MISO Quarterly Seams Report

April 11, 2017

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Contents

1. PJM ......................................................................................................................................................... 5

i. FERC Order 1000 .............................................................................................................................. 5

ii. MISO-PJM Joint RTO Planning Committee (JRPC) ................................................................ 5

iii. MISO-PJM Interregional Planning Stakeholder Advisory Committee (IPSAC) .......... 6

iv. Coordinated Transaction Scheduling ........................................................................................ 7

v. Interface Pricing ................................................................................................................................ 7

vi. Pseudo-Ties......................................................................................................................................... 8

2. SPP .......................................................................................................................................................... 9

i. MISO-SPP Interregional Planning Stakeholder Advisory Committee (IPSAC) .......... 9

ii. MISO-SPP Joint Planning Committee (JPC) ............................................................................. 9

iii. Interface Pricing ............................................................................................................................. 10

iv. Market-to-Market Enhancements ........................................................................................... 11

3. SERTP - Southeastern Regional Transmission Planning (Includes Southern Company, TVA, AECI, and LG&E, and others) ...................................................................... 11

i. Interregional Coordination ........................................................................................................ 11

4. Multiregional Activities ............................................................................................................... 12

i. Congestion Management Process Working Group ............................................................ 12

ii. Parallel Flow Visualization Project ......................................................................................... 15

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Executive Summary

PJM Seams Updates

MISO-PJM Joint RTO Planning Committee (JRPC): FERC accepted MISO’s fourth compliance filing on Order 1000 with PJM with no additional compliance directives, thus concluding docket ER13-1943. FERC also issued Orders on Docket EL13-88 (“NIPSCO Order”) accepting JOA and Tariff changes filed by MISO and PJM on June 20, 2016 and December 15, 2016 (subject to further compliance) and ruling on open rehearing and clarification requests. MISO and PJM were given an additional seven compliance directives which, after a granted extension request, are due April 24, 2017. MISO and PJM filed JOA edits on December 30, 2016 to incorporate the new Targeted Market Efficiency Project (TMEP) type for projects justified on historical congestion. Regional cost allocation is still being finalized in the RECBWG and Tariff filings are due at the end of April.

MISO-PJM Interregional Planning Stakeholder Advisory Committee (IPSAC): MISO and PJM are in the second year of their two-year Interregional Market Efficiency Project study. MISO published regional issues, for interregional project consideration and solicited interregional projects from stakeholders, concurrent with PJM’s regional project solicitation window. MISO and PJM will evaluate interregional project proposals submitted to both regional processes. Analysis is expected to begin in April and May, with any potential Interregional Market Efficiency Projects recommended for MTEP17 and RTEP17 inclusion. Coordinated Transaction Scheduling: MISO has been performing regression and integration testing with the latest CTS engine release. In addition, MISO and PJM staff have been collaborating on the development of a joint functional testing plan. The joint functional testing has been tentatively planned for end of May at MISO. Targeted implementation date by MISO and PJM for CTS is October 3, 2017. Interface Pricing: MISO and PJM staff posted an updated “MISO-PJM Interface Pricing Post Implementation Document” as meeting materials for the February 28, 2017 JCM meeting. Sample historical real-time data, Day-ahead data, and FTR data have been exchanged between the RTOs to support and document post implementation process. The collaborative approach has been implemented for this year’s FTR allocation, and it will be implemented in MISO Real-time on June 1, 2017. Pseudo-Ties: MISO has submitted to FERC a new Attachment to the Tariff, Attachment FFF Pseudo-Tie Agreement and is responding to comments and protests. MISO BPM 030 Pseudo-Ties is currently undergoing final approvals prior to being posted on the MISO internet site. MISO and PJM are reviewing the JOA for updates and clarifications regarding Pseudo-Ties.

