rstalter@nyiso.com

aschnell@nyiso.com

* Persons designated for service.13
II. MOTION TO INTERVENE

*Ted J. Murphy

Hunton & Williams LLP
2200 Pennsylvania Avenue, NW Washington, D.C. 20037
Tel: (202) 955-1500

Fax: (202) 778-2201
tmurphy@hunton.com

The NYISO is the independent, not-for-profit entity responsible for administering Commission-jurisdictional markets for electricity and capacity, for providing open-access transmission service, and for maintaining electric reliability in the NYCA, including the
metropolitan New York City area. The NYISO and PJM are responsible for neighboring Balancing Authority Areas. There is substantial interregional trading between their areas, including exports and imports of capacity and energy. Changes to one Balancing Authority Area’s capacity market rules can have substantial impacts on market outcomes and system operations in the other Balancing Authority Area.

13 The NYISO respectfully requests waiver of the requirements of Rule 18 C.F.R. § 385.203(b)(3) (2015) to permit service on more than two persons.

As discussed below, allowing a generator that is directly interconnected to the NYCA

transmission system to be committed and dispatched by PJM in accordance with PJM’s proposed new pseudo-tie rules could threaten the reliable operation of the NYCA and disrupt the NYISOadministered markets. The NYISO, therefore, has a unique, direct and substantial interest in the outcome of this proceeding that cannot be adequately represented by any other party. It is
appropriate and in the public interest that the NYISO be permitted to intervene herein and to
participate with full rights as a party.

III.BACKGROUND

A.PJM’s March and August 2017 Pseudo-Tie Filings

On March 9, 2017 PJM submitted tariff revisions in Docket No. ER17-1138 that

proposed to explicitly incorporate a requirement that external Capacity Performance Resources
must be pseudo-tied to the PJM Balancing Authority Area in order to be excepted from PJM’s
Capacity Performance Limit (the “March Filing”). The NYISO’s attached March Protest
explained the reliability and market reasons why the NYISO could not and does not support
implementing PJM’s pseudo-tie construct for sales of capacity from generators that are
interconnected to the NYCA transmission system to PJM. The March Protest stated that PJM’s
filing was incomplete because it did not include the pro forma pseudo-tie agreement that PJM
was (at the time) still in the process of developing. The NYISO’s March Protest argued “It is not
possible to fully understand how PJM’s pseudo-tie proposals would actually be applied without
considering the pro forma language.”14

It is clear from PJM staff presentations that the tariff revisions proposed in PJM’s March
and August Filings are integrally related and were, at least until late 2016 or early 2017, being

14 March Protest at 8.

developed in a coordinated fashion.15 PJM’s proposed pro forma pseudo-tie agreement builds upon existing PJM tariff requirements that resources located outside of PJM that seek to become Capacity Performance Resources must have confirmed long-term firm transmission service or the equivalent thereof, and must not be subject to NERC tagging as an interchange transaction in order to be excepted from PJM’s Capacity Import Limit. The specified transmission service
requirements to obtain an exception from PJM’s Capacity Import Limit were first accepted by the Commission in its “June 2015 Order.”16

In its pro forma pseudo-tie agreement, PJM proposes to require “Native Balancing
Authority Areas” to agree to: (1) make long-term firm transmission service or its equivalent
available to enable the energy associated with pseudo-tied capacity to be exported to the PJM
Balancing Authority Area; (2) give PJM operational control of the pseudo-tied generator,
including authority to commit and dispatch the generator, except when local transmission
reliability concerns arise; (3) not require e-tagging of power flows from the pseudo-tied
generator; (4) use the NERC Interchange Distribution Calculator (“IDC”) re-dispatch process
and the Congestion Management Process (“CMP”) included in the Joint Operating Agreement
Between the Midcontinent Independent System Operator, Inc. and PJM Interconnection, L.L.C.
(“PJM/MISO JOA”) to address congestion impacts; and (5) “honor firm delivery transfer status
via third party firm flow limit calculation procedures” in accordance with the CMP.17 Finally,
PJM proposes to require a generator that wants to become a PJM Capacity Performance

15 See, e.g., Proposal for Pro Forma Pseudo-Tie Agreements, Jacqulynn Hugee, PJM Markets and

Reliability Committee, January 2017 at 5. < http://www.pjm.com/~/media/committees-

groups/committees/mrc/20170126/20170126-item-11-pseudo-tie-agreement-presentation.ashx > (“January MRC Presentation”).

16 See PJM Filing at n. 8; citing PJM Interconnection, L.L.C., 151 FERC ¶ 61,208, at PP 96-97 (2015); order on reh’g, 155 FERC ¶ 61,157, at P 44 (2016).

17 See Section 7 of the proposed pro forma pseudo-tie agreement. As explained below, NYISO believes the intent of PJM’s language is to require the Native BAA to grant PJM a “firm flow entitlement” to use the Native
BAA’s transmission system.

Resource to compensate the Native Balancing Authority Area for the reasonable implementation and operations related costs it incurs.

B. Pseudo-Tie Arrangements Have Never Been Implemented in the NYISO,

PJM’s Proposed Rules Do Not Appear to Be Workable for the NYISO and Attempting to Implement them Would Adversely Impact New York

PJM has had pseudo-tie arrangements with some of its other neighbors for years. In

particular, PJM currently has a number of pseudo-tied generators located inside the Midcontinent
Independent Transmission System Operator, Inc. (“MISO”). Although there have been
disagreements between PJM and MISO related to their implementation of pseudo-tied generators
for years, it appears that the two Regional Transmission Organizations (“RTOs”) may have
worked out their differences.18 However, there are multiple pending complaint proceedings
concerning the application of PJM and MISO congestion charges to pseudo-tied units19 and any
agreement that PJM and MISO may have reached does not resolve the concerns NYISO raises in
this protest.

