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Transmission 2000: Can ISOs Iron Out the Seams?

One Market? The Case for Consolidation
Fortnightly Magazine - May 1 2000

trends."

Mr. Charles King March 6, 2000
Vice President-Market Services
New York ISO
5172 Western Turnpike
Altamont, NY 12009

Dear Chuck:

Historically, PJM and NY have prescheduled transactions between the control areas on a day-ahead basis. Transactions were scheduled to allow each system to better plan and prepare their generation commitments and transmission analysis for the next day. PJM's current scheduling process schedules generation to cover the expected obligations to other control areas and maintains an acceptable ramp for control area interchange based on the prescheduled values. Over the last few weeks, PJM has noticed a disturbing trend of prescheduled contracts being routinely, and in many times significantly, curtailed. This has caused hardships to PJM operations that are unacceptable.

PJM understands the curtailments are a result of the structure of the NY market, which subjects contracts scheduled in the day-ahead market to reevaluation again in the hour-ahead market. The reevaluation many times has curtailed prescheduled transactions based on the perceived economic value of the transaction. PJM has no way of predicting these results and many times has had as little as 10 minutes notice to adjust its system to respond to the curtailments. These unexpected curtailments defeat the purpose of the scheduling transactions in order to prepare both of our systems. In fact, it appears many times we are confusing our operators as to the expected operations.

PJM requests that we return to the policy of only prescheduling contracts that have a high probability of operating as scheduled and that are not subject to reevaluation. PJM understands you may have the ability to change your procedures to allow day-ahead schedules to be considered "must run" intra day. PJM believes this change would allow us to continue prescheduling contracts if they are considered "must run" by both ISOs. If NY cannot change its policy, PJM will be forced to evaluate how we protect the operations of our system. This may include discontinuing the practice of prescheduling any transactions with NY ISO.

Hopefully we can resolve these problems in the short term and continue working with our memberships and through the ISO MOU to further enhance our procedures and market rules to make operations as seamless as possible.

Sincerely,
Bruce M. Balmat
Vice President
System Operations Division
PJM Interconnection

Some analysts say the letter was an example of squabbling between the ISOs. The ISO chiefs, however, characterize the letter as proof of their efforts to collaborate.

Says PJM's Harris, "I think the letter speaks for itself. ISO New York was being formed. In this particular matter we feel we had to take care of the reliability in the liquid market in PJM. Their actions were having a direct effect upon us. We had to make it very clear [that] that kind of action was having an impact."

New York ISO's Museler says PJM's concerns were legitimate, and his organization has been responsive.

"We are working with them to try to work out those transaction issues. The letter addressed one particular aspect of our transaction issues in which our protocols for external transactions are different

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