Demand Response Compensation in Organized Wholesale Energy Markets, 47499-47503 [2010-19376]
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Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Proposed Rules
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[FR Doc. 2010–19424 Filed 8–5–10; 8:45 am]
BILLING CODE 8070–01–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 35
[Docket No. RM10–17–000]
Demand Response Compensation in
Organized Wholesale Energy Markets
Federal Energy Regulatory
Commission.
ACTION: Supplemental Notice of
Proposed Rulemaking and Notice of
Technical Conference.
AGENCY:
The Federal Energy
Regulatory Commission is issuing a
Supplemental Notice of Proposed
Rulemaking (NOPR) and Notice of
Technical Conference to provide
additional opportunity for comment on
issues related to the March 18, 2010
NOPR, 75 FR 15362 (March 29, 2010),
regarding the appropriate compensation
to be paid to demand response resources
in organized wholesale electric markets
administered by Independent System
Operators or Regional Transmission
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SUMMARY:
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Organizations. The Commission
proposed an approach for compensating
demand response resources in order to
improve the competitiveness of
organized wholesale energy markets and
thus ensure just and reasonable
wholesale rates. The Supplemental
NOPR seeks comment on whether the
Commission should adopt requirements
related to two issues addressed in
comments: If the Commission were to
adopt a net benefits test for determining
when to compensate demand response
providers, what, if any, requirements
should apply to the methods for
determining net benefits; and what, if
any, requirements should apply to how
the costs of demand response are
allocated. The Commission invites all
interested persons to submit comments
in response to the issues discussed
herein.
DATES: A technical conference will be
held at the Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426, no later than 45
days following the publication of this
document in the Federal Register. The
exact date of the conference will be
provided in a subsequent Commission
publication in the Federal Register.
Comments on the NOPR will be due
30 days following the technical
conference announced herein. The
Commission will announce the
comment close date in a subsequent
publication in the Federal Register.
ADDRESSES: You may submit comments,
identified by docket number by any of
the following methods:
Agency Web Site: https://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: Commenters
unable to file comments electronically
must mail or hand deliver an original
and 14 copies of their 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:
David Hunger (Technical Information),
Office of Energy Policy and
Innovation, Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502–
8148, david.hunger@ferc.gov.
Helen Dyson (Legal Information), Office
of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street, NE., Washington, DC
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47499
20426, (202) 502–8856,
helen.dyson@ferc.gov.
SUPPLEMENTARY INFORMATION:
Supplemental Notice of Proposed
Rulemaking and Notice of Technical
Conference
Table of Contents
Paragraph
Nos.
I. Background .............................
II. Net Benefits ...........................
A. The March NOPR ..........
B. Comments .......................
C. Discussion ......................
III. Cost Allocation ....................
A. Comments ......................
B. Discussion ......................
IV. Technical Conference ..........
V. Comment Procedures ............
VI. Document Availability ........
2
4
4
5
8
9
9
12
13
19
23
Issued August 2, 2010.
1. In a Notice of Proposed Rulemaking
(NOPR) issued in this proceeding on
March 18, 2010 (March NOPR),1 the
Commission proposed to require
Independent System Operators (ISOs)
and Regional Transmission
Organizations (RTOs) 2 with tariff
provisions allowing demand response 3
resources 4 to participate in wholesale
energy markets by reducing
consumption of electricity from
expected levels in response to price
signals, to pay those demand response
resources, in all hours, the market price
of energy (also referred to as the
‘‘locational marginal price’’ or ‘‘LMP’’) for
such reductions. In light of matters
elucidated in responsive comments to
the March NOPR, the Commission seeks
additional comments on whether the
Commission should adopt requirements
related to two issues: (1) If the
Commission were to adopt a net benefits
test for determining when to
compensate demand response
providers, what, if any, requirements
should apply to the methods for
1 Demand Response Compensation in Organized
Wholesale Energy Markets, Notice of Proposed
Rulemaking, 75 FR 15362 (March 29, 2010), 130
FERC ¶ 61,213 (March 18, 2010).
2 The following RTOs and ISOs have organized
wholesale electricity markets: PJM Interconnection,
L.L.C. (PJM); New York Independent System
Operator, Inc. (NYISO); Midwest Independent
Transmission System Operator, Inc. (Midwest ISO);
ISO New England, Inc. (ISO–NE); California
Independent System Operator Corp. (CAISO); and
Southwest Power Pool, Inc. (SPP).
3 Demand response means a reduction in the
consumption of electric energy by customers from
their expected consumption in response to an
increase in the price of electric energy or to
incentive payments designed to induce lower
consumption of electric energy. 18 CFR 35.28(b)(4)
(2010).
4 Demand response resource means a resource
capable of providing demand response. 18 CFR
35.28(b)(5) (2010).
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Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Proposed Rules
determining net benefits; and (2) what,
if any, requirements should apply to
how the costs of demand response are
allocated. The Commission also directs
staff to hold a technical conference on
these issues no later than 45 days
following publication of this notice in
the Federal Register. The exact date of
the technical conference will be
provided in a subsequent notice.
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I. Background
2. In the March NOPR, the
Commission proposed to add section
35.18(g)(1)(v) to its regulations to
establish a specific compensation
approach for demand response
resources participating in organized
wholesale energy markets, i.e., the dayahead and real-time markets
administered by ISOs and RTOs. Under
the proposed section, each Commissionapproved ISO and RTO that has a tariff
provision providing for participation of
demand response resources in its
organized wholesale energy market
would pay demand response resources,
in all hours, the market price for energy,
i.e., the LMP,5 for demand reductions
made in response to price signals.6
3. Numerous comments were filed in
response to the NOPR, many of which
support the proposed demand response
compensation level.7 However, other
comments support payment of LMP
5 LMP refers to the price calculated by the ISO or
RTO at particular locations or electrical nodes
within the ISO or RTO footprint and is used as the
market price to compensate generators. There are
variations in the way ISOs and RTOs calculate
LMP; however, each method establishes the
marginal value of resources in that market. Nothing
here or in the March NOPR is intended to change
ISO and RTO methods for calculating LMP.
6 The proposed provision applies only to demand
response acting as a resource in organized
wholesale energy markets. The provision will not
apply to demand response under programs that
ISOs and RTOs administer for reliability or
emergency conditions, such as, for instance,
Midwest ISO’s Emergency Demand Response;
NYISO’s Emergency Demand Response Program;
PJM’s Emergency Load Response; and ISO–NE’s
Real-Time 30–Minute Demand Response Program,
Real-Time and 2–Hour Demand Response Program,
and Real-Time Profiled Response Program. The
provision also will not apply to compensation in
ancillary services markets, which the Commission
has addressed elsewhere. See, e.g., Wholesale
Competition in Regions with Organized Electric
Markets, Order No. 719, 73 FR 64100 (Oct. 28,
2008), FERC Stats. & Regs. P 31,281 (2008) (Order
No. 719).