The NYISO does not have, and is not currently developing, pseudo-tie rules of its own.
New York generators have never before been pseudo-tied to PJM or to any other region. The
NYISO does not require a pseudo-tie arrangement to accept capacity from any of its four
neighboring external Balancing Authority Areas. Capacity exports from New York to PJM have
been less than 200 MW in recent years. Exports of Federal preference power from the Niagara
and St. Lawrence hydroelectric facilities in New York to municipal entities and cooperatives in

18 See PJM’s filing of Proposed Revisions to Joint Operating Agreement Between PJM and MISO in
Docket No. ER17-2218-000 and MISO’s simultaneous filing in Docket No. ER17-2220-000 (August 1, 2017).

19 See Midcontinent Independent System Operator, Inc. and PJM Interconnection L.L.C. Status Update,

Docket Nos. EL16-108-000, EL17-29-000, EL17-31-000, EL17-37-000 (March 27, 2017) (providing informational update on efforts by MISO and PJM to resolve “congestion overlap” issue related to pseudo-tied generation in each RTO in four pending complaint dockets).

PJM occurred under arrangements that PJM has confirmed are and will continue to be excluded from PJM’s pseudo-tie requirements.20

The NYISO/PJM border is fundamentally different from PJM’s borders with its other

neighbors, including PJM’s border with MISO. There are currently seven PARs in-service at the
NYISO/PJM border that are operated to achieve specific components of NYCA/PJM interchange
in order to maximize its reliability and economic value. There are also three scheduled lines that
interconnect the NYCA with the PJM Balancing Authority Area that use direct current
technology or variable frequency transformers to control power flows to match the interchange
that is scheduled over those facilities. NYISO is not aware of any other border between PJM and
a neighboring Balancing Authority Area where power flows are as heavily managed by control
technologies in order to maximize economic and reliability benefits. As explained below,
implementing PJM’s proposed pro forma pseudo-tie arrangements would result in inefficient
scheduling and congestion management at the PJM/NYISO interface because the pro forma rules
do not appear to allow the output of a generator that is pseudo-tied to PJM to be represented as a
component of NYISO/PJM interchange, as is done today to maximize benefits to both Balancing
Authority Areas.

The NYISO and PJM have developed special rules to manage PAR-controlled flows
across their common interface. These rules are set forth in the Joint Operating Agreement
Among and Between New York Independent System Operator Inc. and PJM Interconnection,
L.L.C. (the “NYISO/PJM JOA”).21 The NYISO/PJM JOA does not include pseudo-tie

20 See Answer of PJM Interconnection, L.L.C. to Protests and Comments, Docket No. ER17-1138 at 47 (April 25, 2017).

21 The NYISO/PJM JOA is on file (on behalf of both NYISO and PJM) as Section 35 of the NYISO Open
Access Transmission Tariff (“NYISO OATT”). Schedule D to the JOA (Section 35.23) sets forth the Market-to-
Market (“M2M”) coordination rules that apply to NYISO and PJM. The NYISO and PJM recently filed proposed
revisions to their JOA (including proposed revisions to the M2M coordination rules) to address the elimination of

procedures and, as discussed below, the NYISO/PJM JOA is incompatible with some of the pseudo-tie rules proposed in the August Filing.

As further discussed below, PJM’s pseudo-tie requirement also appears to conflict with other features of the NYISO’s Commission-approved tariffs and threaten to create reliability problems and market inefficiencies in New York.

C. Contrary to Commission Precedent the August Filing Does Not Reflect the

NYISO’s Input on Seams, Market, or Reliability Issues Impacting New York

The Commission first accepted PJM’s Capacity Import Limit rules in its April 2014
Order in Docket No. ER14-503.22 That order rejected recommendations by intervenors that a
pseudo-tie requirement be made applicable to all external resources seeking to participate in
PJM’s forward capacity auctions. The Commission agreed with PJM’s position at the time that
such a mandate would “limit competition from external resources (by making it more difficult
for them to qualify as capacity resources) without providing any offsetting benefits.”23
The June 2015 Order, however, accepted a PJM proposal to require external capacity resources to be pseudo-tied to PJM, even though PJM’s tariffs did not include an explicit pseudo-
tie requirement at that time. The Commission’s determination was predicated on a finding that
the protestors in that proceeding had not shown that a pseudo-tie requirement would exacerbate
seams. The Commission also emphasized that PJM was “required to reach agreement with
External Balancing Authorities regarding all implementation issues associated with a pseudo-tied

the 1000 MW wheel that was originally established in the 1970s by the Consolidated Edison Company of New York, Inc. and the Public Service Electric and Gas Company (“Con Edison - PSEG Wheel”). The jointly filed revisions are pending in Docket No. ER17-905-000.

22 PJM Interconnection, L.L.C., 147 FERC ¶ 61,060 (2014) (“April 2014 Order”).

23 April 2014 Order at P 49.

resource, including reliability and commercial obligations, and that this process should minimize any resulting seems issues”24

As discussed below, PJM’s proposed pro forma pseudo-tie agreement has not been

designed to minimize seams at the NYISO/PJM interface, and does not account for commercial or reliability issues in the NYISO. Nor does it reflect the level of inter-regional coordination that PJM argued is necessary in the ongoing MISO pseudo-tie proceeding.25

IV.PROTEST

A.NYISO Concerns with Specific Provisions of PJM’s Proposed Pro Forma

Pseudo-Tie Agreement

1. Allowing PJM to Commit and Dispatch Generators that are

Connected to NYCA Transmission Facilities Would Put NYCA Reliability at Risk and Increase the Cost NYISO Incurs to Serve NYCA Loads

Section 2(d) of the pro forma pseudo-tie agreement states that PJM will provide

commitment and dispatch instructions to the “Company” that (presumably) owns or operates the
pseudo-tied Facility. Section 2(d) also says PJM and Native Balancing Authority “will also
provide data concerning its dispatch decisions for the Facility to each other solely for use in their
operational planning analyses.” Section 2(g) of the pro forma pseudo-tie agreement similarly
states that the Native Balancing Authority and the PJM Balancing Authority “hereby agree that
the PJM Balancing Authority shall have operational control of the Facility while this Agreement

