Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators, 23902-23927 [2019-10742]
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Federal Register / Vol. 84, No. 100 / Thursday, May 23, 2019 / Rules and Regulations
Order on rehearing and
clarification.
DEPARTMENT OF ENERGY
ACTION:
Federal Energy Regulatory
Commission
SUMMARY:
18 CFR Part 35
[Docket Nos. RM16–23–001; AD16–20–001;
Order No. 841–A]
Electric Storage Participation in
Markets Operated by Regional
Transmission Organizations and
Independent System Operators
Federal Energy Regulatory
Commission, DOE.
AGENCY:
The Federal Energy
Regulatory Commission addresses
petitions for rehearing and clarification
and generally affirms its determinations
in Order No. 841, amending its
regulations under the Federal Power Act
to remove barriers to the participation of
electric storage resources in the
capacity, energy, and ancillary service
markets operated by Regional
Transmission Organizations and
Independent System Operators.
DATES: This order on rehearing and
clarification will become effective
August 21, 2019.
FOR FURTHER INFORMATION CONTACT:
Kaitlin Johnson (Technical Information),
Office of Energy Policy and
Innovation, Federal Energy Regulatory
Commission, 888 First Street NE,
Washington, DC 20426, (202) 502–
8542, kaitlin.johnson@ferc.gov
Karin Herzfeld (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street NE, Washington, DC
20426, (202) 502–8459,
karin.herzfeld@ferc.gov
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph No.
I. Introduction ...............................................................................................................................................................................
II. Discussion ................................................................................................................................................................................
A. Definition of Electric Storage Resource ..........................................................................................................................
1. Final Rule ...................................................................................................................................................................
2. Requests for Rehearing or Clarification ....................................................................................................................
3. Commission Determination .......................................................................................................................................
B. Participation Model for Electric Storage Resources .......................................................................................................
1. Final Rule ...................................................................................................................................................................
2. Requests for Rehearing or Clarification ....................................................................................................................
3. Commission Determination .......................................................................................................................................
C. Eligibility of Electric Storage Resources To Participate in the RTO/ISO Markets .......................................................
1. Final Rule ...................................................................................................................................................................
2. Requests for Rehearing or Clarification ....................................................................................................................
3. Commission Determination .......................................................................................................................................
D. Participation in the RTO/ISO Markets as Supply and Demand ....................................................................................
1. Eligibility To Participate as a Wholesale Seller and Wholesale Buyer ..................................................................
2. Participation as Price Takers .....................................................................................................................................
E. Physical and Operational Characteristics of Electric Storage Resources ......................................................................
1. Requirement To Incorporate Bidding Parameters as Part of the Electric Storage Resource Participation Model
F. Minimum Size Requirement ............................................................................................................................................
1. Final Rule ...................................................................................................................................................................
2. Requests for Rehearing or Clarification ....................................................................................................................
3. Commission Determination .......................................................................................................................................
G. Energy Used To Charge Electric Storage Resources (Charging Energy) ........................................................................
1. Price for Charging Energy ..........................................................................................................................................
2. Metering and Accounting Practices for Charging Energy ........................................................................................
III. Compliance Requirements .....................................................................................................................................................
A. Final Rule .........................................................................................................................................................................
B. Requests for Rehearing or Clarification ...........................................................................................................................
C. Commission Determination ..............................................................................................................................................
IV. Document Availability ...........................................................................................................................................................
I. Introduction
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1. On February 15, 2018, the Federal
Energy Regulatory Commission
(Commission) issued Order No. 841,
which established reforms to remove
barriers to the participation of electric
storage resources 1 in the Regional
Transmission Organization and
Independent System Operator markets
1 Electric Storage Participation in Markets
Operated by Regional Transmission Organizations
and Independent System Operators, Order No. 841,
83 FR 9580, 162 FERC ¶ 61,127, at P 1 (2018). Order
No. 841 defined an electric storage resource as a
resource capable of receiving electric energy from
the grid and storing it for later injection of electric
energy back to the grid. Id. P 1 n.1.
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(RTO/ISO markets).2 The Commission
found that existing RTO/ISO market
rules are unjust and unreasonable in
light of barriers that they present to the
participation of electric storage
resources in the RTO/ISO markets,
thereby reducing competition and
failing to ensure just and reasonable
rates.3 To help ensure that the RTO/ISO
markets produce just and reasonable
rates, pursuant to the Commission’s
legal authority under Federal Power Act
2 For purposes of Order No. 841, the Commission
defined RTO/ISO markets as the capacity, energy,
and ancillary services markets operated by the
RTOs and ISOs. Id. P 1 n.2.
3 Id. P 1.
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(FPA) section 206,4 the Commission in
Order No. 841 modified § 35.28 of the
Commission’s regulations 5 to require
each RTO/ISO to revise its tariff to
establish market rules that, recognizing
the physical and operational
characteristics of electric storage
resources, facilitate their participation
in the RTO/ISO markets.6
2. More specifically, Order No. 841
required each RTO/ISO to revise its
tariff to establish a participation model
consisting of market rules that,
recognizing the physical and
4 16
U.S.C. 824e (2012).
CFR 35.28 (2018).
6 Order No. 841, 162 FERC ¶ 61,127 at P 1.
5 18
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operational characteristics of electric
storage resources, facilitates their
participation in the RTO/ISO markets.7
For each RTO/ISO, the tariff provisions
for the participation model for electric
storage resources must (1) ensure that a
resource using the participation model
for electric storage resources is eligible
to provide all capacity, energy, and
ancillary services that it is technically
capable of providing in the RTO/ISO
markets; (2) ensure that a resource using
the participation model for electric
storage resources can be dispatched and
can set the wholesale market clearing
price as both a wholesale seller and
wholesale buyer consistent with
existing market rules that govern when
a resource can set the wholesale price;
(3) account for the physical and
operational characteristics of electric
storage resources through bidding
parameters or other means; and (4)
establish a minimum size requirement
for participation in the RTO/ISO
markets that does not exceed 100 kW.8
Additionally, Order No. 841 directed
each RTO/ISO to specify that the sale of
electric energy from the RTO/ISO
markets to an electric storage resource
that the resource then resells back to
those markets must be at the wholesale
locational marginal price (LMP).
3. The following petitioners filed
timely requests for rehearing or
rehearing and clarification of Order No.
841: AES Companies; American
Municipal Power, Inc., American Public
Power Association, and National Rural
Electric Cooperative Association
(collectively, AMP/APPA/NRECA);
California Energy Storage Alliance;
California Independent System Operator
Corporation (CAISO); Edison Electric
Institute (EEI); Midcontinent
Independent System Operator, Inc.
(MISO); National Association of
Regulatory Utility Commissioners
(NARUC); Transmission Access Policy
Study Group (TAPS); and Xcel Energy
Services Inc. (Xcel Energy Services).9
7 Id. P 3. In Order No. 841, the Commission used
the term ‘‘participation model’’ to refer to distinct
tariff provisions that an RTO/ISO creates for a
particular type of resource when that type of
resource has unique physical and operational
characteristics or other attributes that warrant
distinctive treatment from other market
participants. The Commission further explained
that it was requiring a participation model for
electric storage resources that will help facilitate the
participation of electric storage resources in the
RTO/ISO markets. Id.
8 Id. P 4.
9 Advanced Energy Economy, Energy Storage
Association, and Monitoring Analytics, LLC acting
in its capacity as the Independent Market Monitor
for PJM filed answers to the requests for rehearing
or clarification. Title 18 CFR 385.713(d)(1), Rule
713(d)(1) of the Commission’s Rules of Practice and
Procedure, prohibits an answer to a request for
rehearing. Accordingly, we reject these answers.
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Organization of MISO States; Pacific Gas
and Electric Company; PJM
Interconnection, L.L.C. (PJM); and
Southwest Power Pool, Inc. (SPP) filed
requests for clarification. For the
reasons discussed below, we deny the
requests for rehearing and deny in part
and grant in part the requests for
clarification.
4. Specifically, we grant SPP’s request
for clarification that Order No. 841 does
not require an RTO/ISO to create and
provide a capacity product that an RTO/
ISO market does not otherwise offer. We
also grant PJM’s request for clarification
that the final rule allows for flexibility
in how RTOs/ISOs account for the
physical and operational characteristics
of electric storage resources, including
State of Charge. We further grant EEI’s
request to clarify that the Commission
will not dismiss as per se unreasonable
any proposal to establish a non-facilityspecific rate for wholesale distribution
service to an electric storage resource for
its charging. We also grant CAISO’s
request to clarify that an RTO/ISO could
require verification from the host
distribution utility that it is unable or
unwilling to net wholesale demand
from retail settlement before the RTO/
ISO ceases to settle an electric storage
resource’s wholesale demand at the
wholesale LMP. Finally, we grant
clarification of the Commission’s
finding that applicable transmission
charges should apply when an electric
storage resource is charging to resell
energy at a later time. We also modify
§ 35.28(g)(9)(i)(B) of the Commission’s
regulations to clarify that each RTO/ISO
is required to allow resources using the
participation model for electric storage
resources to participate in the RTO/ISO
markets as dispatchable resources, not
that such resources are required to be
dispatchable to use that participation
model.
II. Discussion
1. Final Rule
5. In Order No. 841, the Commission
revised § 35.28(b) of the Commission’s
regulations to define an electric storage
resource as ‘‘a resource capable of
receiving electric energy from the grid
and storing it for later injection of
electric energy back to the grid.’’ 10 The
Commission stated that this definition is
intended to cover electric storage
resources capable of receiving electric
energy from the grid and storing it for
later injection of electric energy back to
the grid, regardless of their storage
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No. 841, 162 FERC ¶ 61,127 at P 29.
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medium (e.g., batteries, flywheels,
compressed air, and pumped-hydro).
Additionally, the Commission stated
that electric storage resources located on
the interstate transmission system, on a
distribution system, or behind the meter
fall under this definition. The
Commission stated that, by including all
electric storage technologies, and by
allowing resources that are
interconnected to the transmission
system, distribution system, or behind
the meter to use the participation model
for electric storage resources, the
Commission was ensuring that the
market rules will not be designed for
any particular electric storage
technology.11
6. The Commission observed that an
electric storage resource that injects
electric energy back to the grid for
purposes of participating in an RTO/ISO
market engages in a sale of electric
energy at wholesale in interstate
commerce.12 As a result, the
Commission found that such an electric
storage resource must fulfill certain
responsibilities set forth in the FPA and
the Commission’s rules and
regulations.13
7. The Commission disagreed with
commenters who asserted that the
definition of an electric storage resource
should be limited to those electric
storage resources that are
interconnected to the transmission
system.14 The Commission found that
electric storage resources interconnected
to the distribution system are already
participating in the RTO/ISO markets 15
and that they should continue to be able
to do so. The Commission stated that
such a limitation also would be
inconsistent with the participation of
other types of resources because various
types of traditional generation and
demand-side resources that are not
connected directly to the transmission
11 Id.
A. Definition of Electric Storage
Resource
10 Order
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12 Id. P 30. The Commission also observed that
injections of electric energy back to the grid do not
necessarily trigger the Commission’s jurisdiction.
Id. n.49 (citing Sun Edison LLC, 129 FERC ¶ 61,146
(2009), reh’g granted on other grounds, 131 FERC
¶ 61,213 (2010) (the Commission’s jurisdiction
would arise only when a facility operating under a
state net metering program produces more power
than it consumes over the relevant netting period);
MidAmerican Energy Co., 94 FERC ¶ 61,340 (2001)).
13 Id. P 30. The Commission provided the
following examples of such responsibilities: Filing
rates under FPA section 205 (potentially including
obtaining market-based rate authority); submitting
FPA sections 203 and 204 filings related to
corporate mergers and other activities; and fulfilling
FPA section 301 accounting obligations and FPA
section 305(b) interlocking directorate obligations.
Id. (citing 16 U.S.C. 824b, 824c, 824d, 825, 825d(b)).
14 Id. P 31.
15 Id. (citing PJM Interconnection L.L.C., 149
FERC ¶ 61,185 (2014), order on reh’g, 151 FERC
¶ 61,231 (2015)).
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system currently participate in the RTO/
ISO markets.
8. The Commission also explained
that, by ‘‘capable of . . . later injection
of electric energy back to the grid,’’ it
meant that the electric storage resource
is both physically designed and
configured to inject electric energy back
onto the grid and, as relevant, is
contractually permitted to do so (e.g.,
per the interconnection agreement
between an electric storage resource that
is interconnected on a distribution
system or behind-the-meter with the
distribution utility to which it is
interconnected).16 Consequently, the
Commission found that the definition of
an electric storage resource excludes a
resource that is either (1) physically
incapable of injecting electric energy
back onto the grid due to its design or
configuration or (2) contractually barred
from injecting electric energy back onto
the grid. Further, the Commission
explained that Order No. 841 requires
each RTO/ISO to implement market
rules applicable to electric storage
resources, as defined therein, that
voluntarily seek to participate in the
RTO/ISO markets; Order No. 841 does
not require electric storage resources to
participate in those markets.17
9. The Commission stated that it has
exclusive jurisdiction over the
wholesale markets and the criteria for
participation in those markets,
including the wholesale market rules for
participation of resources connected at
or below distribution-level voltages.18
The Commission also noted its
understanding that numerous resources
connected to the distribution system
participate in the RTO/ISO markets
today.19 Under those circumstances, the
Commission was not persuaded to grant
commenters’ request that the
Commission allow states to decide
whether electric storage resources in
their state that are located behind a
retail meter or on the distribution
system are permitted to participate in
the RTO/ISO markets through the
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16 Id.
P 33.
17 Id. P 35.
18 Id. (citing FERC v. Elec. Power Supply Ass’n,
136 S. Ct. 760 (2016) (EPSA); Advanced Energy
Economy, 161 FERC ¶ 61,245, at PP 59–60 (2017)
(AEE), reh’g denied, 163 FERC ¶ 61,030 (2018) (AEE
Rehearing Order)).
19 Id. (citing Southern California Edison Co.,
Docket No. ER10–1356–000 (2010) (accepting
Southern California Edison’s Wholesale
Distribution Access Tariff); PJM Interconnection,
L.L.C., Docket No. ER11–3148–000 (2011)
(delegated letter order) (accepting Wholesale Market
Participation Agreement among PJM, CleanLight
Power, L.L.C. and Public Service Electric and Gas
Company); PJM Manual 14C, section 1.3 (discussing
requirements of Wholesale Market Participation
Agreements)).
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electric storage resource participation
model.
10. That said, the Commission
emphasized the ongoing, vital role of
the states with respect to the
development and operation of electric
storage resources.20 The Commission
noted that such state responsibilities
include, among other things, retail
services and matters related to the
distribution system, including design,
operations, power quality, reliability,
and system costs. The Commission
added that nothing in Order No. 841
was intended to affect or implicate the
responsibilities of distribution utilities
to maintain the safety and the reliability
of the distribution system or their use of
electric storage resources on their
systems. Further, in Order No. 841, the
Commission added § 35.28(g)(9)(ii) to
the Commission’s regulations to require
that the sale of electric energy from the
RTO/ISO markets to an electric storage
resource that the resource then resells
back to those markets be at the
wholesale LMP.21
2. Requests for Rehearing or
Clarification
11. Petitioners raise several issues
concerning the Commission’s authority
with respect to electric storage
resources’ participation in RTO/ISO
markets. First, some petitioners contend
that the Commission must, or should,
provide relevant electric retail
regulatory authorities (RERRA) with an
electric storage resource opt-out similar
to that afforded for demand response in
Order No. 719. Second, petitioners raise
concerns about the Commission’s
authority to require that the sale of
electric energy from the RTO/ISO
markets to an electric storage resource
that the resource then resells back to
those markets be at the wholesale LMP.
12. Several petitioners 22 ask the
Commission to grant rehearing or
clarification of the Commission’s denial
of requests to ‘‘allow states to decide
whether electric storage resources in
their state that are located behind a
retail meter or on the distribution
system are permitted to participate in
the RTO/ISO markets through the
electric storage resource participation
model.’’ 23 Generally, these petitioners
contend that the Commission’s decision
20 Id.
P 36.
substantive requirements of this
determination are discussed further in section II.G.
(Energy Used to Charge Electric Storage Resources).
22 See e.g., AMP/APPA/NRECA; EEI; NARUC;
Organization of MISO States; TAPS; and Xcel
Energy Services.
23 Order No. 841, 162 FERC ¶ 61,127 at P 35
(referred to herein as the decision not to adopt an
‘‘electric storage resource opt-out’’).