7 See Comments of Illinois Citizens Utility Board
at 2; Comments of Industrial Energy Consumers of
America at 3; Comments of National Energy
Marketers Association at 3–4; Comments of
National League of Cities; Comments of New Jersey
Board of Public Utilities at 2; Comments of North
America Power Partners at 4; Comments of
Pennsylvania Department of Environmental
Protection at 5; Comments of Price Responsive Load
Coalition at 2; Comments of Schneider Electric USA
at 2; Comments of Wal-Mart Stores, Inc. at 4;
Comments of Virginia Committee for Fair Utility
Rates at 7.
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only when the benefits of demand
response compensation outweigh the
costs of paying demand response
resources, as determined by some type
of net benefits test.8 Still other
comments argue that, in order to
determine the justness and
reasonableness of the proposed
compensation level, the corresponding
cost allocation must be considered.9
More specifically, these comments raise
concerns regarding how the costs
associated with direct payment of LMP
for demand response will be allocated,
or assigned, within an ISO or RTO.
Several commenters assert that the
issues of cost allocation and net benefits
are inherently linked, so that the
Commission must address both issues
together.10 Comments regarding net
benefits and cost allocation issues are
discussed below.
II. Net Benefits
A. The March NOPR
4. In the March NOPR, the
Commission proposed to require ISOs
and RTOs to pay LMP to demand
response providers in all hours, but the
Commission also sought comment on,
among other things, whether payment of
LMP should indeed apply in all hours
and, if not, the criteria that should be
used for establishing the hours when
LMP should apply.11
8 See generally, Comments of New York State
Consumer Protection Board; New England
Consumer Advocates; Capital Power; Electric Power
Supply Association (EPSA); Exelon Corporation
(Exelon); PJM Power Providers Group; New England
Conference of Public Utility Commissioners
(NECPUC); Maryland Public Service Commission
(Maryland Commission); New York State Public
Service Commission (New York Commission);
NSTAR Electric Company; National Grid USA
(National Grid); PPL Parties; New England Public
Systems; Viridity Energy, Inc.; and Charles
Cicchetti.
9 Comments of ISO–NE at 39–40. See also,
Comments of American Electric Power Service
Corp. at 6–10; Comments of CAISO at 6; Comments
of Consolidated Edison Company at 2; Comments
of Hess Corporation at 3; Comments of the Illinois
Commerce Commission at 12; Comments of PJM at
8; Comments of Potomac Economics at 3;
Comments of Massachusetts Attorney General and
Maine Public Advocate at 11; Comments of
Midwest ISO Transmission Owners at 5–6;
Comments of Midwest TDUs at 13; Comments of
Edison Electric Institute at 5; Comments of NECPUC
at 12, 22; Comments of New England Consumer
Advocates at 11; Comments of RRI Energy, Inc. at
6; Comments of San Diego Gas & Electric Co. at
3–4.
10 As further addressed below, several
commenters assert that the costs of demand
response compensation should be borne by only
those market participants determined to have
benefitted from the subject load reduction, as
determined by some type of net benefits test. See,
e.g., Comments of ISO–NE at 5–6; Comments of
NECPUC at 22; Comments of PJM at 12–14;
Comments of PJM Power Providers Group at 37–38.
11 March NOPR, 130 FERC ¶ 61,213 at P 20.
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B. Comments
5. As noted above, numerous
commenters, primarily industrial
consumers and some consumer
advocates, agree with the Commission’s
proposal to pay LMP to demand
response providers in all hours.12 They
argue that, regardless of the hour or
season, all consumers share in the
benefits demand response resources
provide, including lowering the clearing
price.13 They also argue that, regardless
of the hour or season, both demand
response providers and generators
provide a comparable service in terms of
balancing supply and demand and
therefore should be paid on a
comparable basis, i.e., LMP.14
6. At the same time, a diverse group
of commenters maintain that paying
LMP for demand response in all hours,
including off-peak hours, might not
result in net benefits to customers,
because the payments might be
substantially more than the savings
created by reducing the clearing price at
that time.15 According to these
commenters, net benefits are most likely
to be positive and greatest when the
supply curve is steepest, which
typically occurs in highest-cost, peak
hours.16 Some commenters suggest that
paying LMP in all hours might make
more difficult, and less accurate, the
establishment of baselines for measuring
whether a demand response provider
has, in fact, responded.17
7. Many commenters who oppose
paying LMP in all hours for demand
response suggest approaches, or net
benefits tests, for determining when
LMP should apply. These commenters
state that the purpose of these tests
would be to determine the point at
which the incremental payment for
demand response equals the
incremental benefit of the reduction in
load; payment of LMP would apply only
12 See Comments of Steel Manufacturers
Association at 12; Comments of Consumer Demand
Response Initiative at 12; Comments of Joint
Consumer Advocates at 11–12.
13 Comments of Alliance for Clean Energy New
York at 2–3; Comments of American Chemistry
Council at 3; Comments of American Forest & Paper
Association at 3; Comments of Crane & Co. at
2–3; Comments of Industrial Energy Consumers of
America at 2; Comments of Industrial Energy
Consumers of Pennsylvania at 3; Comments of
Madison Paper Industries at 2–3.
14 Comments of Steel Manufacturers Association
at 12.
15 Comments of Capital Power Corporation at 5;
Comments of PJM Power Providers Group at 5.
16 Comments of NECPUC at 13.
17 Comments of ISO–NE at 32–33; Comments of
California Department of Water Resources at 11;
Comments of National Grid USA at 8.
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Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Proposed Rules
up to that point.18 To achieve that end,
some comments advocate a net benefits
trigger based on a particular price or
period of hours.19 While some proposals
would utilize a static bid threshold,
such as $75/MWh,20 other proposals
would utilize a dynamic bid threshold,
which could be based upon fuel prices
and heat rates of marginal generation.21
Still other commenters urge
compensating demand response during
an ISO- or RTO-defined period of
critical high-cost hours in which it is
cost-effective to pay the full LMP.22 In
addition to advancing net benefits tests,
some commenters suggest
implementation of an ISO- or RTOdeveloped mechanism to determine
whether a net customer benefit would
occur in advance of dispatch.23 Some
commenters, however, state that it
would be difficult to prescribe by
regulation the hours in which demand
response provides net benefits because
system conditions and load patterns
change across seasons and over time.24
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C. Discussion
8. Due to matters raised in responsive
comments to the March NOPR, the
Commission seeks further information
regarding the net benefits issue.
Accordingly, the Commission seeks
additional comments and directs staff to
hold a technical conference regarding
various net benefits tests.25 Specifically,
the Commission seeks comment on the
following issues, as well as any other
issues:
(1) Some commenters address the
need for a net benefits test. Address why
the Commission should adopt a net
18 Comments of New England Consumer
Advocates at 11; Comments of NYSCPB at 5;
Comments of National Grid at 4–5.
19 For example, National Grid states that the
threshold could be triggered by a particular price
on the supply offer curve at which the additional
cost of paying LMP to demand response resources
is most likely to be outweighed by LMP reductions
in the wholesale energy market as a result of the
demand reductions produced by these resources.
Comments of National Grid at 6.