24 June 2015 Order at P 96 (footnote citing to pertinent NERC and NAESB rules omitted).

25 PJM protested MISO’s February 28, 2017 filing of a proposed pro forma pseudo-tie agreement in Docket
No. ER17-1061-000 on the ground that MISO was allegedly granting itself too much authority. In its protest PJM
stated that “PJM’s pro forma agreement requires mutual agreement because PJM wants to ensure that the Native
Balancing Authority, native Reliability Coordinator and native Transmission Operator agree with PJM on how the
pseudo-tie will be implemented and operated since they will be impacted by that pseudo-tie, and to ensure
coordination and clear delineation of roles and responsibilities as between them, consistent with NERC standards.”
PJM emphasized that the relevant NERC standards require coordination between regions on issues that include Area
Control Error, Frequency Control, congestion management, resource adequacy planning/scheduling, and
contingency reserve assessment. See Protest of PJM Interconnection, L.L.C., Docket No. ER17-1061-000 at 2
(March 21, 2017) (footnotes omitted from quote).

is in effect.” Finally, Section 2(m) of the pro forma pseudo-tie agreement states that under

normal operating conditions PJM is responsible for the capacity, energy and dispatch of the MW dedicated to the Pseudo-Tie of the Facility.

Reliability Concerns

The reliable operation of the New York State Transmission System is of paramount

importance to the NYISO, which acts as the Reliability Coordinator and a Transmission Operator for the Bulk Electric System. The NYISO desires to maintain reliable operations and is
concerned that implementing pseudo-ties would degrade its ability to do so. The operation of the New York State Transmission System (“NYSTS”) is governed not only by the Commission’s
reliability standards, as enforced by NERC and the NPCC, but also by a series of local
Reliability Rules issued and enforced by the New York State Reliability Council (“NYSRC”).26 The operation of the NYSTS requires close coordination between the NYISO, the New York
Transmission Owners, and individual NYCA Generators to ensure that all applicable standards are satisfied, and that reliability is maintained. Effective coordination is particularly critical in New York due to New York’s transmission limits, high levels of congestion and the unique
operating and reliability challenges presented by New York City.

The NYISO and its predecessor, the New York Power Pool, have relied for over forty
years on the ability to commit and dispatch NYCA Generators to manage reliability of the
NYSTS though the use of highly automated security constrained commitment and dispatch
software systems. The NYISO’s planning and operating rules and practices are fundamentally
based on the premise that Generators interconnected to the NYSTS will be subject to the control

26 Under Section 215(h)(3) of the Federal Power Act (“FPA”), New York State is authorized to have

reliability rules that are more stringent than those adopted by the North American Electric Reliability Organization
and the regional reliability entities. Under New York law, the NYSRC is charged with developing such reliability
rules.

and dispatch of the NYISO. The NYISO has significant concerns about the potential reliability
impacts of ceding NYISO control to PJM to commit and dispatch generators that are directly
interconnected to the NYSTS, including the metropolitan New York City area. Ceding
commitment and dispatch authority over New York generation to PJM is inconsistent with the
intent of, and might violate, the Agreement Between the New York Independent System Operator
and Transmission Owners (“ISO-TO Agreement”).27 Section 3 of the ISO-TO Agreement
makes NYISO ultimately responsible for controlling, operating, and maintaining the reliability of
the NYS Power System.

New York State’s special Reliability Rules28 supplement and are more stringent than the
NERC and regional standards. Some of the best known Reliability Rules are the “Thunderstorm
Alert” or “Storm Watch” rules that apply when a thunderstorm threatens the major transmission
lines that serve New York City. When a Thunderstorm Alert is in effect, NYISO is required to
commit and dispatch additional generation in New York City and to reduce the output of
generators that must rely on the at-risk transmission facilities to supply energy to New York
City. It is essential that all generators that are interconnected to the NYSTS comply with
NYISO’s instructions when the NYISO issues a Thunderstorm Alert.
The NYISO’s Tariffs implement certain Reliability Rules directly;29 while
implementation of other Reliability Rules requires close coordination between the Transmission

27 The ISO-TO Agreement is one of the NYISO’s foundational documents, and is subject to the public
interest standard of review under the Mobile-Sierra Doctrine. The agreement can be found at
http://www.nyiso.com/public/markets_operations/documents/legal_regulatory/index.jsp.

28 NYISO OATT Section 1.18 and NYISO Market Administration and Control Area Services Tariff

(“NYISO Services Tariff”) Section 2.18 define “Reliability Rules” as “Those rules, standards, procedures and

protocols developed and promulgated by the NYSRC, including Local Reliability Rules, in accordance with NERC,
NPCC, FERC, PSC and NRC standards, rules and regulations, and other criteria and pursuant to the NYSRC
Agreement.”

29 See e.g., NYISO Services Tariff Section 4.1.9 (“Generating units designated pursuant to the New York
State Reliability Council’s Local Reliability Rule I-R3 -- Loss of Generator Gas Supply (New York City) or I-R5 --

Owners and the NYISO.30 The Transmission Owners also coordinate with the NYISO on the
implementation of Applications of the Reliability Rules (“ARRs”) for those portions of the
NYSTS not included in the NYISO Controlled Transmission System.31 Coordination among the NYISO, NYCA generators and the Transmission Owners is critical to protecting NYSTS
reliability. Operating practices and procedures using NYISO’s security constrained dispatch are implemented during emergencies or other operating contingencies when time is of the essence to maintain reliability. Comprehensive training on and intimate familiarity with the Reliability
Rules and all of the ARRs that could apply to a particular NYCA generator are necessary to
coordinate effectively during these events.

PJM’s requirement of operational control of pseudo-tied NYCA generators would

jeopardize compliance with these Reliability Rules. Specifically, allowing PJM to control

Generators that are connected to the NYSTS may introduce reliability issues when a pseudo-tied generator is needed to respond to maintain reliability, consistent with longstanding NYISO
planning and operations practices.