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SPP Seams Updates

MISO-SPP Interregional Planning Stakeholder Advisory Committee (IPSAC): MISO and SPP had an in-person IPSAC meeting at the MISO offices in Metairie, LA on March 9, 2017. The bulk of the meeting focused on the 2016 Coordinated System Plan (CSP) study although several other topics were discussed. MISO and SPP shared preliminary results for the 2016 CSP study and discussed next steps. Currently, there are several interregional transmission projects that pass the MISO-SPP Joint Operating Agreement criteria although further evaluation is needed. There are also a few additional projects that show potential that are close to the JOA defined criterion. MISO and SPP will continue to evaluate these projects and share final results at the April 24, 2017 IPSAC meeting. MISO and SPP also presented on a variety of other topics including the 2017 joint study effort, APC calculation differences, MISO TMEPS and efforts related to regional coordination. MISO-SPP Joint Planning Committee (JPC): MISO and SPP had a JPC meeting on February 7, 2017. The primary purpose of that meeting was to discuss the upcoming IPSAC meeting (March 9, 2017) and figure out what the agenda was going to look like. MISO and SPP discussed what agenda items each RTO would prepare. Also, MISO and SPP discussed the status of the 2016 CSP study and went through the work left to be completed. Additional items were discussed such as the JPC chair moving over to MISO for 2017, and regional coordination efforts. Interface Pricing: MISO and SPP have communicated their plan to develop an impact analysis report that identifies the market inefficiency by comparing the current interface pricing method to an ideal method. The RTOs have started to exchange analysis results based on real-time data from March 1, 2015 to Feb 29, 2016. The full analysis is expected to be completed by the end of April 2017, and the RTOs will review analysis results with stakeholders of both markets at the May MISO-SPP JOA meeting.

Other Seams & Multi-regional Activities

Congestion Management Process Working Group: T h e N o v e m b e r 1 0 , 2 0 1 7 m e e t i n g was spent identifying significant design component issues associated with the freeze date update and where consensus may exist among CMP entities. On the December 9th conference call the following topics were discussed: NNL Allocation Activities, CMPWG Metrics Report, Treatment of EAR in MISO Market Flows, and CMPWG Charter.

Parallel Flow Visualization project: OATI has enabled the first phase of the PFV software development (Change Order 397) in DEMO. This includes generation priorities and flowgate allocation process. Testing is underway. All OATI programming should be done by March 2017 as per the initial schedule.

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Introduction

Since September 2012, MISO started publishing Quarterly Seams reports based on input from stakeholders to provide important updates on MISO’s coordination activities with its Seams entities – PJM, SPP, Southern Co., TVA and others. Coordination activities specific to each MISO Seams Entity are described in various sections below.

The list of Seams Quarterly Reports is available at https://www.misoenergy.org/WhatWeDo/StrategicInitiatives/Pages/Seams.aspx

1. PJM

i. FERC Order 1000 Q1 2017 Update On January 9, 2017, FERC accepted MISO’s November 22, 2016 Fourth Compliance Filing with no additional compliance directives. This concludes docket ER13-1943. Q4 2016 Update FERC issued an Order on Rehearing and Compliance on October 28, 2016 accepting the June 20, 2016 compliance filing subject to further compliance filings. Given a 30 day due date, MISO and its filing partners submitted a compliance filing on November 22, 2016. The filing addressed all four non-substantive directives from the October 28 Order. The Order also denied rehearing requests from PJM, PJM Transmission Owners, and MISO Transmission Owners.

ii. MISO-PJM Joint RTO Planning Committee (JRPC) Q1 2017 Update

On January 19, 2017, FERC issued an Order on Docket EL13-88 (“NIPSCO Order”). The Order accepted JOA and Tariff changes filed by MISO and PJM on June 20, 2016, including:

Detailed Coordinated System Plan study steps and timeline (subject to further compliance)

Removal of interregional benefit-to-cost ratio (i.e. “third hurdle”)

Use of regional benefits as interregional cost split

Generation interconnection coordination

Lowering 345 kV and removal of $5 million Interregional Market Efficiency Project thresholds (MISO Tariff only)

The Order also ruled on open rehearing and clarification requests. Notably, FERC denied ITC’s request for clarification that MISO must lower its Market