20 Comments of the New York Commission at 10.
According to the New York Commission, a static
bid threshold helps prevent demand response
providers from gaming the system by seeking
compensation for reducing electricity consumption
for reasons other than market prices, but can also
limit participation in a demand response program
because prices might not exceed the threshold on
a consistent basis.
21 Comments of National Grid at 6; Comments of
the New York Commission at 10; Comments of
Viridity at 24.
22 Comments of the Maryland Commission at
4–5.
23 Comments of NYSCPB at 5.
24 Midwest ISO Transmission Owners at 16.
25 As noted above, the exact date of the technical
conference will be provided in a subsequent notice
and will be no later than 45 days following
publication of this notice in the Federal Register.
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benefits test for determining demand
response compensation, and what the
objectives of any such test would be.
(2) How to define benefits, including
whether the benefits associated with
demand response should account only
for lower market-clearing prices in the
day-ahead and real-time markets or
should also include consideration of
operational benefits (e.g., lower reserve
requirements), societal benefits or
another measure.
(3) In addition to the payments
received from the wholesale market,
what are the costs demand response
providers and load serving entities incur
and should these be included for
purposes of a net benefits test.
(4) How to identify the beneficiaries
of demand response, and how the
allocation of costs related to demand
response compensation affect the
beneficiaries, if at all.
(5) Whether any net benefits
methodology adopted should be the
same for all ISOs and RTOs or whether
the individual circumstances or
configuration of each ISO and RTO
would support a different net benefits
methodology.
(6) Proposed methodologies for
implementing a net benefits test.
Comments also should consider
whether a net benefits threshold should
be established up front based on static
measures, such as a specific price or
number of peak hours, or established on
a dynamic basis, such as a price
threshold based on a pre-set heat rate
and daily updated fuel price; and
similarly, whether the net benefits
should be an explicit test run by the ISO
or RTO either after bids have been
received or each hour prior to accepting
demand response bids. Comments
should also describe the advantages and
limitations of any proposed net benefits
methodologies.
III. Cost Allocation
A. Comments
9. Comments concerning cost
allocation essentially ask how the
proposed demand response
compensation level will be funded.26
These commenters argue that, if not
structured correctly, demand response
compensation methodologies can
increase, rather than decrease costs to
end-users.27 Some commenters further
contend that requiring payment of LMP
for demand response will require ISOs
and RTOs to reopen cost allocation
issues that have previously been settled
based on varying ISO- and RTO-specific
demand response compensation
levels.28 Additional commenters assert
that demand response compensation
and a method for allocating the
associated costs are so inextricably
entwined that the two issues must be
simultaneously addressed as part of an
integrated demand response regime.29
10. Another group of commenters
endorse the position that demand
response compensation and cost
allocation are necessarily related, but
they contend that resolution of cost
allocation issues can await the final rule
on demand response compensation.
These commenters maintain that any
cost allocation approach will depend on
the outcome of the final demand
response compensation rule 30 and, in
any case, should first be addressed
through stakeholder discussions at the
regional level.
11. Several commenters advocate a
specific approach or discuss the pros
and cons of alternative approaches for
allocating the costs associated with
demand response compensation.
Potential approaches raised in
comments include:
(1) Allocating the costs across the
entire relevant ISO or RTO market,
based upon the rationale that there are
system-wide benefits to demand
response, including reducing the market
price for energy.31 Conversely, some
commenters argue that, while this
approach might increase the amount of
demand response provided to the
market, it might also result in some
market participants paying costs
associated with demand response for
which they do not receive equivalent
benefit.32
(2) Allocating the costs to only the
load-serving entity of record, i.e., the
load-serving entity that would have
served the load providing the demand
response. According to commenters,
this option assumes that the deemed full
benefit of demand response is only
received by the load-serving entity of
record and that demand response does
28 Comments
26 ISO–NE
Comments at 5, 40; Comments of PJM
at 8; Comments of Potomac Economics at 3.
27 Comments of Massachusetts Attorney General
and Maine Public Advocate at 11 (arguing that
spreading the costs of demand response over a
smaller amount of load is cost-effective only so long
as the remaining load pays a lower price than it
would have paid if the demand response had not
participated).
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of Midwest TDUs at 13.
Comments of ISO–NE at 4–5; Comments of
Edison Electric Institute (EEI) at 5; Comments of
Charles Cicchetti at 26–27; Comments of CAISO
at 6.
30 Comments of New England Consumer
Advocates at 11.
31 See Comments of NECPUC at 22.
32 Comments of Midwest ISO Transmission
Owners at 5.
29 Id.;
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not impact other load-serving entities
across the ISO or RTO.33
(3) Uplifting the costs locally to all
load-serving entities within the zone
impacted by the demand response
reduction, based on a load ratio share.
Commenters assert that this approach
theoretically allocates the cost of
demand response compensation to only
those load-serving entities that
benefitted from the demand response
provided.34
(4) Recovering the costs through a
surcharge added to the LMP for
customers purchasing from the relevant
energy market in the hour when the
demand response resource is committed
or dispatched. The rationale for this
approach is that it allocates the costs of
demand response resource procurement
on the basis of cost-causation, i.e.,
demand response resource costs are
allocated directly to those energy market
consumers who benefitted from the
demand response resource provided. To
implement this proposal, an adjustment
to the market price paid by customers
would be calculated.35
(5) Utilizing a hybrid approach, in a
manner intended to minimize cost
impacts on final customers.36 Hybrid
approaches include splitting the costs
between load-serving entities and
transmission owners,37 and allocating
part of the costs to the demand response
provider’s load-serving entity and part
to all of the load-serving entities in the
zone where the load reduction occurred,
based on a load ratio share.38
B. Discussion
12. From the comments received,
issues concerning cost allocation may be
integrally related to the proposal
relating to demand response
compensation, and we believe such
issues should be explored further. In
addition, the diversity of comments
relating to cost allocation leave open the
33 Comments
of PJM at 15.
of PJM at 14; Comments of NECPUC
at 22; Comments of Midwest ISO Transmission
Owners at 6.
35 Comments of NECPUC at 22, 23.
36 Comments of ISO–NE at 40.
37 ISO–NE suggests charging the difference
between LMP and the generation (or ‘‘G’’) portion of
the retail rate (i.e., LMP–G) to the load-serving
entity that is providing the energy, and charging the
remainder (i.e., ‘‘G’’) to network load, which would
be billed to transmission owners. Comments of
ISO–NE at 5.
38 As described by PJM, the ‘‘[load-serving entity]
of record will receive a direct allocation of direct
payments made for the demand response MWh
reduction multiplied by the difference between the
appropriate wholesale market price and the retail
rate, and the cost associated with the MWh
reduction multiplied by the retail rate allocated to
all [load-serving entities] in the zone where the load
reduction occurred based on a load ratio share.’’
Comments of PJM at 10.