Market Efficiency Concerns

PJM’s commitment and dispatch of pseudo-tied Generation Capacity Resources that are interconnected to the NYCA would cause significant inefficiencies in the NYISO’s Day-Ahead and Real-Time Energy Markets that would reduce the value of NYISO’s market solutions and would be expected to increase the costs incurred to serve NYCA loads.

Loss of Generator Gas Supply (Long Island), as being required either to burn an alternate fuel at designated

minimum levels, or to activate their auto-swap capability, based on forecast Load levels in Load Zones J and K (for
purposes of this Section 4.1.9, “Eligible Units”), shall be eligible to recover costs associated with burning the
required alternate fuel when Local Reliability Rule I-R-3 or I-R5 is invoked pursuant to the provisions of this
Section 4.1.9.”).

30 See Applications of the NYSRC Reliability Rules, available at

http://www.nysrc.org/pdf/NYSRCReliabilityRulesComplianceMonitoring/apprulesintro.pdf.

31 See TO Applications of NYSRC Reliability Rules, available at

http://www.nyiso.com/public/webdocs/markets_operations/committees/councils/nysrc/reliability_rules_2_2003.pdf.

If a Generation Capacity Resource that is directly interconnected to the NYCA but

pseudo-tied to PJM does not participate in the NYISO’s Day-Ahead Energy Market (“DAM”),
the NYISO will not be able to develop a least-cost Day-Ahead solution that incorporates the
reliability and market impacts that the operation of the pseudo-tied PJM Generation Capacity
Resource is expected to cause in the NYCA. PJM does not run its DAM until after NYISO’s
DAM results have ordinarily been posted.32 Because PJM is not expected to provide its Day-
Ahead schedules for pseudo-tied generators to NYISO in advance of NYISO running its DAM,
the NYISO Day-Ahead assumptions about the pseudo-tied generator’s probable operation will

introduce material uncertainties into the NYISO’s Day-Ahead solution that would be expected to increase the total cost incurred to serve NYCA load in the NYISO’s DAM and/or in its RealTime Energy Market (“RTM”).

PJM has suggested that it may use Day-Ahead congestion management to reduce its

expected impact on congestion management flowgates associated with PJM’s external Generator Capacity Resources. However, there are only two redispatch flowgates that are currently active in NYISO’s real-time congestion management process with PJM. It would be impractical to expect cross-border congestion management practices to ameliorate the impacts of transferring control of a NYCA generator to PJM. The existence of PARs and other control devices at the NYISO’s border with PJM limits the potential benefits of redispatching PJM generation to
manage congestion on flowgates located in the NYCA.

The NYISO schedules and dispatches generation in its RTM using a 2.5 hour look-ahead
Real-Time Commitment process (“RTC”) that achieves a least-cost commitment by anticipating

32 The NYISO’s Day-Ahead Market (“DAM”) closes at 5:00 a.m. (EST) on the day before the operating day and the results are ordinarily posted by 10:00 a.m. on the day before the operating day. The NYISO’s Tariffs require the DAM to be posted by 11:00 a.m. PJM’s DAM closes at 10:30 a.m. on the day before the operating day and the results are ordinarily posted by 1:30 p.m. on the day before the operating day.

changes in load, system configuration, and generator output. In order for NYISO’s RTC to
produce a least-cost solution, it must accurately reflect the expected reliability and market
impacts caused by the operation of all generation. The inability to incorporate the expected
operation of PJM’s pseudo-tied Generation Capacity Resources that are located in the NYCA
will compromise efficiency by introducing material uncertainties into the NYISO’s RTM.
PJM’s March Filing33 and Sections 7 and 8 of PJM’s pro forma pseudo-tie agreement34 each indicate that PJM intends to rely upon redispatch coordination to address transmission congestion on NYCA flowgates that is caused by PJM’s scheduling and dispatch of a pseudo-tied Generation Capacity Resource. Redispatch coordination by PJM is expected to present a less efficient solution to transmission congestion that is occurring in the NYCA than NYISO’s RTC look-ahead commitment can produce for the following reasons:

First, M2M redispatch coordination is only engaged after congestion develops and the NYCA experiences congestion costs. RTC’s look-ahead process proactively develops a leastcost solution to anticipated congestion and redispatches resources before congestion occurs. This permits RTC to incorporate generator commitment time and ramp constraints into its leastcost solution. Second, in most cases the NYCA generators that are available for commitment or redispatch by RTC will have significantly more impact on efficiently resolving the NYCA
transmission constraints that are represented by congestion management flowgates than
generators located in PJM’s Balancing Authority Area do.

33 March Filing at 4, 14-15.

34 Section 7 of PJMs pro forma pseudo-tie agreement states that Facility impacts will be controlled using

the NERC Interchange Distribution Calculator (“IDC”) process and the Congestion Management Process set forth in the PJM/MISO JOA. Section 8 of PJMs pro forma pseudo-tie agreement addresses the establishment of
Coordinated Flowgates that are used in the redispatch coordination (congestion management) process.

The Day-Ahead and real-time market efficiency concerns that the NYISO identifies in

this section of its Protest will not arise if PJM allows its external Generation Capacity Resources that are directly interconnected to the NYCA to be scheduled and dispatched by the NYISO, in accordance with the NYISO’s market rules.