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Efficiency Project voltage threshold with SPP, thus affirming that the threshold was lowered only for the PJM seam. Additionally, FERC granted an OMS request for clarification that lowering the Market Efficiency Project voltage does not pre-determine cost allocation, leading to an additional directive for MISO to affirm or propose new cost allocation for sub-345 kV Interregional Market Efficiency Projects with PJM. MISO and PJM were given 7 compliance directives which, after a granted extension request, are due April 24, 2017. On January 19, 2017, FERC also accepted, in a separate Order under Docket EL13-88, JOA changes filed by MISO and PJM on December 15, 2016 to include generation deactivation coordination. MISO and PJM filed JOA edits on December 30, 2016 to incorporate the new Targeted Market Efficiency Project (TMEP) type for projects justified on historical congestion. Regional cost allocation is still being finalized in the RECBWG and Tariff filings are due at the end of April 2017. Q4 2016 Update

On FERC Docket EL13-88 (“NIPSCO Order”), MISO and PJM submitted the final rounds of directives on October 18, 25, and December 15, 2016. Those directives included an informational filing on how a joint model with common assumptions could be implemented into the RTOs’ regional planning processes and a status report and JOA edits for including generation retirement coordination procedures in the JOA. MISO and PJM continued to refine the Targeted Market Efficiency Project (TMEP) proposal to approve projects justified on historical congestion and will file JOA edits at the end of 2016. Regional cost allocation is still being finalized and Tariff filings are expected in Q1, 2017.

iii. MISO-PJM Interregional Planning Stakeholder Advisory Committee (IPSAC) Q1 2017 Update

MISO and PJM are in the second year of their 2-year Interregional Market Efficiency Project study. The first year is focused on issue identification and the second on project solicitation and evaluation. MISO published regional issues, for interregional project consideration, on January 16, 2016. MISO solicited interregional projects from stakeholders through the end of February 2017, running concurrent with PJM’s regional project solicitation window. MISO and PJM will evaluate interregional project proposals submitted to both regional processes. The RTOs received 8 interregional project proposals from 6 proposing entities. 3 projects are upgrades and 5 are greenfield. The cost ranges between $1 million and $198 million (in service year dollars). Notably, half of the projects are sub-345 kV, which now qualify as MISO Market Efficiency Projects after FERC’s EL13-88 ruling. Analysis is expected to begin in April and May, with any potential Interregional Market Efficiency Projects

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recommended for MTEP17 and RTEP17 inclusion.

MISO and PJM also performed their 2017 annual issues review focused on reliability projects. The RTOs found no opportunities for an Interregional Reliability Project and shared their conclusion at the March 24, 2016 IPSAC.

Links to MISO-PJM IPSAC meeting materials:

January 20, 2017

March 24, 2017

Q4 2016 Update

MISO and PJM have completed the 2016 Targeted M2M Congestion Study and found 5 potential projects. The RTOs are waiting for favorable approval of the TMEP project type and benefit calculation before recommending these projects to their respective Boards.

Links to MISO-PJM IPSAC meeting materials:

October 28, 2016

December 2, 2016

iv. Coordinated Transaction Scheduling Q1 2017 Update MISO has been performing regression and integration testing with the latest CTS engine release. In addition, MISO and PJM staff have been collaborating on the development of a joint functional testing plan. The joint functional testing has been tentatively planned for end of May at MISO. Targeted implementation date by MISO and PJM for CTS is October 3, 2017. Q4 2016 Update MISO has been performing regression and integration testing with the latest CTS engine release. In addition, MISO and PJM staffs have been collaborating on the development of joint system testing plan. Targeted implementation date by MISO and PJM for CTS is October 3, 2017.

v. Interface Pricing Q1 2017 Update MISO and PJM staff posted an updated “MISO-PJM Interface Pricing Post Implementation Document” as meeting materials for the February 28, 2017 JCM meeting. Sample historical Real-Time data, Day-Ahead data, and FTR data have been exchanged between the RTOs to support and document post implementation process. The collaborative approach has been implemented for this year’s FTR allocation, and it will be implemented in MISO Real-Time on June 1, 2017. Q4 2016 Update