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34 Comments
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question of whether a singular cost
allocation approach should be
determined by the Commission for all
ISOs and RTOs or whether differing cost
allocation approaches should be
developed regionally and reviewed by
the Commission on an ISO- and RTOspecific basis. Accordingly, the
Commission seeks additional comments
on whether the Commission should
consider a generic approach to
allocating the costs of demand response
compensation required by the final rule
in this proceeding, and if so, what
approach the Commission should adopt.
Such issues also will be explored at the
staff technical conference. Specifically,
the Commission seeks comment on the
following issues, as well as any other
issues:
(1) Whether standardizing demand
response compensation among ISOs and
RTOs requires simultaneous
standardization of a method for
allocating the costs associated with such
compensation. In addition, whether
standardizing demand response
compensation among ISOs and RTOs
requires consideration of corresponding
settlements and other impacts
associated with the compensation
mechanism.
(2) If the Commission standardizes an
approach for allocating the costs
associated with requiring payment for
demand response, what type of
approach is appropriate. Comments
should address the specific approaches
delineated above, and may address
other broad principles the Commission
could use to determine the cost
allocation method.
(3) How the use of a net benefits test
would affect the need for and
methodologies for determining cost
allocation.
IV. Technical Conference
13. The exact date of the Commission
staff technical conference directed
herein will be provided in a subsequent
notice and will be no later than 45 days
following publication of this notice in
the Federal Register. The conference
will be held in the Commission Meeting
Room at the Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426. All interested
persons are invited to participate in the
conference.
14. Those interested in speaking at the
conference should notify the
Commission by August 10, 2010 by
completing an online form describing
the topics that they will address:
https://www.ferc.gov/whats-new/
registration/demand-RM10-17-000speaker-form.asp. Due to time
constraints, we may not be able to
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accommodate all individuals interested
in speaking, so multiple persons sharing
the same position are encouraged to
have one representative speak on their
behalf. A detailed agenda, including
panel speakers, will be published at a
later date.
15. The technical conference will be
transcribed. Transcripts of the
conference will be immediately
available for a fee from Ace-Federal
Reporters, Inc. ((202) 347–3700 or
1–800–336–6646). The transcript will be
available for free on the Commission’s
eLibrary system and on the Calendar of
Events approximately one week after the
conference.
16. A free webcast of the technical
conference directed herein will be
available. Anyone with Internet access
interested in viewing this conference
can do so by navigating to https://
www.ferc.gov’s Calendar of Events and
locating the appropriate event in the
Calendar. The events will contain a link
to the applicable webcast option. The
Capitol Connection provides technical
support for the webcasts and offers the
option of listening to the conferences
via phone-bridge for a fee. If you have
any questions, visit https://
www.CapitolConnection.org or call (703)
993–3100.
17. There is an ‘‘eSubscription’’ link
on the Web site that enables subscribers
to receive email notification when a
document is added to a subscribed
docket(s). For assistance with any FERC
Online service, please e-mail
FERCOnlineSupport@ferc.gov, or call
(866) 208–3676 (toll free). For TTY, call
202 502–8659.
18. Commission conferences are
accessible under section 508 of the
Rehabilitation Act of 1973. For
accessibility accommodations, please
send an e-mail to accessibility@ferc.gov
or call toll free (866) 208–3372 (voice)
or (202) 208–1659 (TTY), or send a FAX
to (202) 208–2106 with the required
accommodations.
V. Comment Procedures
19. 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 30 days following
the technical conference announced
above. Comments must refer to Docket
No. RM10–17–000, and must include
the commenter’s name, the organization
the commenter represents, if applicable,
and the commenter’s address.
20. The Commission encourages
comments to be filed electronically via
the eFiling link on the Commission’s
E:\FR\FM\06AUP1.SGM
06AUP1
Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Proposed Rules
and dissenting, in part with a separate
statement attached.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
VI. Document Availability
mstockstill on DSKH9S0YB1PROD with PROPOSALS
Web site at https://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.
21. Commenters that are not able to
file comments electronically must send
an original and 14 copies of their
comments to: Federal Energy Regulatory
Commission, Secretary of the
Commission, 888 First Street, NE.,
Washington, DC 20426.
22. 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.
[Docket No. DEA–247C]
23. 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
FERC’s Home Page (https://www.ferc.gov)
and in FERC’s Public Reference Room
during normal business hours (8:30 a.m.
to 5 p.m. Eastern time) at 888 First
Street, NE., Room 2A, Washington, DC
20426.
24. From FERC’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.
25. User assistance is available for
eLibrary and the FERC’s website during
normal business hours from FERC
Online Support at (202) 502–6652 (toll
free at 1–866–208–3676) or e-mail 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.
Schedules of Controlled Substances;
Placement of 2,5-Dimethoxy-4-(n)propylthiophenethylamine and NBenzylpiperazine Into Schedule I of the
Controlled Substances Act; Correction
List of Subjects in 18 CFR Part 35
Electric power rates, Electric utilities,
Reporting and recordkeeping
requirements.
By direction of the Commission.
Commissioner Moeller is concurring, in part
VerDate Mar<15>2010
16:12 Aug 05, 2010
Jkt 220001
MOELLER, Commissioner, concurring,
in part and dissenting, in part:
While I support the decision to
supplement the record and convene a
technical conference, for the reasons set
forth in my concurring and dissenting
statement on the NOPR that initiated
this proceeding on March 18, I continue
to concur and dissent, in part.
Philip D. Moeller,
Commissioner.
[FR Doc. 2010–19376 Filed 8–5–10; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Part 1308
Drug Enforcement
Administration (DEA), Department of
Justice.
ACTION: Notice of proposed rulemaking:
correction.
AGENCY:
The Drug Enforcement
Administration (DEA) is correcting a
notice of proposed rulemaking that
appeared in the Federal Register of
September 8, 2003. The proposed rule
pertained to the scheduling of NBenzylpiperazine (BZP), and contained
an error regarding the potency of BZP
relative to amphetamine. Although DEA
used the correct figures in arriving at its
scheduling determination, the agency is
publishing this correction to provide an
official statement of the actual figures.
This correction does not address the
scheduling of 2,5-dimethoxy-4-(n)propylthiophenethylamine (2C–T–7)
which was also placed into schedule I
as a result of the above cited
rulemaking.
SUMMARY:
This correction is effective
August 6, 2010 without further action.
FOR FURTHER INFORMATION CONTACT:
Christine A. Sannerud, PhD, Chief, Drug
and Chemical Evaluation Section, Office
of Diversion Control, Drug Enforcement
Administration, 8701 Morrissette Drive,
Springfield, VA 22152, Telephone (202)
307–7183.
SUPPLEMENTARY INFORMATION:
DATES:
PO 00000
Frm 00014
Fmt 4702
Sfmt 4702
47503
Background
DEA is correcting an inadvertent error
that occurred in a Notice of Proposed
Rulemaking that scheduled the
substance n-Benzylpiperazine (BZP) as a
schedule I controlled substance. The
Notice of Proposed Rulemaking,
published on September 8, 2003 (68 FR
52872), proposed the control of BZP in
schedule I of the Controlled Substances
Act (CSA). The Final Rule, published on
March 18, 2004 (69 FR 12794), finalized
the placement of BZP in schedule I of
the CSA.