2. PJM’s Pro Forma Pseudo-tie Agreement Requires a Form of

Transmission Service That Does Not Exist in the NYISO

Section 2(b) of PJM’s proposed pro forma pseudo-tie agreement requires External

Generation Capacity Resources to obtain long-term firm point-to-point transmission service “or
the equivalent thereof, as required by the PJM Governing Documents”35 in order to pseudo-tie a
generator into the PJM Balancing Authority Area. This aspect of the PJM proposal is based on
the traditional concept of physical reservation of transmission service as reflected in the pro
forma OATT, and the Commission’s rules under Order Nos. 888 and 890.
This concept is, however, fundamentally different from the manner in which the NYISO provides transmission service to its customers. In the NYISO, there are no express physical
reservations of transmission capacity in the manner contemplated by traditional firm point-to-
point service. Rather, in the NYISO, customers are entitled to schedule transactions between any
two points on the system as long as such transactions are consistent with a security-constrained
economic dispatch (as they will be in most circumstances). The only way to “reserve”
transmission capacity in New York is to couple the use of the transmission system with an
identified energy transaction. Essentially, any desired use of the transmission system can be
accommodated as long as the transmission customer is willing to pay for the cost of congestion.
The economic value of limited transmission capacity is allocated through the use of Day-Ahead

35 NYISO explained why several proposed requirements included in PJM’s pending revisions to the “PJM Governing Documents” are unjust and unreasonable in the protest that NYISO filed on March 31, 2017. See
Attachment A to this protest.

financial rights called Transmission Congestion Contracts (“TCCs”) rather than through physical reservations on the NYISO system. Customers holding TCCs are thus able to hedge against
congestion costs associated with transactions between specified points on the NYISO system. Under this approach, the NYISO makes the entire capacity of the New York State Transmission System available to customers, and most desired transactions are able to be accommodated,
subject to payment of congestion costs.

The NYISO’s financial reservation model has been in place since the NYISO

commenced operations in 1999. The Commission has repeatedly found it to be just and

reasonable.36 It facilitates the efficient operation of competitive markets by ensuring that all
available transmission capacity is able to be used, and by preventing the hoarding of scarce
capacity by market participants.37 However, the NYISO’s financial reservation model does not
fit readily with the requirement for “physical” firm point-to-point transmission service embodied
in PJM’s proposal. The NYISO does not provide firm point-to-point transmission service in the
manner contemplated by the PJM proposal, however PJM’s proposed pro forma pseudo-tie
agreement would also permit the use of “equivalent” transmission service. The NYISO believes
that it is possible for the concerns underlying the firm point-to-point requirement in the PJM
proposal to be addressed, and for the NYISO and PJM to come up with a mutually acceptable
solution that ensures the deliverability of capacity to the PJM system that is consistent within the

36 See New York Independent System Operator, Inc., 125 FERC ¶ 61,274 (2008) (Confirming that NYISO's
financial reservation model was consistent with or superior to the physical reservation requirements of Order No.
890's pro forma OATT.); New York Independent System Operator, Inc., 123 FERC ¶ 61,134 (2008) (stating same).

37 See Regional Transmission Organizations, Order No. 2000, 65 Fed. Reg. 809 (Jan. 6, 2000), FERC Stats. & Regs. ¶ 31,089 at pg. 31,126 (2000) (holding that systems based on locational prices and financial rights “provide a sound framework for efficient congestion management”), order on reh'g, Order No. 2000-A, 65 Fed. Reg. 12,088 (Feb. 25, 2000), FERC Stats. & Regs. ¶ 31,092 (2000), aff'd, Public Utility District No. 1 of Snohomish County, Washington v. FERC, 272 F.3d 607 (D.C. Cir. 2001).

NYISO’s financial reservation model. Such a solution, however, will require discussions and coordination between the NYISO and PJM.

The implementation of firm point-to-point service, as reflected in the pro forma OATT
and the PJM proposal, is fundamentally incompatible with the NYISO’s existing market rules
and, perhaps most importantly, is unnecessary to accommodate the efficient export of NYCA
capacity to PJM. It would be highly burdensome, and unjust and unreasonable, to require the
NYISO to modify its rules simply to accommodate PJM’s unilateral imposition of the point-to-
point requirement on its external Generation Capacity Resources that are interconnected to the
NYCA transmission system.

3. PJM’s Proposal that it be Granted a Firm Flow Entitlement to Use

the Transmission System of an External Balancing Authority Area Is Unjust and Unreasonable and Should be Rejected

In Section 7 of its proposed pro forma pseudo-tie agreement, PJM proposes to require the
Native Balancing Authority to “honor firm delivery transfer status via third party firm flow limit
calculation procedure” pursuant to the CMP provisions of the PJM/MISO JOA. NYISO was not
able to locate the words “firm delivery transfer status” or the words “third party firm flow limit”
in MISO’s posted version of the PJM/MISO JOA.38 Based on proposed tariff revisions included
in PJM’s March Filing, the NYISO believes that PJM intends for the quoted terms to require the
Native Balancing Authority to grant PJM a “firm flow entitlement” to use the Native Balancing
Authority Area’s transmission system to deliver energy from a pseudo-tied Facility to the PJM
Balancing Authority Area.

38 Link to MISO’s posting of the PJM/MISO JOA:

https://www.misoenergy.org/Library/Repository/Tariff/Rate%20Schedules/Rate%20Schedule%2005%20-
%20MISO-PJM%20JOA%20and%20CMP.pdf

PJM’s March Filing stated that PJM should receive a “firm flow entitlement” on any
coordinated redispatch flowgate associated with an external Generation Capacity Resource.39 Proposed Section 5.5A(b)(i)(D) of PJM’s Tariff (included in PJM’s March Filing) requires a PJM Capacity Market Seller to secure “written acknowledgement from the external Balancing Authority Area” that “firm allocations associated with any coordinated flowgate applicable to the external Generation Capacity Resource … will be allocated to PJM.”

In its March Filing PJM argued that granting PJM a “firm flow allocation” is appropriate
because “a pseudo-tied resource is capacity committed to PJM load, and therefore, PJM load
should be assigned the firm flow allocation from that coordinated flowgate.”40 PJM’s position is
unjust and unreasonable, and should be rejected by the Commission for the reasons explained
below.

