Grid operators explore physical, market solutions to Lake Erie loop flow

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About The Grid A blog about the changing North American electric power system.

The New York ISO hosted a technical conference Oct. 29 to discuss proposed solutions to the Lake Erie loop flow problem.

Lake Erie loop flow results when electricity transactions intended to flow between markets south of Lake Erie instead, because of grid conditions, end up flowing north of the lake, through Ontario and New York, causing congestion in these systems.

FERC directed the New York ISO in a July 16 order (ER08-1281) to work with neighboring systems to develop a long-term solution to the loop flow problem. The ISO's response is due Jan. 12, 2010.

At the conference, representative from the New York ISO, PJM Interconnection LLC, Midwest ISO and Ontario Independent Electricity System Operator described proposed solutions and a timeline for implementation to a broad group of stakeholders.

The proposed solutions include a physical solution using phase angle regulators as well as several market solutions involving improved congestion management and better market coordination between regions.

Several of the presenters noted that some of the approaches to solving the loop flow problem benefit from ongoing work among the RTOs to improve market consistency and transmission coordination.

"It's all about seams," New York ISO President and CEO Stephen Whitley said. Loop flow has been a "tough issue" as regional markets evolved over the past nine to 10 years, he said, but a solution needs to be found that makes the electricity marketplace broader and more efficient while also bringing value to consumers.

Robert Pike from the New York ISO, who moderated the panel, further noted that transmission loading relief, or TLR, is the only mechanism the region has to deal with congestion caused by loop flow.

In 2008, the Ontario IESO had to initiate TLR actions 163 times in response to loop flow, and in 2007, Ontario TLR actions resulted in the curtailment of as much as 373 MW of transactions in a single day.

The intent of the loop flow exercise, Pike said, is to incorporate loop flows into the market as much as possible, "and not make them the 'evil enemy.'"

Nevertheless, the first defense against Lake Erie loop flow is the physical one of using phase angle regulators, or PARs, on the Ontario-Michigan interface. The Ontario IESO's Peter Sergejewich updated stakeholders on progress in bringing the PARs back into service.

Initially installed in 1999, the PARs suffered from equipment failures. The equipment has been repaired or replaced, and should be in service by the end of the first quarter of 2010.

The agreement on PAR operation between the Midwest ISO and Ontario IESO has also dragged out, but Sergejewich indicated that the agreement is expected to be completed in a time frame that will allow the PARs to operate during 2010.

Successful operation of the PARs will reduce but not eliminate loop flow. They are designed to control up to 600 MW of loop flow in either direction. This will deal with more than 90% of counterclockwise loop flows and about 80% of clockwise loop flows.

Market solutions

The reduced magnitude of loop flows resulting from PAR operation should make them easier to mitigate using market solutions.

Pike said one such solution is a "buy-through" of congestion. This approach would establish an economic-based alternative to market and operational disruptions caused by TLRs.

Under this approach, parties scheduling transactions with any of the other ISOs or RTOs surrounding Lake Erie would be billed for the real-time congestion costs incurred by neighboring systems to support the loop flow created by the transaction.

The party would then have the option of paying the congestion charges ("buying through" the congestion) for its transaction to occur. A party not willing to "buy through" runs the risk that its transaction would be curtailed when congestion is detected along its transmission path.

Pike also discussed how greater interregional transaction coordination could reduce congestion. Most regions exchange scheduling information only on an hour-ahead basis. Pike said expanding this to an in-hour basis could lower total system operating costs, expand the pool of flexible assets available to balance intermittent power generation as well as improve price consistency and transmission utilization across markets.

Sometimes your neighbor can solve your problem cheaper than you can, Pike said.

Tom Mallinger of the Midwest ISO talked about ways grid operators could increase their visualization of loop flows. He described work that was under way among Midwest ISO, PJM and Southwest Power Pool in this area, as well as work to be conducted by North American Electric Reliability Corp.'s Interchange Distribution Calculator Working Group.

It was also mentioned that the North American Energy Standards Board is looking into the business practice implications of these proposals.

Next steps

Several participants asked how detailed the January 2010 FERC filing would be. Pike said the New York ISO would provide "as much as we can" in terms of concepts and time schedules. FERC's reaction and public comments in the proceeding would help guide further actions.

Several participants also asked about the costs of the various proposals. Pike said the parties actively involved in the process see benefits from a market efficiency standpoint, but clearly, implementation costs are a concern. He said the design has to be further refined before it would be possible to estimate costs, and added that he thought FERC would also be conscious of costs and benefits.

He also pointed out that even when FERC approves an approach to the loop flow problem, each RTO will have to develop and approve specific tariff language through its own stakeholder process.

Links:

* Oct. 29 conference presentations

* Oct 29 draft loop flow white paper