Each of these rules contained a
misstatement in the ‘‘Supplementary
Information’’ section, with regard to the
potency differences between BZP and
amphetamine. In each rule, it was
erroneously stated that BZP is 10 to 20
times more potent than amphetamine.
In actuality, the converse is true (i.e.,
BZP is 10 to 20 times less potent than
amphetamine.) Therefore this
Rulemaking corrects this misstatement
in the Notice of Proposed Rulemaking.
Under separate rulemaking, DEA is
publishing a correction to the Final
Rule, published March 18, 2004 (68 FR
12794).
DEA emphasizes that these errors
were made solely in the rules as
published in the Federal Register. Both
DEA and the U.S. Department of Health
and Human Services (HHS) considered
the correct BZP potencies during their
scheduling deliberations. The correct
potencies were included in both the
HHS scientific and medical evaluation
document, and in DEA’s scheduling
document, which were used to make the
determination for control. The public
docket for BZP contains both of these
review documents. In addition, DEA has
already published on the agency’s Web
site the correct figures regarding relative
potency.
The determination of control of BZP
was made after consideration of all the
available data and all eight factors and
the criteria for schedule I as specified in
21 U.S.C. 811 and 812. The
amphetamine-like property of BZP was
determined following the collective
review and consideration of all the
available evidence including drug
discrimination and self-administration
and other information. These studies
were briefly mentioned in the rules
controlling BZP as a schedule I
controlled substance and were
discussed in detail in the scientific and
medical evaluation and scheduling
documents prepared by both HHS and
DEA.
Although the potency difference
between BZP and amphetamine was
discussed in the rules proposing and
E:\FR\FM\06AUP1.SGM
06AUP1
Agencies
[Federal Register Volume 75, Number 151 (Friday, August 6, 2010)]
[Proposed Rules]
[Pages 47499-47503]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-19376]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 35
[Docket No. RM10-17-000]
Demand Response Compensation in Organized Wholesale Energy
Markets
AGENCY: Federal Energy Regulatory Commission.
ACTION: Supplemental Notice of Proposed Rulemaking and Notice of
Technical Conference.
-----------------------------------------------------------------------
SUMMARY: The Federal Energy Regulatory Commission is issuing a
Supplemental Notice of Proposed Rulemaking (NOPR) and Notice of
Technical Conference to provide additional opportunity for comment on
issues related to the March 18, 2010 NOPR, 75 FR 15362 (March 29,
2010), regarding the appropriate compensation to be paid to demand
response resources in organized wholesale electric markets administered
by Independent System Operators or Regional Transmission Organizations.
The Commission proposed an approach for compensating demand response
resources in order to improve the competitiveness of organized
wholesale energy markets and thus ensure just and reasonable wholesale
rates. The Supplemental NOPR seeks comment on whether the Commission
should adopt requirements related to two issues addressed in comments:
If the Commission were to adopt a net benefits test for determining
when to compensate demand response providers, what, if any,
requirements should apply to the methods for determining net benefits;
and what, if any, requirements should apply to how the costs of demand
response are allocated. The Commission invites all interested persons
to submit comments in response to the issues discussed herein.
DATES: A technical conference will be held at the Federal Energy
Regulatory Commission, 888 First Street, NE., Washington, DC 20426, no
later than 45 days following the publication of this document in the
Federal Register. The exact date of the conference will be provided in
a subsequent Commission publication in the Federal Register.
Comments on the NOPR will be due 30 days following the technical
conference announced herein. The Commission will announce the comment
close date in a subsequent publication in the Federal Register.
ADDRESSES: You may submit comments, identified by docket number by any
of the following methods:
Agency Web Site: https://ferc.gov. Documents created electronically
using word processing software should be filed in native applications
or print-to-PDF format and not in a scanned format.
Mail/Hand Delivery: Commenters unable to file comments
electronically must mail or hand deliver an original and 14 copies of
their 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:
David Hunger (Technical Information), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426, (202) 502-8148, david.hunger@ferc.gov.
Helen Dyson (Legal Information), Office of the General Counsel, Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426, (202) 502-8856, helen.dyson@ferc.gov.
SUPPLEMENTARY INFORMATION:
Supplemental Notice of Proposed Rulemaking and Notice of Technical
Conference
Table of Contents
Paragraph
Nos.
I. Background............................................... 2
II. Net Benefits............................................ 4
A. The March NOPR....................................... 4
B. Comments............................................. 5
C. Discussion........................................... 8
III. Cost Allocation........................................ 9
A. Comments............................................. 9
B. Discussion........................................... 12
IV. Technical Conference.................................... 13
V. Comment Procedures....................................... 19
VI. Document Availability................................... 23
Issued August 2, 2010.
1. In a Notice of Proposed Rulemaking (NOPR) issued in this
proceeding on March 18, 2010 (March NOPR),\1\ the Commission proposed
to require Independent System Operators (ISOs) and Regional
Transmission Organizations (RTOs) \2\ with tariff provisions allowing
demand response \3\ resources \4\ to participate in wholesale energy
markets by reducing consumption of electricity from expected levels in
response to price signals, to pay those demand response resources, in
all hours, the market price of energy (also referred to as the
``locational marginal price'' or ``LMP'') for such reductions. In light
of matters elucidated in responsive comments to the March NOPR, the
Commission seeks additional comments on whether the Commission should
adopt requirements related to two issues: (1) If the Commission were to
adopt a net benefits test for determining when to compensate demand
response providers, what, if any, requirements should apply to the
methods for
[[Page 47500]]
determining net benefits; and (2) what, if any, requirements should
apply to how the costs of demand response are allocated. The Commission
also directs staff to hold a technical conference on these issues no
later than 45 days following publication of this notice in the Federal
Register. The exact date of the technical conference will be provided
in a subsequent notice.
---------------------------------------------------------------------------
\1\ Demand Response Compensation in Organized Wholesale Energy
Markets, Notice of Proposed Rulemaking, 75 FR 15362 (March 29,
2010), 130 FERC ] 61,213 (March 18, 2010).
\2\ The following RTOs and ISOs have organized wholesale
electricity markets: PJM Interconnection, L.L.C. (PJM); New York
Independent System Operator, Inc. (NYISO); Midwest Independent
Transmission System Operator, Inc. (Midwest ISO); ISO New England,
Inc. (ISO-NE); California Independent System Operator Corp. (CAISO);
and Southwest Power Pool, Inc. (SPP).
\3\ Demand response means a reduction in the consumption of
electric energy by customers from their expected consumption in
response to an increase in the price of electric energy or to
incentive payments designed to induce lower consumption of electric
energy. 18 CFR 35.28(b)(4) (2010).
\4\ Demand response resource means a resource capable of
providing demand response. 18 CFR 35.28(b)(5) (2010).