21 The
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to decline to adopt an electric storage
resource opt-out is a violation of FPA
section 201, which expressly excludes
from Commission jurisdiction retail
electric service and facilities for the
local distribution of electric energy.24
Petitioners also cite to the Commission’s
demand response rule in Order No. 719
and the U.S. Supreme Court’s decision
in EPSA to support their proposition
that the Commission must adopt an
electric storage resource opt-out.25
a. Whether the Commission Is Required
To Adopt an Opt-Out
13. AMP/APPA/NRECA ask the
Commission to grant rehearing and
declare that Order No. 841 is limited to
RTO/ISO market rules, and nothing in
Order No. 841 overrides state laws or
tariff requirements that might prohibit
or limit an electric storage resource
interconnected with the distribution
system or behind a retail meter from
directly accessing the wholesale
market.26 They assert that the
Commission does not have authority to
disregard or override state and local
restrictions on the participation of
distribution-level and behind-the-meter
electric storage resources in wholesale
markets because FPA section 201(b)
reserves to the states the regulation of
retail service and specifically excludes
local distribution facilities from the
Commission’s jurisdiction.27 They
further argue that the Commission lacks
authority to compel entities exempt
from the Commission’s rate jurisdiction
under FPA section 201(f), such as public
power and cooperative utilities, to allow
retail behind-the-meter electric storage
resources to participate in wholesale
markets.28 They contend that, while
certain distribution-connected resources
may participate in wholesale markets,
the Commission has indicated that ‘‘the
vast majority of small generator
interconnections will be with state
jurisdictional facilities’’ and that such
interconnections will be governed by
state law.29 Therefore, they argue that
24 See, e.g., AMP/APPA/NRECA Rehearing
Request at 8 (citing 16 U.S.C. 824(b); NARUC
Rehearing Request at 3 (citing 16 U.S.C. 824(b),
824o(i); Cal. Indep. Sys. Operator Corp. v. FERC,
372 F.3d 395, 398–99 (D.C. Cir. 2004)); Xcel Energy
Services Rehearing Request at 8.
25 See Wholesale Competition in Regions with
Organized Electric Markets, Order No. 719, 125
FERC ¶ 61,071 (2008), order on reh’g, Order No.
719–A, 128 FERC ¶ 61,059, order on reh’g, Order
No. 719–B, 129 FERC ¶ 61,252 (2009); EPSA, 136
S. Ct. 760.
26 AMP/APPA/NRECA Rehearing Request at 8.
27 Id. at 9 (citing 16 U.S.C. 824(b)(1); EPSA, 136
S. Ct. at 775).
28 Id. at 9 n.25.
29 Id. at 9 (citing Standardization of Small
Generator Interconnection Agreements and
Procedures, Order No. 2006–A, 113 FERC ¶ 61,195,
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the Commission has exceeded its
authority if Order No. 841 indicates that
an electric storage resource taking retail
service from a distribution utility may
disregard retail service terms and
conditions that limit direct participation
in the wholesale market.30
14. TAPS similarly asserts that states’
exclusive jurisdiction to set the terms
and conditions of retail service includes
conditioning receipt of retail service on
the customer’s agreement as to whether
and how to interconnect behind-themeter resources and what the customer
may do with such resources.31 Xcel
Energy Services contends that granting
rehearing would not allow states to
change the Commission’s criteria for
participating in wholesale markets, but
would require electric storage resources
connected at the distribution level or
behind the meter to also ensure that
their activities are in accordance with
state legal requirements governing retail
sales and use of the distribution
system.32
15. Some petitioners argue that, while
the Commission cites EPSA 33 for the
proposition that it ‘‘has exclusive
jurisdiction over the wholesale markets
and the criteria for participation in
those markets,’’ 34 EPSA does not
support the Commission’s decision not
to adopt an electric storage resource optout.35 AMP/APPA/NRECA assert that
(1) EPSA concerned federal authority to
regulate wholesale demand response
compensation, not state authority over
demand response resource
participation,36 (2) the Order No. 719
opt-out rules were not at issue in EPSA
because the Supreme Court treated
those rules as an established part of the
regulatory framework for demand
response,37 and (3) the authority of
states to veto retail customer
participation in demand response
aggregations was a reason for the Court’s
at P 105 (2005), clarified, Order No. 2006–B, 116
FERC ¶ 61,046 (2006), corrected, 71 FR 53,965
(Sept. 13, 2006)).
30 Id. at 9.
31 TAPS Rehearing Request at 7–8.
32 Xcel Energy Services Rehearing Request at 6–
7.
33 136 S. Ct. 760.
34 Order No. 841, 162 FERC ¶ 61,127 at P 35.
35 See, e.g., AMP/APPA/NRECA, NARUC, and
Xcel Energy Services.
36 AMP/APPA/NRECA Rehearing Request at 10–
11 (citing Order No. 841, 162 FERC ¶ 61,127 at P
35; EPSA, 136 S. Ct. at 773).
37 Id. at 11 (citing EPSA, 136 S. Ct. at 771, 772,
779–80). They assert that the Court had no reason
to address and did not address the scope of the
Commission’s authority to determine which
demand response resources are eligible to
participate in the wholesale market in the first
place, nor did it suggest that the Commission may
override retail service terms and conditions that
might restrict or condition such eligibility. Id.
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finding that the Commission did not
improperly intrude on states’
jurisdiction over retail sales.38 NARUC
argues that, while EPSA supports the
assertion that the Commission may
determine how resources participate in
the RTO/ISO markets because the
Commission has the authority to
determine how prices are set, EPSA
does not support the finding that states
cannot determine whether resources can
participate in the RTO/ISO markets.39
16. Xcel Energy Services claims that
the Supreme Court permitted the
Commission’s demand response pricing
changes in EPSA because, there, the
Commission addressed only
‘‘transactions occurring on the
wholesale market,’’ and ‘‘every aspect of
the regulatory plan happen[ed]
exclusively on the wholesale market
and govern[ed] exclusively that market’s
rules.’’ 40 Xcel Energy Services argues
that, unlike the indirect effects on retail
sales that the Supreme Court permitted
in EPSA, Order No. 841 directly affects
retail sales because it allows
distribution-connected and behind-themeter electric storage resources to make
wholesale sales and purchases, which
fundamentally changes how retail sales
occur and directly interferes with a
state’s ability to regulate retail sales.41
For instance, Xcel Energy Services
argues that, if a retail customer sells into
the wholesale market and sells more
than it purchases for the applicable
billing period, then what had previously
been a retail sale by the distribution
company is now a wholesale sale within
the Commission’s jurisdiction.42 Xcel
Energy Services adds that, because
Order No. 841 entitles an electric
storage resource to purchase at
wholesale from the RTO/ISO market,
Order No. 841 removes what was
previously a franchised retail sale by the
distribution provider, which could
preempt the distribution utility’s stategranted franchise.43 Xcel Energy
Services also claims that, unlike Order
No. 745, which was at issue in EPSA,
Order No. 841 will require distribution
utilities to establish extensive and
expensive processes to assist the market
participation of distribution-connected
and behind-the-meter electric storage
resources, including (1) processes that
allow electric storage resources to use
their wires to transmit energy to and
from the electric transmission grid, and
(2) processes to separately track retail
and wholesale sales and purchases.44
Xcel Energy Services further argues that
Order No. 841 will require distribution
providers to manage both state-regulated
and Commission-jurisdictional
interconnections, interfere with state
regulation of distribution system
reliability, permit resources to cycle in
and out of state jurisdiction, and force
states to accommodate the
Commission’s electric storage policy.45
17. Some petitioners further argue
that the Commission’s decision not to
adopt an opt-out is inconsistent with
other provisions of Order No. 841 that,
according to petitioners, indicate that
RERRAs and distribution utilities have
the authority to limit the ability of
electric storage resources to access the
RTO/ISO markets.46 Some of these
petitioners point to the Commission’s
finding that ‘‘[t]o the extent that the host
distribution utility is unable . . . or
unwilling to net out any energy
purchases associated with . . . electric
storage resources’ wholesale charging
activities from the host customer’s retail
bill, the RTO/ISO would be prevented
from charging that resource wholesale
rates for the charging energy for which
it is already paying retail rates.’’ 47
These petitioners also argue that, by
finding that an electric storage resource
is not eligible, by definition, for
participation in the RTO/ISO markets if
it is ‘‘contractually barred from injecting
electric energy back onto the grid,’’ the
Commission acknowledged that an
electric storage resource could be barred
from participation by a distribution
interconnection agreement.48 NARUC
asserts that the Commission failed,
however, to acknowledge that the states
have jurisdiction over those
agreements.49
18. NARUC also adds that PJM
Manual 14C, which the Commission
cited as support for the finding that
44 Id.
at 9.
at 10–12.
46 See, e.g., AMP/APPA/NRECA, NARUC,
Organization of MISO States, and TAPS.
47 AMP/APPA/NRECA Rehearing Request at 6;
TAPS Rehearing Request at 7 (citing Order No. 841,
162 FERC ¶ 61,127 at P 326).
48 AMP/APPA/NRECA Rehearing Request at 6
(citing Order No. 841, 162 FERC ¶ 61,127 at P 33
(‘‘per the interconnection agreement between an
electric storage resource that is interconnected on
a distribution system or behind-the-meter with a
distribution utility to which it is interconnected’’));
NARUC Rehearing Request at 8 (citing Order No.
841, 162 FERC ¶ 61,127 at P 33).
49 NARUC Rehearing Request at 8.
45 Id.
38 Id.
(citing EPSA, 136 S. Ct. at 779–80).
Rehearing Request at 6 (citing EPSA,
136 S. Ct. at 771, 773, 780).
40 Xcel Energy Services Rehearing Request at 7
(citing EPSA, 136 S. Ct. at 764, 777).
41 Id. at 7.
42 Id. at 8 (citing Order No. 841, 162 FERC
¶ 61,127 at P 289 (‘‘The Commission has found that
the sale of energy from the grid that is used to
charge electric storage resources for later resale into
the energy or ancillary service markets constitutes
a sale for resale in interstate commerce.’’)).
43 Id. at 8–9 (citing Order No. 841, 162 FERC
¶ 61,127 at P 56).
39 NARUC
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distribution-level resources currently
participate in the wholesale markets,
indicates that the Commission does not
determine whether distribution-level
resources can participate in wholesale
markets.50 NARUC asserts that PJM’s
Manual 14C specifies that the only
reason for a Wholesale Market
Participation Agreement is to facilitate
participation by distribution-level
generators over which the Commission
lacks jurisdiction.51 According to
NARUC, the Commission and PJM
generally are not involved in the
physical interconnection of distributionlevel facilities using the Wholesale
Market Participation Agreement; rather,
it is a product of federal-state comity
that should not be mistaken for an
exercise of exclusive federal
jurisdiction.52
19. AMP/APPA/NRECA, NARUC, and
TAPS also point to the Commission’s
acknowledgment in Order No. 2006–A
that the vast majority of distributionlevel interconnections are subject to
state, rather than Commission,
jurisdiction.53 TAPS asserts that,
because the Commission has
acknowledged that the vast majority of
distribution-level interconnections are
subject to RERRA jurisdiction, the
language in Order No. 841 requiring an
electric storage resource to be
‘‘contractually permitted’’ to inject
electric energy back to the grid gives
RERRAs a veto over wholesale sales by
distribution-connected and behind-theretail-meter electric storage resources.54
50 Id.
at 6.
at 6–7 (citing PJM Manual 14C, Generation
and Transmission Interconnection Facility
Construction, Revision 12, section 1.3 (‘‘Generators
planning to connect to the local distribution
systems at locations that are not under FERC
jurisdiction and wish to participate in PJM’s market
need to execute a PJM Wholesale Market
Participation Agreement’’)).
52 Id. (citing PJM Manual 14C: Generation and
Transmission Interconnection Facility
Construction, Revision 12, section 1.3 (‘‘Generators
planning to connect to the local distribution
systems at locations that are not under FERC
jurisdiction and wish to participate in PJM’s market
need to execute a PJM Wholesale Market
Participation Agreement’’); PJM Manual 14A: New
Service Request Process, Revision 20, 4.3
(‘‘Developers interconnecting to non-FERC
jurisdictional facilities who intend on participating
in the PJM wholesale market will receive a three
party agreement known as a [Wholesale Market
Participation Agreement]. The [Wholesale Market
Participation Agreement] is a non-Tariff agreement
which must be filed with the FERC. The [Wholesale
Market Participation Agreement] is essentially an
ISA without interconnection provisions.’’)
(emphasis added)).
53 AMP/APPA/NRECA Rehearing Request at 9;
NARUC Rehearing Request at 3; TAPS Rehearing
Request at 6 n.8 (citing Order No. 2006–A, 113
FERC ¶ 61,195 at P 105).
54 TAPS Rehearing Request at 6 (quoting Order
No. 2006–A, 113 FERC ¶ 61,195 at P 105 (‘‘Order
No. 2006 in no way affects rules adopted by the
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TAPS adds that, while the Commission
has reached into the distribution
systems of public utilities in narrow
circumstances where the purpose of the
interconnection is for wholesale sales
and the distribution facilities at issue
are already subject to the public utility’s
open access transmission tariff (OATT),
facilities behind the retail meter are
plainly beyond the scope of facilities
‘‘included in a public utility’s
Commission-filed OATT.’’ 55 TAPS also
states that, with respect to net metering,
the Commission allows the RERRA to
set the netting interval to determine
whether a distributed resource makes a
net sale of electricity subject to the
Commission’s jurisdiction.56 TAPS
asserts that, because electric storage
resources that rely on energy purchases
to charge always purchase more energy
than they sell, if the RERRA sets a
netting interval for such a resource that
is longer than its charge/discharge cycle,
there does not appear to be a net sale of
electricity from that resource under the
‘‘MidAmerican standard.’’ 57
20. Organization of MISO States
argues that being ‘‘contractually
permitted’’ to inject electric energy back
onto the grid could be interpreted
broadly to include the rules surrounding
operation and interconnection to the
distribution system or narrowly to
address only technical interconnection
rules.58 Organization of MISO States
asks the Commission to clarify that
nothing in Order No. 841 is intended to
impact existing rules related to
interconnection or operation of
resources connected to the distribution
system and that each RTO/ISO may
adopt tariff provisions that require
states for the interconnection of generators with
state jurisdictional facilities. We expect that the vast
majority of small generator interconnections will be
with state jurisdictional facilities. The Commission
encourages development of state interconnection
programs, and interconnections with state
jurisdictional facilities continue to be governed by
state law.’’)).
55 Id. at 6 n.8 (quoting Standardization of
Generator Interconnection Agreements and
Procedures, Order No. 2003–A, 106 FERC ¶ 61,220,
at PP 710, 730, order on reh’g, Order No. 2003–B,
109 FERC ¶ 61,287 (2004), order on reh’g, Order No.
2003–C, 111 FERC ¶ 61,401 (2005), aff’d sub nom.
Nat’l Ass’n of Regulatory Util. Comm’rs v. FERC,
475 F.3d 1277 (D.C. Cir. 2007); Standardization of
Small Generator Interconnection Agreements and
Procedures, Order No. 2006, 111 FERC ¶ 61,220, at
P 481, order on reh’g, Order No. 2006–A, 113 FERC
¶ 61,195 (2005), order granting clarification, Order
No. 2006–B, 116 FERC ¶ 61,046 (2006)).
56 TAPS Rehearing Request at 6 n.9 (citing
MidAmerican Energy Co., 94 FERC ¶ 61,340, at
62,263 (2001); Order No. 2003–A, 106 FERC
¶ 61,220 at P 747; Sun Edison LLC, 129 FERC
¶ 61,146, at P 19 (2009), on reh’g, 131 FERC
¶ 61,213 (2010)).
57 Id. at 6 n.9.
58 Organization of MISO States Rehearing Request
at 5.
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compliance with applicable rules as
confirmed by the distribution utility and
RERRA before an asset can be
authorized to participate in the RTO/
ISO markets.59
21. MISO seeks clarification with
respect to the Commission’s statement
that it did not intend Order No. 841 ‘‘to
affect or implicate the responsibilities of
distribution utilities to maintain the
safety and the reliability of the
distribution system or their use of
electric storage resources on their
systems.’’ MISO requests that the
Commission clarify that each RTO/ISO
may require a distribution-connected
electric storage resource to comply with
interconnection and/or operating
requirements intended to address, to the
reasonable satisfaction of the RTO/ISO,
any potential material adverse reliability
impacts on the distribution system
raised by the relevant local distribution
company. If the Commission declines to
provide this clarification, MISO seeks
rehearing on this issue.