A firm flow entitlement is, in essence, a right to use a portion of another Balancing
Authority’s transmission system without paying for that use. PJM and NYISO have granted
entitlements to use each other’s transmission system in a carefully studied and negotiated,
mutually agreed, “swap” of rights in accordance with rules set forth in the NYISO/PJM JOA.
Each ISO/RTO was granted rights to use specifically identified slices of the other entity’s
transmission system in the interest of enabling more efficient interregional coordination. There
is no “swap” proposed in Section 5.5A(b)(i)(D) of the PJM OATT. It simply requires that PJM
be allocated entitlements to use another Balancing Authority Area’s transmission system without
paying for that use or providing any other form of compensation in return.
PJM’s proposed requirement is unjust and unreasonable because it ignores the fact that any use PJM makes of an external Balancing Authority Area’s transmission system is an

39 March Filing at 9-10.

40 March Filing at 15-16.

incremental addition to the native Balancing Authority Area’s own use of its transmission system
to serve that external Balancing Authority’s native load customers (who paid for the construction
of the transmission system). It appears to NYISO that Section 5.5A(b)(i)(D) of the PJM OATT
(which is a new provision that PJM proposed in its March Filing) requires that PJM be given
transmission rights without paying for them. PJM’s proposal that it should receive “firm
allocations associated with any coordinated flowgates applicable to the external generator under
an agreed congestion management process” is unjust and unreasonable, and should be rejected.
Section 6.2.1.1 of Schedule D to the NYISO/PJM JOA states “External Capacity
Resources may be included in the M2M Entitlement calculation to the extent the Parties mutually
agree to their inclusion” and “Inclusion of PJM External Capacity Resources that exceed the net
M2M Entitlement impact of the PJM External Capacity Resources that were used for the initial
implementation of the M2M coordination process must be mutually agreed to by the Parties.”
The NYISO cannot agree to grant PJM a firm flow entitlement to use the NYCA transmission
system unless PJM provides fair compensation in return.

Although NYISO is not prepared to grant PJM or a PJM External Capacity Resource a
“physical” firm flow entitlement on the NYCA transmission system, if a PJM External Capacity
Resource pays for upgrades to the NYCA transmission system in order to improve its
deliverability to the PJM Balancing Authority Area, the upgrades may result in an award of
Incremental Transmission Congestion Contracts (“TCCs”) in accordance with the NYISO’s
Open Access Transmission Tariff.41 TCCs are financial instruments that provide congestion

41 See NYISO OATT Section 19.2.4.

payments42 that can be used to hedge the congestion cost of delivering a PJM External Capacity Resource to the PJM Balancing Authority Area in the NYISO’s Day-Ahead Market.

4. PJM’s Proposed Rules Addressing Generators that Simultaneously

Sell Capacity to Multiple Balancing Authority Areas Are Incomplete

Section 2(p) of PJM’s proposed pro forma pseudo-tie agreement addresses generators
that are selling a portion of their capacity to PJM, and the remainder to the Native Balancing
Authority Area. PJM proposes two different allocations of split capacity sales. PJM’s first
option allocates the “first __ MW dispatched from” a generator to the Native Balancing
Authority, and allocates the remaining MW of energy and ancillary services to the PJM
Balancing Authority Area via the Pseudo-Tie. PJM’s second option states that some of the MW
of energy and ancillary service will remain with the Native Balancing Authority Area and not be
subject to the Pseudo-tie, and specifies the percentage of the generator’s installed capacity that
will be dedicated to the Pseudo-Tie.

It is NYISO’s understanding that the pseudo-tie requirement mandates that dispatch

control over the pseudo-tied output be given to PJM, and that PJM treats the pseudo-tied output
as part of its Balancing Authority Area. If some of the MW are being used to satisfy capacity
obligations in the NYISO, then the two Balancing Authority Areas each having dispatch control
over the generator raises a host of practical issues that are not addressed in Section 2(p) of PJM’s
pro forma pseudo-tie agreement. If fewer MW than the minimum stable output of the generator
were dedicated to PJM via the pseudo-tie, would PJM have the right to require the Generator’s
commitment? If so, this would force the generator to be committed and to sell energy
uneconomically in the Native Balancing Authority Area in order to satisfy its capacity obligation
to PJM. The NYISO has concerns about how a partially pseudo-tied generator would structure

42 See NYISO OATT Section 20.2.3.

its energy and ancillary service offers to recover its incremental costs at times when the

generator’s commitment is not economic in both of the markets in which it participates. How
would start-up costs be allocated between the two Balancing Authority Areas?43 Finally, it is
unclear how the dual authority to instruct the generator’s operation would be applied in
circumstances where the two Balancing Authority Areas seek to dispatch the generator in ways
that are inconsistent with one another, or that are inconsistent with the generator’s operating
capabilities. PJM’s proposed pro forma pseudo-tie rules raise a number of practical operating
questions and leave the door open to scenarios in which a generator might have to produce
energy at a loss in one of the two markets where it has assumed a capacity obligation.
The NYISO’s concerns are not addressed in PJM’s proposed pro forma pseudo-tie
agreement. Without rules negotiated and agreed to by both participating Balancing Authority
Areas to govern bifurcated capacity sales, the pro forma terms and conditions are unjust and
unreasonable.

5. Energy Produced by PJM Capacity Performance Resources that are

Interconnected to NYCA Transmission Facilities Must be Accounted for as Interchange Between the NYISO and PJM

Section 7 of PJM’s pro forma pseudo-tie agreement proposes to require the Native
Balancing Authority Area to agree to waive the NERC tagging requirement for the energy
produced by a pseudo-tied Facility. Section 2(g) of PJM’s proposed pro forma pseudo-tie
agreement states that the Native Balancing Authority and the PJM Balancing Authority will
include the real-time pseudo-tie value in their respective calculations of Actual Net Interchange
(“ANI”) and Area Control Error (“ACE”). The NYISO is prepared to consider whether it might
be acceptable to waive the NERC tagging requirement. However, the NYISO believes it is

43 Consider a hypothetical scenario where one of the Balancing Authority Areas would not have started-up
the generator, but dispatches the generator to provide energy after the other Balancing Authority Area instructs it to
start-up.

necessary to explicitly incorporate the scheduled output from PJM capacity resources that are interconnected to the NYCA transmission system into the scheduled interchange between the NYISO and PJM Balancing Authority Areas.