---------------------------------------------------------------------------
I. Background
2. In the March NOPR, the Commission proposed to add section
35.18(g)(1)(v) to its regulations to establish a specific compensation
approach for demand response resources participating in organized
wholesale energy markets, i.e., the day-ahead and real-time markets
administered by ISOs and RTOs. Under the proposed section, each
Commission-approved ISO and RTO that has a tariff provision providing
for participation of demand response resources in its organized
wholesale energy market would pay demand response resources, in all
hours, the market price for energy, i.e., the LMP,\5\ for demand
reductions made in response to price signals.\6\
---------------------------------------------------------------------------
\5\ LMP refers to the price calculated by the ISO or RTO at
particular locations or electrical nodes within the ISO or RTO
footprint and is used as the market price to compensate generators.
There are variations in the way ISOs and RTOs calculate LMP;
however, each method establishes the marginal value of resources in
that market. Nothing here or in the March NOPR is intended to change
ISO and RTO methods for calculating LMP.
\6\ The proposed provision applies only to demand response
acting as a resource in organized wholesale energy markets. The
provision will not apply to demand response under programs that ISOs
and RTOs administer for reliability or emergency conditions, such
as, for instance, Midwest ISO's Emergency Demand Response; NYISO's
Emergency Demand Response Program; PJM's Emergency Load Response;
and ISO-NE's Real-Time 30-Minute Demand Response Program, Real-Time
and 2-Hour Demand Response Program, and Real-Time Profiled Response
Program. The provision also will not apply to compensation in
ancillary services markets, which the Commission has addressed
elsewhere. See, e.g., Wholesale Competition in Regions with
Organized Electric Markets, Order No. 719, 73 FR 64100 (Oct. 28,
2008), FERC Stats. & Regs. P 31,281 (2008) (Order No. 719).
---------------------------------------------------------------------------
3. Numerous comments were filed in response to the NOPR, many of
which support the proposed demand response compensation level.\7\
However, other comments support payment of LMP only when the benefits
of demand response compensation outweigh the costs of paying demand
response resources, as determined by some type of net benefits test.\8\
Still other comments argue that, in order to determine the justness and
reasonableness of the proposed compensation level, the corresponding
cost allocation must be considered.\9\ More specifically, these
comments raise concerns regarding how the costs associated with direct
payment of LMP for demand response will be allocated, or assigned,
within an ISO or RTO. Several commenters assert that the issues of cost
allocation and net benefits are inherently linked, so that the
Commission must address both issues together.\10\ Comments regarding
net benefits and cost allocation issues are discussed below.
---------------------------------------------------------------------------
\7\ See Comments of Illinois Citizens Utility Board at 2;
Comments of Industrial Energy Consumers of America at 3; Comments of
National Energy Marketers Association at 3-4; Comments of National
League of Cities; Comments of New Jersey Board of Public Utilities
at 2; Comments of North America Power Partners at 4; Comments of
Pennsylvania Department of Environmental Protection at 5; Comments
of Price Responsive Load Coalition at 2; Comments of Schneider
Electric USA at 2; Comments of Wal-Mart Stores, Inc. at 4; Comments
of Virginia Committee for Fair Utility Rates at 7.
\8\ See generally, Comments of New York State Consumer
Protection Board; New England Consumer Advocates; Capital Power;
Electric Power Supply Association (EPSA); Exelon Corporation
(Exelon); PJM Power Providers Group; New England Conference of
Public Utility Commissioners (NECPUC); Maryland Public Service
Commission (Maryland Commission); New York State Public Service
Commission (New York Commission); NSTAR Electric Company; National
Grid USA (National Grid); PPL Parties; New England Public Systems;
Viridity Energy, Inc.; and Charles Cicchetti.
\9\ Comments of ISO-NE at 39-40. See also, Comments of American
Electric Power Service Corp. at 6-10; Comments of CAISO at 6;
Comments of Consolidated Edison Company at 2; Comments of Hess
Corporation at 3; Comments of the Illinois Commerce Commission at
12; Comments of PJM at 8; Comments of Potomac Economics at 3;
Comments of Massachusetts Attorney General and Maine Public Advocate
at 11; Comments of Midwest ISO Transmission Owners at 5-6; Comments
of Midwest TDUs at 13; Comments of Edison Electric Institute at 5;
Comments of NECPUC at 12, 22; Comments of New England Consumer
Advocates at 11; Comments of RRI Energy, Inc. at 6; Comments of San
Diego Gas & Electric Co. at 3-4.
\10\ As further addressed below, several commenters assert that
the costs of demand response compensation should be borne by only
those market participants determined to have benefitted from the
subject load reduction, as determined by some type of net benefits
test. See, e.g., Comments of ISO-NE at 5-6; Comments of NECPUC at
22; Comments of PJM at 12-14; Comments of PJM Power Providers Group
at 37-38.
---------------------------------------------------------------------------
II. Net Benefits
A. The March NOPR
4. In the March NOPR, the Commission proposed to require ISOs and
RTOs to pay LMP to demand response providers in all hours, but the
Commission also sought comment on, among other things, whether payment
of LMP should indeed apply in all hours and, if not, the criteria that
should be used for establishing the hours when LMP should apply.\11\
---------------------------------------------------------------------------
\11\ March NOPR, 130 FERC ] 61,213 at P 20.
---------------------------------------------------------------------------
B. Comments
5. As noted above, numerous commenters, primarily industrial
consumers and some consumer advocates, agree with the Commission's
proposal to pay LMP to demand response providers in all hours.\12\ They
argue that, regardless of the hour or season, all consumers share in
the benefits demand response resources provide, including lowering the
clearing price.\13\ They also argue that, regardless of the hour or
season, both demand response providers and generators provide a
comparable service in terms of balancing supply and demand and
therefore should be paid on a comparable basis, i.e., LMP.\14\
---------------------------------------------------------------------------
\12\ See Comments of Steel Manufacturers Association at 12;
Comments of Consumer Demand Response Initiative at 12; Comments of
Joint Consumer Advocates at 11-12.
\13\ Comments of Alliance for Clean Energy New York at 2-3;
Comments of American Chemistry Council at 3; Comments of American
Forest & Paper Association at 3; Comments of Crane & Co. at 2-3;
Comments of Industrial Energy Consumers of America at 2; Comments of
Industrial Energy Consumers of Pennsylvania at 3; Comments of
Madison Paper Industries at 2-3.
\14\ Comments of Steel Manufacturers Association at 12.
---------------------------------------------------------------------------
6. At the same time, a diverse group of commenters maintain that
paying LMP for demand response in all hours, including off-peak hours,
might not result in net benefits to customers, because the payments
might be substantially more than the savings created by reducing the
clearing price at that time.\15\ According to these commenters, net
benefits are most likely to be positive and greatest when the supply
curve is steepest, which typically occurs in highest-cost, peak
hours.\16\ Some commenters suggest that paying LMP in all hours might
make more difficult, and less accurate, the establishment of baselines
for measuring whether a demand response provider has, in fact,
responded.\17\
---------------------------------------------------------------------------
\15\ Comments of Capital Power Corporation at 5; Comments of PJM
Power Providers Group at 5.