Organization of MISO States similarly
asks the Commission to clarify that an
RTO/ISO may propose tariff provisions
recognizing a unique regional situation
that requires additional RERRA
oversight of resources connected to the
distribution system that participate in
wholesale markets.
b. Whether the Commission Should
Exercise Its Discretion and Adopt an
Opt-Out
22. Several petitioners argue that,
even if the Commission concludes that
it is not required to adopt an electric
storage resource opt-out, the
Commission’s decision not to adopt an
opt-out is an unexplained departure
from Order No. 719, in which the
Commission reasoned that its demand
response resource opt-out properly
balanced the Commission’s goal of
removing barriers to the development of
demand response resources in the
organized wholesale markets with the
interests and concerns of state and local
regulatory authorities.60 EEI contends
that the Commission’s sole reason for
declining to pursue a path of
cooperative federalism by adopting an
opt-out is that distribution-connected
resources already participate in the
wholesale market, which lacks factual
support as to penetration and impact.61
AMP/APPA/NRECA and TAPS claim
that the Commission’s decision in Order
No. 841 not to adopt an opt-out for
59 Id.
at 5–6.
e.g., AMP/APPA/NRECA, EEI, NARUC,
TAPS, and Xcel Energy Services.
61 EEI Rehearing Request at 7 (citing Order No.
841, 162 FERC ¶ 61,127 at P 35).
60 See,
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electric storage resources is arbitrary or
inconsistent because an electric storage
resource may still choose to participate
in RTO/ISO markets as demand
response, in which case it would be
subject to the RERRA opt-out rules.62
23. AMP/APPA/NRECA, EEI, and
TAPS argue that there is a more
compelling argument for the
Commission to adopt an opt-out in
Order No. 841 than there was in Order
No. 719 because electric storage
resources inject power into the
distribution system, thereby creating
more significant operational, safety, and
reliability concerns for retail customer
interconnections and distribution
systems than demand response
resources.63 EEI adds that, in some
regions, the infrastructure, technology
and resources are not in place to
support large numbers of distributionconnected electric storage resources
participating in the wholesale
markets.64 Organization of MISO States
notes that, in AEE, the Commission
cited the distinction between wholesale
energy efficiency resources and demand
response resources, finding that
‘‘[energy efficiency resources] are not
likely to present the same operational
and day-to-day planning complexity.’’ 65
Organization of MISO States argues that
the potential moment-to-moment
changes in utilization of electric storage
resources are more in line with demand
response than energy efficiency.66
24. TAPS asserts that the lack of an
opt-out creates confusion that will
undermine investment and create
market uncertainty.67 Therefore, TAPS
argues that, instead of leaving RERRA
policies to be implemented on a caseby-case basis, the Commission should
provide a straightforward mechanism to
62 AMP/APPA/NRECA Rehearing Request at 14
n.48 (citing Order No. 841, 162 FERC ¶ 61,127 at
P 56; 18 CFR 35.28(g)(1)(iii)); TAPS Rehearing
Request at 4 (citing Order No. 841, 162 FERC
¶ 61,127 at PP 32, 55–56) (arguing that the electric
storage resource owner’s choice of which construct
to use to participate in the RTO/ISO markets should
not strip away the RERRA’s authority that the
Commission has previously recognized).
63 See, e.g., EEI Rehearing Request at 5 (claiming
that the charging and discharging activity of
distribution-connected electric storage resources
could raise complicated interactions between
wholesale and retail market activity that the
distribution utility and RERRA will need to
address); TAPS Rehearing Request at 4 (claiming
that the need for deference is especially high for
behind-the-retail-meter electric storage resources
that may involve retail customers using retail
interconnections to make wholesale purchases and
sales).
64 EEI Rehearing Request at 5.
65 Organization of MISO States Rehearing Request
at 3 (citing Order No. 841, 162 FERC ¶ 61,127 at P
35; AEE, 161 FERC ¶ 61,245 at P 63).
66 Id. at 3.
67 TAPS Rehearing Request at 9.
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enable RTOs/ISOs to implement RERRA
decisions in a systematic and orderly
way.68 TAPS argues that the opt-out
approach afforded for demand response
in Order No. 719 has a proven record
and can be implemented easily by
RTOs/ISOs because they already use the
mechanism for demand response
resources. According to TAPS, this
approach could help avoid the need to
consider disruptive market re-runs or
alternative enforcement mechanisms if
an RTO/ISO accepts supply offers or
demand bids from distributionconnected or behind-the-retail-meter
electric storage resources that are barred
from making such sales or purchases
under state law.69
25. NARUC also expresses concern
that the Commission’s decision not to
adopt an opt-out in Order No. 841 could
inhibit state energy storage initiatives
and posits that adopting an opt-out
would provide clarity that would
advance federal and state policymakers’
shared interest in a resilient electric
system with a diverse resource mix. If
the Commission does not grant
rehearing on the opt-out, NARUC asks
the Commission to defer the
determination of this jurisdictional
issue to Docket No. RM18–9–000.70
26. If the Commission does not grant
rehearing and provide an opt-out for
electric storage resources, Xcel Energy
Services requests that the Commission
allow states, in conjunction with RTOs/
ISOs, to determine the appropriate
minimum capacity threshold at which
electric storage resources connected to
the distribution system or located
behind a retail meter can participate in
wholesale markets.71
c. Other Issues
27. SPP seeks clarification regarding
whether it is the responsibility of the
RTO/ISO to ensure that the necessary
contractual arrangements are in place to
permit an electric storage resource to
inject energy onto the grid, or whether
it is sufficient for an RTO/ISO to require
an electric storage resource to attest that
it has all the necessary contractual
arrangements in place.72 SPP states that
it has taken the attestation approach in
the area of demand response aggregation
and seeks confirmation that such an
approach would be sufficient for SPP to
determine that a facility meets that
particular qualification for an electric
storage resource.73
68 Id.
at 10.
at 11.
70 NARUC Rehearing Request at 9.
71 Excel Energy Services Rehearing Request at 16.
72 SPP Motion for Clarification at 2 (citing Order
No. 841, 162 FERC ¶ 61,127 at P 33), 13.
73 Id. at 2–3.
69 Id.
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28. SPP also seeks clarification that,
while nothing in Order No. 841 requires
an electric storage resource to
participate in an RTO/ISO market, this
does not supersede other reasons
outside of the context of Order No. 841
that an electric storage resource might
be required to comply with provisions
of RTO/ISO tariffs applicable to all
resources and loads.74 SPP argues that
these generally applicable requirements
are critical as they give SPP awareness
of the loads and resources that may exist
within its markets and ensure that its
tariff is administered in a manner that
is not unduly discriminatory to any type
of load or resource.75
29. Finally, AMP/APPA/NRECA
claim that the assertion of jurisdiction
over the purchase of charging energy as
a wholesale sale presupposes that the
electric storage resource may bypass the
distribution utility and purchase
directly from the wholesale market.76
TAPS argues that the Commission does
not have the authority to authorize retail
customers to purchase energy from
entities other than their distribution
utility because the decision to allow a
retail customer to purchase directly
from suppliers other than its retail
utility is a matter of state law or
voluntary choice by the public-utility
distribution company.77
3. Commission Determination
30. We deny rehearing. As a
preliminary matter, we decline to defer
the determination of whether to adopt
an electric storage resource opt-out to
74 Id. at 3 (citing Order No. 841, 162 FERC
¶ 61,127 at P 35). For example, SPP states that it
requires all loads and resources within the SPP
region to register with SPP and it has certain mustoffer requirements that apply to all available
registered resources. SPP also states that it requires
behind-the-meter resources of 10 MW or greater to
register. Id. at 3–4.
75 Id. at 4.
76 AMP/APPA/NRECA Rehearing Request at 10
(citing Order No. 841, 162 FERC ¶ 61,127 at P 294
(requiring that the sale of electric energy from the
RTO/ISO markets to an electric storage resource
that the resource then resells back to those markets
be at the wholesale LMP)).
77 TAPS Rehearing Request at 8 n.11 (citing New
York v. FERC, 535 U.S. 1, 12 n.9, 13, 20, 23 (2002)
(quoting Promoting Wholesale Competition
Through Open Access Non-Discriminatory
Transmission Services by Public Utilities; Recovery
of Stranded Costs by Public Utilities and
Transmitting Utilities, Order No. 888, FERC Stats.
& Regs. ¶ 31,036, at 31,782–83, 31,969 (1996),
(cross-referenced at 77 FERC ¶ 61,080), order on
reh’g, Order No. 888–A, FERC Stats. & Regs.
¶ 31,048, (cross-referenced at 78 FERC ¶ 61,220),
order on reh’g, Order No. 888–B, 81 FERC ¶ 61,248
(1997), order on reh’g, Order No. 888–C, 82 FERC
¶ 61,046 (1998), aff’d in relevant part sub nom.
Transmission Access Policy Study Group v. FERC,
225 F.3d 667 (D.C. Cir. 2000), aff’d sub nom. New
York v. FERC, 535 U.S. 1 (2002)).
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Docket No. RM18–9–000.78 That
proceeding is focused on issues relating
to distributed energy resource
aggregations, while Order No. 841
addresses the participation of nonaggregated electric storage resources in
RTO/ISO markets. We find that the
Commission had sufficient record
evidence before it to determine whether
to adopt an electric storage resource optout, regardless of its decision to gather
more information with respect to its
proposals to remove barriers to the
participation of distributed energy
resource aggregations in RTO/ISO
markets in Docket No. RM18–9–000.79
31. We continue to find that the
Commission’s establishing the criteria
for participation in the RTO/ISO
markets of electric storage resources,
including those resources located on the
distribution system or behind the meter,
is essential to the Commission’s ability
to fulfill its statutory responsibility to
ensure that wholesale rates are just and
reasonable.80 Below, we outline the
relevant precedent with respect to the
Commission’s authority over electric
storage participation in RTO/ISO
markets, and then we address arguments
raised by petitioners and the dissent
concerning the Commission’s decision
not to adopt an electric storage resource
opt-out. Finally, we address arguments
that the Commission does not have
authority to require that the sale of
electric energy from the RTO/ISO
markets to an electric storage resource
that the resource then resells back to
those markets be at the wholesale LMP.
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a. Whether the Commission Must Adopt
an Opt-Out
32. As discussed below, we find that
the FPA and relevant precedent does
not legally compel the Commission to
adopt an opt-out with respect to
participation in RTO/ISO markets by
electric storage resources interconnected
on a distribution system or located
behind a retail meter. FPA section 201 81
authorizes the Commission to regulate
the transmission of electric energy in
interstate commerce and the wholesale
sale of electric energy in interstate
commerce, as well as all facilities used
for such transmission or sale of electric
energy. Section 201 also defines a
public utility as ‘‘any person who owns
or operates facilities subject to the
jurisdiction of the Commission.’’ 82 FPA
78 See
NARUC Rehearing Request at 9.
Order No. 841, 162 FERC ¶ 61,127 at P 5.
80 See id. PP 1, 35.
81 16 U.S.C. 824.
82 Id. 824(e).
79 See
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sections 205 83 and 206 84 provide the
Commission with jurisdiction over all
rates and charges made, demanded, or
received by any public utility for or in
connection with the transmission or sale
of electric energy subject to the
Commission’s jurisdiction. Those
sections also provide the Commission
with jurisdiction over all rules,
regulations, practices, or contracts
affecting jurisdictional rates, charges, or
classifications.
33. In EPSA, the U.S. Supreme Court
interpreted those FPA sections to
uphold the Commission’s jurisdiction
over the participation in RTO/ISO
markets of demand response resources:
A type of non-traditional resource that,
by definition, is located behind a
customer meter and generally is located
on the distribution system.85 The Court
did not find the Commission’s authority
to be lessened by the location of
demand response resources behind the
retail customer meter.
34. First, the Court found that the
Commission’s regulation of demand
response participation in wholesale
markets met the ‘‘affecting’’ standard in
FPA sections 205 and 206 ‘‘with room
to spare.’’ 86 In making this finding, the
Court approved a ‘‘common-sense’’
construction of the FPA’s language,
previously articulated by the U.S. Court
of Appeals for the District of Columbia
Circuit (D.C. Circuit), that ‘‘limit[s] [the
Commission]’s ‘affecting’ jurisdiction to
rules or practices that directly affect the
wholesale rate.’’ 87 The Court then
described, among other considerations,
how RTOs/ISOs employ demand
response bids in competitive auctions
that balance wholesale supply and
wholesale demand and thereby set
wholesale prices. For these reasons, the
Court found that ‘‘[w]holesale demand
response, in short, is all about reducing
wholesale rates; so too, then, the rules
and practices that determine how those
programs operate.’’ 88 The Court
concluded that ‘‘[c]ompensation for
demand response thus directly affects
824d.
824e.
85 See EPSA, 136 S. Ct. 760; 18 CFR 35.28(b)(4)
(defining demand response as ‘‘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’’).
86 EPSA, 136 S. Ct. at 774 (referring to the
Commission’s jurisdiction under FPA sections 205
and 206 to regulate practices affecting jurisdictional
rates).
87 Id. (citing Cal. Indep. Sys. Operator Corp. v.
FERC, 372 F.3d 395, 403 (2004) (internal quotation
marks omitted)).
88 Id. at 774.
wholesale prices. Indeed, it is hard to
think of a practice that does so more.’’ 89
35. Second, the Court found that the
Commission’s regulation of demand
response resources did not regulate
retail sales in violation of FPA section
201(b).90 In making that finding, the
Court rejected EPSA’s arguments that
the Commission (1) effectively regulated
the retail price by increasing effective
retail rates and (2) forced retail
customers to respond to wholesale price
signals for the express purpose of
overriding state policy. Rather, the
Court held that the Commission’s
regulation did ‘‘anything but increase
retail prices’’ and that, ‘‘[i]n promoting
demand response, [the Commission] did
no more than follow the dictates of its
regulatory mission to improve the
competitiveness, efficiency, and
reliability of the wholesale market.’’ 91
36. Finally, the Court stated that the
‘‘finishing blow to both of EPSA’s
arguments comes from [the
Commission]’s notable solicitude
toward the States.’’ 92 Describing and
commenting on the opt-out for states
that the Commission included in Order
No. 745, the Court stated that
the Rule allows any State regulator to
prohibit its consumers from making demand
response bids in the wholesale market.
Although claiming the ability to negate such
state decisions, the Commission chose not to
do so in recognition of the linkage between
wholesale and retail markets and the States’
role in overseeing retail sales. The veto
power thus granted to the States belies
EPSA’s view that FERC aimed to ‘obliterate[ ]’
their regulatory authority or ‘override’ their
pricing policies. And that veto gives States
the means to block whatever ‘effective’
increases in retail rates demand response
programs might be thought to produce.
Wholesale demand response as implemented
in the Rule is a program of cooperative
federalism, in which the States retain the last
word. That feature of the Rule removes any
conceivable doubt as to its compliance with
824(b)’s allocation of federal and state
authority.93
37. Consistent with EPSA, the
Commission found in AEE that,
although the Commission in Order Nos.
719 and 745 granted RERRAs an opt-out
83 Id.
84 Id.
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89 Id.
at 775.
at 784.
91 Id. at 778–79.
92 Id. at 779. Earlier in its decision, the Court
described the Commission’s action as follows:
‘‘Pointing to the Commission’s analysis in Order
No. 719, [Order No. 745] explained that the FPA
gives [the Commission] jurisdiction over such bids
because they directly affect wholesale rates.
Nonetheless, [Order No. 745] noted, [the
Commission] would continue Order No. 719’s
policy of allowing any state regulatory body to
prohibit consumers in its retail market from taking
part in wholesale demand response programs.’’ Id.
at 772.
93 Id. at 779–80 (internal citations omitted).
90 Id.
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from allowing retail customers to
participate as wholesale demand
response, the Commission was not
obligated to do so.94 Like compensation
for demand response, the Commission
held that it has jurisdiction over the
participation of energy efficiency
resources in RTO/ISO markets as a
practice directly affecting wholesale
markets, rates, and prices.95 The
Commission found that, because it has
exclusive jurisdiction to regulate the
participation of energy efficiency
resources in RTO/ISO markets, RERRAs
may not bar, restrict, or otherwise
condition the participation of energy
efficiency resources in RTO/ISO
markets unless the Commission
expressly gives RERRAs such
authority.96 The Commission explained
that, as part and parcel of the
participation of energy efficiency
resources in RTO/ISO markets, the
terms of eligibility of energy efficiency
resource participation in the RTO/ISO
markets has a direct effect on wholesale
rates and that the Commission may set
the terms of transactions occurring in
the RTO/ISO markets, including which
resources are eligible to participate, to
ensure the reasonableness of wholesale
prices and the reliability of the
interstate grid.97 The Commission thus
concluded that a provision directly
restricting retail customers’
participation in RTO/ISO markets, even
if contained in the terms of retail
service, nonetheless intrudes on the
Commission’s jurisdiction over those
markets and prevents the Commission
from carrying out its statutory authority
to ensure that wholesale electricity
markets produce just and reasonable
rates.98
38. Several of these findings are
relevant to the Commission’s decision to
apply Order No. 841 to electric storage
resources, including those connected at
distribution-level voltages or behind the
meter, without adopting an electric
storage resource opt-out.99 The
Commission has exclusive jurisdiction
94 AEE, 161 FERC ¶ 61,245 at P 62 (citing EPSA,
136 S. Ct. at 776).
95 Id. P 60.
96 Id. P 61.
97 Id. (citing EPSA, 136 S. Ct. 760 at 784).
98 AEE Rehearing Order, 163 FERC ¶ 61,030 at P
37 (citing Oneok, Inc. v. Learjet, Inc., 135 S. Ct.
