158 FERC ¶ 61,047

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM17-2-000]

Uplift Cost Allocation and Transparency in Markets Operated by Regional Transmission 

Organizations and Independent System Operators

(January 19, 2017)

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of Proposed Rulemaking.

SUMMARY: The Federal Energy Regulatory Commission (Commission) is proposing 

to revise its regulations to require that each regional transmission organization (RTO) and 

independent system operator (ISO) that currently allocates the costs of real-time uplift 

due to deviations should allocate such real-time uplift costs only to those market 

participants whose transactions are reasonably expected to have caused the real-time 

uplift costs. The Commission also proposes to revise its regulations to enhance 

transparency by requiring that each RTO/ISO post uplift costs paid (dollars) and 

operator-initiated commitments (megawatts) on its website; and define in its tariff its 

transmission constraint penalty factors, as well as the circumstances under which those

penalty factors can set locational marginal prices, and any procedure for changing those

factors. 
Docket No. RM17-2-000 - 2 -

DATES: Comments are due [INSERT DATE 60 days after publication in the 

FEDERAL REGISTER]

ADDRESSES: Comments, identified by docket number, may be filed in the following

ways:

• Electronic Filing through http://www.ferc.gov. Documents created electronically 

using word processing software should be filed in native applications or print-toPDF format and not in a scanned format.

• Mail/Hand Delivery: Those unable to file electronically may mail or hand-deliver 

comments to: Federal Energy Regulatory Commission, Secretary of the 

Commission, 888 First Street, NE, Washington, DC 20426.

Instructions: For detailed instructions on submitting comments and additional 

information on the rulemaking process, see the Comment Procedures Section of this 

document.

FOR FURTHER INFORMATION CONTACT:

Stanley Wolf (Technical Information)

Office of Energy Policy and Innovation

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

(202) 502-6841

Stanley.Wolf@ferc.gov

Keatley Adams (Technical Information)

Office of Energy Market Regulation

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

(202) 502-8678

Keatley.Adams@ferc.gov

Colin Beckman (Legal Information)
Docket No. RM17

-2-000 - 3 -

Office of the General Counsel

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

(202) 502-8049

Colin.Beckman@ferc.gov

SUPPLEMENTARY INFORMATION

:
UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Uplift Cost Allocation and Transparency in Markets 

Operated by Regional Transmission Organizations and 

Independent System Operators

Docket No. RM17-2-000

NOTICE OF PROPOSED RULEMAKING

TABLE OF CONTENTS

Paragraph Numbers

I. Background .................................................................................................................... 9.

II. Discussion ................................................................................................................... 12.

A. Uplift Cost Allocation ............................................................................................ 12.

1. Uplift Cost Allocation Background.................................................................... 13.

2. Current RTO/ISO Practices................................................................................ 16.

3. Comments........................................................................................................... 23.

a. Practices for Allocating Uplift Costs to Deviations....................................... 23.

b. Virtual Transactions and Uplift...................................................................... 27.

c. Coordinated Transaction Scheduling ............................................................. 29.

d. Additional Comments .................................................................................... 30.

4. Need for Reform................................................................................................. 31.

5. Proposal .............................................................................................................. 35.

a. Real-Time Uplift Categories .......................................................................... 40.

b. Netting............................................................................................................ 45.

c. Deviations that Result from Following Dispatch........................................... 51.

d. Settlement....................................................................................................... 55.

e. Other Comments Sought ................................................................................ 56.

B. Transparency .......................................................................................................... 57.

1. Background ........................................................................................................ 58.

2. Current RTO/ISO Practices................................................................................ 59.

a. Reporting Uplift.............................................................................................. 59.

b. Reporting Operator-Initiated Commitments.................................................. 63.

c. Transmission Constraint Penalty Factors....................................................... 66.

3. Comments........................................................................................................... 67.

a. General Comments......................................................................................... 67.
Docket No. RM17-2-000 - 2 -

b. Comments on Uplift Reporting...................................................................... 68.

c. Comments on Reporting Operator-Initiated Commitments........................... 72.

d. Comments on Transmission Constraint Penalty Factors ............................... 75.

4. Need for Reform................................................................................................. 77.

5. Proposal .............................................................................................................. 82.

a. Uplift Reporting.............................................................................................. 83.

b. Reporting Operator-Initiated Commitments.................................................. 90.

c. Transmission Constraint Penalty Factors....................................................... 96.

d. Comment Sought on Transmission Outages................................................ 100.

e. Comment Sought on Availability of Market Models................................... 101.

III. Compliance.............................................................................................................. 102.

IV. Information Collection Statement .......................................................................... 105.

V. Environmental Analysis ........................................................................................... 110.

VI. Regulatory Flexibility Act ...................................................................................... 111.

VII. Comment Procedures............................................................................................. 113.

VIII. Document Availability ......................................................................................... 117.
158 FERC ¶ 61,047

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Uplift Cost Allocation and Transparency in Markets 

Operated by Regional Transmission Organizations and 

Independent System Operators

Docket No. RM17-2-000

NOTICE OF PROPOSED RULEMAKING

(January 19, 2017)

1. In this Notice of Proposed Rulemaking (NOPR), the Federal Energy Regulatory 

Commission (Commission) proposes to revise its regulations to address potentially unjust 

and unreasonable approaches to real-time uplift cost allocation and transparency practices 

by regional transmission organizations (RTOs) and independent system operators (ISOs).

2. While the Commission and RTOs/ISOs have taken steps to reduce the amount of 

uplift in the energy and ancillary services markets, the complexity inherent in the electric 

system and limitations in the tools available to maintain reliable operations can lead to 

system operators taking out-of-market actions to manage reliability. When they do so, 

energy and ancillary service prices may not reflect the marginal cost of production and 

some resources may therefore need make-whole payments to ensure recovery of 

operating costs. Since the limitations in representing the complexity of the electric 

system in market models are unlikely to ever be fully resolved, uplift costs are also 

unlikely to be completely eliminated. As a result, RTOs/ISOs need to have a method for 

allocating these costs to market participants. At the highest level, the allocation of uplift 

costs should, to the extent possible, encourage behavior that will reduce the need for 
Docket No. RM17-2-000 - 2 -

uplift-creating actions and avoid discouraging market participant behavior that lowers 

total production costs (i.e., enhances efficiency). The reforms proposed in this NOPR are 

designed to achieve these objectives.

3. Given that RTOs/ISOs are likely going to need to take some out-of-market 

actions, there is a need to provide transparency regarding those actions and the associated 

uplift costs. The lack of transparency regarding uplift and operator-initiated 

commitments1

, which can cause uplift, hinders a market participant’s ability to plan and 

efficiently respond to system needs. Market participants may lack the information 

necessary to evaluate the need for and value of additional investment, such as 

transmission upgrades or new generation. Also, without sufficient transparency, market 

participants may not be able to assess each RTO’s/ISO’s operator-initiated commitment 

practices and raise any issues of concern through the stakeholder process. The 

transparency reforms proposed in this NOPR are designed to allow market participants to 

understand the actions RTOs/ISOs are taking and respond accordingly.

 1 An operator-initiated commitment is a commitment that is not associated with a 

resource clearing the day-ahead or real-time market on the basis of economics and that is 

not self-scheduled. See FERC, Operator Initiated Commitments in RTO and ISO 

Markets, Docket No. AD14-14-000 at 8-20 (Dec. 2014), http://www.ferc.gov/legal/staffreports/2014/AD14-14-operator-actions.pdf.
Docket No. RM17-2-000 - 3 -

4. First, we preliminarily find that certain practices of allocating the cost of real-time 

uplift2 to market participants who deviate from day-ahead market schedules (deviations) 

are inconsistent with cost causation, which may distort market outcomes, potentially 

resulting in unjust and unreasonable rates. Specifically, some RTO/ISO practices of 

allocating real-time uplift costs to deviations that could not reasonably be expected to 

have caused those uplift costs can distort market outcomes by inappropriately penalizing

behavior that can improve price formation. Therefore, we propose to require that, if an 

RTO/ISO allocates real-time uplift costs to deviations, it must do so based on cost 

causation, as further discussed below. For the purposes of allocating uplift costs to 

deviations, we propose that deviations are megawatt hour differences between a market 

participant’s scheduled deliveries or receipts at particular points—as determined by the 

day-ahead market clearing process—and those amounts actually delivered or received in 

real-time that are not related to real-time economic or reliability-related operator dispatch 

instructions. This proposal would apply only to real-time uplift cost allocation to 

deviations. This NOPR does not apply to other methods used by RTOs/ISOs to allocate 

uplift costs. If an RTO/ISO does not currently allocate real-time uplift costs to 

 2 Real-time uplift refers to uplift payments to resources committed after the close 

of the day-ahead market, including any uplift associated with reliability commitments, 

whether or not the RTO/ISO considers such commitments outside of the day-ahead 

market, e.g., the Reliability Unit Commitment or RUC process. As such, uplift payments 

to resources committed in a reliability unit commitment process would be considered 

real-time uplift for the purposes of this NOPR).
Docket No. RM17-2-000 - 4 -

deviations, this NOPR does not impose a requirement on those RTOs/ISOs to allocate 

real-time uplift costs to deviations.

5. Second, we preliminarily find that current practices with respect to reporting uplift 

payments, operator-initiated commitments, and transmission constraint penalty factors3

are unjust and unreasonable. The lack of transparency into the costs allocated to market 

participants, and into the causes of such costs, hinders the ability of market participants to 

assess the effectiveness of current operational practices or to evaluate the need for 

additional investment, such as transmission upgrades or new generation. Similarly, the 

lack of transparency with respect to transmission constraint penalty factors may hinder a 

market participant’s ability to effectively understand how an RTO’s/ISO’s actions affect 

energy prices and thus, hinder its ability to hedge energy market transactions. As 

discussed further below, for these reasons we preliminarily find that these practices may 

result in rates that are unjust and unreasonable. We therefore propose to require that each 

RTO/ISO: (1) report total uplift payments for each transmission zone, broken out by day 

and uplift category; (2) report total uplift payments for each resource on a monthly basis; 

(3) report megawatts (MW) of operator-initiated commitments in or near real-time and 

after the close of the day-ahead market, broken out by transmission zone and 

commitment reason; and (4) define in its tariff the transmission constraint penalty factors, 

 3 Transmission constraint penalty factors are the values at which an RTO’s/ISO’s 

market software will relax the limit on a transmission constraint rather than continue to 

re-dispatch resources to relieve congestion associated with that constraint. 
Docket No. RM17-2-000 - 5 -

as well as the circumstances under which those factors can set locational marginal prices 

(LMPs), and the process by which they can be changed.

6. The goals of the price formation proceeding are to: (1) maximize market surplus 

for consumers and suppliers; (2) provide correct incentives for market participants to 

follow commitment and dispatch instructions, make efficient investments in facilities and 

equipment, and maintain reliability; (3) provide transparency so that market participants 

understand how prices reflect the actual marginal cost of serving load and the operational 

constraints of reliably operating the system; and (4) ensure that all suppliers have an 

opportunity to recover their costs.4

7. The reforms proposed in this NOPR address two of the Commission’s price 

formation goals. First, the proposed reforms to uplift costs allocated to deviations should 

improve market participants’ incentives to perform in real-time consistent with operator 

instructions and bid into the day-ahead market and submit day-ahead schedules consistent 

with expected real-time system conditions. Second, the proposed transparency reforms 

will help market participants understand how prices reflect the actual marginal cost of 

serving load and the operational constraints of reliably operating the system.

 4 See Price Formation in Energy and Ancillary Services Markets Operated by 

Regional Transmission Organizations and Independent System Operators, Notice 

Inviting Post-Technical Workshop Comments, Docket No. AD14-14-000, at 1 (Jan. 16, 

2015) (Notice Inviting Comments); Price Formation in Energy and Ancillary Services 

Markets Operated by Regional Transmission Organizations and Independent System 

Operators, Notice, Docket No. AD14-14-000 (June 19, 2014) (Price Formation Notice).
Docket No. RM17-2-000 - 6 -

8. We seek comment on these proposed reforms 60 days after publication of this 

NOPR in the Federal Register.