\16\ Comments of NECPUC at 13.
\17\ Comments of ISO-NE at 32-33; Comments of California
Department of Water Resources at 11; Comments of National Grid USA
at 8.
---------------------------------------------------------------------------
7. Many commenters who oppose paying LMP in all hours for demand
response suggest approaches, or net benefits tests, for determining
when LMP should apply. These commenters state that the purpose of these
tests would be to determine the point at which the incremental payment
for demand response equals the incremental benefit of the reduction in
load; payment of LMP would apply only
[[Page 47501]]
up to that point.\18\ To achieve that end, some comments advocate a net
benefits trigger based on a particular price or period of hours.\19\
While some proposals would utilize a static bid threshold, such as $75/
MWh,\20\ other proposals would utilize a dynamic bid threshold, which
could be based upon fuel prices and heat rates of marginal
generation.\21\ Still other commenters urge compensating demand
response during an ISO- or RTO-defined period of critical high-cost
hours in which it is cost-effective to pay the full LMP.\22\ In
addition to advancing net benefits tests, some commenters suggest
implementation of an ISO- or RTO-developed mechanism to determine
whether a net customer benefit would occur in advance of dispatch.\23\
Some commenters, however, state that it would be difficult to prescribe
by regulation the hours in which demand response provides net benefits
because system conditions and load patterns change across seasons and
over time.\24\
---------------------------------------------------------------------------
\18\ Comments of New England Consumer Advocates at 11; Comments
of NYSCPB at 5; Comments of National Grid at 4-5.
\19\ For example, National Grid states that the threshold could
be triggered by a particular price on the supply offer curve at
which the additional cost of paying LMP to demand response resources
is most likely to be outweighed by LMP reductions in the wholesale
energy market as a result of the demand reductions produced by these
resources. Comments of National Grid at 6.
\20\ Comments of the New York Commission at 10. According to the
New York Commission, a static bid threshold helps prevent demand
response providers from gaming the system by seeking compensation
for reducing electricity consumption for reasons other than market
prices, but can also limit participation in a demand response
program because prices might not exceed the threshold on a
consistent basis.
\21\ Comments of National Grid at 6; Comments of the New York
Commission at 10; Comments of Viridity at 24.
\22\ Comments of the Maryland Commission at 4-5.
\23\ Comments of NYSCPB at 5.
\24\ Midwest ISO Transmission Owners at 16.
---------------------------------------------------------------------------
C. Discussion
8. Due to matters raised in responsive comments to the March NOPR,
the Commission seeks further information regarding the net benefits
issue. Accordingly, the Commission seeks additional comments and
directs staff to hold a technical conference regarding various net
benefits tests.\25\ Specifically, the Commission seeks comment on the
following issues, as well as any other issues:
---------------------------------------------------------------------------
\25\ As noted above, the exact date of the technical conference
will be provided in a subsequent notice and will be no later than 45
days following publication of this notice in the Federal Register.
---------------------------------------------------------------------------
(1) Some commenters address the need for a net benefits test.
Address why the Commission should adopt a net benefits test for
determining demand response compensation, and what the objectives of
any such test would be.
(2) How to define benefits, including whether the benefits
associated with demand response should account only for lower market-
clearing prices in the day-ahead and real-time markets or should also
include consideration of operational benefits (e.g., lower reserve
requirements), societal benefits or another measure.
(3) In addition to the payments received from the wholesale market,
what are the costs demand response providers and load serving entities
incur and should these be included for purposes of a net benefits test.
(4) How to identify the beneficiaries of demand response, and how
the allocation of costs related to demand response compensation affect
the beneficiaries, if at all.
(5) Whether any net benefits methodology adopted should be the same
for all ISOs and RTOs or whether the individual circumstances or
configuration of each ISO and RTO would support a different net
benefits methodology.
(6) Proposed methodologies for implementing a net benefits test.
Comments also should consider whether a net benefits threshold should
be established up front based on static measures, such as a specific
price or number of peak hours, or established on a dynamic basis, such
as a price threshold based on a pre-set heat rate and daily updated
fuel price; and similarly, whether the net benefits should be an
explicit test run by the ISO or RTO either after bids have been
received or each hour prior to accepting demand response bids. Comments
should also describe the advantages and limitations of any proposed net
benefits methodologies.
III. Cost Allocation
A. Comments
9. Comments concerning cost allocation essentially ask how the
proposed demand response compensation level will be funded.\26\ These
commenters argue that, if not structured correctly, demand response
compensation methodologies can increase, rather than decrease costs to
end-users.\27\ Some commenters further contend that requiring payment
of LMP for demand response will require ISOs and RTOs to reopen cost
allocation issues that have previously been settled based on varying
ISO- and RTO-specific demand response compensation levels.\28\
Additional commenters assert that demand response compensation and a
method for allocating the associated costs are so inextricably entwined
that the two issues must be simultaneously addressed as part of an
integrated demand response regime.\29\
---------------------------------------------------------------------------
\26\ ISO-NE Comments at 5, 40; Comments of PJM at 8; Comments of
Potomac Economics at 3.
\27\ Comments of Massachusetts Attorney General and Maine Public
Advocate at 11 (arguing that spreading the costs of demand response
over a smaller amount of load is cost-effective only so long as the
remaining load pays a lower price than it would have paid if the
demand response had not participated).
\28\ Comments of Midwest TDUs at 13.
\29\ Id.; Comments of ISO-NE at 4-5; Comments of Edison Electric
Institute (EEI) at 5; Comments of Charles Cicchetti at 26-27;
Comments of CAISO at 6.
---------------------------------------------------------------------------
10. Another group of commenters endorse the position that demand
response compensation and cost allocation are necessarily related, but
they contend that resolution of cost allocation issues can await the
final rule on demand response compensation. These commenters maintain
that any cost allocation approach will depend on the outcome of the
final demand response compensation rule \30\ and, in any case, should
first be addressed through stakeholder discussions at the regional
level.
---------------------------------------------------------------------------
\30\ Comments of New England Consumer Advocates at 11.
---------------------------------------------------------------------------
11. Several commenters advocate a specific approach or discuss the
pros and cons of alternative approaches for allocating the costs
associated with demand response compensation. Potential approaches
raised in comments include:
(1) Allocating the costs across the entire relevant ISO or RTO
market, based upon the rationale that there are system-wide benefits to
demand response, including reducing the market price for energy.\31\
Conversely, some commenters argue that, while this approach might
increase the amount of demand response provided to the market, it might
also result in some market participants paying costs associated with
demand response for which they do not receive equivalent benefit.\32\
---------------------------------------------------------------------------
\31\ See Comments of NECPUC at 22.
\32\ Comments of Midwest ISO Transmission Owners at 5.
---------------------------------------------------------------------------
(2) Allocating the costs to only the load-serving entity of record,
i.e., the load-serving entity that would have served the load providing
the demand response. According to commenters, this option assumes that
the deemed full benefit of demand response is only received by the
load-serving entity of record and that demand response does
[[Page 47502]]
not impact other load-serving entities across the ISO or RTO.\33\
---------------------------------------------------------------------------
\33\ Comments of PJM at 15.