1591, 1600 (2015) (finding that the proper test for
determining whether a state action is preempted is
‘‘whether the challenged measures are ‘aimed
directly at interstate purchasers and wholesalers for
resale’ or not’’) (Oneok) (quoting N. Natural Gas Co.
v. State Corp. Comm’n of Kan., 372 U.S. 84, 94
(1963)); Nantahala Power & Light Co. v. Thornburg,
476 U.S. 953, 970 (finding that ‘‘a State may not
exercise its undoubted jurisdiction over retail sales
to prevent the wholesaler-as-seller from recovering
the costs of paying the FERC-approved rate’’)).
99 See Order No. 841, 162 FERC ¶ 61,127 at P 35.
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over the wholesale markets and the
criteria for participation in those
markets, including the wholesale market
rules for participation of resources
connected at distribution-level voltages
or behind the meter.100 As the
Commission previously has found, the
authority to determine which resources
are eligible to participate in the RTO/
ISO markets is a fundamental
component of the regulation of the RTO/
ISO markets.101 By applying Order No.
841 to electric storage resources
connected at distribution-level voltages
or behind the meter, and by finding that
the Commission is not required to adopt
an electric storage resource opt-out, the
Commission is not specifying any terms
of sale at retail. Rather, the Commission
is merely exercising its authority under
the FPA to ‘‘regulate what takes place in
the wholesale market’’ by ensuring that
technically capable resources are
eligible and able to participate in those
markets.102
39. We disagree with assertions by
petitioners and the dissent that, unless
the Commission adopts an opt-out, the
Commission’s regulation of the RTO/
ISO market participation of distributionconnected and behind-the-meter electric
storage resources violates FPA section
201.103 We find that the Supreme
Court’s jurisdictional findings in EPSA
regarding wholesale demand response
apply with at least as much force to
participation in RTO/ISO markets by
electric storage resources engaged in
wholesale sales in interstate commerce,
even where those resources are
interconnected on a distribution system
or located behind a retail meter. Order
No. 841 directed changes to wholesale
RTO/ISO markets to remove barriers to
the participation of resources that
directly engage in sales for resale under
the FPA, an objective that is at the very
core of the Commission’s jurisdictional
responsibilities. We acknowledge that
the Commission’s actions in Order No.
841 to improve wholesale markets will
have impacts beyond those markets.
However, as the Supreme Court stated
in EPSA, ‘‘[w]hen FERC regulates what
takes place on the wholesale market, as
part of carrying out its charge to
improve how that market runs, then no
100 Id.
P 35 (citing EPSA, 136 S. Ct. 760).
AEE Rehearing Order, 163 FERC ¶ 61,030
101 See
at P 36.
102 See EPSA, 136 S. Ct. at 776.
103 See, e.g., AMP/APPA/NRECA Rehearing
Request at 8; NARUC Rehearing Request at 3; Xcel
Energy Services Rehearing Request at 8; Electric
Storage Participation in Markets Operated by
Regional Transmission Organizations and
Independent System Operators, Order No. 841–A,
167 FERC ¶ 61,154, at PP 5–12 (McNamee, Comm’r,
concurring in part and dissenting in part) (Dissent).
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matter the effect on retail rates, § 824(b)
imposes no bar.’’ 104
40. Further, contrary to the
petitioners’ arguments, the Court’s
jurisdictional conclusion in EPSA did
not rest upon the fact that states were
granted an opt-out. As alluded to above,
the Court described how its ‘‘analysis of
FERC’s regulatory authority proceeds’’
without referring to an opt-out, stating:
First, the practices at issue in the Rule—
market operators’ payments for demand
response commitments—directly affect
wholesale rates. Second, in addressing those
practices, the Commission has not regulated
retail sales. Taken together, those
conclusions establish that the Rule complies
with the FPA’s plain terms.105
When the Court then stated that it
viewed the opt-out merely as the
‘‘finishing blow’’ to EPSA’s already
losing arguments that the Commission
‘‘aimed to obliterate [states’] regulatory
authority or override their pricing
policies,’’ 106 that statement was not a
determinative part of its analysis.107
Thus, we find that the Court’s overall
analysis of the Commission’s
jurisdiction with respect to participation
by demand response resources in RTO/
ISO markets makes clear that the
Commission is not legally compelled to
adopt an opt-out with respect to
participation in RTO/ISO markets by
electric storage resources interconnected
on a distribution system or located
behind a retail meter. Moreover, as the
Commission noted in Order No. 841,
there are already numerous distributionconnected resources participating in the
RTO/ISO markets that are subject to the
RTO/ISO tariffs.108 For these reasons,
contrary to petitioners’ arguments,
EPSA does not require the Commission
104 EPSA,
136 S. Ct. at 776.
at 773. Similarly, after concluding its
discussion of the first of these two points, the Court
stated, ‘‘The above conclusion does not end our
inquiry into the Commission’s statutory authority;
to uphold the Rule, we also must determine that it
does not regulate retail electricity sales.’’ Id. at 775.
106 Id. at 779 (internal quotations omitted).
107 In his dissent, Justice Scalia shared this
understanding of the Court’s analysis, stating,
‘‘Moreover, the rule itself allows States to forbid
their retail customers to participate in the existing
demand response scheme. The majority accepts
FERC’s argument that this is merely a matter of
grace, and claims that it puts the ‘finishing blow’
to respondents’ argument that 16 U.S.C. 824(b)(1)
prohibits the scheme.’’ Id. at 789 (Scalia, J.,
dissenting).
108 Order No. 841, 162 FERC ¶ 61,127 at P 35.
Contrary to EEI’s assertion that this statement lacks
factual support, the Commission cited to wholesale
market participation programs in both PJM and
CAISO. As further evidence that numerous
distribution-connected resources are participating
in the RTO/ISO markets, we note the filing of
Wholesale Market Participation Agreements and
Wholesale Distribution Access Tariffs that allow
such resources to participate in the RTO/ISO
markets.
105 Id.
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to adopt an electric storage resource optout.109
41. We also disagree with assertions
that states can dictate whether resources
are allowed to participate in the RTO/
ISO markets through conditions on the
receipt of retail service.110 We
acknowledge that states have the
authority to include conditions in their
own retail distributed energy resource
or retail electric storage resource
programs that prohibit any participating
resources from also selling into the
RTO/ISO markets. In that scenario, the
owner of a resource has a choice
between participating in the retail
market or wholesale market. However,
states may not take away that choice by
broadly prohibiting all retail customers
from participating in RTO/ISO markets.
As explained above, the Commission
has exclusive jurisdiction over the terms
of eligibility for participation in the
RTO/ISO markets.111 Therefore, such
conditions aimed directly at the RTO/
ISO markets, even if contained in the
terms of retail service, would intrude on
the Commission’s jurisdiction over the
RTO/ISO markets.112 Just as the
Commission cannot issue ‘‘a regulation
compelling every consumer to buy a
certain amount of electricity on the
retail market’’ 113 because such a
regulation would specify terms of sale at
retail, states cannot intrude on the
Commission’s jurisdiction by
prohibiting all consumers from selling
into the wholesale market.
42. We thus also disagree with
petitioners’ arguments that the
requirement in Order No. 841 that an
electric storage resource be
‘‘contractually permitted’’ to inject
electric energy back to the grid gives
RERRAs a ‘‘veto’’ over the participation
in wholesale markets of electric storage
resources that are interconnected to the
109 See, e.g., AMP/APPA/NRECA Rehearing
Request at 10–11; NARUC Rehearing Request at 5–
6.
110 See AMP/APPA/NRECA Rehearing Request at
9; TAPS Rehearing Request at 7–8.
111 See AEE, 161 FERC ¶ 61,245 at P 61.
112 See AEE Rehearing Order, 163 FERC ¶ 61,030
at P 37 (finding that a provision directly restricting
retail customers’ participation in RTO/ISO markets,
even if contained in the terms of retail service,
nonetheless intrudes on the Commission’s
jurisdiction over the wholesale markets). See also
Oneok, 135 S. Ct. at 1600 (finding that the proper
test for determining whether a state action is
preempted is ‘‘whether the challenged measures are
‘aimed directly at interstate purchasers and
wholesalers for resale’ or not’’) (quoting N. Natural
Gas Co. v. State Corp. Comm’n of Kan., 372 U.S.
84, 94 (1963)); Nantahala Power & Light Co. v.
Thornburg, 476 U.S. 953, 970 (finding that ‘‘a State
may not exercise its undoubted jurisdiction over
retail sales to prevent the wholesaler-as-seller from
recovering the costs of paying the FERC-approved
rate’’).
113 EPSA, 136 S. Ct. at 776.
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distribution system or located behind a
retail meter.114 Rather, we clarify that
the requirement to be contractually
permitted to inject energy onto the grid
is intended to ensure that the definition
of electric storage resource does not
encompass any resource that does not
have the requisite permits, agreements,
or other necessary documentation in
place that would ensure its ability to
inject electric energy back to the grid
and therefore engage in a wholesale
sale. As the Commission stated in Order
No. 841, the Commission recognizes a
vital role for the states with respect to
‘‘retail services and matters related to
the distribution system, including
design, operations, power quality,
reliability, and system costs.’’ 115 We
acknowledge that states have
jurisdiction over the interconnections of
certain resources to the distribution
system and the requirements reasonably
related to those interconnections, such
as a requirement to upgrade the
distribution system to facilitate the
injection of electric energy back to the
grid, a requirement to install certain
technologies to mitigate a reliability or
safety concern, or a charge for wholesale
distribution service. We further
understand that interconnection
agreements may include technical
requirements to safeguard against
reliability or safety concerns, such as
utility curtailment and anti-islanding
provisions, or requirements to install
equipment that forces resources to trip
offline during extreme frequency,
voltage, or fault current incidents.
Indeed, such requirements could
address the concerns raised by
petitioners regarding the physical and
operational impacts of electric storage
resources on the distribution system.
However, a broad prohibition on
participating in the RTO/ISO markets is
not reasonably related to the
interconnection of a particular resource
to the distribution system. We therefore
disagree with assertions that state
authority over certain interconnections
necessitates that the Commission adopt
an opt-out for electric storage resources
connected to the distribution system or
behind the meter.
43. We also are not persuaded by Xcel
Energy Services’ assertion that, unlike
the ‘‘indirect’’ effects permitted in
EPSA, Order No. 841 directly affects
retail sales because it ‘‘fundamentally
changes how retail sales occur and
directly interferes with a state’s ability
114 See, e.g., AMP/APPA/NRECA Rehearing
Request at 6; NARUC Rehearing Request at 7–8;
TAPS Rehearing Request at 6.
115 Order No. 841, 162 FERC ¶ 61,127 at P 36.
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to regulate retail sales.’’ 116 The Court in
EPSA recognized that, because the
wholesale and retail markets are not
‘‘hermetically sealed,’’ Commission
regulation of the ‘‘wholesale market
ha[s] natural consequences at the retail
level.’’ 117 The Court concluded,
however, that when the Commission
‘‘regulates what takes place on the
wholesale market, as part of carrying out
its charge to improve how that market
runs,’’ the effects on the retail market
have ‘‘no legal consequence’’ and FPA
section 201 ‘‘imposes no bar’’ on the
Commission’s action.118
44. Like the Commission’s regulation
of demand response participation in the
wholesale market, Order No. 841
‘‘addresses—and addresses only—
transactions occurring on the wholesale
market.’’ 119 In addition, as with Order
No. 745, the Commission’s justifications
for Order No. 841 ‘‘are all about, and
only about, improving the wholesale
market.’’ 120 And, just as the Court
explained with respect to demand
response, the Commission did not
‘‘invent’’ wholesale market participation
of electric storage resources and the
practice did not emerge as a
‘‘Commission power grab.’’ 121 Rather
‘‘the impetus came from wholesale
market operators’’ that ‘‘sought, and
obtained, [the Commission’s] approval
to institute such programs.’’ 122
Accordingly, Order No. 841 does not
regulate retail sales and the effects that
the order may have on retail sales are of
‘‘no legal consequence.’’ 123
45. Contrary to Xcel Energy Services’
contention that Order No. 841 requires
distribution utilities to establish
expensive processes to assist the market
participation of distribution-connected
and behind-the-meter electric storage
resources, the Commission is not
imposing any new requirements on
distribution utilities to enable the
participation of electric storage
resources in RTO/ISO markets. To the
extent that distribution utilities do incur
costs associated with enabling such
116 See
Xcel Energy Services Rehearing Request at
7.
117 EPSA,
136 S. Ct. at 776.
(‘‘When FERC sets a wholesale rate, when
it changes wholesale market rules, when it allocates
electricity as between wholesale purchasers—in
short, when it takes virtually any action respecting
wholesale transactions—it has some effect, in either
the short or the long term, on retail rates. That is
of no legal consequence.’’).
119 Id.
120 Id. at 779.
121 Id.
122 Id. See, e.g., Midwest Indep. Trans. Sys.
Operator, Inc., 129 FERC ¶ 61,303 (2009); New York
Indep. Sys. Operator, Inc., 127 FERC ¶ 61,135
(2009); California Indep. Sys. Operator Corp., 132
FERC ¶ 61,211 (2010).
123 EPSA, 136 S. Ct. at 776.
118 Id.
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participation, the Commission is also
not changing the ability of distribution
utilities to allocate any costs that they
incur in operating and maintaining their
respective power systems.124 In any
event, any additional costs imposed on
distribution utilities could be
outweighed by the overall benefits from
increased competition due to greater
participation of electric storage
resources in RTO/ISO markets.
46. In response to Xcel Energy
Services’ argument that Order No. 841
interferes with state regulation of the
reliability of the distribution system and
MISO’s request to clarify that each RTO/
ISO may require a distributionconnected electric storage resource to
comply with interconnection or
operating requirements to address any
potential material adverse reliability
impacts on the distribution system, we
reiterate that nothing in Order No. 841
preempts the states’ right to regulate the
safety and reliability of the distribution
system and that all electric storage
resources must comply with any
applicable interconnection and
operating requirements. As noted above,
we understand that electric storage
resources located on the distribution
system are subject to various technical
requirements that should help alleviate
any concerns related to the safety and
reliability of the distribution system due
to RTO/ISO dispatch. As to Xcel Energy
Services’ concern that a distribution
utility’s retail sale to its customer could
become a wholesale sale if that
customer participates in the wholesale
markets and sells more than it
purchases for a billing period, we find
that concern regarding a distribution
utility’s sale of energy to an electric
storage resource to be outside the scope
of this proceeding. The Commission’s
findings in Order No. 841 are limited to
sales in RTO/ISO markets and do not
address what retail customers may do
with energy purchased at retail.125
47. The dissent suggests that today’s
order ‘‘mandates’’ that electric storage
resources ‘‘be permitted to use
distribution facilities so that they may
access the wholesale market.’’ 126 That is
incorrect. As explained above, Order
No. 841 addressed only the rules
governing electric storage resources’
124 See
Order No. 841, 162 FERC ¶ 61,127 at P
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274.
125 Moreover, to the extent that Xcel Energy
Services is concerned that retail customers could
attempt to make purchases under a state-regulated
retail tariff and then sell that energy into the
Commission-jurisdictional wholesale market,
nothing in Order No. 841 prevents states from
prohibiting the resale of energy purchased under a
retail tariff in the terms and conditions of retail
service.
126 Dissent at P 5.
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participation in the wholesale
market.127 Order No. 841 did not
mandate that electric storage resources
must have access to the distribution
system. Instead, Order No. 841
concluded that states cannot directly
prohibit electric storage resources from
participating in the wholesale market
because doing so would invade the
Commission’s ‘‘exclusive jurisdiction
over the wholesale markets and the
criteria for participation in those
markets.’’ 128 In reaching that
conclusion, the Commission recognized
explicitly, as it must, that the states
have authority to regulate the
distribution system, ‘‘including [its]
design, operations, power quality,
reliability, and system costs.’’ 129
48. The dissent also characterizes
today’s order as ‘‘hav[ing] the effect of
directing that [electric storage resources]
have access to distribution
facilities.’’ 130 That too is incorrect.