I. Background

9. In June 2014, the Commission initiated a proceeding, in Docket No. AD14-14-

000, Price Formation in Energy and Ancillary Services Markets in Regional 

Transmission Organizations and Independent System Operators, to evaluate issues 

regarding price formation in the energy and ancillary services markets operated by 

RTOs/ISOs (Price Formation Proceeding). The notice initiating that proceeding stated 

that there may be opportunities for the RTOs/ISOs to improve the price formation 

process in the energy and ancillary services markets. As set forth in the notice, prices 

used in energy and ancillary services markets ideally “would reflect the true marginal 

cost of production, taking into account all physical system constraints, and these prices 

would fully compensate all resources for the variable cost of providing service.”5

 

Pursuant to the notice, staff conducted outreach and convened technical workshops on the 

following four general issues: (1) use of uplift payments; (2) offer price mitigation and 

offer price caps; (3) scarcity and shortage pricing; and (4) operator actions that affect

prices.6

 

 5 Price Formation Notice, Docket No. AD14-14-000, at 2 (June 19, 2014).

6 Id. at 1, 3-4.
Docket No. RM17-2-000 - 7 -

10. In January 2015, the Commission requested comments on questions that arose 

from the price formation technical workshops.7

 As a result of these comments, the 

Commission identified, among other things, five topics with potential for reform to 

improve price formation, but for which further information was needed. 

11. In November 2015, the Commission issued an order that directed each RTO/ISO 

to report on these five price formation topics: fast-start pricing; managing multiple 

contingencies; look-ahead modeling; uplift allocation; and transparency.8

 Specifically, 

the order directed each RTO/ISO to file a report providing an update on its current 

practices in the five topic areas, outlining the status of its efforts (if any) to address issues 

in each of the five topic areas, and responding to specific questions contained in the 

order. In the reports filed and the subsequent comments, RTOs/ISOs and other 

commenters addressed the issues of uplift cost allocation and transparency,9 which are 

the subject of this NOPR. 

II. Discussion

A. Uplift Cost Allocation

12. In this section, we first provide a brief background on uplift payments and 

deviations between day-ahead and real-time schedules as a way to determine uplift cost 

 7 Notice Inviting Comments, Docket No. AD14-14-000 (Jan. 16, 2015). 

8 Price Formation in Energy and Ancillary Services Markets Operated by 

Regional Transmission Organizations and Independent System Operators, 153 FERC 

¶ 61,221 (2015) (Order Directing Reports).

9 A list of commenters and the abbreviated names used in this NOPR appears in 

the Appendix. 
Docket No. RM17-2-000 - 8 -

allocation. We then review current RTO/ISO practices and comments regarding these 

practices submitted prior to and after the issuance of the Order Directing Reports. 

Finally, we explain the need for reform and set forth the proposal in detail.

1. Uplift Cost Allocation Background

13. Uplift generally refers to payments that RTOs/ISOs make to a resource whose 

commitment and dispatch result in a shortfall between the costs in a resource’s offer and 

the revenue earned through market clearing prices.10 For example, if a resource is 

committed and is not able to fully recover its costs from the energy and ancillary services 

markets, it would receive an uplift payment. As noted in the Staff Analysis of Uplift, 

modeling, software, and certain other limitations are inherent in the complexity of the 

electric system and the tools available to maintain reliable operations. As a result, system 

operators may have to take out-of-market actions to manage reliability, with resulting 

energy and ancillary service prices not reflecting the marginal cost of production. Uplift, 

or make-whole, payments may therefore be needed to ensure that resources committed 

and dispatched out-of-market are able to recover their operating costs. These modeling, 

software, and other limitations will likely persist, making uplift an inherent element of 

centralized wholesale energy and ancillary services markets that may not be completely 

eliminated. Therefore, RTOs/ISOs must have a method to allocate these costs to market 

participants. Generally, RTOs/ISOs allocate uplift costs either directly to market 

 10 FERC, Staff Analysis of Uplift in RTO and ISO Markets, Docket No. AD14-14-

000, at 1-2 (Aug. 2014), https://www.ferc.gov/legal/staff-reports/2014/08-13-14-

uplift.pdf.
Docket No. RM17-2-000 - 9 -

participants who caused the uplift or to load. Allocation of uplift costs to load is 

motivated by several considerations. Load can be viewed as the ultimate beneficiary of 

the actions the system operator takes to maintain reliability. Further, one principle of cost 

allocation is to allocate costs in a way that is least likely to distort market participant 

behavior. In electricity markets, load is the class of market participants that is currently 

the least sensitive to price and for whom an allocation of uplift costs is arguably least 

likely to distort behavior. For shorthand, allocating uplift costs to load is referred to as 

“beneficiary pays.” In practice, RTOs/ISOs often use a combination of the two 

approaches, with load receiving all of the uplift costs that are not allocated through costcausation methods, such as a deviations-based approach.

14. In its Order Directing Reports, the Commission asked the RTOs/ISOs to explain 

whether and how the RTO/ISO allocates real-time energy and ancillary services market 

uplift costs based on deviations from market participants’ day-ahead schedules, and 

whether deviations that increase the need for actions that cause real-time uplift payments 

(harming deviations) are netted against deviations that reduce the need for actions that 

cause real-time uplift payments (helping deviations).11 

15. In response, most RTOs/ISOs state that they classify certain schedule differences 

between the day-ahead and real-time markets as deviations and allocate at least some 

portion of real-time uplift costs to those deviations. Allocation of real-time uplift costs to 

deviations is the focus of this NOPR because deviations may increase the need for 

 11 Order Directing Reports, 153 FERC ¶ 61,221 at P 64, question 3.b.
Docket No. RM17-2-000 - 10 -

operator actions that cause real-time uplift, such as additional unit commitments in realtime to replace a shortfall in generation or an increase in load compared to the day-ahead 

market solution. This NOPR does not address other methods of uplift cost allocation, 

such as allocation to load obligations, and does not propose to require RTOs/ISOs to 

allocate real-time uplift costs to deviations. 

2. Current RTO/ISO Practices

16. All of the RTOs/ISOs state that they use some form of beneficiary pays or costcausation principles to allocate uplift costs.12 However, the current uplift cost allocation 

methods of the RTOs/ISOs vary significantly, both in terms of granularity and the 

exemption of certain types of transactions. The definition of what precisely constitutes a 

deviation also varies across RTOs/ISOs. 

17. NYISO generally allocates uplift costs based on the beneficiary pays principle.

13 

NYISO allocates uplift costs associated with state-wide reliability to all loads in the 

New York Control Area, and allocates uplift costs associated with local reliability to load 

within the transmission district where the reliability actions were taken. NYISO allocates 

real-time uplift costs on a beneficiary pays basis to load obligations, using real-time 

metered load during the hours in which uplift costs were incurred.14 NYISO also 

 12 NYISO Report at 45; PJM Report at 28; SPP Report at 19; MISO Report at 42; 

ISO-NE Report at 43; CAISO Report at 35.

13 NYISO Report at 46. 

14 Id. at 40.
Docket No. RM17-2-000 - 11 -

explains that it eliminated all uplift costs associated with Coordinated Transaction 

Scheduling (CTS)15 in a reciprocal fashion with ISO-NE, and that it supports the 

elimination of all uplift cost allocation and fees on exports because these fees reduce 

trade between regions and adversely impact total production costs.16

18. CAISO explains that it has many categories of uplift, and that it allocates uplift 

costs to transmission owners (who pass uplift costs to transmission customers), loads, and 

exports, depending on whether the system operator made the dispatch decision to address 

transmission constraints, energy imbalance, real-time congestion, or bid cost recovery.17 

CAISO asserts that any allocation based on deviations should consider the wide 

variability in scheduling and metering granularity for different resources and that there 

might be implementation challenges in a more granular cost allocation.18 

19. ISO-NE states that roughly half of its uplift costs are allocated to deviations, 

which include generator deviations, load deviations, increment (virtual) deviations, and 

 15 CTS is a set of real-time market rules that allow imports and exports to be 

scheduled based on a bidder’s willingness to purchase energy sourced from one RTO/ISO 

and sell the energy at a sink in another, adjacent RTO/ISO, if the difference between the 

forecasted prices at the sink and source is greater than or equal to the dollar value 

specified in the CTS Interface Bid (spread bid). 

16 NYISO Report at 45-46.

17 CAISO Report at 40-45. 

18 Id. at 37. 
Docket No. RM17-2-000 - 12 -

import deviations.19 ISO-NE calculates each market participant’s deviations hourly, 

netting virtual demand bids and deviations from day-ahead load across all locations.20 

However, hourly generator and virtual supply deviations are not subject to netting in ISONE.21 ISO-NE does not allocate uplift costs to CTS transactions.22

20. PJM allocates uplift costs incurred for reasons other than reliability to deviations, 

including cleared virtual bids, transaction deviations, and load deviations.23 PJM states 

that it assesses deviations daily by netting deviations separately within three different 

categories (demand, supply, and generation) at a single transmission zone, hub, or 

interface.24 PJM explains that its current netting rule allows a supply or demand 

deviation from a virtual transaction in the day-ahead energy market to be netted against 

 19 ISO-NE Report at 54-55.

20 Id. at 50.

21 Id. 

22 ISO-NE Report at 53.

23 PJM Report at 30-31.

24 Id. at 31.
Docket No. RM17-2-000 - 13 -

internal bilateral transactions25 occurring at the same location.26 PJM does not consider 

up-to-congestion transactions27 to be deviations and does not allocate uplift to them.28 

PJM considers CTS transactions (and other imports and exports) to be deviations, and 

allocates uplift to them.

21. SPP states that it allocates uplift costs based on causation when the cause is 

identifiable and the cost of doing so does not outweigh the benefit.29 For example, realtime uplift costs are allocated to deviations from day-ahead schedules and SPP dispatch 

instructions.30 SPP states that virtual transactions are considered deviations, but virtual 

supply offers are netted against a countervailing deviation between day-ahead and real-

 25 Internal bilateral transactions are a type of bilateral transaction used to purchase 

or sell one or more electricity market product(s) within a region. In all of the 

RTOs/ISOs, internal bilateral transactions are financial agreements that the two parties 

report to the RTO/ISO to streamline accounting and settlement. None of the RTOs/ISOs 

model internal bilateral transactions in the real-time or day-ahead market, and internal 

bilateral transactions do not affect market dispatch or power flows. 

26 PJM Report at 33.

27 An up-to-congestion transaction is a form of virtual transaction that combines an 

offer to sell energy at a source, with a bid to buy the same MW quantity of energy at a 

sink where such transaction specifies the maximum difference between the LMP at the 

source and sink.

28 PJM Report at 33.

29 SPP Report at 20.

30 Id. at 22.
Docket No. RM17-2-000 - 14 -

time schedules (i.e., a load or export decrease, or import increase, relative to its dayahead schedule) at the same settlement location.31 

22. MISO has a granular approach to allocating uplift costs that it states is based on 

determining cost-causation where possible. MISO has several categories of uplift, but, 

for example, MISO’s Revenue Sufficiency Guarantee uplift category has six different 

methodologies for distributing costs based on the reason a resource was committed.32 

MISO also allocates uplift costs according to a set of defined categories based on what 

MISO determines to be the cause of the uplift. Uplift costs resulting from real-time 

capacity commitments are largely allocated to deviations, including physical supply and 

demand deviations, virtual transactions, and import and export physical schedules.33 A 

portion of uplift resulting from transmission constraint relief is assigned to the deviations 

that caused the congestion.34 MISO has also noted that it will not allocate uplift costs to 

CTS between itself and PJM, which is expected to be implemented in the spring of 

2017.35

 31 Id. at 38.

32 MISO Report at 42-43.

33 Id. at 44.

34 Id. 

35 Midcontinent Indep. Sys. Operator, Inc., 155 FERC ¶ 61,038, at P 3 (2016).
Docket No. RM17-2-000 - 15 -

3. Comments

a. Practices for Allocating Uplift Costs to Deviations

23. Some commenters criticize the practice of allocating uplift costs to real-time 

deviations from day-ahead schedules. For example, Appian Way asserts that deviationsbased approaches to uplift cost allocation create market inefficiencies in the form of 

unnecessary and inappropriate barriers to market participants accessing the spot market, 

and also shift the cost responsibility for uplift from load to other market participants.36

24. Others, however, support allocating uplift costs to deviations from day-ahead 

schedules, but argue that such deviations should be netted based on whether they 

contribute to or alleviate the condition causing uplift.37 Some commenters contend, for 

example, that netting such deviations is consistent with cost causation principles because 

it ensures that only market participants deviating from their day-ahead schedules in a 

manner that increases uplift payments will incur those costs.38 

25. Multiple commenters also recommend the creation of more specific uplift cost 

allocation categories that are better aligned with cost causation. To this end, some 

commenters suggest creating a congestion management category that would distinguish 

 36 Appian Way Comments at 1, 7.

37 Financial Marketers Coalition Comments at 31.

38 Id. at 14, 31.
Docket No. RM17-2-000 - 16 -

uplift incurred for congestion management from uplift incurred for capacity needs or 

voltage and local reliability and allocate uplift costs accordingly.