The NYISO/PJM border is fundamentally different from PJM’s borders with its other

neighbors, particularly PJM’s border with MISO where most of the generators that are presently
pseudo-tied to PJM are located. There are currently seven PARs in-service at the NYISO/PJM
border that are operated to achieve specific components of scheduled interchange in accordance
with the requirements of the NYISO/PJM JOA and Section 17.1.1.1.2 of the NYISO Services
Tariff. There are also three scheduled lines located at NYISO’s border with PJM that use direct
current technology or variable frequency transformers to control power flows to match the

interchange that is scheduled over those facilities.

The Ramapo, ABC and EFO PARs that are located in New York or New Jersey at the NYISO’s border with PJM (collectively, the “NY/NJ PARs”) are currently being operated to achieve scheduled interchange and to implement M2M PAR coordination in accordance with Schedule D to the NYISO/PJM JOA, which is consistent with how the NYISO and PJM have operated the Ramapo PARs since 2013.44

The proposed “Target Values” for the NY/NJ PARs incorporate the net interchange
schedule between PJM and the NYISO over the AC tie lines, distributed across the various
NY/NJ PARs using allocations that NYISO and PJM developed with input from the affected
transmission owners.45 Section 5.5 of Schedule D to the NYISO/PJM JOA makes clear that the

44 See New York Independent System Operator, Inc. and PJM Interconnection, L.L.C., Order Accepting and
Suspending Filing, Subject to Refund, and Further Commission Order, 158 FERC ¶ 62,270 (March 31, 2017); see
also, Section 7.2 of Schedule D to the proposed JOA revisions that were jointly filed by PJM and NYISO in Docket
No. ER17-905-000.

45 See Table 5 in Section 7.2.1 of Schedule D to the proposed JOA revisions that were jointly filed by PJM and NYISO in Docket No. ER17-905-000.

interchange schedules it addresses are imports, exports and wheels-through the NYCA and PJM that are scheduled to flow over a proxy bus or a scheduled line. PJM’s use of the NYISO’s transmission system to serve PJM’s Rockland Electric load is also explicitly addressed in
Schedule D to the NYISO/PJM JOA.

Other than PJM service to its Rockland Electric load, Schedule D to the NYISO/PJM
JOA does not presently allow for the use of untagged transmission service to deliver power
across the NYISO/PJM border. PJM’s unwillingness to permit external Generation Capacity
Resources to use scheduled interchange to deliver energy to PJM across its border with the
NYISO is inconsistent with the currently effective market rules that NYISO and PJM jointly
developed for operating the NY/NJ PARs.46 The inconsistency between PJM’s requirements for
how external Generation Capacity Resources must deliver energy to PJM and the rules NYISO
and PJM jointly developed addressing the scheduling of transactions and operation of PARs at
their common border could cause significant market inefficiencies and reliability concerns if the
NYISO and PJM do not incorporate energy produced by PJM Capacity Performance Resources
into the recognized interchange between their Balancing Authority Areas.
Failure to meet interchange flow targets can result in financial settlement obligations being assigned to PJM or to NYISO under the M2M PAR coordination rules in the NYISO/PJM JOA.47 NYISO and PJM will use NY/NJ PAR taps to prevent energy produced by a pseudo-tied generator from flowing into PJM over any NY/NJ PAR-controlled interface when power flows fall outside of the targets specified in Schedule D to the NYISO/PJM JOA. When the NY/NJ PARs are operated to block untagged power flows, energy produced by an external Generation

46 PJM’s requirements for energy deliveries from external Generation Capacity Resources is also

inconsistent with the jointly developed rules that were in Schedule D to the NYISO/PJM JOA from January 15, 2013 to April 31, 2017.

47 See Schedule D to the JOA, Sections 7.2.2, 7.2.3, 8.1 and 8.3.

Capacity Resource would be expected to flow into PJM over the uncontrolled interconnections between Pennsylvania and Western New York. These untagged power flows would have a
different value than power flows over the NY/NJ PAR controlled facilities, would require the
NYISO and PJM to consume NY/NJ PAR taps (a limited resource48) to block untagged flows, and could present reliability concerns that are described elsewhere in this protest.
The efficiency and reliability concerns NYISO identifies in this section of its Protest could be avoided if PJM were to instead require external Generation Capacity Resources to use scheduled interchange to deliver capacity to PJM at PJM’s border with the NYCA, or if the NYISO and PJM develop an alternative method of incorporating the output of Generation
Capacity Resources into net interchange. NYISO is prepared to work with PJM to ensure PJM has access to the information it requires to monitor the delivery of energy from external
Generation Capacity Resources located in New York.

6. PJM’s Pro Forma Pseudo-Tie Agreement Should Permit a Pseudo-

Tied Generator to Be Committed for Reliability Purposes By its Native Balancing Authority at Times When the Generator Is Not Committed by PJM

ISO-New England, Inc.’s (“ISO-NE’s”) tariffs facilitate the participation of external resources in its Forward Capacity Markets while still allowing them, under certain
circumstances, to provide capacity and energy to the Balancing Authority Areas to which they are physically interconnected. Under the ISO-NE rules, external capacity resources remain available in the native region’s commitment and dispatch and are permitted to supply energy to their native region if it otherwise is not required by ISO-NE.49

48 See Section 7.2 of Schedule D to the proposed NYISO/PJM JOA revisions that were jointly filed by PJM and NYISO in Docket No. ER17-905-000.

49 See New York Indep. Sys. Operator, Inc., 158 FERC ¶ 61,064 at P 39 (2017) (“Per the ISO-NE Tariff,
when an import generator is located in a control area with which the ISO-NE control area has implemented certain
enhanced scheduling procedures (e.g., NYISO), “the resource must comply with all offer, outage scheduling and

PJM’s proposed pro forma pseudo-tie agreement explicitly authorizes the Native

Balancing Authority to “direct that the amount of energy utilizing the Pseudo-Tie of the Facility
be adjusted for local transmission reliability concerns, and shall be responsible for mitigating the
transmission related congestion on the transmission system where the Facility is connected.”50
The preamble to PJM’s pro forma agreement further states that “the Facility will not be directed
to serve load in the Native Balancing Authority Area at a time when the PJM Balancing
Authority Area requires the output of the Facility, except during a local transmission reliability
emergency…”51 NYISO reads the cited provisions of the pro forma pseudo-tie agreement as
authorizing a Native Balancing Authority Area (1) to specify or to limit the output of, a pseudo-
tied Facility in order to address or mitigate local transmission reliability concerns, and/or (2) to
use the output of the pseudo-tied Facility to serve the load of the Native Balancing Authority
Area in order to address or mitigate local transmission reliability concerns. PJM’s provisions
that empower the Native Reliability Coordinator to dispatch a pseudo-tied Facility to address
local transmission reliability concerns are helpful. However, NYISO believes there are
additional improvements that need to be made.

