On May 21, 2020, FERC issued three orders denying, or denying in part, complaints against PJM Interconnection, L.L.C. (“PJM”), finding that the complainants failed to demonstrate that PJM’s pseudo-tie rules are unjust, unreasonable, or unduly discriminatory or that such rules had been applied in a manner inconsistent with the PJM Tariff. With respect to PJM’s market-to-market flowgate test and its electrical distance requirement, however, FERC granted the complaints in part, finding that PJM’s Tariff fails to provide an open and transparent process regarding PJM’s administration of those requirements.
All three complaints involved external resources seeking to participate in PJM’s capacity auctions. Under PJM’s Tariff, such resource must be pseudo-tied from their native balancing authority area (“BAA”) and meet a set of threshold Tariff requirements that were approved by FERC in 2017. These requirements include, among other things, satisfaction of a flowgate test and an electrical distance requirement. The complaints filed by Brookfield Energy Marketing LP (“Brookfield”) and Tilton Energy LLC (“Tilton”) focused largely on PJM’s flowgate test, whereas the Cube Yadkin Generation, L.L.C. (“Cube Yadkin”) complaint focused on the electrical distance requirement.
FERC’s May 21 Orders addressing the Brookfield, Tilton, and Cube Yadkin complaints came after a FERC-instituted a paper hearing examining the issues raised by the complaints, including PJM’s interpretation and application of the flowgate test. In its May 21 Orders, FERC found that none of the complainants had demonstrated that the pseudo-tie requirements themselves were unjust and unreasonable, or the PJM had failed to properly follow its Tariff. However, FERC did find that the PJM Tariff was unjust and unreasonable for failing to provide an open and transparent process for pseudo-tie applicants to determine the reasons why PJM determined that their resource failed the relevant tests. FERC recognized the complexity of the system modeling involved and stated that PJM should be able to change its modeling assumptions as needed, but explained that any such changes must be transparent and afford interested parties the opportunity to question and challenge the changes.
To remedy the unjustness and unreasonableness of the tariff, FERC ordered PJM to revise Attachment DD of its Tariff to require PJM to (i) post to its website material assumptions that are used in the modeling, (ii) provide pseudo-tied applicants a copy of their test results and related workpapers, and, (iii) upon request, meet with each applicant to discuss the specific modeling assumptions employed by PJM and ultimate test results.