39

26. MISO Market Monitor asserts that uplift costs should be minimized to the extent 

possible by incorporating reliability requirements into market-based products, but any 

remaining uplift costs should then be allocated based on cost causation. MISO Market 

Monitor believes that allocating uplift costs to those that cause it or benefit from it gives

market participants an incentive to act to minimize it. MISO Market Monitor also asserts 

that MISO’s uplift cost allocation approach is the best practice in the industry because it 

determines why the uplift was incurred and allocates the costs accordingly.40 MISO 

Market Monitor also argues that for both capacity-related and congestion-related uplift, 

cost allocations should be based on deviations from the market participants’ day-ahead 

schedules.41

b. Virtual Transactions and Uplift

27. Allocation of uplift costs to virtual transactions is a contentious issue, and 

commenters hold disparate opinions. Some commenters argue that virtual transactions 

contribute to price convergence between the day-ahead and real-time markets, thus 

reducing, rather than increasing, uplift. They also argue that virtual transactions are 

easily forced out of the market by added fees, such as uplift. These commenters support 

 39 Id. at 14; XO Energy Comments at 24.

40 MISO Market Monitor Feb. 24, 2015 Comments at 16-17.

41 Id. at 17.
Docket No. RM17-2-000 - 17 -

either reducing or eliminating the allocation of uplift costs to virtual transactions.42 For 

example, XO Energy argues that it is unjust and unreasonable to allocate energy 

deviation-related uplift costs to virtual transactions as XO Energy asserts these 

transactions do not impact unit commitment because the energy impacts “net out” and do 

not affect the system’s power balance.43

28. Other commenters disagree, arguing that virtual transactions should be allocated 

uplift costs because they affect day-ahead commitment and dispatch, and thus can impact 

uplift.44 For example, PJM states that allocating uplift costs to virtual transactions is 

consistent with cost causation, and that up-to-congestion transactions should be allocated 

uplift costs similar to other virtual transactions, although they are not currently allocated 

such costs.45 Several commenters also contend that cost allocation rules for virtual 

transactions may need to be revised.46 For example, EEI notes that in PJM, virtual 

transactions, including increment offers and decrement bids, are allocated uplift costs, 

while up-to-congestion transactions are not. EEI asserts that up-to-congestion 

 42 Appian Way Comments at 10; Financial Marketers Coalition Comments 

at 14-15; XO Energy Comments at 21.

43 XO Energy Comments at 19-21.

44 PSEG Companies Comments at 10; EEI Comments at 4. 

45 PJM Report at 33.

46 EPSA/P3 Comments at 12; DC Energy, Inertia Power, and Vitol Comments 

at 4-5. 
Docket No. RM17-2-000 - 18 -

transactions should not be given preferential treatment and should instead be allocated a 

share of uplift costs.47

c. Coordinated Transaction Scheduling

29. CTS transactions are scheduled in real-time by the participating RTO/ISOs48

based on forecasted prices. CTS is not used in all RTO/ISO markets and the allocation of 

uplift costs to CTS varies by market, as described herein. Some RTOs/ISOs, such as 

MISO, view CTS transactions as economically dispatched, similar to the economic 

dispatch of a generator, and therefore do not consider them to be deviations for the 

purpose of allocating uplift costs. NYISO and ISO-NE do not allocate uplift costs to 

CTS transactions between their markets. PJM, however, views CTS transactions as 

deviations, indistinguishable in effect from other deviations that cause uplift. 

d. Additional Comments

30. Commenters also provide feedback on several other market design mechanisms 

related to uplift. For example, several commenters discuss the netting of internal bilateral 

transactions against other deviations when allocating uplift costs in PJM. While some 

advocate eliminating this market rule,49 others support it, contending that internal 

bilateral transactions are valuable hedging tools which allow market participants to 

 47 EEI Comments at 4.

48 Currently, CTS is effective between NYISO and ISO-NE and NYISO and PJM. 

MISO and PJM expect to implement CTS in 2017.

49 PJM Market Monitor Comments at 13; PJM Report at 33; Appian Way 

Comments at 8.
Docket No. RM17-2-000 - 19 -

counteract a deviation from a virtual transaction in the day-ahead market and promote 

convergence between day-ahead and real-time prices.50 

4. Need for Reform

31. We preliminarily find that some existing RTO/ISO practices of real-time uplift 

cost allocation to deviations may be unjust and unreasonable. Specifically, these realtime uplift cost allocation practices may result in unjust and unreasonable rates by 

allocating costs to deviations that could not reasonably be expected to have caused those 

costs. Allocating costs to deviations that did not cause these costs can inappropriately 

penalize certain types of transactions that may be beneficial to price formation. We note 

that the Commission is not proposing to require RTOs/ISOs to allocate any amount of 

uplift costs to deviations, rather we are simply proposing reforms to uplift cost allocation 

to deviations to the extent an RTO/ISO chooses to allocate some uplift costs to 

deviations.

32. While there are several approaches to allocating uplift costs, most RTOs/ISOs 

allocate at least a portion of real-time uplift costs to market participants that deviate from 

their day-ahead market schedules. When market participants deviate from their dayahead schedule, RTOs/ISOs may have to take actions in real-time to address differences 

between the day-ahead market solution and real-time system conditions. These actions,

such as committing additional resources, can result in real-time uplift costs. 

 50 EPSA/P3 Comments at 12-13.
Docket No. RM17-2-000 - 20 -

33. However, RTOs/ISOs do not always consider whether a deviation likely 

contributed to increasing or decreasing real-time uplift costs when allocating real-time 

uplift costs. Deviations from day-ahead market schedules that create the need for 

additional resource commitments in real-time tend to increase real-time uplift costs. On 

the other hand, deviations can also contribute to the convergence of the day-ahead and 

real-time markets by helping to ensure that the day-ahead market solution and the 

attendant day-ahead schedule reduces the need for system operator actions in real-time. 

If real-time uplift costs are assigned improperly, such costs may impact market behavior 

in a manner that limits otherwise beneficial transactions, which in turn may distort prices 
Docket No. RM17-2-000 - 21 -

and market outcomes. This distortion can lead to increased real-time uplift payments, 

higher overall costs to consumers, and potentially unjust and unreasonable rates.51

34. Therefore, we preliminarily find unjust and unreasonable real-time uplift cost 

allocation rules that fail to distinguish between deviations that help converge day-ahead 

and real-time markets52 and those that harm efforts to address system needs. Such rules 

fail to appropriately assign real-time uplift costs to market participants that are likely to 

cause such costs and inappropriately deter transactions that are likely to minimize these 

costs. 

5. Proposal

35. To remedy the potentially unjust and unreasonable rates resulting from allocating 

real-time uplift costs to deviations in a manner inconsistent with cost causation, we 

propose that, pursuant to section 206 of the Federal Power Act,53 each RTO/ISO that 

currently allocates real-item uplift costs to deviations must follow the practices described 

below when allocating such costs. Specifically, the following practices ensure that if an 

RTO/ISO chooses to allocate real-time uplift costs to deviations, it must do so consistent 

with cost causation. Accordingly, we first propose that RTOs/ISOs categorize real-time 

 51 FERC, Staff Analysis of Uplift in RTO and ISO Markets, Docket No. AD14-14-

000, at 5-7 (Aug. 2014), https://www.ferc.gov/legal/staff-reports/2014/08-13-14-

uplift.pdf.

52 Deviations that help converge day-ahead and real-time markets are deviations 

that bring day-ahead and real-time prices, commitments, and dispatch closer together.

53 16 U.S.C. 824e.
Docket No. RM17-2-000 - 22 -

uplift costs allocated to deviations into at least two categories based on the reason uplift 

costs were incurred, a system-wide capacity category and a congestion management 

category as discussed in more detail below. Second, we propose to require each 

RTO/ISO to distinguish between deviations that are “helping” to address system needs 

and those that are “harming” efforts to address system needs. Further, within each uplift 

category, uplift costs must be allocated to a market participant’s net “harming” 

deviations, i.e., relevant “harming” deviations net of relevant “helping” deviations. 

Third, we propose to clarify that a resource responding to an RTO/ISO-initiated real-time 

dispatch instruction should not be allocated deviations-related real-time uplift costs. 

Finally, we propose that real-time uplift costs allocated to deviations must be settled 

using hourly uplift rate calculations. Each proposed practice is described in detail below. 

36. This proposal would apply only to real-time uplift costs allocated to deviations. 

The NOPR does not propose to require that RTOs/ISOs allocate uplift costs to deviations, 

and we recognize that there are other methods for allocating uplift costs that are not based 

on deviations, such as allocations based on load obligation. Further, we recognize that 

there are many causes of uplift and this NOPR does not propose to address the allocation 

of all uplift costs. Rather, to improve upon existing RTO/ISO cost allocation practices, 

this NOPR addresses the allocation of uplift costs caused by market participants that 

deviate from their day-ahead market schedules.

37. Most RTOs/ISOs allocate some real-time uplift costs to deviations, although their 

methods for doing so vary. We set forth here a definition of deviations to delineate what 

type of real-time uplift cost allocation is the subject of this NOPR. We propose that 
Docket No. RM17-2-000 - 23 -

deviations are megawatt hour differences between a market participant’s scheduled 

deliveries or receipts at particular points cleared in the day-ahead market and those 

amounts actually delivered or received at those points in real-time that are not related to 

real-time economic or reliability-related operator dispatch instructions. We propose that, 

to the extent an RTO/ISO allocates real-time uplift costs to deviations, it must do so 

consistent with this proposed definition. We seek comment on the proposed definition of 

deviations. 

38. We propose that if an RTO/ISO allocates real-time uplift costs to deviations, it 

must allocate such costs only to deviations that can reasonably be expected to have 

caused those costs. Real-time uplift costs are most likely to be incurred when, for various 

reasons, the day-ahead market clearing process does not schedule sufficient resources to 

satisfy the system’s real-time needs, and instead, RTOs/ISOs must procure additional 

resources after the day-ahead market has cleared. Market participants that deviate from 

their day-ahead schedules will either more closely align the day-ahead market solution 

with actual real-time system needs or contribute to a divergence from the day-ahead 

solution. Scheduling practices that contribute to these divergences may require operator 

actions, such as operator-initiated commitments, in real-time.

39. RTO/ISO day-ahead and real-time price signals provide economic incentives to 

respond to system needs. Allocating real-time uplift costs to deviations consistent with 

cost causation would help ensure that real-time uplift cost allocation does not discourage 

or deter behavior that may converge day-ahead and real-time market solutions. By 

eliminating the allocation of real-time uplift costs to transactions that are beneficial to 
Docket No. RM17-2-000 - 24 -

meeting system needs, this proposal strengthens the economic incentives for market 

participants to respond to system needs. Further, allocating real-time uplift costs 

consistent with cost causation rewards the ability to perform in real-time consistent with 

operator instructions and disciplines forward scheduling practices by encouraging market 

participants to bid into the day-ahead market and submit day-ahead schedules consistent 

with expected real-time system conditions.

a. Real-Time Uplift Categories

40. We propose to require each RTO/ISO to categorize real-time uplift costs allocated

to deviations into at least two categories based on the reason the uplift cost was incurred: 

(1) a system-wide capacity category and (2) a congestion management category. The 

system-wide capacity category would include real-time uplift related to resource 

commitments made to ensure sufficient system-wide online capacity to meet energy and 

operating reserve requirements. The congestion management category would include 

real-time uplift related to resource commitments to manage transmission congestion on 

specific constraints. Under this proposal, we require that an RTO/ISO establish at least 

these two categories for real-time uplift cost allocation to deviations, but propose to 

provide flexibility to an RTO/ISO to establish additional categories. 

41. We propose distinguishing the two categories, system-wide capacity and 

congestion management. The distinction ensures real-time uplift costs are allocated more 

specifically to the market participant that caused the uplift. Two examples illustrate how 

delineating these two categories is consistent with cost causation. 
Docket No. RM17-2-000 - 25 -

42. As a first example, consider a market participant that owns a generator that in realtime produces less than the output set forth in its day-ahead schedule when it did not 

receive dispatch instructions to do so. That generator’s deviation impacted the 

RTO’s/ISO’s ability to maintain real-time energy and operating reserve requirements and 

required a new commitment to make up for the generator’s deviation. However, absent 

impacting the power flows on a system constraint, the generator did not contribute to 

congestion on any constraint. Such a generator should be allocated real-time uplift costs 

for capacity but not congestion management. The generator caused a need for more 

capacity to come online, but did not cause a need to relieve congestion on a constraint.