NYISO does not read Section 2(l) as authorizing the Native Balancing Authority Area to
require the commitment of a pseudo-tied Facility to address or mitigate local transmission
reliability concerns. PJM’s pro forma pseudo-tie agreement appears to be silent on the subject of
whether, and the circumstances under which, its external Generation Capacity Resources will be
available for commitment by the Reliability Coordinator of the Native Balancing Authority Area
to which a pseudo-tied generator is directly interconnected. NYISO requests that the

operating requirements applicable to capacity resources in the native Control Area.”); citing ISO-NE Tariff, Section III.13.6.1.2.3 (b).

50 Pro forma pseudo-tie agreement Section 2(l).

51 Pro forma pseudo-tie agreement at 3.

Commission direct PJM to revise its pro forma pseudo-tie agreement to explicitly permit the
Native Balancing Authority Area to schedule, dispatch and compensate a PJM Generation
Capacity Resource at times when (a) PJM has not committed the resource, and (b) the PJM
Generation Capacity Resource’s operation is necessary to protect reliability in the Native
Balancing Authority Area. The NYISO respectfully submits that it is unjust and unreasonable
for PJM to fail to clearly specify that Reliability Coordinators that are responsible for
maintaining reliability in the Balancing Authority Area to which a pseudo-tied Generation
Capacity Resource is directly interconnected may commit, dispatch, and compensate pseudo-tied generators to address reliability concerns at times when PJM has not scheduled its external
Generation Capacity Resource to operate. The Commission should direct PJM to revise Section 2(l) of its pro forma pseudo-tie agreement accordingly.

V. THE COMMISSION SHOULD DIRECT PJM TO WORK WITH THE NYISO TO

DEVELOP MUTUALLY ACCEPTABLE ALTERNATIVE MEANS OF ADDRESSING PJM’S OBJECTIVES

For the reasons set forth above, PJM’s August Filing is unjust and unreasonable, at least
as applied to generation that is directly interconnected to the NYCA transmission system, and
should not be unconditionally accepted in its current form. PJM has not demonstrated that its
proposed tariff revisions are just and reasonable. Nor has PJM justified requiring the NYISO to
make the sweeping changes to its Tariffs, market rules and software that would be necessary to
accommodate PJM’s proposals without compromising reliability or market efficiency in New
York.

PJM has indicated that it does not intend to enter into pseudo-tie arrangements that have
not been agreed to by all affected parties, including native Balancing Authorities such as the

NYISO.52 If this is true then there is no prospect that the PJM Filing’s proposals would ever be
implemented for generators that are directly interconnected to the NYCA because PJM’s
proposed prerequisites cannot be satisfied and NYISO could not voluntarily agree to support a
pseudo-tie to PJM under the terms and conditions included in PJM’s pro forma pseudo-tie
agreement, or under the tariff revisions proposed in PJM’s March or August Filings. The
NYISO is willing to work with PJM to develop an alternative method of selling capacity across
their common border that would be acceptable to both PJM and the NYISO.
Accordingly, the Commission should condition its acceptance of PJM’s March and
August filings on PJM’s submission of tariff rules that do not mandate the use of pseudo-ties at
all of its borders and that give PJM sufficient flexibility to accommodate differences between
PJM’s neighboring Balancing Authority Areas. NYISO’s requested relief will require PJM to
abandon its stated goal of having one-size-fits-all uniform pseudo-tie arrangements in place with
all of its neighbors.53 PJM’s goal is unrealistic because PJM’s proposal is not compatible with
the NYISO’s Tariffs, Agreements and market rules, because the interface between the NYCA
and the PJM Control Area is different from PJM’s border with its other neighbors, and because
PJM is required to work with the NYISO to address all implementation issues associated with
implementing pseudo-ties, including reliability and commercial obligations and other seams
issues.

VI.CONCLUSION

Wherefore, NYISO respectfully requests that the Commission grant its intervention in the
above-captioned proceeding, find that the PJM Filing’s proposals are not just and reasonable, at

52 See, e.g., January MRC Presentation at 5 (“PJM will not approve any Pseudo-Ties that do not have signoff by all affected entities.”).

53 See March Filing at 4-5.

least as applied to generators that are directly interconnected to the NYCA, and condition its
acceptance of PJM’s March and August filings on PJM’s submission of tariff rules that do not mandate the use of pseudo-ties at all of its borders and that give PJM sufficient flexibility to
accommodate differences between PJM’s neighboring Balancing Authority Areas. At minimum, the Commission should require PJM to make explicit in its tariff that pseudo-tie arrangements can only occur if the native Balancing Authority agrees and elects to execute a pseudo-tie
agreement with PJM and the applicable generator. This requirement would codify in PJM’s
tariff the Commission’s finding in prior proceedings.54

Respectfully submitted,

/s/ Alex M. Schnell

Alex M. Schnell

Assistant General Counsel/

Registered Corporate Counsel

New York Independent System Operator, Inc.

Dated: September 1, 2017

cc:Michael Bardee

Anna Cochrane
Jette Gebhart
Kurt Longo

David Morenoff
Daniel Nowak
Larry Parkinson

J. Arnold Quinn
Douglas Roe

Kathleen Schnorf Gary Will

54 See June 2015 Order at P 96.

Attachment A

Motion to Intervene One Day Out of Time and Protest of
The New York Independent System Operator, Inc.

Submitted in Docket No. ER17-1138-000 on
March 31, 2017