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Power & Pipes

FERC, CFTC, and State Energy Law Developments

The Federal Energy Regulatory Commission (FERC or Commission) appears to be inching closer toward a resolution on grid operators’ proposals to facilitate electric storage participation in organized capacity, energy, and ancillary service markets. On April 1, FERC’s Office of Energy Market Regulation (Staff) directed each of the Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs) that submitted compliance filings in response to FERC’s Order No. 841 to submit additional information on the mechanics of their proposed energy storage market rules. Those latest actions by Staff break FERC’s recent silence on the grid operators’ proposals, which were submitted to the Commission over four months ago and which must be implemented as early as December 2019.

Although tailored to each ISO’s and RTO’s proposal, Staff’s requests were largely centered on the same general areas and directed the ISOs and RTOs to further explain how the mechanics of their proposed storage participation models meet compliance with Order No. 841. For example, among other things, Staff sought more information on how the ISOs and RTOs will:

  • Assess transmission charges: Order No. 841 found that electric storage resources should not be assessed transmission charges when they are dispatched by an ISO or RTO to provide a grid service (e.g., frequency regulation, ramping service). Staff’s information requests directed some of the grid operators to explain further how storage resources would be exempt from those transmission charges under a variety of different operational circumstances.
  • Address conflicting dispatch signals: Order No. 841 required each grid operator to demonstrate that its market design will prevent conflicting supply offers and demand bids from the same resource for the same interval. Staff directed the ISOs and RTOs to provide more detail on how they will avoid such conflicting dispatches, particularly when storage resources migrate continuously between charging and discharging modes.
  • Accommodate Aggregated Resources: Although the Commission declined to address distributed resource aggregation in Order No. 841, several of the information requests from Staff sought clarity on the paths to market participation for aggregated storage resources.
  • Implement accounting, software, and metering practices: Staff sought further details on the changes the ISOs and RTOs would need to implement to administer the proposed storage participation models, and how those changes would prevent storage resources from paying twice for the same charging energy (i.e., wholesale and retail price).

The ISOs and RTOs will have 30 days to respond to the information requests.

It remains to be seen whether the ISOs and RTOs will be directed to respond to other areas of inquiry that were not addressed by this round of information requests, or whether FERC will continue moving closer to approving the proposals. In the meantime, the information requests provide a glimpse into the complexities of implementing the market participation models envisioned by the ISOs. and RTOs