Although Order No. 841 provides that
states may not prohibit electric storage
resources from participating in
wholesale markets,131 that requirement
does not amount to an effective right of
access to the distribution system
itself.132 As noted, Order No. 841 does
not modify states’ authority to regulate
the distribution system, including the
terms of access, provided that they do
not ‘‘aim[ ] directly at the RTO/ISO
markets.’’ 133 Consistent with the FPA’s
cooperative federalist foundation, where
electric storage resources interconnected
with the distribution system are
participating in RTO/ISO markets, it
will be under circumstances that are
consistent with states’ authority to
regulate the distribution system.
Accordingly, Order No. 841 does not
amount to regulation of the distribution
system, effectively or otherwise.134
127 See supra P 44 (‘‘[A]s with Order No. 745, the
Commission’s justifications for Order No. 841 ‘are
all about, and only about, improving the wholesale
market.’ ’’ (quoting EPSA, 136 S. Ct. at 779)).
128 See supra P 38; supra P 41 (explaining that
‘‘conditions aimed directly at the RTO/ISO markets,
even if contained in the terms of retail service,
would intrude on the Commission’s jurisdiction
over the RTO/ISO markets’’ (citing Oneok, 135 S.
Ct. at 1600)).
129 Order No. 841, 162 FERC ¶ 61,127 at P 36.
130 Dissent at n.18.
131 See supra PP 38, 41.
132 To paraphrase the Court in EPSA, the word
‘‘effect[ ] is doing quite a lot of work in that
argument.’’ EPSA, 136 S. Ct. at 777.
133 See supra PP 38, 41.
134 In addition, the D.C. Circuit has held that the
Commission properly may exercise jurisdiction
with respect to distribution facilities in certain
circumstances. See Nat’l Ass’n of Regulatory Util.
Comm’rs v. FERC, 475 F.3d 1277 at 1282. Like the
orders in that case, Order No. 841 also ‘‘leave[s]
state law completely undisturbed’’ and thus the
Commission is not impermissibly
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49. Some petitioners cite the
Commission’s interconnection policies
generally to argue that the Commission
must adopt an electric storage resource
opt-out.135 However, Order No. 841 did
not reform or address any procedures
pertaining to the interconnection of
resources to transmission or distribution
facilities. The Commission cited to
certain RTO/ISO interconnection and
market participation procedures, but
merely to demonstrate that many
distribution-connected resources are
currently participating in those
markets.136 As the Commission found in
Order No. 841, an electric storage
resource that injects electric energy back
into the grid for purposes of
participating in an RTO/ISO market
engages in a sale of electric energy at
wholesale in interstate commerce 137
and the sale of charging energy to an
electric storage resource that the
resource then resells into an RTO/ISO
market is also a sale for resale in
interstate commerce.138
b. Whether the Commission Should
Exercise Its Discretion and Adopt an
Opt-Out
50. We also disagree that the
Commission’s decision not to exercise
its discretion and adopt an opt-out in
Order No. 841 is an unexplained
departure from the demand response
resource opt-out adopted in Order No.
719.139 As the Commission explained in
AEE, Order No. 719 expressly provided
that it only applies to demand response
resources;140 therefore, the
Commission’s decision not to adopt an
electric storage resource opt-out is not a
change in policy.141
‘‘commandeering’’ the states, as the dissent argues.
Id. at 1283.
135 See, e.g., AMP/APPA/NRECA Rehearing
Request at 9; NARUC Rehearing Request at 3; TAPS
Rehearing Request at 6 n.8 (citing the Commission’s
acknowledgment in Order No. 2006–A that the vast
majority of distribution-level interconnections are
subject to state jurisdiction); Xcel Energy Services
Rehearing Request at 10 (arguing that Order No. 841
will convert distribution facilities into Commissionregulated transmission facilities for interconnection
purposes).
136 See Order No. 841, 162 FERC ¶ 61,127 at P 35
n.56.
137 Id. P 26.
138 See id. P 295.
139 See EEI Rehearing Request at 7; NARUC
Rehearing Request at 3; TAPS Rehearing Request at
3–4; Xcel Energy Services Rehearing Request at 13–
15.
140 AEE, 161 FERC ¶ 61,245 at P 65.
141 Even if it were a policy change, the
Commission ‘‘need not demonstrate . . . that the
reasons for the new policy are better than the
reasons for the old one; it suffices that the new
policy is permissible under the statute, that there
are good reasons for it, and that the agency believes
it to be better.’’ FCC v. Fox Television Stations, 556
U.S. 502, 513 (2009).
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51. Further, the resources that will
use the electric storage resource
participation model under Order No.
841 differ significantly from the demand
response resources at issue in Order No.
719. Most notably, unlike demand
response, electric storage resources are
capable of engaging in sales for resale of
electricity and those electric storage
resources making sales in the RTO/ISO
markets are public utilities subject to
the Commission’s jurisdiction.142
52. In addition, unlike in the case of
demand response resources, RERRAs
and distribution utilities do not have a
longstanding history of managing and
regulating programs for electric storage
resources within their boundaries. Prior
to the Commission’s issuance of Order
No. 719, many RERRAs supported the
use of demand response resources in
their boundaries, either requiring the
distribution utilities that they regulate
to establish demand response programs
and compensate retail customers for
their participation, or approving
distribution utility-developed demand
response programs. Such entities were
concerned that, as a result of Order No.
719, the ‘‘best’’ demand response
resources would choose to participate in
the wholesale markets instead of retail
programs, depriving load serving
entities of important resources used to
keep rates down for all consumers.143
The Commission adopted the opt-out in
Order No. 719 in part to help address
that concern.144 With respect to electric
storage resources, fewer states have
policies that involve electric storage
resources, and those policies that exist
were implemented fairly recently.145
Accordingly, we find that the record in
these proceedings does not indicate that
142 See Order No. 841, 162 FERC ¶ 61,127 at P 30
(observing that an electric storage resource that
injects electric energy back to the grid for purposes
of participating in an RTO/ISO market engages in
a sale of electric energy at wholesale in interstate
commerce and must fulfill certain responsibilities
set forth in the FPA and the Commission’s rules and
regulations); EnergyConnect, Inc., 130 FERC
¶ 61,031, at P 30 (2010) (finding that an entity only
engaged in the provision of demand response
services that makes no sales of electric energy for
resale would not be a public utility required to have
a rate on file with the Commission).
143 See Order No. 719, 125 FERC ¶ 61,071 at P
141.
144 See id. P 155 (explaining that ‘‘[t]he
Commission’s intent was not to interfere with the
operation of successful demand response
programs’’).
145 For instance, among the many comments on
the NOPR submitted by various state agencies and
representatives, only California, Connecticut,
Massachusetts and New York mentioned any
specific state electric storage initiatives. See
California Commission Comments (RM16–23–000)
at 4–5, 10–13; Connecticut Commission Comments
(RM16–23–000) at 4–5; Massachusetts Commission
Comments (RM16–23–000) at 3, 6–8; New York
Commission Comments (RM16–23–000) at 8.
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a comparable opt-out is appropriate for
energy storage resources.
53. We further reject AMP/APPA/
NRECA’s and TAPS’s argument that,
because an electric storage device may
choose to participate in RTO/ISO
markets as demand response and thus
become subject to opt-out rules, the
Commission’s decision not to adopt an
electric storage resource opt-out is
arbitrary or inconsistent.146 As the
Commission stated in Order No. 841,
participation by demand response
resources in an RTO/ISO market does
not involve a sale of electric energy at
wholesale in interstate commerce.147
Although electric storage resources
participate in the RTO/ISO markets by
injecting electric energy back to the grid,
demand response participates in the
RTO/ISO markets as a ‘‘reduction in the
consumption of electricity.’’ 148
Therefore, when an electric storage
device chooses to participate in the
RTO/ISO markets as demand response,
it is not participating as an ‘‘electric
storage resource’’ or injecting electricity
onto the grid and should not be subject
to the market rules applicable to electric
storage resources. Accordingly, because
demand response and electric storage
resources have differing ways of
interacting with RTO/ISO markets and
are subject to different market rules, it
is not arbitrary or inconsistent for the
Commission to take different policy
approaches when integrating those
resources into the RTO/ISO markets.
54. We also disagree with
Organization of MISO States’ argument
that electric storage resources are more
similar to demand response resources
than energy efficiency resources due to
the operational challenges that they
present and therefore the Commission
should adopt an opt-out here.149 As
discussed above, electric storage
resources are capable of engaging in
sales for resale of electricity, and those
electric storage resources making sales
in the RTO/ISO markets are public
utilities subject to the Commission’s
jurisdiction. These characteristics
distinguish electric storage resources
making sales in the RTO/ISO markets
from both demand response resources
and energy efficiency resources.
55. In response to TAPS’ concern
about whether there is a net sale of
electricity from an electric storage
resource under the MidAmerican
standard, we note that MidAmerican
146 See AMP/APPA/NRECA Rehearing Request at
14 n.48; TAPS Rehearing Request at 4.
147 See EnergyConnect, Inc., 130 FERC ¶ 61,031 at
P 30.
148 18 CFR 35.28(b)(4).
149 See Organization of MISO States Rehearing
Request at 3.
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applies only to retail customers
participating in retail net metering
programs, which is consistent with the
Commission’s acknowledgement in
Order No. 841 that injections of electric
energy back to the grid do not
necessarily trigger the Commission’s
jurisdiction.150 If an electric storage
resource were to participate in a retail
net metering program and in the RTO/
ISO markets—which the Commission
did not prohibit in Order No. 841—
Commission jurisdiction would arise
only where the electric storage resource
participates in the wholesale market by
making a Commission-jurisdictional
sale for resale. It would be the
responsibility of the RTO/ISO to
establish metering and accounting
practices to measure which actions
taken by that electric storage resource
are wholesale actions in the RTO/ISO
markets.151
56. We recognize, as did the Court in
EPSA, that sales for resale of electricity
necessarily have effects on the
distribution system.152 We have
considered those effects in evaluating
whether to exercise our discretion to
grant an opt-out, but find that the
benefits of allowing electric storage
resources broader access to the
wholesale market outweigh any policy
considerations in favor of an opt-out. In
particular, Order No. 841 found that the
benefits of removing barriers to the
participation of electric storage
resources in RTO/ISO markets are
significant and, in light of those
benefits, we are not persuaded to adopt
an opt-out that could limit that
participation. In addition, as discussed
in the preceding section, there are
several ways that RERRAs may address
any concerns about effects on the
distribution system without broadly
prohibiting the participation of
distribution-connected and behind-themeter resources in RTO/ISO markets.
c. Other Issues
57. Finally, we deny rehearing
regarding the Commission’s authority to
require that the sale of electric energy
from the RTO/ISO markets to an electric
storage resource that the resource then
resells back to those markets be at the
wholesale LMP. We find to be
misplaced suggestions that Order No.
841 ‘‘authorizes’’ retail customers (in
this case, electric storage resources) to
purchase energy from entities other than
their distribution utility or ‘‘entitles’’
electric storage resources to bypass the
150 See
Order No. 841, 162 FERC ¶ 61,127 at P 30
n.49.
151 See
152 See
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distribution utility by purchasing from
the RTO/ISO market.153 The
Commission is not preempting
distribution utilities’ franchised right to
continue to make retail sales to their
retail customers, as Xcel Energy
Services suggests.
58. First, an electric storage resource
purchasing charging energy directly
from the RTO/ISO markets that it will
resell back to those markets is not a
retail customer making a purchase of
retail energy but rather is a public utility
engaging in a wholesale purchase and a
wholesale sale.154 Therefore, such a
purchase of charging energy from the
RTO/ISO markets does not infringe
upon a distribution utility’s right to sell
at retail because that energy will be
resold in the RTO/ISO markets.
59. Second, in Order No. 841, the
Commission did not purport to
authorize electric storage resources who
are retail customers to bypass their
distribution utilities and make
purchases of energy directly from RTO/
ISO markets. Order No. 841 does not
require electric storage resources to
participate in the RTO/ISO markets; it
only directs RTOs/ISOs to adopt market
rules that apply to electric storage
resources that voluntarily seek to
participate in the RTO/ISO markets.
Furthermore, Order No. 841 only
addresses sales for resale; for this
reason, the Commission only addressed
pricing issues related to the wholesale
sales addressed therein and did not
preclude other options for electric
storage resources to obtain charging
energy.155
60. To further eliminate the potential
for confusion on this point, we clarify
that, in declining requests to allow
states to decide whether electric storage
resources in their state that are located
behind a retail meter or on the
distribution system are permitted to
‘‘participate’’ in the RTO/ISO markets
through the electric storage resource
participation model, the Commission
was referring to the ability of electric
storage resources to sell into the RTO/
ISO markets. Given this clarification, we
also dismiss as moot the argument that
there is inconsistency between the
Commission’s finding that an RTO/ISO
is prevented from charging a resource
wholesale rates if the host distribution
153 See
AMP/APPA/NRECA Rehearing Request at
10; TAPS Rehearing Request at 8 n.11; Xcel Energy
Services Rehearing Request at 8.
154 Because such a resource is making wholesale
sales in interstate commerce, it is a public utility
that must fulfill certain responsibilities set forth in
the FPA and the Commission’s rules and
regulations. See Order No. 841, 162 FERC ¶ 61,127
at P 30.
155 Id. P 299.
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utility is unable or unwilling to net out
wholesale energy purchases and the
Commission’s decision to decline to
adopt an opt-out.156
61. In response to SPP’s request for
clarification regarding whether it is
sufficient for an RTO/ISO to require an
electric storage resource to attest that it
has all the necessary contractual
arrangements in place to permit that
resource to inject energy onto the
grid,157 we clarify that Order No. 841
did not specify how an RTO/ISO must
determine whether a particular resource
seeking to participate in its markets
qualifies as an electric storage resource
under the definition set forth therein.
Therefore, we clarify for SPP that, on
compliance, it may propose the
attestation approach that it has taken for
demand response. Based on the full
record before it, the Commission will
consider on compliance whether
allowing a resource to attest that it
meets the definition of electric storage
resources, including the associated
requirement that it be contractually
permitted to inject energy onto the grid,
is just and reasonable.
62. In response to Organization of
MISO States’ request for clarification
that RTOs/ISOs may propose tariff
provisions that require electric storage
resources to comply with applicable
RERRA and distribution utility rules, we
note that any resources subject to a
RERRA’s jurisdiction must comply with
that RERRA’s rules assuming that such
rules do not conflict with the
requirements of Order No. 841 (e.g., by
placing a broad prohibition on
participating in the RTO/ISO
markets).158 Similarly, in response to
SPP’s request for clarification regarding
whether the requirements of Order No.
841 supersede RTO/ISO tariff provisions
that apply to all resources, we clarify
that the requirements of Order No. 841
do not absolve electric storage resources
from complying with RTO/ISO tariff
provisions of general applicability as
long as those tariff provisions do not
conflict with the requirements of Order
No. 841.
B. Participation Model for Electric
Storage Resources
1. Final Rule
63. In Order No. 841, the Commission
added § 35.28(g)(9)(i) to the
Commission’s regulations to require
each RTO/ISO to revise its tariff to
156 See AMP/APPA/NRECA Rehearing Request at
6; TAPS Rehearing Request at 7 (citing Order No.
841, 162 FERC ¶ 61,127 at P 326).
157 SPP Motion for Clarification at 2 (citing Order
No. 841, 162 FERC ¶ 61,127 at P 33), 13.
158 See id. at 5–6.
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include a participation model consisting
of market rules that, recognizing the
physical and operational characteristics
of electric storage resources, facilitates
their participation in the RTO/ISO
markets.159 In adopting this
requirement, the Commission stated that
it was not convinced by commenters
who argued that separate participation
models are necessary for different types
of electric storage resources (e.g.,
slower, faster, or aggregated).160
Specifically, the Commission noted that
it believed that the physical differences
between electric storage resources can
be represented by complying with the
final rule’s requirements for bidding
parameters 161 and that a single
participation model can be designed to
be flexible enough to accommodate any
type of electric storage resource.
