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Power & Pipes

FERC, CFTC, and State Energy Law Developments

In a landmark rulemaking announced at today’s open meeting, the Federal Energy Regulatory Commission (FERC or Commission) opened participation in organized wholesale markets to electric storage resources. The final rule aims to remove barriers to participation in organized markets, reflecting FERC’s view that existing market participation models can limit the availability of services that resources based on newer technology are capable of providing.

The final rule requires each regional transmission organization (RTO) and independent system operator (ISO) to revise their tariffs to establish a participation model that recognizes the physical and operational characteristics of electric storage resources and facilitates the participation of those resources in the organized markets. FERC staff’s accompanying presentation explained that those participation models must (1) ensure that a resource using the participation model in an organized market is eligible to provide all capacity, energy, and ancillary services that it is technically capable of providing; (2) ensure that a resource using the participation model can be dispatched and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer consistent with existing market rules; (3) account for the physical and operational characteristics of electric storage resources through bidding parameters or other means; and (4) set a minimum size requirement that does not exceed 100 kilowatts. The final rule also requires that the sale of electric energy from the organized markets to an electric storage resource that the resource then resells back to those markets must be at the wholesale locational marginal price. The final rule will take effect 90 days after publication in the Federal Register. RTOs and ISOs will have 270 days after the effective date to submit compliance filings, with an additional 365 days to fully implement the new tariff provisions.

Although the Commission previously proposed to enact reforms related to market participation by aggregated distributed energy resources, it stopped short of taking any action, for the time being. The Commission reaffirmed its view that removing unnecessary barriers to market participation is important, but concluded that more information is needed with respect to aggregated distributed energy resources. To that end, the Commission and its staff plan to convene a two-day technical conference in April of this year to gather additional information on those types of resources.

The final rule is another indication of FERC’s continued focus on electric storage development. FERC engaged in a lengthy stakeholder process to develop the rule that attracted significant industry attention since the proposed rulemaking was issued in November 2016. FERC also issued a policy statement in early 2017 clarifying the cost recovery for storage resources that provide transmission grid support services. Today’s final rule marks the latest regulatory milestone designed to encourage the development of electric storage resources.

For a more comprehensive analysis of the final rule, read our recent LawFlash on the subject.