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MISO and PJM staffs continue to develop the post implementation documentation. Sample historical real-time data have been exchanged between the RTOs to support and document post implementation process. Agreement is to implement the collaborative approach for the next FTR 2016/2017 planning year beginning June 1, 2017. See link to meeting materials in Q3 2016 update for more details on collaborative approach.

vi. Pseudo-Ties

Q1 2017 Update MISO presented the proposed Pseudo-Tie Agreement and Business Practice Manual to the Reliability Subcommittee at a special meeting on December 16th. At the meeting, the MISO RSC approved the proposed documents. MISO filed the Pseudo-Tie Agreement with FERC as Attachment FFF to the MISO Tariff on February 28th. MISO is reviewing the comments and protests submitted and will be submitting a response.. A new Business Practice Manual – BPM-030 Pseudo-Ties – is currently undergoing final approvals prior to being posted on the MISO internet site. MISO and PJM continue to collaborate on implementation of Pseudo-Ties. We are jointly reviewing the Joint Operation Agreement (JOA) for updates and clarifications regarding the implementation and operation of Pseudo-Ties going forward. Q4 2016 Update

MISO presented updates to its pseudo-tie policy at the JCM and Reliability Subcommittee. MISO and PJM presented an update on pseudo-ties at the November JCM. MISO continues to make progress on the issue of “Make Whole Payments for Pseudo-Ties” through the Markets Subcommittee. In the coming months, MISO will continue to enhance its pseudo-tie policy through the Reliability Subcommittee, Planning Subcommittee, and Markets Subcommittee. MISO is targeting a December or January filing for its tariff updates and will be presenting the proposed updates at a special meeting of the RSC on December 16th. PJM continues to work with its stakeholders through the Underperformance Risk Management Senior Task Force and is planning to make a tariff filing in the coming months.

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2. SPP

i. MISO-SPP Interregional Planning Stakeholder Advisory Committee (IPSAC)

Q1 2017 Update MISO and SPP had and in-person IPSAC meeting at the MISO offices in Metairie, LA on March 9, 2017. The bulk of the meeting focused on the 2016 Coordinated System Plan (CSP) study although several other topics were discussed. MISO and SPP shared preliminary results for the 2016 CSP study and discussed next steps. Currently, there are several interregional transmission projects that pass the MISO-SPP Joint Operating Agreement criteria although further evaluation is needed. There are also a few additional projects that show potential that are close to the JOA defined criterion. MISO and SPP will continue to evaluate these projects and share final results at the April 24, 2017 IPSAC meeting. MISO and SPP also presented on a variety of other topics including the 2017 joint study effort, APC calculation differences, MISO TMEPS and efforts related to regional coordination.

Link to MISO-PJM IPSAC meeting materials: March 9, 2017 Q4 2016 Update MISO and SPP requested solution ideas from stakeholders for the seven needs being studied for the 2016 MISO-SPP Coordinated System Plan (CSP) study at the beginning of October. The solution idea submittals were due on November 30, 2016. In total, MISO and SPP received 32 solution ideas and now are in the process of screening those solutions. Additionally, MISO and SPP posted the joint 2025 model for the CSP study on the MISO ftp site on December 1, 2016. The 2020 and 2030 models are expected be ready and posted prior to the next IPSAC meeting which will be held via WebEx and conference call on December 16, 2016. The 2016 MISO-SPP CSP study is expected to be completed by April 2017 so a longer-term, broader interregional study can begin.

ii. MISO-SPP Joint Planning Committee (JPC)

Q1 2017 Update MISO and SPP had a JPC meeting on February 7, 2017. The primary purpose of that meeting was to discuss the upcoming IPSAC meeting (March 9, 2017) and figure out what the agenda was going to look like. MISO and SPP discussed what agenda items each RTO would prepare. Also, MISO and SPP discussed the status of the 2016 CSP study and went through the work left to be completed.