43. As a second example, suppose that the same generator is owned by a market 

participant that also serves real-time load. If the market participant reduces its real-time 

load in an amount that equals the generator’s deviation (i.e., its reduced supply), the 

market participant’s behavior on net did not impact the RTO’s/ISO’s ability to maintain 

real-time energy and operating reserve requirements. However, if this behavior—on 

net—impacts congestion on the system, the market participant should be allocated realtime uplift costs related to congestion management.

44. We request comments on whether the proposed reforms should recognize the need 

for regional flexibility with regard to the uplift categories. We also request comment on 

whether other categories should be required. 

b. Netting

45. In allocating uplift costs to deviations, we propose to require each RTO/ISO to 

distinguish between deviations that are “helping” efforts to address system needs and 
Docket No. RM17-2-000 - 26 -

those that are “harming” efforts to address system needs. The particular system need of 

relevance will depend on the category of uplift costs at issue, as discussed further below. 

Within each uplift category, uplift costs must be allocated to a market participant’s net 

“harming” deviations, i.e., relevant “harming” deviations net of relevant “helping” 

deviations. Such allocation should be commensurate with a market participant’s share of 

total net “harming” deviations.

46. Under the proposed system-wide capacity category, a market participant would be 

allocated a portion of the total real-time uplift costs incurred to maintain energy and 

operating reserve requirements in the real-time market based on the net contributions of

its deviations to those costs. This method would require an RTO/ISO to determine if

each market participant’s deviations are, on net, “helping”, by converging the day-ahead 

scheduled unit commitment and dispatch to the unit commitment and dispatch needed to 

meet real-time energy and operating reserve requirements, or if they are “harming”, by 

exacerbating the difference between the day-ahead scheduled unit commitment and 

dispatch and the unit commitment and dispatch needed to meet real-time energy and 

operating reserve requirements. For example, if the system operator committed an 

additional resource to maintain energy and operating reserve requirements in the realtime market, a market participant with net deviations that increased demand (or decreased 

supply) would be allocated a portion of real-time uplift costs in the system-wide category, 

while a market participant with net deviations that increased supply (or decreased 

demand) would not. 
Docket No. RM17-2-000 - 27 -

47. Under the proposed congestion management category, a market participant would 

be allocated real-time uplift costs if its net deviations contributed to a difference between 

the congestion on a specific constraint in the day-ahead market and the real-time 

congestion on that constraint. This method would require an RTO/ISO to determine if

each market participant’s deviations are, on net, “helping”, by converging day-ahead and 

real-time congestion patterns, or if they are “harming”, by exacerbating the difference 

between day-ahead and real-time congestion on a constraint. Market participants would 

be allocated real-time uplift costs in this category only if their net deviations are harming 

by contributing to differences between day-ahead and real-time congestion on a 

constraint. 

48. For netting within this congestion management category, we propose to require 

each RTO/ISO to determine real-time uplift cost allocation based on the net impact of a 

market participant’s deviations on a constraint. To make this determination, an RTO/ISO 

should net the deviations that relieve real-time congestion on the constraint with those 

that contribute to it. 

49. Deviations caused by non-market transactions (such as internal bilateral 

transactions) would not be netted in either the proposed system-wide capacity category or 

the proposed congestion management category because they take place outside of the 

day-ahead and real-time markets. Transactions that take place outside of the markets do 

not affect real-time scheduling or dispatch and therefore should not offset transactions 

that do affect real-time scheduling or dispatch. 
Docket No. RM17-2-000 - 28 -

50. We seek comment on whether there should be advanced notification requirements 

in determining helpful deviations. That is, is there a period of time prior to the operating 

hour at which a deviation should no longer be considered helpful because notification of 

the deviation was provided to the RTO/ISO too close to the operating hour? If so, we 

seek comment on what the advanced notification requirement should be.54 Under the 

proposed definition of deviations, transactions related to real-time economic or 

reliability-related operator dispatch instructions would not be used in determining a 

market participant’s net deviations for both the system-wide capacity and congestion 

management categories. We also request comment on whether and how such 

transactions should be used to determine a market participant’s net deviations.

c. Deviations that Result from Following Dispatch

51. Based on the discussion above and consistent with the proposed definition of 

deviations, we clarify that if the RTO/ISO instructs a resource to deviate from its dayahead schedule, be that a market-based or out-of-market instruction, that resource would 

not be regarded as deviating for purposes of this NOPR, and should not be allocated realtime deviation-related uplift costs, because it is helping to address differences between 

the day-ahead market solution and real-time system needs.

 54 For example, MISO determines whether a deviation is helpful based on whether 

it occurred before or after a notification deadline which is four hours prior to the 

operating hour. See generally MISO, FERC Electric Tariff, Definitions, “Notification 

Deadline”, § 1.N & Real-Time Energy and Operating Reserve Market Settlement Cal, § 

40.3.3.
Docket No. RM17-2-000 - 29 -

52. Consistent with this clarification, first, we propose that an RTO/ISO may not 

allocate deviation-related real-time uplift costs to a transaction that is economically 

evaluated by the RTO/ISO in the real-time market. Such transactions include real-time 

energy transactions and CTS transactions. Such real-time transactions are responding to 

real-time market price signals and are not deviations for the purposes of this NOPR. 

These transactions are helping to address real-time system needs and allocating real-time 

deviation-related uplift costs to such transactions could distort incentives to respond to 

these signals. Conversely, transactions that are not economically evaluated in the realtime market and do not have day-ahead schedules, such as self-scheduled real-time 

transactions, should be treated as deviations for the purposes of allocating real-time 

deviation-related uplift costs.

53. Second, consistent with this clarification, we further propose that instructed 

deviations (those initiated by the RTO/ISO) are not deviations for the purposes of 

allocating real-time uplift costs, and therefore, an RTO/ISO may not allocate real-time 

uplift costs based on deviations that result from a market participant following a 

reliability- related dispatch instruction. Following such a dispatch instruction, by 

definition, helps the system. Allocating real-time uplift costs to market participants who 

follow dispatch instructions unfairly penalizes market participants that are responding to 

system needs in real-time. Further, assessing real-time uplift costs to such deviations 

could discourage a market participant from following dispatch instructions. At times of 

system stress, it is essential that resources follow dispatch instructions. For instance, an 

RTO/ISO may issue out-of-market dispatch instructions or deploy reserves to address 
Docket No. RM17-2-000 - 30 -

immediate reliability issues. A resource that responds to such an RTO/ISO instruction 

performs an essential reliability function and should not be allocated real-time deviationrelated uplift costs for following the dispatch instruction.

54. By excluding instructed deviations from the definition of a deviation, the 

Commission is also proposing that instructed deviations would not be used in any 

‘helping’ and ‘harming’ netting process. We seek comment on whether instructed 

deviations should be included in any netting calculations. 

d. Settlement

55. Regarding settlement of uplift costs, under both the system-wide capacity category 

and the congestion management category, we propose to require RTOs/ISOs to allocate 

and net real-time uplift costs on an hourly basis. RTOs/ISOs typically allocate uplift 

costs either hourly or daily. Hourly allocation would most closely align the imposition of 

costs with the incentives to behave efficiently in the market, since the costs of real-time 

uplift and the actions that cause that real-time uplift can and usually do change from hour 

to hour. Under hourly cost allocation, the costs for real-time uplift during a particular 

hour are allocated only to those market participants that contribute to the need for that 

uplift in that hour. 

e. Other Comments Sought

56. We recognize that considering real-time uplift cost allocation to deviations for 

system-wide capacity and congestion management separately may require a method for 

dividing costs between the two categories for circumstances in which real-time uplift is 

incurred for the benefit of both categories (e.g., committing a unit to relieve transmission 
Docket No. RM17-2-000 - 31 -

congestion will also impact system-wide capacity requirements). We seek comment on 

the best methods to quantify this impact and to perform the appropriate cost allocation. 

We also seek comment on the process for netting of transactions and deviations set forth 

in the proposal for each category. Finally, we seek comment on the clarifications 

provided herein regarding those transactions that should not be considered deviations for 

the purpose of real-time uplift cost allocation and whether there are additional 

transactions that should be included in this category.

B. Transparency

57. In this section, we first provide a brief background on the benefits of transparency 

in the wholesale electric power markets operated by RTOs/ISOs with respect to reporting 

uplift, operator-initiated commitments, and transmission constraint penalty factors. We 

then review current RTO/ISO practices with regard to reporting uplift and operatorinitiated commitments, and summarize comments on transparency requirements, 

frequency of reporting, type of uplift information to be reported, inclusion of reasons for 

uplift or operator-initiated commitments, granularity with respect to location, and the 

inclusion of transmission constraint penalty factors in RTO/ISO tariffs. Then, we 

explain the need for the reform regarding reporting of uplift, operator-initiated 

commitments, and transmission constraint penalty factors. Finally, we request comment 

on two additional topics: reporting of transmission outages and availability of network 

models. 
Docket No. RM17-2-000 - 32 -

1. Background

58. Visibility into the process by which prices are developed in energy and ancillary 

services markets supports the functioning of efficient markets by enhancing 

predictability, identifying system needs, and facilitating investment decisions. Moreover, 

understanding how RTOs/ISOs calculate prices and how events impact those prices is 

critical to hedging, investment, and resource entry and exit decisions. While all 

RTOs/ISOs release some information, either through periodic reports or making data 

available on their websites, as discussed below, there is significant variation in the 

timing, granularity, and types of data released.

2. Current RTO/ISO Practices

a. Reporting Uplift

59. All RTOs/ISOs report information about uplift payments. However, the extent of 

the information reported varies widely. For example, ISO-NE and NYISO provide 

monthly reports of uplift that generally provide information that is aggregated across 

zones and over the month.55 NYISO also makes aggregated uplift costs (in dollars) 

available to stakeholders on a daily basis through its daily reconciliation reports.56 MISO 

provides a number of monthly reports to market participants on categories of uplift costs; 

the reports aggregate the uplift data by category by month and provide historical monthly 

 55 ISO-NE Report at 60; NYISO Report at 56-57.

56 NYISO Report at 59.
Docket No. RM17-2-000 - 33 -

data for comparison.

57 CAISO aggregates uplift data to its 10 existing local capacity 

requirement areas and reports daily total uplift costs for each month by the market in 

which the uplift is incurred (e.g., day-ahead or real-time), and by the type of costs 

incurred, i.e., start-up costs, minimum load costs or energy bid costs.58 PJM has recently 

adopted new rules to allow the reporting of daily uplift information by transmission zone, 

with certain exceptions for confidentiality reasons.59 SPP provides uplift information in a 

report that divides uplift costs into seven categories.60

60. RTO/ISO reporting practices are driven, in part, by the time needed to complete 

the settlement process. Some settlement periods last three to five business days and

CAISO provides uplift cost information based on its 12-business day recalculation 

statement, although the settlement period is shorter.61 Because of this lag, RTOs/ISOs 

typically report uplift on a monthly basis, with the information aggregated to a zonal or 

settlement area level. 

 57 MISO Report at 60.

58 CAISO Report at 56.

59 PJM, Business Practice Manual 33: Administrative Services for the PJM 

Interconnection Operating Agreement at 23-24.

60 SPP Report at 40.

61 ISO-NE Report at 64-65; PJM Report at 51; CAISO Report at 58.
Docket No. RM17-2-000 - 34 -

61. Most RTOs/ISOs cite confidentiality issues as an additional reason for their 

current reporting practices, particularly in regions with few market participants.62 Uplift 

information is typically aggregated to avoid publishing information for individual 

resources. All RTOs/ISOs assert that they are prohibited from publicly revealing 

resource-specific data, as specified in their confidentiality rules.63 Some RTOs/ISOs note 

that they cannot provide information on a more granular basis without changes to their 

confidentiality rules or information policies.64

62. It is worth noting that market participants with market-based and traditional cost 

of service rate authority are required to report uplift payments in the Electric Quarterly 

Report (EQR). Pursuant to EQR reporting requirements, uplift payments are required to 

be reported at a granular level. Those reporting requirements require market participants 

to report when the uplift payment changes. Because many resources are commercially 

organized as stand-alone limited liability corporations, many individual resources report 

uplift payments to EQR within 30 days following the end of a quarter. While EQR 

provides a significant amount of information, it does not provide detailed information 

regarding uplift. For example, EQR contains only a single “uplift” category which does 

 62 PJM Report at 48, 54-55; SPP Report at 41, 44; ISO-NE Report at 61, 67; 

NYISO Report at 60.