However, the Commission stated that, to
the extent an RTO/ISO seeks to include
in its tariff additional market rules that
accommodate electric storage resources
with specific physical and operational
characteristics, the RTO/ISO may
propose such revisions to its tariff
through a separate FPA section 205
filing.162
2. Requests for Rehearing or
Clarification
64. In their rehearing request, AES
Companies argue that there are
significant differences in operating
characteristics, such as response speeds,
among the technologies that fall under
Order No. 841’s definition of an electric
storage resource. According to AES
Companies, legacy RTO/ISO software is
incapable of supporting a participation
model that all such technologies can
use, and the RTOs/ISOs cannot
anticipate all yet-to-be-developed
technologies. AES Companies therefore
argue that, because multiple
participation models are needed to
remove the barriers to the participation
of electric storage resources that the
Commission identified in Order No.
841, the Commission’s directive to each
RTO/ISO to establish a single
participation model for all electric
storage resources is an impossible task,
invariably excluding some resources.
AES Companies add that the
Commission’s statement that an RTO/
ISO may propose additional market
159 Order
No. 841, 162 FERC ¶ 61,127 at P 51.
P 54.
161 In Order No. 841, the Commission added
§ 35.28(g)(9)(i)(C) to the Commission’s regulations
to require each RTO/ISO to have tariff provisions
providing a participation model for electric storage
resources that accounts for the physical and
operational characteristics of electric storage
resources through bidding parameters or other
means. Id. P 191.
162 Id. P 54 (referencing 16 U.S.C. 824d).
160 Id.
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rules to accommodate electric storage
resources with specific physical and
operational characteristics through a
separate FPA section 205 filing is
insufficient to address these
concerns.163
provisions that enable electric storage
resources to provide capacity, it must
propose such rules on compliance.
3. Commission Determination
65. We deny AES Companies’ request
for rehearing. While we agree with AES
Companies that the various technologies
that qualify as an electric storage
resource under the definition that the
Commission adopted in the final rule
may have different operating
characteristics and that new electric
storage technologies will likely emerge,
we continue to find that a single
participation model can be designed to
be flexible enough to accommodate any
type of electric storage resource.164
Specifically, Order No. 841’s
requirement that each RTO/ISO must
establish tariff provisions providing a
participation model for electric storage
resources that accounts for the physical
and operational characteristics of
electric storage resources through
bidding parameters or other means
should allow for the representation of
the physical and operational differences
between different types of electric
storage resources. For this reason, we
remain unpersuaded that the
Commission must require separate
participation models for different types
of electric storage resources to remove
barriers to their participation in RTO/
ISO markets.
67. SPP seeks clarification that Order
No. 841 does not require an RTO/ISO to
create and provide a capacity product
that an RTO/ISO market does not
otherwise offer, noting that SPP does
not currently operate a forward capacity
market or offer capacity as a biddable
product on its system.167
2. Requests for Rehearing or
Clarification
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C. Eligibility of Electric Storage
Resources To Participate in the RTO/
ISO Markets
1. Final Rule
66. Order No. 841 added
§ 35.28(g)(9)(i)(A) to the Commission’s
regulations to require each RTO/ISO to
establish market rules so that a resource
using the participation model for
electric storage resources is eligible to
provide all capacity, energy, and
ancillary services that it is technically
capable of providing, including services
that the RTOs/ISOs do not procure
through an organized market.165 While
noting that there is significant variation
in how each RTO/ISO approaches
resource adequacy, the Commission
found that it is important for electric
storage resources that can provide value
in those resource adequacy constructs to
be eligible to participate.166 The
Commission further stated that, if an
RTO/ISO does not have existing tariff
3. Commission Determination
68. We grant SPP’s request for
clarification. Order No. 841 does not
require an RTO/ISO that does not have
a capacity product in its markets to
create such a product to comply with
the final rule. However, to the extent
that an RTO/ISO has a resource
adequacy construct, the RTO/ISO must
demonstrate on compliance that the
existing market rules governing its
resource adequacy construct provide a
means for electric storage resources to
participate in that construct if electric
storage resources are technically capable
of doing so.168
D. Participation in the RTO/ISO Markets
as Supply and Demand
1. Eligibility To Participate as a
Wholesale Seller and Wholesale Buyer
a. Final Rule
69. In Order No. 841, the Commission
added § 35.28(g)(9)(i)(B) to the
Commission’s regulations to require
each RTO/ISO to revise its tariff to
ensure that a resource using the
participation model for electric storage
resources can be dispatched as supply
and demand and can set the wholesale
market clearing price as both a
wholesale seller and wholesale buyer,
consistent with rules that govern the
conditions under which a resource can
set the wholesale price.169 The
Commission found that, for a resource
using the participation model for
electric storage resources to be able to
set prices in the RTO/ISO markets as
either a wholesale seller or a wholesale
buyer, it must be available to the RTO/
ISO as a dispatchable resource.
Moreover, the Commission required that
resources using the participation model
for electric storage resources must be
allowed to participate in the RTO/ISO
markets as price takers, consistent with
the existing rules for self-scheduled
resources.
70. Additionally, the Commission
required in Order No. 841 that RTOs/
ISOs must accept wholesale bids from
resources using the participation model
for electric storage resources to buy
energy.170 The Commission further
stated that allowing electric storage
resources to participate in the RTO/ISO
markets as dispatchable load will allow
these resources to set the market
clearing price under certain
circumstances, thus better reflecting the
value of the marginal resource and
ensuring that electric storage resources
are dispatched in accordance with the
highest value service that they are
capable of providing during a set market
interval.171
b. Requests for Rehearing or
Clarification
71. AES Companies seek rehearing of
what they construe as Order No. 841’s
requirement that all resources using an
RTO’s/ISO’s participation model for
electric storage resources be
dispatchable, citing to the Commission’s
determinations in Order No. 841 that (1)
to set prices in the RTO/ISO markets as
either a wholesale seller or a wholesale
buyer, a resource using the participation
model for electric storage resources
must be available to the RTO/ISO as a
dispatchable resource and (2) an electric
storage resource participation model
must ensure that a resource using it can
be dispatched.172 AES Companies argue
that these requirements codify the
existing unjust, unreasonable, unduly
discriminatory and preferential status
quo that prevents resources that provide
services automatically from
participating in RTO/ISO markets
without risking the physical damage to
their equipment that can occur if they
are subject to RTO/ISO dispatch. AES
Companies argue that, contrary to Order
No. 841’s statement that a participation
model for electric storage resources
must recognize the physical and
operational characteristics of electric
storage resources, predicating
participation on dispatchability fails to
recognize the physical and operational
characteristics of these electric storage
resources.173
72. In addition, AES Companies argue
that Order No. 841 unreasonably limits
its application of the term ‘‘dispatch’’ to
an activity performed exclusively by
RTO/ISO software. According to AES
170 See
163 AES
Companies Rehearing Request at 11–13.
164 Order No. 841, 162 FERC ¶ 61,127 at P 54.
165 Id. P 76.
166 Id. P 100.
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167 SPP
Motion for Clarification at 4–5.
168 Order No. 841, 162 FERC ¶ 61,127 at P 76. See
also id. P 100.
169 See id. P 142.
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id.
id. P 143.
172 AES Companies Rehearing Request at 7 (citing
Order No. 841, 162 FERC ¶ 61,127 at PP 142, 4).
173 Id. at 8–11.
171 See
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Companies, the term ‘‘dispatch’’ should
instead be ‘‘inclusive of scheduling an
electric storage resource to operate
autonomously, and ordered outside of
the RTO/ISO software by the Reliability
Coordinator.’’ 174
73. SPP seeks clarification that Order
No. 841 will not require an RTO/ISO
that does not currently offer a real-time
dispatchable load service, such as SPP,
to create a new service to dispatch an
electric storage resource as load or
negative generation. To the extent that
Order No. 841 requires the development
of such a new service, SPP asks whether
the Commission will provide each RTO/
ISO with flexibility to develop such
service consistent with its existing
market design constructs, with a full
opportunity to evaluate the potential
system impacts, and with flexibility to
propose its own timeline for developing
and implementing such a service.175
c. Commission Determination
74. In their rehearing request, AES
Companies argue that Order No. 841
requires a resource seeking to
participate in RTO/ISO markets under
the electric storage resource
participation model to be available to
the RTO/ISO as a dispatchable resource.
We disagree with this characterization
of Order No. 841’s requirements and
thus, deny AES Companies’ request for
rehearing. However, we find it is
necessary to modify § 35.28(g)(9)(i)(B) of
the Commission’s regulations to clarify
that, to the extent electric storage
resources are dispatchable, the RTO/ISO
is required to allow them to participate
as dispatchable resources and to set the
clearing price in the RTO/ISO markets
as part of the participation model. We
clarify that not all electric storage
resources that seek to use the electric
storage resource participation model
need to be dispatchable to use that
participation model.
75. Order No. 841 added
§ 35.28(g)(9)(i)(B) to the Commission’s
regulations to require each RTO/ISO to
revise its tariff to provide a participation
model for electric storage resources that
ensures that a resource using the
participation model can be dispatched
and can set the wholesale market
clearing price.176
76. We clarify here that this
requirement was not intended to require
that a resource using the participation
model for electric storage resources be
dispatchable. Rather, by stating that this
was to be ‘‘consistent with rules that
174 Id.
at 9.
Motion for Clarification at 5–6.
176 18 CFR 35.28(g)(9)(i)(B); Order No. 841, 162
FERC ¶ 61,127 at P 142.
175 SPP
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govern the conditions under which a
resource can set the wholesale price,’’
Order No. 841 requires each RTO/ISO to
revise its tariff to include a participation
model for electric storage resources
enabling the RTO/ISO to dispatch a
resource using that model to the extent
that the resource has indicated to the
RTO/ISO, whether through its offers to
sell or bids to buy or some other
mechanism, that it desires to be
dispatchable. Our clarification is
consistent with Order No. 841’s findings
that (1) resources using the participation
model for electric storage resources
must be allowed to participate in the
RTO/ISO markets as price takers,
consistent with the existing market rules
for self-scheduled resources 177 and (2)
to ensure consistent treatment in the
RTO/ISO markets, electric storage
resources must maintain the same
ability to self-schedule their resource as
other market participants.178
77. To remove the ambiguity, we
revise § 35.28(g)(9)(i)(B) of the
Commission’s regulations to require
each RTO/ISO to revise its tariff to
provide a participation model for
electric storage resources that enables a
resource using the participation model
for electric storage resources to be
dispatched and ensures that such a
dispatchable resource can set the
wholesale market clearing price.
78. This modification clarifies that
each RTO/ISO is required to allow
resources using the participation model
for electric storage resources to
participate in the RTO/ISO markets as
dispatchable resources, not that such
resources must be dispatchable to use
that participation model. We reiterate,
however, that the Commission will
continue to require that resources using
the participation model for electric
storage resources can only set prices in
the RTO/ISO markets as either a
wholesale seller or a wholesale buyer if
they are available to the RTO/ISO as a
dispatchable resource.179
79. AES Companies request that the
Commission expand our use of the term
dispatch beyond those ‘‘activities
performed by RTO/ISO software.’’
However, as clarified above, Order No.
841 only required that each RTO/ISO
must be capable of dispatching
resources using the participation model
for electric storage resources and allow
such dispatchable resources to set prices
in the RTO/ISO markets. Given this
clarification, we do not find it necessary
to expand our use of the term dispatch
177 See
Order No. 841, 162 FERC ¶ 61,127 at P
142.
178 See
179 See
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23915
beyond RTO/ISO activities, as requested
by AES Companies.
80. We deny SPP’s request for
clarification that it need not revise its
market rules to allow for dispatchable
load. In Order No. 841, the Commission
required each RTO/ISO to create a
participation model for electric storage
resources that ensures that a resource
using that model can be dispatched as
a wholesale buyer.180 Additionally, the
Commission required that RTOs/ISOs
accept wholesale bids from resources
using the participation model for
electric storage resources to buy
energy.181 As the Commission stated in
Order No. 841, allowing electric storage
resources to participate in the RTO/ISO
markets as dispatchable load will allow
these resources to set the market
clearing price under certain
circumstances, thus better reflecting the
value of the marginal resource and
ensuring that electric storage resources
are dispatched in accordance with the
highest value service that they are
capable of providing during a set market
interval.182
81. We clarify for SPP that Order No.
841 provides flexibility for each RTO/
ISO to develop a participation model for
electric storage resources consistent
with its existing market design
constructs, as SPP requests. Order No.
841 did not, however, provide each
RTO/ISO with flexibility to propose its
own timeline for developing and
implementing any aspect of the
participation model for electric storage
resources, including the requirement
that RTOs/ISOs must ensure a resource
using the participation model for
electric storage resources can be
dispatched as a wholesale buyer.
2. Participation as Price Takers
a. Final Rule
82. In the final rule, the Commission
required that resources using the
participation model for electric storage
resources must be allowed to participate
in the RTO/ISO markets as price takers,
consistent with the existing rules for
self-scheduled resources.183 The
Commission rejected assertions that an
RTO/ISO must decide whether to allow
electric storage resources to be price
takers, finding that, to ensure consistent
180 See
id.; 18 CFR 35.28 (g)(9)(i)(B).
No. 841, 162 FERC ¶ 61,127 at P 142.
See also id. P 150 (‘‘This final rule requires an
electric storage resource to be eligible to participate
in the RTO/ISO markets as a wholesale buyer and
for each RTO/ISO to be able to dispatch them as
such. Such a mechanism would entail participation
in the energy markets, not the provision of a new
service . . . .’’).
182 See id. P 143.
183 Id. P 142.
181 Order
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treatment in the RTO/ISO markets,
electric storage resources must maintain
the same ability to self-schedule their
resource as other market participants.184
Additionally, to ensure that electric
storage resources are treated
consistently with the ability of selfscheduled load resources and
traditional generation resources to
participate in the RTO/ISO markets, the
Commission determined that the ability
of electric storage resources to
participate as price takers should not be
limited to their participation as load.185
b. Requests for Rehearing or
Clarification
83. MISO requests clarification that,
in complying with the directive to allow
electric storage resources to be price
takers as self-scheduled resources,186
MISO may also consider treating an
electric storage resource as a selfscheduled price-taker if the electric
storage resource uses its State of Charge
to lock its energy output to a very
narrow range. MISO explains that, in
real time, an electric storage resource
could use its State of Charge to lock its
MW amount around its day-ahead
position, and that locking energy output
to a very narrow range may result in
capacity that cleared in the capacity
market not being fully available to the
day-ahead market, counter to the dayahead must-offer obligation.187
c. Commission Determination
84. We deny MISO’s request for
clarification. We reiterate that RTOs/
ISOs must provide electric storage
resources with the same ability to selfschedule as other market
participants.188 We therefore find that,
to the extent that a resource using the
participation model for electric storage
resources has not elected to be a selfscheduled price taker, it would be
unreasonable for an RTO/ISO to
designate that resource as a selfscheduled price taker solely based on
the State of Charge parameters that the
resource has submitted. We find that the
RTO/ISO must provide resources using
the electric storage resource
participation model with the
opportunity to determine whether to
184 Id.
P 144.
P 148.
186 MISO Request for Rehearing at 7 (citing Order
No. 841, 162 FERC ¶ 61,127 at P 142).
187 MISO states that such a limitation would be
consistent with the principle articulated in Order
No. 841 that an [electric storage resource] ‘‘must not
de-rate its capacity below any capacity obligations
it has assumed, such as any applicable must-offer
requirement.’’ Id. at 7–8 (citing Order No. 841, 162
FERC ¶ 61,127 at P 99).
188 See Order No. 841, 162 FERC ¶ 61,127 at P
144.
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self-schedule, consistent with the
RTO’s/ISO’s existing rules for selfscheduled resources.
85. However, in response to MISO’s
concern that, if a resource using the
participation model for electric storage
resources restricts its energy output to a
very narrow range through its State of
Charge, any of its capacity that cleared
in the capacity market may not be fully
available to the day-ahead market, we
agree that a resource using the
participation model for electric storage
resources may not use a bidding
parameter, such as State of Charge, to
circumvent its obligations in the RTO/
ISO markets, including any day-ahead
must-offer obligation for capacity
resources.
E. Physical and Operational
Characteristics of Electric Storage
Resources
1. Requirement To Incorporate Bidding
Parameters as Part of the Electric
Storage Resource Participation Model
a. Final Rule
86. In the final rule, the Commission
added § 35.28(g)(9)(i)(C) to the
Commission’s regulations to require
each RTO/ISO to have tariff provisions
providing a participation model for
electric storage resources that accounts
for the physical and operational
characteristics of electric storage
resources through bidding parameters or
other means.189 Specifically, the
Commission required that each RTO’s/
ISO’s participation model for electric
storage resources must account for 13
different physical and operational
characteristics, as defined in the final
rule.190 In adopting this requirement,
the Commission noted that it was
189 Id.
P 191.