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Additional items were discussed such as the JPC chair moving over to MISO for 2017, and regional coordination efforts.

Q4 2016 Update MISO and SPP had a JPC meeting on October 7th and November 7th. Both of those meetings revolved around the 2016 MISO-SPP CSP study progress. Discussions occurred around the joint model build, CSP study timeline, longer-term study for 2017 and beyond and when the next IPSAC meeting should be held. Additional items that were discussed were the status of MTEP and SPP’s ITP

as well as the coordination of the MISO Jonesboro project and the Bull Shoals bus tie.

iii. Interface Pricing

Q1 2017 Update MISO and SPP have communicated their plan to develop an impact analysis report that identifies the market inefficiency by comparing the current interface pricing method to an ideal method. The RTOs have started to exchange analysis results based on real-time data from March 1, 2015 to Feb 29, 2016. The full analysis is expected to be completed by the end of April 2017, and the RTOs will review analysis results with stakeholders of both markets at the May MISO-SPP JOA meeting. Q4 2016 Update See Q3 2016 update. Q3 2016 Update

MISO and SPP have communicated their plan to develop an impact analysis report that identifies the market inefficiency by comparing the current interface pricing method to an ideal method. The RTOs have started to exchange analysis results based on Real-Time conditions. The full analysis is expected to be completed by Q1 of 2017, and the RTOs will review analysis results with stakeholders of both markets at the end of Q1 2017.

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iv. Market-to-Market Enhancements

Q1 2017 Update See Q4 2016 update

.

Q4 2016 Update MISO and SPP continue to discuss enhancements to the existing real-time market-to-market process.

3. SERTP - Southeastern Regional Transmission Planning (Includes Southern Company, TVA, AECI, and LG&E, and others)

i. Interregional Coordination Q1 2017 Update See Q4 2016 update Q4 2016 Update On December MISO and SERTP sponsors completed the annual exchange of current regional transmission plans, including power-flow models and associated data, in accordance with Attachment FF, Section B of the MISO Tariff. Both parties are reviewing calendars and targeting Q1 2017 to kick off interregional coordination meetings, as required by Section A1 of Attachment FF.

.

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4. Multiregional Activities

i. Congestion Management Process Working Group

Q1 2017 Update

Significant items from the March 15-16, 2017 CMPWG meeting hosted by MISO:

CMPWG Charter

o The CMPWG charter was amended to limit the assignment of proxies to others within the same company. This change makes the CMPWG charter consistent with the CMPC charter. The CMPC will need to approve the revised CMPWG charter.

NNL Allocation Activities

o While there was much discussion on how Transmission Upgrade Studies (TUSs) should be performed, there was no CMPWG agreement following the discussion at this meeting and during a separate CMPWG call held on March 28, 2017. The issue involves the fact that, beginning in 2014, the CMP models were allowed to be updated without a requirement that the TUS be completed prior to the model update.

o Flowgate allocations were rerun on March 6 to extend freeze date Transmission Service Reservation (TSR) beyond January 2018.

o The following items will be addressed as part of the summer 2017 CMP model update:

i) The May 2017 IDC model will be used to develop the summer 2017 CMP model. That model has been expanded to reflect individual shares of JOUs needed for the Parallel Flow Visualization project.

ii) All Reciprocal Entities will switch to using block loading to dispatch freeze date generators in the allocation process.

o OATI Change Orders: i) MISO and SPP have agreed to fund a change order that

provides detailed gen-to-load impacts and TSR impacts from 2 DA and DA allocations.

ii) There is a one-hour time shift that appears in the OATI impact calculations. The CMWG is reviewing this time shift and how it should be fixed.

Treatment of EAR in MISO Market Flows

o There was a baseline CMP filing made on March 22, 2017 to reflect changes to EAR in MISO market flows that will take effect on June 1, 2017.