63 CAISO Report at 59; NYISO Report at 58; PJM Report at 50-51; SPP Report at 

42; ISO-NE Report at 63-64; MISO Report at 58-59.

64 PJM Report at 48; ISO-NE Report at 61.
Docket No. RM17-2-000 - 35 -

not differentiate between different types of uplift (e.g., day-ahead, voltage and local 

reliability).

b. Reporting Operator-Initiated Commitments

63. RTOs/ISOs also vary in the amount, granularity, and timing of information that is 

reported on operator-initiated commitments. For example, CAISO, MISO, and NYISO 

provide information regarding operator-initiated commitments either shortly after the 

operating day or in near real-time. CAISO and MISO both report total operator-initiated 

commitments aggregated across the RTO/ISO, including the reasons for the 

commitments.65 MISO provides its reports in near real-time, while CAISO releases its 

report several days after the operating day. Throughout the operating day, NYISO posts 

operational announcements providing information about individual operator-initiated 

commitments, including the units involved, level of unit commitment, and the reason for 

the commitment, with a reference to the relevant reliability rule, if applicable.

66 

64. In addition, all RTOs/ISOs provide summary reports of operator-initiated 

commitments over longer time periods. CAISO’s monthly performance report provides 

metrics on exceptional dispatch67 and operator-initiated commitments organized by 

 65 MISO Report at 60; CAISO, Daily Exceptional Dispatch Report, 

http://www.caiso.com/market/Pages/DailyExceptionalDispatch/Default.aspx.

66 NYISO Report at 56-57 and n.32.

67 CAISO states that its system operator issues exceptional dispatches to resources 

to address system issues that cannot be addressed by the constraints modeled within the 

market. CAISO Report at 41.
Docket No. RM17-2-000 - 36 -

market (i.e., day-ahead or real-time), trade date, reason, or local area.68 CAISO also files 

a monthly report on the frequency and volume of exceptional dispatch, pursuant to 

directives in previous Commission orders.

69 ISO-NE publishes weekly, monthly, and 

quarterly reports that describe notable operational events, but it does not provide any 

information regarding the location or capacity of committed units.

70 ISO-NE also reports 

the number of units committed after the close of the day-ahead market (but not including 

real-time commitments) each day.

71 SPP reports monthly the MW of operator-initiated 

commitments.

72 

65. PJM states that, although its confidentiality provisions prevent it from reporting 

individual operator-initiated commitments in real-time, it does provide regionally 

aggregated information on uneconomic commitments in the day-ahead market at the end 

of the business day. In addition, PJM posts total capacity committed during the 

Reliability Assessment and Commitment period to meet forecasted load and reserves, as 

well as resources committed for transmission constraints, voltage/reactive constraints, or 

 68 Id. at 56.

69 Id. See also Cal. Indep. Sys. Operator Corp., 131 FERC ¶ 61,100 (2010) 

(clarifying the reporting timeline for reporting exceptional dispatches).

70 ISO-NE Report at 60.

71 Id. at 61-62.

72 SPP Report at 40.
Docket No. RM17-2-000 - 37 -

conservative operations.

73 ISO-NE also states its confidentiality provisions prohibit 

reporting of operator-initiated commitments in real-time, while CAISO states providing 

information about exceptional dispatches more frequently than monthly would require 

significant changes to its systems.74 SPP states it is technically feasible to report 

commitments resulting from operator actions in real-time, but notes such reporting could 

disclose sensitive reliability information.75

c. Transmission Constraint Penalty Factors

66. Transmission constraint penalty factors are the values at which an RTO’s/ISO’s 

market software will relax the flow-based limit on a transmission element to relieve a 

constraint caused by that limit rather than re-dispatch resources to relieve the constraint. 

The cost of re-dispatching resources can be regarded as the re-dispatch price. 

Transmission constraint penalty factors represent the maximum re-dispatch price that the 

system will pay before allowing flows to exceed a given transmission element’s limit.76 

The penalty factors should be set at levels that are high enough to avoid relaxing 

constraints too frequently, but low enough to avoid extremely expensive re-dispatch 

 73 PJM Report at 49-50.

74 ISO-NE Report at 65; CAISO Report at 58, 62.

75 SPP Report at 41.

76 Transmission constraint penalty factors create a cap on the shadow price of a 

transmission constraint. See MISO Market Monitor Comments, Docket No. AD14-14-

000, at 20-21 (Feb. 24, 2015).
Docket No. RM17-2-000 - 38 -

solutions that are more expensive than the expected cost of exceeding a given 

transmission element’s limit. While these penalty factors can have significant impacts on 

prices, changes are not always made public nor do all RTOs/ISOs file them with the 

Commission. Specifically, PJM and ISO-NE do not include transmission constraint 

penalty factors in their respective tariffs.77 Further, MISO is the only RTO/ISO that 

details in its tariff how transmission constraint penalty factors are temporarily changed.78

3. Comments

a. General Comments

67. Various commenters recommend reporting of uplift and operator-initiated 

commitments that is more regular, more geographically granular, more specific about the 

size of the action (in MW), and/or more informative of the reason for uplift or operator 

action. Numerous commenters argue that such reporting about uplift and operatorinitiated commitments should be mandatory.

79 Exelon urges the Commission to require 

RTOs/ISOs to identify out-of-market actions and the resulting uplift in regular reports.80 

 77 CAISO, MRTU Tariff §§ 27.4.3.1-27.4.3.3; SPP, OATT, Sixth Revised Volume 

No. 1, Attachment AE, § 8.3.2, Addendum 1; NYISO Tariffs, NYISO Markets and 

Services Tariff § 1.20; MISO, FERC Electric Tariff, Schedule 28A.

78 MISO, FERC Electric Tariff, Schedule 28A.

79 DC Energy, Inertia Power, and Vitol Comments at 18; EPSA Comments (on 

MISO Report) at 22; EPSA/NEPGA Comments at 14; Energy Storage Association 

Comments at 2-3; Exelon Comments at 17-18; PSEG Companies Comments at 16.

80 Exelon Comments at 17-18.
Docket No. RM17-2-000 - 39 -

Several commenters propose that RTOs/ISOs be required to post information in a way 

that is uniform, consistent, and comparable across RTOs/ISOs.81 

b. Comments on Uplift Reporting

68. In terms of frequency, some commenters recommend monthly reporting of uplift 

to improve transparency.82 Energy Storage Association requests that RTOs/ISOs provide 

daily summary data on uplift credits. Energy Storage Association asserts that such 

information should, at a minimum, be at a zonal level and should be made available by all 

RTOs/ISOs several days after the operating day.

83

69. Several commenters request more granular locational information regarding 

uplift.

84 These commenters argue that it is difficult to reduce or eliminate uplift when 

market participants do not know where it originates. To address this request, many 

commenters, including CAISO, ISO-NE, and PJM, support reporting uplift on a zonal 

 81 DC Energy, Inertia Power, and Vitol Comments at 18; EPSA Comments (on 

price formation) at 22; EPSA Comments (on MISO Report) at 22; EPSA/IPPNY 

Comments at 13; EPSA Comments (on SPP Report) at 10; EPSA/NEPGA Comments at 

14-15; EPSA/P3 Comments at 15; EPSA/WPTF Comments at 10.

82 EPSA Comments (on MISO Report) at 21-22; EPSA/NEPGA Comments at 13.

83 Energy Storage Association Comments at 2-3.

84 Financial Marketers Coalition Comments at 45; Energy Storage Association 

Comments at 6; Golden Spread Comments at 8-9.
Docket No. RM17-2-000 - 40 -

basis.85 CAISO, ISO-NE, and PJM state that zonal reporting strikes a balance between 

granularity and confidentiality.

86 In contrast, SPP and MISO caution that reporting 

uplift on a zonal basis could reveal sensitive market participant information.87 

70. Commenters have differing views on what uplift information should be reported. 

PSEG Companies argue that uplift can be effectively reported on a dollar basis.88 

Energy Storage Association states that RTOs/ISOs should share daily summary data on 

uplift in dollars, including the reasons for the uplift and the location (at a minimum at a 

zonal level) of the resources that receive it.

89 The PJM Market Monitor recommends

reporting uplift charges by resource as well as detailed reasons for incurring uplift.90 

EPSA and EPSA/NEPGA recommend reporting the settled uplift dollar impact on a MW

 85 Financial Marketers Coalition Comments at 45; Energy Storage Association 

Comments at 6; PJM Market Monitor Comments at 20; CAISO Report at 61; PJM Report 

at 52; ISO-NE Report at 64, 66. 

86 PJM Report at 53; ISO-NE Report at 66; CAISO Report at 61.

87 MISO Report at 60-61; SPP Report at 43. 

88 PSEG Companies Comments at 12, 15-16.

89 Energy Storage Association Comments at 2. 

90 PJM Market Monitor Comments at 20-21.
Docket No. RM17-2-000 - 41 -

basis, as well as the reasons for out-of-market commitments every month.91 EPSA 

asserts that reporting additional information on the drivers of uplift and out-of-market 

dispatch can be made public without compromising sensitive information, because

NYISO currently does so in monthly reports.92 

71. EPSA/IPPNY warns that reporting uplift more frequently than daily could 

potentially reveal confidential information.93 Energy Storage Association suggests that,

given confidentiality concerns, the Commission could allow an RTO/ISO to request an 

exemption from reporting zonal or locational information in certain situations where 

there are few participants in a zone or location.

94 ISO-NE and MISO suggest that the 

level of aggregation be adjusted to ensure that confidentiality is maintained.95

 91 EPSA and its joint commenters support several variations of “reporting actual 

settled uplift dollar impacts, on a Megawatt (MW) basis.” It is unclear whether this is 

referring to reporting uplift dollars divided by the total capacity of resources that receive 

uplift payments, or reporting the total capacity of committed resources in lieu of 

identifying specific units. EPSA Comments (on price formation) at 23; EPSA Comments 

(on MISO Report) at 21-22; EPSA/NEPGA Comments at 13. 

92 EPSA Comments (on price formation) at 23.

93 EPSA/IPPNY Comments at 12-13.

94 Energy Storage Association Comments at 3. 

95 ISO-NE Report at 66; MISO Report at 61.
Docket No. RM17-2-000 - 42 -

c. Comments on Reporting Operator-Initiated 

Commitments

72. Several commenters recommend monthly reporting of operator-initiated actions, 

including the reasons for out-of-market actions, to improve transparency.96 Commenters 

argue that understanding the reasons for out-of-market commitments will help market 

participants discern what types of investments are needed to meet system needs.

97 

Moreover, the Financial Marketers Coalition states that, when out-of-market 

commitments are identified by location and explained, financial participants will refrain 

from bidding because they know that prices will not converge and uplift is likely.98 

73. Some commenters also suggest that RTOs/ISOs report operator-initiated

commitments closer to real-time. In particular, PSEG Companies suggest that NYISO’s 

approach to disclosing out-of-market commitment and dispatch decisions should be 

considered a best practice.99 

 96 EPSA Comments (on MISO Report) at 21-22; EPSA/NEPGA Comments at 13; 

Exelon Comments at 18; EPSA Comments (on price formation) at 23 EPSA/IPPNY 

Comments at 13; EPSA/P3 Comments at 15-16.

97 EPSA Comments (on price formation) at 23; EPSA/P3 Comments at 15-16.

98 Financial Marketers Coalition Comments at 42.

99 PSEG Companies Comments at 11. 
Docket No. RM17-2-000 - 43 -

74. Several commenters request more granular locational information regarding outof-market operator actions.100 PSEG Companies note that when RTOs/ISOs provide only 

aggregated data, it is not possible to discern whether the RTO/ISO needed those units or 

how many MW were actually required.101 

d. Comments on Transmission Constraint Penalty Factors

75. The MISO Market Monitor asserts that transmission constraint penalty factors

substantially affect market outcomes but are not filed with or approved by the 

Commission for some RTOs/ISOs. MISO Market Monitor adds that increasing 

transmission constraint penalty factors during real-time operations to relieve constraints 

may indicate that constraints were undervalued previously, and lowering transmission 

constraint penalty factors during real-time operations may indicate that the RTO/ISO is 

attempting to manually reduce congestion costs. MISO Market Monitor contends that 

these concerns can be addressed by: (1) establishing parameters that reflect the reliability 

value of managing the constraints, which likely varies by constraint; (2) filing these 

values in the RTO’s/ISO’s tariffs so they are known and approved by the Commission; 

and (3) filing tariff provisions that specify the procedures and authority for RTOs/ISOs to 

modify transmission constraint penalty factors.102

 100 Financial Marketers Coalition Comments at 45 (referring to SPP); Energy 

Storage Association Comments at 6 (referring to MISO and SPP); Golden Spread 

Comments at 8-9.