P 236. Those physical and operating
characteristics are as follows: (1) State of Charge, (2)
Maximum State of Charge, (3) Minimum State of
Charge, (4) Maximum Charge Limit, (5) Maximum
Discharge Limit, (6) Minimum Charge Time, (7)
Maximum Charge Time, (8) Minimum Run Time,
(9) Maximum Run Time, (10) Minimum Discharge
Limit, (11) Minimum Charge Limit, (12) Discharge
Ramp Rate, and (13) Charge Ramp Rate. Relevant
to the discussion of MISO’s request for clarification
below, the final rule defined State of Charge as ‘‘the
amount of energy stored in proportion to the limit
on the amount of energy that can be stored,
typically expressed as a percentage. It represents
the forecasted starting State of Charge for the market
interval being offered into.’’ Minimum Charge Limit
is the ‘‘minimum [megawatt] level that a resource
using the participation model for electric storage
resources can receive from the grid’’ and Minimum
Discharge Limit is the ‘‘minimum [megawatt]
output level that a resource using the participation
model for electric storage resources can inject onto
the grid.’’ Discharge Ramp Rate and Charge Ramp
Rate are the speed at which a resource using the
participation model for electric storage resources
can move from zero output to its Maximum
Discharge Limit and Maximum Charge Limit,
respectively. Id.
190 Id.
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persuaded by commenters’ arguments
that there may be other means of
accounting for the physical and
operational characteristics of electric
storage resources than bidding
parameters and that greater regional
flexibility than the Commission
proposed in the Notice of Proposed
Rulemaking (NOPR) is appropriate.191
In particular, the Commission stated
that different RTOs/ISOs may be able to
more effectively account for the
physical and operational characteristics
of electric storage resources through
different mechanisms given their unique
market designs.
b. Requests for Rehearing or
Clarification
87. MISO requests clarification on
whether it may require electric storage
resources to submit their State of Charge
forecasts at the beginning of a particular
market interval. MISO contends that
such a requirement will allow it to
derive the charging or discharging status
of a resource for every interval,
eliminating the need for MISO to
introduce a binary variable to determine
the charging or discharging mode of a
resource in its co-optimization process
and in turn avoiding potential adverse
impacts on its market clearing and
commitment processes.192
88. MISO also requests clarification
that, if an electric storage resource does
not provide minimum charge and
discharge limits and can be moved
smoothly between negative and
positive, MISO may require the resource
to submit a single hourly ramp rate for
the day-ahead market and for its Look
Ahead Commitment process. According
to MISO, it has currently adopted this
practice with respect to other resources.
MISO argues that such a requirement
would allow it to avoid the nonlinearity
caused by a megawatt dependent ramp
curve and additional integer variables.
MISO also asks the Commission to
clarify that it may apply its current
practice of allowing three ramp rates
and ramp rate curves for regulating, up,
and down movement to electric storage
resources.193
89. PJM seeks clarification that the
final rule allows for flexibility in how
RTOs/ISOs account for the physical and
operational characteristics of electric
storage resources, including State of
Charge.194 Specifically, PJM argues that
there are different approaches to
191 Id. P 190; NOPR (Docket Nos. RM16–23–000;
AD16–20–000), 81 FR 86522.
192 MISO Request for Rehearing at 6.
193 Id. at 6–7.
194 PJM Motion for Clarification at 1 (citing Order
No. 841, 162 FERC ¶ 61,127 at PP 189–194, 211–
216, 220–224).
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implementing Order No. 841’s
requirement that an electric storage
resource participation model account
for electric storage resources’ physical
and operational characteristics, which
involve different degrees of modeling
and operational changes and
challenges.195
c. Commission Determination
90. In response to MISO’s request for
clarification, we clarify that, on
compliance, MISO may propose to
require a resource using the electric
storage resource participation model to
submit its forecasted State of Charge at
the beginning of any market interval in
which it intends to participate. With
that said, we make no findings on the
proposal that MISO outlines in its
request for clarification. Order No. 841
provided flexibility to the RTOs/ISOs on
how to account for the physical and
operational characteristics of electric
storage resources.196 We will not
prejudge any particular approach to
implementing Order No. 841’s
requirement that each RTO/ISO
establish a participation model for
electric storage resources that accounts
for the physical and operational
characteristics of electric storage
resources through bidding parameters or
other means; rather, we will evaluate
MISO’s proposal on compliance with
the full record before us.
91. Similarly, in response to MISO’s
clarification request regarding ramp
rates, we clarify that MISO may propose
for an electric storage resource that does
not provide minimum charge and
discharge limits and can be moved
smoothly between negative and positive
to submit a single hourly ramp rate for
the day-ahead market and for its Look
Ahead Commitment process. However,
we also make no findings on the merits
of the proposal that MISO outlines in its
request for clarification.
92. Order No. 841 also states that, to
the extent that an RTO/ISO proposes to
comply with the final rule using its
existing bidding parameters or other
market mechanisms, it must
demonstrate in its compliance filing
how its existing market rules account
for these characteristics of electric
storage resources.197 We therefore
clarify that MISO may propose to apply
its current practice of allowing three
ramp rates and ramp rate curves for
regulating, up, and down movement to
resources using the electric storage
resource participation model, but that it
195 Id.
at 2–3.
Order No. 841, 162 FERC ¶ 61,127 at P
196 See
F. Minimum Size Requirement
1. Final Rule
94. In Order No. 841, the Commission
added § 35.28(g)(9)(i)(D) to the
Commission’s regulations to require
each RTO/ISO to revise its tariff to
include a participation model for
electric storage resources that
establishes a minimum size requirement
for participation in the RTO/ISO
markets that does not exceed 100 kW.200
The Commission stated that this
minimum size requirement includes all
minimum capacity requirements,
minimum offer to sell requirements, and
minimum bid to buy requirements for
198 See
id. P 191.
P 190.
200 Id. P 270.
199 Id.
191.
197 Id.
must demonstrate in its compliance
filing how this practice accounts for
Discharge Ramp Rate and Charge Ramp
Rate. The Commission will determine
on compliance whether MISO’s
proposal complies with the
requirements of Order No. 841.
93. We also grant PJM’s request for
clarification. The Order No. 841
requirement that each RTO/ISO
establish tariff provisions providing a
participation model for electric storage
resources that accounts for the physical
and operational characteristics of
electric storage resources through
bidding parameters or other means,
allows for regional flexibility.198
Specifically, in Order No. 841, the
Commission noted that it was
persuaded by commenters’ arguments
that there may be other means of
accounting for the physical and
operational characteristics of electric
storage resources than bidding
parameters and that greater regional
flexibility than the Commission
proposed in the NOPR was appropriate.
In particular, the Commission stated
that different RTOs/ISOs may be able to
more effectively account for the
physical and operational characteristics
of electric storage resources through
different mechanisms given their unique
market designs.199 That said, we make
no findings on the proposed approaches
that PJM outlines in its request for
clarification. We will not prejudge any
particular approach to implementing the
final rule’s requirement that each RTO/
ISO establish a participation model for
electric storage resources that accounts
for the physical and operational
characteristics of electric storage
resources through bidding parameters or
other means; rather, we will evaluate
PJM’s proposal on compliance with a
full record before us.
P 229.
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23917
resources participating in these markets
under the participation model for
electric storage resources. In support of
the requirement, the Commission found
that requiring the RTOs/ISOs to
establish a minimum size requirement
not to exceed 100 kW for the
participation model for electric storage
resources balances the benefits of
increased competition with the
potential need to update RTO/ISO
market clearing software to effectively
model and dispatch smaller
resources.201
95. The Commission further found
that the record shows that all RTOs/
ISOs are already accommodating the
participation of smaller resources in
their markets.202 For example, the
Commission stated that the record
shows that all RTOs/ISOs already have
the modeling and dispatch software
capabilities to accommodate the
participation of resources that are as
small as 100 kW. Specifically, the
Commission noted that both PJM and
SPP have a minimum size requirement
of 100 kW for all resources, and all of
the RTOs/ISOs have at least one
participation model that allows
resources as small as 100 kW to
participate in their markets.203
96. Moreover, in response to concerns
about potential impacts on the
distribution systems and related costs,
the Commission noted that there are
resources located on the distribution
system that are already participating in
the RTO/ISO markets.204 The
Commission stated that establishing a
standard minimum size requirement for
resources using the participation model
for electric storage resources may
potentially result in more resources on
the distribution systems participating in
the RTO/ISO markets. However, the
Commission stated that it does not
change the responsibilities of the RTOs/
ISOs or the distribution utilities, and it
does not change the ability of
distribution utilities to allocate any
costs that they incur in operating and
maintaining their respective power
systems.
97. With respect to concerns about the
need to upgrade RTO/ISO software to
manage the potentially large number of
resources using the participation model
for electric storage resources under the
proposed minimum size requirement,
the Commission found that it was
201 Id.
P 271.
P 272.
203 Id. (citing CAISO Data Request Response at
10–11; ISO–NE Data Request Response at 13–14;
MISO Data Request Response at 10; NYISO Data
Request Response at 9; PJM Data Request Response
at 10; SPP Data Request Response at 5).
204 Id. P 274.
202 Id.
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providing the RTOs/ISOs with adequate
time to develop the requisite tariff
language and update their modeling and
dispatch software to comply with Order
No. 841.205 The Commission was also
not concerned about the potential
availability of software solutions as
multiple RTOs/ISOs already provide a
minimum size requirement of 100 kW
for all resources and have not expressed
similar concerns regarding the
minimum size requirement. However,
the Commission recognized that there
are currently fewer 100 kW resources
than there may be in the future and
stated that it will consider future
requests to increase the minimum size
requirement to the extent an RTO/ISO
can show that it is experiencing
difficulty calculating efficient market
results and there is not a viable software
solution for improving such
calculations.
2. Requests for Rehearing or
Clarification
98. In its rehearing request, EEI states
that the Commission should allow the
RTOs/ISOs, in conjunction with the
electric distribution utilities, to
establish a minimum size requirement
for electric storage resources that would
be manageable for their markets while
maintaining reliability on both the bulk
electric power system and the relevant
distribution systems.206 EEI argues that
the Commission has provided
insufficient support for its proposed
minimum size requirement, stating that
the evidence that the Commission cites
is inadequate given the concerns
expressed in the record that the 100 kW
minimum size requirement may be too
small due to software, settlement, and
other infrastructure limitations. For
example, EEI contends that the
Commission does not provide evidence
in the form of numbers of 100 kW
resources directly participating in the
RTO/ISO markets or the number of tariff
provisions that permit participation at
such size.207
99. EEI argues that the number of
electric storage resources that could
potentially seek to participate in the
wholesale market at the proposed
threshold could become so voluminous
that they (1) exceed the ability of RTOs/
ISOs to manage this volume of
resources, (2) exceed the ability of
distribution utilities to address various
reliability, operational, and
interconnection matters given that
smaller resources are far more likely to
interconnect to the distribution system,
205 Id.
P 275.
Rehearing Request at 9–10.
207 Id. at 8–9.
206 EEI
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and (3) impose implementation costs
significantly greater than corresponding
benefits, particularly in regions where
resources of the 100 kW size have other
compensation options such as net
energy metering. EEI argues that
allowing the RTOs/ISOs to make an
after-the-fact showing of difficulties in
calculating efficient market outcomes
does not adequately account for these
concerns or address the software and
other costs on both the transmission and
distribution system of complying with
the final rule.208
100. MISO requests clarification or, in
the alternative, rehearing that it may
phase in the implementation of the
minimum size requirement.
Specifically, MISO seeks clarification
that it may cap the number of very small
electric storage resources that can
participate in its markets at the number
of such resources that its initial software
and system changes can handle in the
first year of implementation. According
to MISO, it will increase the number of
small electric storage resources that it
will allow in its market as it improves
its software’s capability to manage them.
MISO argues that this phased approach
is a reasonable precaution to proactively
address the potential for large numbers
of small electric storage resources,
rather than waiting to react to adverse
impacts of future high volumes of small
electric storage resources.209
101. MISO also requests clarification
or, in the alternative, rehearing, that the
100 kW limit applies to the Maximum
Charge Limit or Maximum Discharge
Limit and not to the Minimum Charge
Limit or Minimum Discharge Limit.
MISO contends that small electric
storage resources can offer a smaller
Minimum Charge Limit or Minimum
Discharge Limit, such as 0.0001 MW.
MISO adds that, if the offered minimum
limit is too small, an RTO/ISO can
round it to zero and assume that the
resource can smoothly move between
the negative Maximum Charge Limit
and positive Maximum Discharge Limit.
MISO argues that this rounding can
avoid unnecessarily limiting the range
for clearing energy or reserve
products.210
3. Commission Determination
211 See
102. We deny EEI’s request for
clarification and rehearing. We continue
to find that requiring each RTO/ISO to
establish a minimum size requirement
not to exceed 100 kW for the
208 Id. at 9 (citing Order No. 841, 162 FERC
¶ 61,127 at P 275).
209 MISO Rehearing Request at 4–5.
210 Id. at 4 (citing Order No. 841, 162 FERC
¶ 61,127 at P 236).
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participation model for electric storage
resources balances the benefits of
increased competition with the
potential need to update RTO/ISO
market clearing software to effectively
model and dispatch smaller
resources.211 We disagree with EEI that
the Commission lacked sufficient
evidence to support a minimum size
requirement of 100 kW. As the
Commission stated in Order No. 841,
both PJM and SPP have a minimum size
requirement of 100 kW for all resources,
and all of the RTOs/ISOs have at least
one participation model that allows
resources as small as 100 kW to
participate in their markets.212 We
continue to find this evidence sufficient
to demonstrate that all RTOs/ISOs
already have the modeling and dispatch
software capabilities to accommodate
the participation of resources that are as
small as 100 kW.
103. EEI argues that the
implementation costs of the minimum
size requirement will outweigh any
benefits and RTOs/ISOs and
distribution utilities may not be able to
manage the volume of smaller resources
to participate in RTO/ISO markets and
interconnect to the distribution system.
We disagree. As stated in the final rule,
we acknowledge that the 100 kW
minimum size requirement is a balance
between the benefits of increased
competition fostered by the opportunity
for smaller resources to participate in
the RTO/ISO markets using the electric
storage resource participation model
and the potential need to update RTO/
ISO market clearing software to
effectively model and dispatch these
smaller resources.213 Based on the
record before us, we find that the
benefits of increased competition will
outweigh implementation costs,
especially given that all RTOs/ISOs are
already accommodating the
participation of smaller resources in
their markets, as demonstrated in the
final rule.214
104. With respect to EEI’s and MISO’s
concerns about the volume of smaller
resources that may seek to participate in
RTO/ISO markets and interconnect to
the distribution system, in the final rule,
Order No. 841, 162 FERC ¶ 61,127 at P
271.
212 Id. P 272 (citing CAISO Data Request Response
at 10–11; ISO–NE Data Request Response at 13–14;
MISO Data Request Response at 10; NYISO Data
Request Response at 9; PJM Data Request Response
at 10; SPP Data Request Response at 5).
213 See id. P 271.
214 See id. P 272 (citing CAISO Data Request
Response at 10–11; ISO–NE Data Request Response
at 13–14; MISO Data Request Response at 10;
NYISO Data Request Response at 9; PJM Data
Request Response at 10; SPP Data Request Response
at 5).
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the Commission recognized that there
are currently fewer 100 kW resources
than there may be in the future. While
we recognize that EEI argues for greater
flexibility for each RTO/ISO to establish
its own minimum size requirement as
an initial matter, for the reasons
discussed above,215 we continue to find
that it is reasonable to establish a
minimum size requirement not to
exceed 100 kW for the participation
model for electric storage resources.
105. For these reasons, we also deny
MISO’s request for clarification or, in
the alternative, rehearing that it may
phase in the implementation of the
minimum size requirement. We
continue to believe that, given the
record showing that all RTOs/ISOs are
already accommodating the
participation of smaller resources in
their markets 216 and the Commission’s
willingness to consider requests to
increase the minimum size requirement
in the future, we are providing the
RTOs/ISOs with adequate time to
develop the requisite tariff language and
update their modeling and dispatch
software to comply with Order No.
841.217 MISO’s arguments on rehearing
do not convince us otherwise. As the
Commission stated in the final rule,
upon implementation, if an RTO/ISO,
including MISO, finds that it is
experiencing difficulty calculating
efficient market results and there is not
a viable software solution for improving
such calculations, it may file with the
Commission demonstrating such and
proposing to increase the minimum size
requirement for its electric storage
resource participation model.218
Further, as stated in the final rule, a
minimum size requirement that does
not exceed 100 kW does not change the
responsibilities of the RTOs/ISOs or the
distribution utilities, and it does not
change the ability of distribution
utilities to allocate any costs that they
incur in operating and maintaining their
respective power systems.219
106. Finally, in response to MISO’s
request for clarification that the 100 kW
limit does not apply to the Minimum
Charge Limit or Minimum Discharge
215 See
supra P 103.