---------------------------------------------------------------------------
(3) Uplifting the costs locally to all load-serving entities within
the zone impacted by the demand response reduction, based on a load
ratio share. Commenters assert that this approach theoretically
allocates the cost of demand response compensation to only those load-
serving entities that benefitted from the demand response provided.\34\
---------------------------------------------------------------------------
\34\ Comments of PJM at 14; Comments of NECPUC at 22; Comments
of Midwest ISO Transmission Owners at 6.
---------------------------------------------------------------------------
(4) Recovering the costs through a surcharge added to the LMP for
customers purchasing from the relevant energy market in the hour when
the demand response resource is committed or dispatched. The rationale
for this approach is that it allocates the costs of demand response
resource procurement on the basis of cost-causation, i.e., demand
response resource costs are allocated directly to those energy market
consumers who benefitted from the demand response resource provided. To
implement this proposal, an adjustment to the market price paid by
customers would be calculated.\35\
---------------------------------------------------------------------------
\35\ Comments of NECPUC at 22, 23.
---------------------------------------------------------------------------
(5) Utilizing a hybrid approach, in a manner intended to minimize
cost impacts on final customers.\36\ Hybrid approaches include
splitting the costs between load-serving entities and transmission
owners,\37\ and allocating part of the costs to the demand response
provider's load-serving entity and part to all of the load-serving
entities in the zone where the load reduction occurred, based on a load
ratio share.\38\
---------------------------------------------------------------------------
\36\ Comments of ISO-NE at 40.
\37\ ISO-NE suggests charging the difference between LMP and the
generation (or ``G'') portion of the retail rate (i.e., LMP-G) to
the load-serving entity that is providing the energy, and charging
the remainder (i.e., ``G'') to network load, which would be billed
to transmission owners. Comments of ISO-NE at 5.
\38\ As described by PJM, the ``[load-serving entity] of record
will receive a direct allocation of direct payments made for the
demand response MWh reduction multiplied by the difference between
the appropriate wholesale market price and the retail rate, and the
cost associated with the MWh reduction multiplied by the retail rate
allocated to all [load-serving entities] in the zone where the load
reduction occurred based on a load ratio share.'' Comments of PJM at
10.
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B. Discussion
12. From the comments received, issues concerning cost allocation
may be integrally related to the proposal relating to demand response
compensation, and we believe such issues should be explored further. In
addition, the diversity of comments relating to cost allocation leave
open the question of whether a singular cost allocation approach should
be determined by the Commission for all ISOs and RTOs or whether
differing cost allocation approaches should be developed regionally and
reviewed by the Commission on an ISO- and RTO-specific basis.
Accordingly, the Commission seeks additional comments on whether the
Commission should consider a generic approach to allocating the costs
of demand response compensation required by the final rule in this
proceeding, and if so, what approach the Commission should adopt. Such
issues also will be explored at the staff technical conference.
Specifically, the Commission seeks comment on the following issues, as
well as any other issues:
(1) Whether standardizing demand response compensation among ISOs
and RTOs requires simultaneous standardization of a method for
allocating the costs associated with such compensation. In addition,
whether standardizing demand response compensation among ISOs and RTOs
requires consideration of corresponding settlements and other impacts
associated with the compensation mechanism.
(2) If the Commission standardizes an approach for allocating the
costs associated with requiring payment for demand response, what type
of approach is appropriate. Comments should address the specific
approaches delineated above, and may address other broad principles the
Commission could use to determine the cost allocation method.
(3) How the use of a net benefits test would affect the need for
and methodologies for determining cost allocation.
IV. Technical Conference
13. The exact date of the Commission staff technical conference
directed herein will be provided in a subsequent notice and will be no
later than 45 days following publication of this notice in the Federal
Register. The conference will be held in the Commission Meeting Room at
the Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426. All interested persons are invited to participate
in the conference.
14. Those interested in speaking at the conference should notify
the Commission by August 10, 2010 by completing an online form
describing the topics that they will address: https://www.ferc.gov/whats-new/registration/demand-RM10-17-000-speaker-form.asp. Due to
time constraints, we may not be able to accommodate all individuals
interested in speaking, so multiple persons sharing the same position
are encouraged to have one representative speak on their behalf. A
detailed agenda, including panel speakers, will be published at a later
date.
15. The technical conference will be transcribed. Transcripts of
the conference will be immediately available for a fee from Ace-Federal
Reporters, Inc. ((202) 347-3700 or 1-800-336-6646). The transcript will
be available for free on the Commission's eLibrary system and on the
Calendar of Events approximately one week after the conference.
16. A free webcast of the technical conference directed herein will
be available. Anyone with Internet access interested in viewing this
conference can do so by navigating to https://www.ferc.gov's Calendar of
Events and locating the appropriate event in the Calendar. The events
will contain a link to the applicable webcast option. The Capitol
Connection provides technical support for the webcasts and offers the
option of listening to the conferences via phone-bridge for a fee. If
you have any questions, visit https://www.CapitolConnection.org or call
(703) 993-3100.
17. There is an ``eSubscription'' link on the Web site that enables
subscribers to receive email notification when a document is added to a
subscribed docket(s). For assistance with any FERC Online service,
please e-mail FERCOnlineSupport@ferc.gov, or call (866) 208-3676 (toll
free). For TTY, call 202 502-8659.
18. Commission conferences are accessible under section 508 of the
Rehabilitation Act of 1973. For accessibility accommodations, please
send an e-mail to accessibility@ferc.gov or call toll free (866) 208-
3372 (voice) or (202) 208-1659 (TTY), or send a FAX to (202) 208-2106
with the required accommodations.
V. Comment Procedures
19. 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 30 days following the technical conference
announced above. Comments must refer to Docket No. RM10-17-000, and
must include the commenter's name, the organization the commenter
represents, if applicable, and the commenter's address.
20. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's
[[Page 47503]]
Web site at https://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.
21. Commenters that are not able to file comments electronically
must send an original and 14 copies of their comments to: Federal
Energy Regulatory Commission, Secretary of the Commission, 888 First
Street, NE., Washington, DC 20426.
22. 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.
VI. Document Availability
23. 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 FERC's Home Page (https://www.ferc.gov) and in FERC's
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m.
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
24. From FERC'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.
25. User assistance is available for eLibrary and the FERC's
website during normal business hours from FERC Online Support at (202)
502-6652 (toll free at 1-866-208-3676) or e-mail 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. Commissioner Moeller is
concurring, in part and dissenting, in part with a separate
statement attached.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
MOELLER, Commissioner, concurring, in part and dissenting, in part:
While I support the decision to supplement the record and convene a
technical conference, for the reasons set forth in my concurring and
dissenting statement on the NOPR that initiated this proceeding on
March 18, I continue to concur and dissent, in part.
Philip D. Moeller,
Commissioner.
[FR Doc. 2010-19376 Filed 8-5-10; 8:45 am]
BILLING CODE 6717-01-P