101 PSEG Companies Comment at 14.

102 Comments of MISO Market Monitor, Docket No. AD14-14-000, at 20-21 
Docket No. RM17-2-000 - 44 -

76. XO Energy states that transmission constraint penalty factors can have a 

significant impact on prices; however, there is not necessarily clear insight as to how 

transmission constraint penalty factors are determined or calculated in the pricing and 

dispatch algorithms.103 XO Energy contends that, in some cases, the default transmission 

constraint penalty factors can be arbitrarily assigned and modified on a case-by-case 

basis.104 

4. Need for Reform

77. We preliminarily find that some existing RTO/ISO practices of reporting uplift, 

operator-initiated commitments, and transmission constraint penalty factors may result in 

unjust and unreasonable rates. The lack of transparency regarding uplift and operatorinitiated commitments, which can cause uplift, hinders market participants’ ability to plan 

and efficiently respond to system needs. Market participants may lack the information 

necessary to evaluate the need for and value of additional investment, such as 

transmission upgrades or new generation. Also, without sufficient transparency, market 

participants may not be able to assess each RTO’s/ISO’s operator-initiated commitment 

practices and raise any issues of concern through the stakeholder process.

78. Reporting that specifies the location and causes of uplift and operator-initiated 

commitments will help incent appropriate market responses to system needs. For 

 

(Feb. 24, 2015).

103 XO Energy Comments at 67-68. 

104 Id. at 68.
Docket No. RM17-2-000 - 45 -

example, if resources are routinely committed out-of-market to resolve a local voltage 

issue and require uplift payments as a result, it may be beneficial to release information 

on the uplift associated with using such resources to alert market participants about the 

problem. Providing more detailed information about the uplift incurred to address a local 

reliability issue could potentially incent market participants to advocate for changes to the 

RTO/ISO’s operational procedures or to undertake investments that could resolve the 

local reliability issue more efficiently (e.g., install additional capacitors). 

79. While all RTOs/ISOs provide some information regarding the locations and causes 

of uplift and operator-initiated commitments, the information is often highly aggregated 

or lacks detail, limiting its usefulness. Information about the location and causes of uplift 

and operator-initiated commitments that is overly aggregated or lacks detail hinders the 

ability of a market participation to evaluate RTO/ISO operating practices and potentially 

respond to system needs by undertaking new investments. For example, reports that 

aggregate uplift payments over the month may not provide sufficient information, since 

monthly reports can obscure daily trends, which may be more relevant to those evaluating 

operating practices or potential investments. Therefore, increasing transparency with 

respect to the location and cause of uplift can provide market participants additional 

information to evaluate the effectiveness of current operating practices. Without 

sufficient information to evaluate existing operating practices or the need for additional 

investment, market efficiency may be reduced, resulting in unjust and unreasonable rates.

Allowing market participants to better evaluate the need for changes in operating 
Docket No. RM17-2-000 - 46 -

practices or additional investment could ultimately reduce the level of uplift, thereby 

resulting in rates that are just and reasonable. 

80. Similarly, the lack of transparency with respect to transmission constraint penalty 

factors may hinder the ability of market participants to undertake efficient transactions. 

For example, if market participants are unaware of what transmission constraint penalty 

factors are used and whether they will be used to set LMPs, market participants may not 

be able to adequately understand how an RTO’s/ISO’s actions affect clearing prices and 

thus may not be able to hedge transactions appropriately or effectively assess the 

RTO’s/ISO’s actions and raise concerns through the stakeholder process. Without the 

ability to appropriately hedge transactions, market participants may either over-hedge or 

under-hedge their positions, reducing market efficiency. Also, if market participants are 

not able to raise concerns about changes in transmission constraint penalty factors, 

RTOs/ISOs may alter transmission constraint penalty factors more often than necessary, 

which impacts market clearing prices. Therefore, the resulting rates may be unjust and 

unreasonable.

81. Some RTOs/ISOs report that there are a variety of stakeholder initiatives and 

discussions underway to improve transparency,105 while others do not mention any 

specific plans.106 Despite these efforts, it is not clear that the transparency concerns 

 105 CAISO Report at 55; MISO Report at 56; NYISO Report at 55; PJM Report 

at 47.

106 ISO-NE Report at 59; SPP Report at 39.
Docket No. RM17-2-000 - 47 -

discussed in this NOPR will be addressed through existing stakeholder initiatives. 

Accordingly, we preliminarily find that some existing RTO/ISO practices with respect to 

reporting uplift, operator-initiated commitments, and transmission constraint penalty 

factors may be unjust and unreasonable.

5. Proposal

82. To remedy these potentially unjust and unreasonable reporting practices, we 

propose, pursuant to section 206 of the Federal Power Act, to require that each RTO/ISO: 

(1) report total uplift payments for each transmission zone on a monthly basis, broken out 

by day and uplift category; (2) report total uplift payments for each resource on a 

monthly basis; (3) report the MW of operator-initiated commitments in or near real-time 

and after the close of the day-ahead market, broken out by zone and commitment reason; 

and (4) list in its tariff the transmission constraint penalty factors, the circumstances 

under which they can set LMPs, and the procedure by which they can be temporarily 

changed. 

a. Uplift Reporting

83. We propose to require that, within 20 days of the end of each month, each 

RTO/ISO post on its website two reports, at minimum, regarding uplift payments. First, 

the RTO/ISO should report the total uplift payments in dollars paid daily to the resources 

in each transmission zone, subject to certain exceptions described below. Each RTO/ISO 

must post the total amount of uplift in dollars in each category (e.g., day-ahead, real-time, 

voltage and local reliability) paid to resources in each transmission zone for each day 

within the calendar month. We propose to require that each RTO/ISO post uplift 
Docket No. RM17-2-000 - 48 -

payment amounts based on its specific uplift categories to allow market participants to 

distinguish between different types of uplift. Second, each RTO/ISO must post the 

resource name and the total amount of uplift paid in dollars aggregated across the month 

to each resource that received uplift payments within the calendar month. We seek 

comment on whether these resource-specific reports should also be broken out by uplift 

category, be reported using a different time duration, or contain other additional details.

84. Information on uplift payments should be posted in a machine readable format on 

a publicly accessible portion of the RTO’s/ISO’s website. With this information, market 

participants may be able to evaluate possible solutions to reduce the incurrence of uplift. 

For example, with more granular information on the location, amounts, and types of 

uplift, market participants can better evaluate the benefits of additional transmission 

upgrades that could reduce the need for unit commitments. 

85. We also propose to define “transmission zone” as a geographic area that is used 

for the local allocation of charges. For example, this could include a load zone that is 

used to settle charges for energy. We request comments on this proposed definition of 

transmission zone, including the appropriate level of geographic granularity.

86. Regarding the timeliness of posting this information, we recognize that each 

RTO/ISO has a different settlement window and uplift is finalized during the settlement 

process. As such, it is not possible for an RTO/ISO to release information immediately at 

the end of the month. In order to account for differences in settlement periods and the 

time necessary to prepare the uplift data for publication, we propose to require that both 

reports described above be released no later than 20 calendar days following the end of 
Docket No. RM17-2-000 - 49 -

the month. While we believe this is a reasonable timeframe for release, we seek 

comment on the timeframe for releasing the information after the end of each month. In 

addition, we seek comment on the proposed requirement for a daily breakdown of uplift 

categories by charge code, including any obstacles or difficulties related to such reporting 

and whether different categorizations would be more useful.

87. Many commenters express concern that greater transparency in uplift reporting 

could unintentionally disclose a resource’s uplift payments or energy offers, which some 

characterize as confidential or commercially-sensitive information. Commenters’ core 

concerns appear to relate to two issues: first, that disclosing a resource’s uplift payments 

will allow other market participants to calculate energy offers and may result in collusion 

between market participants.107 Second, commenters appear to be concerned that 

revealing uplift payments may put a resource at a competitive disadvantage by disclosing 

commercially sensitive information like fuel procurement strategies.

88. While we understand the need to protect certain types of information, we are not 

persuaded that revealing a resource’s daily uplift payments or energy offer, after some 

minimal time lag, would result in any significant harm to competition or individual 

market participants. First, many individual resources already publicly report their uplift 

payments pursuant to Electric Quarterly Reporting requirements (with a 90-day lag). 

 107 In conjunction with other information, uplift payments could potentially be 

used to determine a resource’s energy offers. For example, if a market participant knew a 

resource’s output, LMP, and uplift payments, it could potentially calculate the resource’s

energy offer because the uplift would make the resource whole up to its offer costs.
Docket No. RM17-2-000 - 50 -

Second, RTO/ISO energy markets are mitigated, so concerns about the potential for 

collusion can be addressed through must offer requirements and market power mitigation 

rules. Third, after the 20-day lag for reporting following the end of the month, fuel costs 

and other conditions have often changed, diminishing the potential usefulness of any 

resource offer information. These three factors limit the potential for anti-competitive 

behavior and any harm to market participants. 

89. Nevertheless, to address commenters’ concerns, we seek to balance the benefits of 

greater transparency with the desire to preserve a reasonable level of confidentiality. 

Specifically, for the reporting requirements aggregated by transmission zone, we propose 

that transmission zones with fewer than four resources need not be reported individually; 

rather, transmission zones with fewer than four resources may be aggregated with a 

neighboring transmission zone and reported collectively. If only one transmission zone 

exists and it has fewer than four resources or, if when combined with a neighboring 

transmission zone the combined transmission zone still has fewer than four resources, 

then these transmission zones would be exempted from reporting the uplift information 

described above. Similarly, for the resource-specific reporting requirements proposed 

above, we will require that uplift payment data for each resource be aggregated across the 

month, rather than reporting daily uplift payments to each resource. We expect that this 

temporal aggregation should mask daily behavior that some commenters have expressed 

concerns over revealing. 
Docket No. RM17-2-000 - 51 -

b. Reporting Operator-Initiated Commitments

90. We also propose to require that each RTO/ISO post all operator-initiated 

commitments on its website. For the purposes of this NOPR, we propose to define 

operator-initiated commitments as a commitment that is not associated with a resource 

clearing the day-ahead or real-time market on the basis of economics and that is not selfscheduled.108 This definition would include any commitment, whether manual or 

automated, made after the execution of the day-ahead market that is made outside of the 

real-time market. Such commitments include commitments made through a residual unit 

commitment processes after the execution of the day-ahead market, commitments made 

through look-ahead commitment processes, and manual commitments made in real-time. 

We acknowledge that this definition of operator-initiated actions could result in reporting 

most commitments that occur after the day-ahead market. Moreover, we understand that 

whether a commitment cleared the market on the basis of economics could be a point of 

confusion, particularly with respect to look-ahead commitment processes. Therefore, we 

request comment on this aspect of the definition of operator-initiated actions. 

91. The report posted on each RTO’s/ISO’s website would include the following:

(1) the upper economic operating limit of the committed resource in MW (i.e., its 

economic maximum); (2) the transmission zone in which the resource is located; and 

(3) the reason for commitment.109 We propose that each RTO/ISO post this information 

 108 See supra text accompanying note 1.

109 For example, if a resource with two combustion turbines with a capacity of 
Docket No. RM17-2-000 - 52 -

on a publicly accessible portion of its website in machine-readable format as soon as 

practicable after the resource has been committed (i.e., directed to start up by the 

RTO/ISO). As above, we propose to define “transmission zone” as a geographic area 

that is used for the local allocation of charges. We request comments on this proposed 

definition, including the appropriate level of geographic granularity. Also, as discussed 

further below, we propose that real-time commitments be posted as soon as practicable 

after they occur, but no later than four hours after the commitment. 