Flowgate Coordination

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o The CMPWG is reviewing the treatment of flowgates that have generator contingencies (either as a single element that is lost or in combination with the loss of a transmission facility.

o Based on the MINT Line Coordinating Committee recommendation that FG 6009 Cooper_S and FG 6030 Nebr City-Cooper are no longer needed for reliability reasons, SPP will review the steps that are needed to remove these two flowgates and will report back at the next CMPWG meeting on May 16-17, 2017.

o There is a CMPWG project to have each Reciprocal Entity compare flowgate ratings in their EMS versus what is used in allocations to verify they are consistent.

Freeze Date Update

o A draft straw proposal document was reviewed during the meeting. PJM took an action item to update the document based on the CMPWG discussion.

Baseline CMP o The CMPWG will discuss whether there are other updates needed

to the baseline CMP at their May 16-17, 2017 meeting.

Parallel Flow Visualization o This project is on schedule with the IDCWG expected to begin

software testing in March. The NAESB Business Practices Subcommittee is working on an update to the currently active TLR standard (WEQ-008) to reflect current practices.

Future CMPWG Meeting

o The next meeting will be held at PJM office 5/16/17-5/17/17.

Q4 2016 Update Significant items from the Nov 10, 2016 CMPWG meeting hosted by SPP:

This meeting was spent identifying significant design component issues associated with the freeze date update and where consensus may exist among CMP entities.

Significant items from the Dec 9, 2016 CMPWG call:

NNL Allocation Activities

o The NNL allocation run to include AECI as a Reciprocal Entity was completed on 10/6/16.

o The summer NNL model update has been deferred to a winter model update due to problems with the response factor calculations in the summer model that have now been corrected. The winter model update is now scheduled to occur on 1/4/17.

o There is agreement that the Reciprocal Entities will use a block loading approach to dispatch freeze date DNRs whose rating has increased since the April 1, 2004 freeze date as part of the next summer model update. This will allow the increased amount to appear in set of Priority 0 generators (generators that were not DNRs as of the freeze date).

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o Transmission Upgrade Studies (TUSs) status:

i) MISO distributed results of its Dec 2014 to June 2016 TUS analysis to the CMPWG exploder on 12/9/16.

ii) SPP is continuing to work on TUS with results expected sometime in 2017. They are evaluating the period March 2014 to 2017.

iii) PJM has developed a new TUS application they expect to have results available in the first couple months of 2017.

iv) There was a review of TUS guidelines. MISO noted a minor correction was needed to the approved guidelines. The CMPWG will discuss further at the next meeting.

Generation changing BAs:

o MISO and SPP have reached agreement on the treatment of Walter Scott 3 and 4 in allocation runs. Once the unit PMAXs have been verified, a rerun of allocations will occur that recognizes a 12 MW shift of WS3 and WS4 capacity to MISO allocations.

o PJM will have the ability to include AMP-Ohio’s share of Prairie State 1 and 2 in their market flows when they update their EMS model on 12/3/16. They will notify the other CMP entities when they actually make the change to their market flows.

o Other generators that are proposed to change BAs were discussed.

Addition of critical flowgates – There was discussion on how to move forward with generation contingency flowgates.

CMPWG Metrics Report

o Work continues on streamlining this report.

Treatment of EAR in MISO Market Flows

o MISO distributed a revised CMP to reflect changes associated with EAR being included in MISO market flows. MISO is targeting to make mid-March baseline CMP filings seeking a 6/1/17 effective date. MISO requested CMPWG comments on the draft changes by 12/23/16.

CMPWG Charter

o MISO requested a change to the CMPWG charter such that the use of voting proxies must remain within the organization of the voting member. This change will be reviewed at the next CMPWG meeting

Future CMPWG Meeting

o The next meeting will be held at TVA office in Chattanooga on 1/24/17-1/25/17.

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ii. Parallel Flow Visualization Project

Q1 2017 Update

This project is on schedule with IDCWG software testing begun in March 2017. The field test is still expected to begin in August 2017.

Q4 2016 Update

OATI has enabled the first phase of the PFV software development (Change Order 397) in DEMO. This includes generation priorities and flowgate allocation process. Testing is underway. All OATI programming should be done by March 2017 as per the initial schedule.