92. Many commenters express concern about the lack of transparency surrounding 

operator-initiated commitments and request that the Commission require RTOs/ISOs to 

provide more information.110 We agree that current RTO/ISO practices may not provide 

sufficient transparency regarding operator-initiated commitments and that a minimum 

level of transparency is necessary as operator-initiated commitments can affect rates. In 

particular, operator-initiated commitments can affect energy and ancillary service prices 

and can result in uplift. In addition, greater transparency will allow stakeholders to better 

assess the RTO’s/ISO’s operator-initiated commitment practices and raise any issues of 

concern through the stakeholder process. 

 

50 MW each was committed to manage congestion on a transmission facility, the 

RTO/ISO would be required to report the committed capacity (100 MW) and the 

reason (e.g., constraint management).

110 E.g., EPSA Comments at 22-23; Exelon Comments at 17-18; Financial 

Marketers Coalition Comments at 42; PSEG Comments at 12. 
Docket No. RM17-2-000 - 53 -

93. While most commenters focus on reporting of manual operator-initiated 

commitments (i.e. not through automated software),

111 operator-initiated commitments 

made through automated processes like look-ahead commitment can also have a 

significant impact on uplift. In addition, as noted by several RTOs/ISOs, manual 

operator-initiated commitments are generally infrequent. Because posting all operatorinitiated commitments, whether manual or automated, would help market participants to 

better understand the drivers behind the incurrence of uplift in each zone and the impact 

of such commitments on rates, we propose that all operator-initiated commitments be 

posted, whether manual or automated. We also seek comment on the types of unit 

commitments that should be reported as operator-initiated commitments. 

94. In addition, we propose that real-time commitments be posted as soon as 

practicable after they occur, but no later than four hours after the commitment. We 

understand that this type of reporting could require significant changes to current 

RTO/ISO systems and processes. Accordingly, we seek comment on the proposed 

reporting timeframe, including the potential software upgrades necessary to facilitate 

reporting in near real-time and other potential implementation challenges. We also seek 

comment on whether a different reporting timeframe (e.g., reporting once daily or 

monthly) would provide sufficient transparency. 

 111 CAISO Report at 60; ISO-NE Report at 65; SPP Report at 42; PSEG

Companies Comments at 12, 14-16, 21.
Docket No. RM17-2-000 - 54 -

95. We also understand that reporting the reason for an operator-initiated commitment 

may require the development of new internal processes. In particular, we understand that 

the reasons for operator-initiated commitments can vary based on the particular situation. 

Therefore, our proposal would only require RTOs/ISOs to report the commitment reason 

within broad categories (e.g., voltage support, capacity-related). We seek comment on 

whether the Commission should define a common set of categories for use across all 

RTOs/ISOs and, if so, what categories should be included, or whether it is more 

appropriate to allow each RTO/ISO to establish a set of appropriate operator-initiated 

commitment reasons on compliance. In addition, we note that some RTOs/ISOs 

currently provide more granular or detailed information about the reason for operatorinitiated commitments.112 Therefore, we seek comment on whether the proposal provides 

sufficient transparency, or if more information is needed (e.g., specific constraint name), 

as well as any potential concerns with requiring additional information (e.g., required 

software upgrades or impact on operational processes). 

c. Transmission Constraint Penalty Factors

96. We propose to require that all RTOs/ISOs include certain provisions related to 

transmission constraint penalty factors in their tariffs because transmission constraint 

penalty factors can significantly impact market clearing prices.

 112 For example, for real-time commitments made to manage congestion, MISO 

identifies the specific constraint that prompted the commitment. MISO Report at 60. 
Docket No. RM17-2-000 - 55 -

97. First, we propose to require that all RTOs/ISOs include their transmission 

constraint penalty factor values in their tariffs. This requirement would only apply to 

penalty factors used for transmission constraints and would not include other penalty 

factors used in commitment and dispatch algorithms. If the RTO/ISO uses different 

transmission constraint penalty factors for different processes, we propose to require that 

all sets of transmission constraint penalty factors be included in the tariff. For example, 

if an RTO/ISO uses different transmission constraint penalty factors in its security 

constrained unit commitment and its security constrained economic dispatch, it should 

include both sets of transmission constraint penalty factors in its tariff.

98. Second, we propose to require that RTOs/ISOs include in their tariffs an 

explanation as to if and when transmission constraint penalty factors may be used to set 

LMPs. If the RTO/ISO has different processes for allowing transmission constraint 

penalty factors to set LMPs in different circumstances, this should be explained in the 

tariff. As part of its explanation, the RTO/ISO should also make clear whether there are 

any specific restrictions or conditions under which transmission constraint penalty factors 

are allowed to set LMPs, such as a minimum duration for transmission constraint 

violations.

99. Finally, if RTOs/ISOs wish to have the flexibility to temporarily change 

transmission constraint penalty factors to account for changes in system conditions, they 

must include the procedures for doing so in their tariffs. We also propose to require these 

procedures to include a requirement that notice of the temporary change be provided to 
Docket No. RM17-2-000 - 56 -

market participants. For example, an RTO/ISO could notify market participants of the 

temporary change by posting on its website. 

d. Comment Sought on Transmission Outages

100. We seek comment on whether additional reporting of transmission outages should 

be required. Transmission outages can affect RTO/ISO commitment and dispatch 

decisions and resulting market clearing prices, and thus are an important facet of price 

formation. Though the current record on this issue is limited, we seek comment as to 

whether additional transparency in this regard would be beneficial to stakeholders and if 

RTOs/ISOs have any limitations in providing more detailed data in this regard, including 

any appropriate time lag for reporting.

e. Comment Sought on Availability of Market Models

101. Some commenters indicate that distribution of the network model may be limited 

to certain market participants.113 For the purposes of this NOPR we define network 

model as the RTO’s/ISO’s model used in its energy management system for the real-time 

operation of the transmission system (e.g., state-estimation, contingency analysis). We 

seek comment on whether certain classes of market participants are prohibited from 

obtaining the network model in certain RTOs/ISOs. Moreover, if there are limitations to 

which market participants are able to obtain the model, we seek comment on the 

justification for any such limitations. 

 113 DC Energy, Inertia Power, and Vitol Comments at 21, 26; Financial Marketers 

Coalition Comments at 43.
Docket No. RM17-2-000 - 57 -

III. Compliance

102. We propose to require that each RTO/ISO submit a compliance filing within 90 

days of the effective date of any eventual Final Rule in this proceeding to demonstrate 

that it meets the proposed requirements set forth in the Final Rule. We note that this 

compliance deadline is for RTOs/ISOs to submit proposed tariff changes or otherwise 

demonstrate compliance with the Final Rule. We understand that implementing the 

reforms required by any Final Rule in this proceeding may be a complex endeavor. 

However, we preliminarily find that implementation of these reforms is important to 

ensure rates are just and reasonable. Therefore, we propose that tariff changes filed in 

response to a Final Rule in this proceeding must become effective no more than six 

months after compliance filings are due. 

103. We seek comment on whether 90 days is sufficient time for RTOs/ISOs to develop 

new tariff language in response to the Final Rule.

104. To the extent that any RTO/ISO believes that it already complies with the reforms 

proposed in this NOPR, the RTO/ISO would be required to demonstrate how it complies 

in the compliance filing required 90 days after the effective date of any Final Rule in this 

proceeding. To the extent that any RTO/ISO believes that its existing market rules are 

consistent with or superior to the reforms adopted in any Final Rule, the Commission will 

entertain those at that time.114

 114 See, e.g., Settlement Intervals and Shortage Pricing in Markets Operated by 

Regional Transmission Organizations and Independent System Operators, Order No. 

825, FERC Stats. & Regs. ¶ 31,384, at P 72 (2016); Demand Response Compensation in 
Docket No. RM17-2-000 - 58 -

IV. Information Collection Statement

105. The Paperwork Reduction Act (PRA)115 requires each federal agency to seek and 

obtain Office of Management and Budget (OMB) approval before undertaking a 

collection of information directed to ten or more persons or contained in a rule of general 

applicability. OMB’s regulations116 require approval of certain information collection 

requirements imposed by agency rules. Upon approval of a collection of information, 

OMB will assign an OMB control number and an expiration date. Respondents subject 

to the filing requirements of an agency rule will not be penalized for failing to respond to 

the collection of information unless the collection of information displays a valid OMB 

control number. 

106. The reforms proposed in this NOPR would amend the Commission’s regulations 

to improve the operation of organized wholesale electric power markets operated by 

RTOs/ISOs. The Commission proposes to require each RTO/ISO that allocates the costs 

of real-time uplift due to deviations should allocate such real-time uplift costs to only 

those market participants whose transactions are reasonably expected to have caused the 

real-time uplift. The Commission also proposes to revise its regulations to enhance 

 

Organized Wholesale Energy Markets, Order No. 745, FERC Stats. & Regs. ¶ 31,322, 

at P 4 & n.7, order on reh’g and clarification, Order No. 745-A, 137 FERC ¶ 61,215 

(2011), reh’g denied, Order No. 745-B, 138 FERC ¶ 61,148 (2012), vacated sub nom. 

Elec. Power Supply Ass’n v. FERC, 753 F.3d 216 (D.C. Cir. 2014), rev’d & remanded 

sub nom. FERC v. Elec. Power Supply Ass’n, 136 S. Ct. 760 (2016).

115 44 U.S.C. 3507 (2012).

116 5 CFR 1320 (2016).
Docket No. RM17-2-000 - 59 -

transparency by requiring that each RTO/ISO post uplift costs paid (dollars) and 

operator-initiated commitments (megawatts) on its website; and define in its tariff its 

transmission constraint penalty factors, as well as the circumstances in which the penalty 

factors can set locational marginal prices, and any procedure for changing the penalty 

factors. The reforms proposed in this NOPR would require one-time filings of tariffs 

with the Commission and potential software upgrades to implement the reforms proposed 

in this NOPR. The Commission anticipates the reforms proposed in this NOPR, once 

implemented, would not significantly change currently existing burdens on an ongoing 

basis. The Commission will submit the proposed reporting requirements to OMB for its 

review and approval under section 3507(d) of the Paperwork Reduction Act.117

107. While the Commission expects the adoption of the reforms proposed in this NOPR 

to provide significant benefits, the Commission understands implementation can be a 

complex endeavor. The Commission solicits public comments on its need for this 

information, whether the information will have practical utility, the accuracy of burden 

and cost estimates, ways to enhance the quality, utility, and clarity of the information to 

be collected or retained, and any suggested methods for minimizing respondents’ burden, 

including the use of automated information techniques.

108. Public Reporting Burden Estimate and Information Collection Costs: The 

Commission believes that the burden estimates that follow are representative of the 

average burden on respondents, including necessary communications with stakeholders.

 117 44 U.S.C. 3507(d).
Docket No. RM17-2-000 - 60 -

FERC-516G, as modified by the NOPR in Docket RM17-2-000

Number of 

Respondents

118

(1)

Annual 

Number of 

Responses 

per 

Respondent

(2)

Total Number 

of Responses 

(1)×(2)=(3)

Average 

Burden 

(Hours) & 

Cost Per 

Response119

(4)

Total 

Annual 

Burden 

Hours & 

Total 

Annual Cost

(3)×(4)=(5)

Cost per 

Respondent

($)

(5)÷(1)

Uplift 

Allocation

6 1 6

500; 

$36,500

3,000;

$219,000 $36,500

Transparency

6 1 6

500;

$36,500

3,000;

$219,000 $36,500

Cost to Comply: The Commission has projected the total cost of compliance, within 

Year 1 to be $438,000. After Year 1, the reforms proposed in this NOPR, once 

 118 Respondent entities are either RTOs or ISOs.

119 The estimated hourly cost (salary plus benefits) provided in this section are 

based on the salary figures for May 2015 posted by the Bureau of Labor Statistics for the 

Utilities sector (available at http://www.bls.gov/oes/current/naics2_22.htm#00-0000) and 

scaled to reflect benefits using the relative importance of employer costs in employee 

compensation from December 2015 (available at

http://www.bls.gov/news.release/ecec.nr0.htm). The hourly estimates for salary plus 

benefits are:

• Legal (code 23-0000), $129.12 

• Computer and Mathematical (code 15-0000), $60.63 

• Information Security Analyst (code 15-1122), $58.08

• Accountant and Auditor (code 13-2011), $53.86

• Information and Record Clerk (code 43-4199), $37.75

• Electrical Engineer (code 17-2071), $64.29

• Economist (code 19-3011), $74.53

• Computer and Information Systems Manager (code 11-3021), $91.76

• Management (code 11-0000), $89.07

The average hourly cost (salary plus benefits), weighting all of these skill sets 

evenly, is $73.23. For the calculations here, the Commission rounds it to $73 per hour.
Docket No. RM17-2-000 - 61 -

implemented, would not significantly change existing burdens on an ongoing basis.

Title: FERC-516G, Electric Rate Schedules and Tariff Filings in Docket RM17-2-000.

Action: Proposed revisions to an existing information collection.

OMB Control No.: TBD.

Respondents for this Rulemaking: RTOs/ISOs.

Frequency of Information: One-time.

Necessity of Information: The Federal Energy Regulatory Commission implements this 

rule to improve competitive wholesale electric markets in the RTO/ISO regions. 

Internal Review: The Commission has reviewed the changes and has determined that 

such changes are necessary. These requirements conform to the Commission’s need for 

efficient information collection, communication, and management within the energy 

industry. The Commission has specific, objective support for the burden estimates 

associated with the information collection requirements.

109. Interested persons may obtain information on the reporting requirements by 

contacting the following: Federal Energy Regulatory Commission, 888 First Street, NE, 

Washington, DC 20426 [Attention: Ellen Brown, Office of the Executive Director], 

e-mail: DataClearance@ferc.gov, Phone: (202) 502-8663, fax: (202) 273-0873. 

Comments concerning the collection of information and the associated burden estimate(s) 

may also be sent to the Office of Information and Regulatory Affairs, 

Office of Management and Budget, 725 17th Street, NW, Washington, DC 20503 
Docket No. RM17-2-000 - 62 -

[Attention: Desk Officer for the Federal Energy Regulatory Commission]. Due to 

security concerns, comments should be sent electronically to the following e-mail 

address: oira_submission@omb.eop.gov. Comments submitted to OMB should refer to 

FERC-516G and OMB Control No TBD.

V. Environmental Analysis

110. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

on the human environment.120 We conclude that neither an Environmental Assessment 

nor an Environmental Impact Statement is required for this NOPR under 

section 380.4(a)(15) of the Commission’s regulations, which provides a categorical 

exemption for approval of actions under sections 205 and 206 of the FPA relating to the 

filing of schedules containing all rates and charges for the transmission or sale of electric 

energy subject to the Commission’s jurisdiction, plus the classification, practices, 

contracts and regulations that affect rates, charges, classifications, and services.121

VI. Regulatory Flexibility Act 

111. The Regulatory Flexibility Act of 1980 (RFA)122 generally requires a description 

and analysis of proposed rules that will have significant economic impact on a substantial 

 120 Regulations Implementing the National Environmental Policy Act of 1969, 

Order No. 486, FERC Stats. & Regs. ¶ 30,783 (1987).

121 18 CFR 380.4(a)(15) (2016). 

122 5 U.S.C. 601-12 (2012).
Docket No. RM17-2-000 - 63 -

number of small entities. The RFA does not mandate any particular outcome in a 

rulemaking. It only requires consideration of alternatives that are less burdensome to 

small entities and an agency explanation of why alternatives were rejected. 

112. This rule would apply to six RTOs/ISOs (all of which are transmission 

organizations). The average estimated annual cost to each of the RTOs/ISOs is $73,000. 

The RTOs/ISOs are not small entities, as defined by the RFA.123 This is because the 

relevant threshold between small and large entities is 500 employees and the Commission 

understands that each RTO/ISO has more than 500 employees. Furthermore, because of 

their pivotal roles in wholesale electric power markets in their regions, none of the 

RTOs/ISOs meet the last criterion of the two-part RFA definition of a small entity: “not 

dominant in its field of operation.” As a result, the Commission certifies that the reforms 

proposed in this NOPR would not have a significant economic impact on a substantial 

number of small entities.

VII. Comment Procedures

113. The Commission invites interested persons to submit comments on the matters and 

issues proposed in this notice to be adopted, including any related matters or alternative 

proposals that commenters may wish to discuss. Comments are due [INSERT DATE 60 

 123 The RFA definition of “small entity” refers to the definition provided in the 

Small Business Act, which defines a “small business concern” as a business that is 

independently owned and operated and that is not dominant in its field of operation. The 

Small Business Administrations’ regulations at 13 C.F.R. 121.201 define the threshold 

for a small Electric Bulk Power Transmission and Control entity (NAICS code 221121) 

to be 500 employees. See 5 U.S.C. 601(3), citing to Section 3 of the Small Business Act, 

15 U.S.C. 632.
Docket No. RM17-2-000 - 64 -

days after publication in the FEDERAL REGISTER]. Comments must refer to 

Docket No. RM17-2-000, and must include the commenter’s name, the organization they 

represent, if applicable, and their address.

114. The Commission encourages comments to be filed electronically via the eFiling 

link on the Commission's web site at http://www.ferc.gov. The Commission accepts 

most standard word processing formats. Documents created electronically using word 

processing software should be filed in native applications or print-to-PDF format and not 

in a scanned format. Commenters filing electronically do not need to make a paper 

filing.

115. Commenters that are not able to file comments electronically must send an 

original of their comments to: Federal Energy Regulatory Commission, Secretary of the 

Commission, 888 First Street NE, Washington, DC, 20426.

116. All comments will be placed in the Commission's public files and may be viewed, 

printed, or downloaded remotely as described in the Document Availability section 

below. Commenters on this proposal are not required to serve copies of their comments 

on other commenters.

VIII. Document Availability

117. In addition to publishing the full text of this document in the Federal Register, the 

Commission provides all interested persons an opportunity to view and/or print the 

contents of this document via the Internet through the Commission's Home Page 

(http://www.ferc.gov) and in the Commission's Public Reference Room during normal 
Docket No. RM17-2-000 - 65 -

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE, Room 2A, 

Washington DC 20426.

118. From the Commission's Home Page on the Internet, this information is available 

on eLibrary. The full text of this document is available on eLibrary in PDF and 

Microsoft Word format for viewing, printing, and/or downloading. To access this 

document in eLibrary, type the docket number excluding the last three digits of this 

document in the docket number field.

119. User assistance is available for eLibrary and the Commission’s website during 

normal business hours from the Commission’s Online Support at 202-502-6652 (toll free 

at 1-866-208-3676) or email at ferconlinesupport@ferc.gov, or the Public Reference 

Room at (202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room 

at public.referenceroom@ferc.gov.

List of subjects in 18 CFR Part 35 

Electric Power Rates

Electric Utilities

Reporting and recordkeeping requirements

By direction of the Commission.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.
Docket No. RM17-2-000 - 66 -

Regulatory Text

In consideration of the foregoing, the Commission proposes to amend Part 35,

Chapter I, Title 18, Code of Federal Regulations, as follows:

Part 35 – FILING OF RATE SCHEDULES AND TARIFFS

1. The authority citation for part 35 continues to read as follows:

Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-

7352.

2. Amend § 35.28 as follows:

(a) Add a new paragraph (g)(11)(i).

(b) Add a new paragraph (g)(11)(ii).

§ 35.28 Non-discriminatory open access transmission tariff.

* * * * *

(g) Tariffs and operations of Commission-approved independent system 

operators and regional transmission organizations. * * *

(11) Uplift allocation and transparency

(i) Uplift Allocation. Each Commission-approved independent 

system operator or regional transmission organization that allocates the costs of real-time 

uplift to deviations must allocate such costs only to those market participants whose 

transactions are reasonably expected to cause the uplift costs. For purposes of this 

allocation, deviations are megawatt hour differences between a market participant’s 

scheduled deliveries or receipts at particular points cleared in the day-ahead market and 

those amounts actually delivered or received in real-time that are not related to real-time 

economic or reliability-related operator dispatch instructions. Costs of uplift payments 
Docket No. RM17-2-000 - 67 -

must be allocated to at least two distinct categories: system-wide capacity and

congestion management. For purposes of this allocation, each Commission-approved 

independent system operator or regional transmission organization must distinguish 

between deviations that help efforts to address system needs and those that harm efforts 

to address system needs. A market participant’s net harmful deviations are its harmful 

deviations less its helpful deviations. Within each uplift category, uplift costs must be 

allocated to a market participant’s net harmful deviations commensurate with the extent 

to which those deviations harm efforts to address system needs. Within the system-wide 

capacity category, a market participant shall be allocated a portion of the total real-time 

uplift costs incurred to maintain energy and operating reserve requirements in the realtime market based on the net contributions of its deviations to those costs. Within the 

congestion management category, costs shall be allocated based on whether a market 

participant’s deviations on net contributed to the real-time congestion at a given 

constraint. For the purposes of real-time uplift allocated to deviations, a market 

participant’s deviations must be netted hourly. Real-time uplift allocated to deviations 

must be settled on an hourly basis.

(ii) Transparency. 

(A) Uplift reporting. Each Commission-approved 

independent system operator or regional transmission organization must post two reports, 

at minimum, regarding uplift on a publicly accessible portion of its website. Such 

postings shall be made within 20 calendar days of the end of each month. First, each 

Commission-approved independent system operator or regional transmission 
Docket No. RM17-2-000 - 68 -

organization must post uplift, paid in dollars, and categorized by transmission zone, day, 

and uplift category. Transmission zone shall be defined as the geographic area that is 

used for the local allocation of charges. Transmission zones with fewer than four 

resources may be aggregated with a neighboring transmission zone and reported 

collectively. If, for any given monthly report, only one transmission zone exists and it 

has fewer than four resources or, if when combined with a neighboring transmission 

zone, the combined transmission zones still have fewer than four resources, these 

transmission zones may be omitted from the reporting requirements described in this 

section. Second, each Commission-approved independent system operator or regional 

transmission organization must post the resource name and the total amount of uplift paid 

in dollars aggregated across the month to each resource that received uplift payments 

within the calendar month. 

(B) Reporting Operator-Initiated Commitments. Each 

Commission-approved independent system operator or regional transmission 

organization must post operator-initiated commitments in megawatts, categorized by 

transmission zone and commitment reason, on a publicly accessible portion of its website 

as soon as practicable after the resource has been committed, but no later than four hours 

after the commitment. Transmission zone shall be defined as a geographic area that is 

used for the local allocation of charges. 

 (C) Transmission constraint penalty factors. Each 

Commission-approved independent system operator or regional transmission 

organization must include, in its tariff, its transmission constraint penalty factor values; 
Docket No. RM17-2-000 - 69 -

the circumstances, if any, under which the transmission constraint penalty factors can set 

locational marginal prices; and the procedure, if any, for temporarily changing the 

transmission constraint penalty factor values. Any procedure for temporarily changing 

transmission constraint penalty factor values must provide for notice of the change to 

market participants.
Docket No. RM17-2-000 - 70 -

Note: The following appendix will not be published in the Federal Register.

APPENDIX: List of Short Names/Acronyms of Commenters

Short Name/Acronym Commenter

Appian Way Appian Way Energy Partners, LLC

CAISO California Independent System Operator 

Corporation

DC Energy, Inertia Power, and Vitol DC Energy, LLC, Inertia Power, LP, and 

Vitol Inc.

EEI Edison Electric Institute

EPSA Electric Power Supply Association

EPSA/IPPNY Electric Power Supply Association and 

Independent Power Producers of New 

York

EPSA/NEPGA Electric Power Supply Association and 

New England Power Generators 

Association, Inc.

EPSA/P3 Electric Power Supply Association and 

PJM Power Providers

EPSA/Western Power Trading Forum Electric Power Supply Association and 

Western Power Trading Forum

Energy Storage Association Energy Storage Association

Entergy Entergy Services, Inc. commented on 

behalf of the Entergy Operating 

Companies (Entergy Arkansas, Inc.; 

Entergy Louisiana, LLC; Entergy 

Mississippi, Inc.; Entergy New Orleans, 

Inc.; and Entergy Texas, Inc.)

Exelon Exelon Corporation
Docket No. RM17-2-000 - 71 -

Financial Marketers Coalition Financial Marketers Coalition

Golden Spread Electric Golden Spread Electric Cooperative, Inc.

ISO-NE ISO New England Inc.

MISO Midcontinent Independent System 

Operator, Inc.

MISO Market Monitor Potomac Economics, LLC 

PJM Market Monitor Monitoring Analytics, LLC

NYISO New York Independent System Operator, 

Inc.

PJM PJM Interconnection, L.L.C.

PSEG Companies PSEG Companies (Public Service Electric 

and Gas Company, PSEG Power LLC and 

PSEG Energy Resources & Trade LLC)

Public Interest Organizations Public Interest Organizations

SPP Southwest Power Pool, Inc.

XO Energy XO Energy, LLC