Order No. 841, 162 FERC ¶ 61,127 at P 272
(citing CAISO Data Request Response at 10–11;
ISO–NE Data Request Response at 13–14; MISO
Data Request Response at 10; NYISO Data Request
Response at 9; PJM Data Request Response at 10;
SPP Data Request Response at 5).
217 See id. P 275. The Commission provided
RTOs/ISOs with 270 days after the publication of
the final rule in the Federal Register to file the tariff
changes (i.e., December 3, 2018) and a further 365
days from that date to implement the tariff
provisions.
218 See id.
219 Id. P 274.
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216 See
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Limit, we clarify that the minimum size
requirement does not prohibit an RTO/
ISO from establishing a minimum size
limit that is lower than 100 kW on any
minimum capacity requirements,
minimum offer to sell requirements, or
minimum bid to buy requirements.
Therefore, it is possible that the
quantities for the Minimum Charge
Limit and Minimum Discharge Limit
may be smaller than 100 kW for
resources using the participation model
for electric storage resources. However,
we do not specify how the minimum
size requirement may affect the
quantities submitted for some of the
physical and operational characteristics
of electric storage resources, and will
not prejudge how the RTOs/ISOs may
propose any such relationships between
the minimum size requirement and the
physical and operational characteristics
of resources using the participation
model for electric storage resources.
G. Energy Used To Charge Electric
Storage Resources (Charging Energy)
1. Price for Charging Energy
a. Final Rule
107. In Order No. 841, the
Commission added § 35.28(g)(9)(ii) to
the Commission’s regulations to require
that the sale of electric energy from the
RTO/ISO markets to an electric storage
resource that the resource then resells
back to those markets be at the
wholesale LMP.220 The Commission
stated that this requirement will apply
regardless of whether the electric
storage resource is using the
participation model for electric storage
resources or another participation
model to participate in the RTO/ISO
markets, as long as the resource meets
the definition of an electric storage
resource set forth in Order No. 841. The
Commission noted that it found that the
sale of energy from the grid that is used
to charge electric storage resources for
later resale into the energy or ancillary
service markets constitutes a sale for
resale in interstate commerce.221 The
Commission stated that, as such, the just
and reasonable rate for that wholesale
sale of energy used to charge that
electric storage resource is the RTO/ISO
market’s wholesale LMP, regardless of
whether the electric storage resource
uses the participation model for electric
storage resources.222
108. In addition, the Commission
disagreed with some commenters’
contention that transmission charges
220 Id.
P 294.
(citing Norton Energy Storage, 95 FERC at
62,701–02).
222 Id.
221 Id.
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23919
that apply to load should not apply to
electric storage resources.223 The
Commission stated that, when an
electric storage resource is charging to
resell energy at a later time, then its
behavior is similar to other load-serving
entities and applicable transmission
charges should apply. However, in
response to the concern that
transmission charges should not apply
when an electric storage resource is
dispatched by an RTO/ISO, the
Commission found that electric storage
resources that are dispatched to
consume electricity to provide a service
in the RTO/ISO markets (such as
frequency regulation or a downward
ramping service) should not pay the
same transmission charges as load
during the provision of that service.224
The Commission found that this would
be consistent with the treatment
afforded traditional generation resources
that provide ancillary services because
they are not charged for their impacts on
the transmission system when they
reduce their output to provide a service
such as frequency regulation down.
Therefore, the Commission found that
electric storage resources should not be
charged transmission charges when they
are dispatched by an RTO/ISO to
provide a service because (1) their
physical impacts on the bulk power
system are comparable to traditional
generators providing the same service
and (2) assessing transmission charges
when they are dispatched to provide a
service would create a disincentive for
them to provide the service.
109. With respect to concerns about
electric storage resources’ use of the
distribution system, the Commission
noted that, in PJM Interconnection LLC,
the Commission permitted a
distribution utility to assess a wholesale
distribution charge to an electric storage
resource participating in the PJM
markets.225 Consistent with this
precedent, the Commission found that it
may be appropriate, on a case-by-case
basis, for distribution utilities to assess
a charge on electric storage resources
similar to those assessed to the market
participant in that proceeding.
223 Id.
P 297.
P 298.
225 Id. P 301 (citing PJM Interconnection L.L.C.,
149 FERC ¶ 61,185 at P 12 (wholesale distribution
charge that ComEd will assess to Energy Vault is a
weighted average carrying charge that is applied on
a case-by-case basis, depending on the distribution
facilities expected to be used in providing
wholesale distribution service), order on reh’g, 151
FERC ¶ 61,231 at PP 16–18).
224 Id.
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b. Requests for Rehearing or
Clarification
110. Pacific Gas and Electric requests
that the Commission clarify that nothing
in Order No. 841 is intended to suggest
that the state no longer has jurisdiction
to determine how power flowing from
the distribution grid, through the
customer meter, and then into the
electric storage resource located behind
the customer meter is to be split
between retail consumption and
wholesale charging for later discharge
into the wholesale markets.226 Pacific
Gas and Electric argues that the final
rule implies that the state has the
authority to determine whether the
power flowing through the customer
meter, or some fraction of it, is
appropriately categorized as wholesale
charging or whether all of it must be
determined to be retail usage.227 Pacific
Gas and Electric asserts that, if the
Commission were to conclude that the
state no longer has this authority, then
a retail customer could use its behindthe-retail-meter electric storage resource
as a means to completely bypass retail
rates for its on-site electricity
consumption by claiming that the
electricity is for later discharge into the
wholesale markets, whether or not that
discharge actually occurs.228
111. Both California Energy Storage
Alliance and CAISO contend that the
final rule presents conflicting positions
on whether transmission charges should
apply to wholesale charging energy
purchased for later resale.229
Specifically, they note that, in
paragraph 298 of Order No. 841, the
Commission found that ‘‘electric storage
resources should not be charged
transmission charges when they are
dispatched by an RTO/ISO to provide a
service. . . .’’ 230 They point out that, in
contrast, in paragraph 297 of the final
rule, the Commission stated that
‘‘[w]hen an electric storage resource is
226 Pacific
Gas and Electric Rehearing Request at
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2.
227 Id. (citing Order No. 841, 162 FERC ¶ 61,127
at P 325 (To the extent that the host distribution
utility is unable—due to a lack of the necessary
metering infrastructure and accounting practices—
or unwilling to net out any energy purchases
associated with a resource using the participation
model for electric storage resources’ wholesale
charging activities from the host customer’s retail
bill, the RTO/ISO would be prevented from
charging that resource using the participation
model for electric storage resources electric
wholesale rates for the charging energy for which
it is already paying retail rates.)).
228 Id. at 2–3.
229 California Energy Storage Alliance Rehearing
Request at 2; CAISO Rehearing Request at 11.
230 California Energy Storage Alliance Rehearing
Request at 2 (citing Order No. 841, 162 FERC
¶ 61,127 at P 298); CAISO Rehearing Request at 11
(citing Order No. 841, 162 FERC ¶ 61,127 at P 298).
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charging to resell energy at a later time,
then its behavior is similar to other
load-serving entities, and we find that
applicable transmission charges should
apply.’’ 231
112. According to California Energy
Storage Alliance, transmission charges
should not apply to wholesale charging
energy that an electric storage resource
later resells. In support of its position,
California Energy Storage Alliance
argues that applying transmission
charges in CAISO would result in an
unreasonable ‘‘double-application’’ of
those charges: Once to the electric
storage resource purchasing its charging
energy at wholesale and once to the load
that the energy is used to serve or the
export transaction that it is needed to
support. California Energy Storage
Alliance further contends that this
double-billing would be unduly and
financially burdensome for electric
storage resources.232
113. CAISO argues that requiring an
RTO/ISO to assess transmission charges
on an electric storage resource’s
charging demand could blunt electric
storage resources’ market effectiveness
and financial viability and
inappropriately shifts transmission costs
into energy markets, which is
inconsistent with Commission
precedent.233 According to CAISO,
unlike load-serving entities with firm
load and little to no ability to curb or
curtail demand, electric storage
resources can charge during periods of
excess generation and low prices,
thereby shifting demand to combat overgeneration, providing ramping
flexibility, addressing negative prices,
and mitigating potential reliability
issues in systems like CAISO that
operate with a high degree of supply
and demand variability. CAISO argues
that requiring RTOs/ISOs to assess
transmission charges on electric storage
devices will force such resources to
include those costs in their market bids,
thus affecting energy market prices.234
114. With respect to Commission
precedent on this issue, CAISO claims
that requiring electric storage resources
to pay transmission charges would
contravene prior Commission
precedent, such as CAISO’s
Commission-accepted non-generator
231 California Energy Storage Alliance Rehearing
Request at 2 (citing Order No. 841, 162 FERC
¶ 61,127 at 297); CAISO Rehearing Request at 11
(citing Order No. 841, 162 FERC ¶ 61,127 at P 297).
232 California Energy Storage Alliance Rehearing
Request at 2–3.
233 CAISO Rehearing Request at 5–6, 11–13 (citing
Cal. Indep. Sys. Operator Corp., 132 FERC ¶ 61,211
(2010); Reform of Generator Interconnection
Procedures and Agreements, 157 FERC ¶ 61,212, at
PP 226–230 (2017)).
234 Id. at 5–6, 11–13.
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resource model, which treats nongenerator resource demand as negative
generation and does not require it to pay
transmission charges.235 CAISO
maintains that, since the acceptance of
the non-generator resource model, the
Commission has noted in other
proceedings that the negative generation
model is a best practice that ‘‘may allow
transmission providers to better account
for the transitions of electric storage
resources between generation and load
and may better enable the use of
existing generator interconnection
procedures and agreements due to their
treatment as negative generation instead
of load.’’ 236
115. For these reasons, CAISO asks
the Commission to clarify that RTOs/
ISOs may, but are not required to,
impose transmission charges on electric
storage resources when they are
charging pursuant to RTO/ISO dispatch.
Alternatively, CAISO asks the
Commission to clarify that each RTO/
ISO may determine (1) what types of
charging activities would not cause an
electric storage resource to incur
transmission charges, (2) that those
services are not limited to ancillary
services, and (3) that charging pursuant
to economic dispatch may qualify as
such a service.237 According to CAISO,
charging an electric storage resource
when it is economic to do so as
instructed by the RTO/ISO to help
balance the system is a critically
important ‘‘service’’ that electric storage
resources provide the grid.238
116. Finally, CAISO seeks
clarification that electric storage
resources participating as transmission
resources under the Commission’s
Policy Statement should not incur
transmission charges for their charging
demand.239 CAISO notes that it may
soon approve a proposal to allow
electric storage resources to provide
reliability/transmission services in its
transmission planning process and that
these resources would then be eligible
to recover some of their costs through
regulated transmission rates and the
remainder through participation in the
wholesale markets. CAISO explains that
whether these resources will incur
transmission charges for charging will
significantly affect their projected costs
235 Id. at 12 (citing Cal. Indep. Sys. Operator
Corp., 132 FERC ¶ 61,211 (2010)).
236 Id. (citing Reform of Generator
Interconnection Procedures and Agreements, 157
FERC ¶ 61,212 at PP 226–230).
237 Id. at 5.
238 Id. at 5, 11.
239 Id. at 12–13 (referencing Utilization of Electric
Storage Resources for Multiple Services When
Receiving Cost-Based Rate Recovery, 158 FERC
¶ 61,051 (2017)).
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in competitive solicitations, as well as
how the resource intends to recover
those costs.240
117. EEI seeks clarification and Xcel
Energy Services seeks rehearing of the
Commission’s finding in Order No. 841
that it may be appropriate, on a case-bycase basis, for distribution utilities to
assess a charge on electric storage
resources similar to those assessed to
the market participant in PJM
Interconnection LLC. They explain that,
in PJM Interconnection LLC, the
Commission permitted the distribution
utility to establish a wholesale
distribution rate that was based on the
carrying charges associated with the
distribution facilities that would be
used to provide wholesale distribution
service to a particular electric storage
resource. According to EEI and Xcel
Energy Services, a customer-specific
methodology for assessing wholesale
distribution charges may no longer be
appropriate when there are a large
number of distribution-connected
electric storage resources participating
in the wholesale markets.241 EEI further
argues that it would be unduly
burdensome to require a distribution
utility to establish a separate, facilityspecific rate for each individual electric
storage resource’s use of the distribution
system,242 while Xcel Energy Services
contends that establishing such rates
would involve significant regulatory
development and filing costs and could
even be unworkable given that the
distribution system is periodically
reconfigured based on system
conditions.243
118. Therefore, EEI seeks clarification
on what the Commission meant by
‘‘case-by-case basis,’’ stating that the
Commission should not dismiss as per
se unreasonable a proposal to establish
a non-facility-specific rate for wholesale
distribution service to charging load.244
Similarly, Xcel Energy Services asks the
Commission to grant rehearing of its
decision to permit wholesale
distribution charges on only a ‘‘case-bycase basis’’ and permit more generic
wholesale distribution rates or tariffs.245
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c. Commission Determination
119. We deny Pacific Gas and
Electric’s request to clarify that states
have jurisdiction to determine how
power flowing from the distribution grid
into the electric storage resource located
240 Id.
at 13.
Rehearing Request at 12; Xcel Energy
Services Rehearing Request at 27–28.
242 EEI Rehearing Request at 12.
243 Xcel Energy Services Rehearing Request at 29.
244 EEI Rehearing Request at 11–12.
245 Xcel Energy Services Rehearing Request at 28,
30.
241 EEI
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behind the customer meter is split
between retail consumption and
wholesale charging for later discharge
into the wholesale markets. In the final
rule, the Commission noted that it
found that the sale of energy from the
grid that is used to charge electric
storage resources for later resale into the
energy or ancillary service markets
constitutes a sale for resale in interstate
commerce; as such, the just and
reasonable rate for that wholesale sale of
energy used to charge that electric
storage resource is the RTO/ISO
market’s wholesale LMP.246 However,
we reiterate that the Commission’s
finding regarding charging energy did
not address payment of the retail rate for
energy. Thus, Order No. 841 does not
authorize electric storage resources to
bypass retail rates for its on-site
electricity consumption, as Pacific Gas
& Electric suggests.247
120. In response to CAISO’s
arguments, we acknowledge that the
participation of electric storage
resources in RTO/ISO markets may
convey a range of benefits, particularly
under certain system conditions, but we
cannot conclude based on the record
before us that an electric storage
resource charging when it is economic
to do so necessarily constitutes the
provision of a service in the RTO/ISO
markets, though it may provide a service
in some specific circumstances. Thus,
we decline to grant clarification that
charging pursuant to economic dispatch
always qualifies as a service. However,
we clarify that services do not need to
be limited to ancillary services; they
could include any service defined in an
RTO/ISO tariff. To the extent that an
RTO/ISO seeks to create a new service
that would involve charging pursuant to
economic dispatch under certain system
conditions, the RTO/ISO may propose
such revisions to its tariff through a
separate FPA section 205 filing.248
121. We also grant clarification of the
Commission’s finding in paragraph 297
that applicable transmission charges
should apply when an electric storage
resource is charging to resell energy at
a later time. In response to the concerns
of CAISO and California Energy Storage
Alliance, we clarify that, in paragraph
297 of the final rule, the Commission’s
use of the phrase ‘‘applicable
transmission charges’’ was intended to
convey that an RTO/ISO may propose to
apply its existing rate structure for
transmission charges to an electric
storage resource that is charging at
wholesale but is not being dispatched
246 Order
No. 841, 162 FERC ¶ 61,127 at P 294.
id. PP 323–324.
248 See 16 U.S.C. 824d.
247 See
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23921
by the RTO/ISO to provide a service in
the RTO/ISO markets. Thus, each RTO/
ISO may on compliance propose that
any electric storage resource that is
charging at wholesale but is not being
dispatched by the RTO/ISO to provide
a service should be assessed charges
consistent with how the RTO/ISO
assesses transmission charges to
wholesale load under its existing rate
structure. We further clarify that, if an
RTO/ISO proposes not to apply
transmission charges to an electric
storage resource that is charging at
wholesale but is not being dispatched
by the RTO/ISO to provide a service,
then the RTO/ISO must demonstrate
that exempting such a resource from
these charges is reasonable given its
existing rate structure for transmission
charges.
122. We find that CAISO’s request for
clarification that electric storage
resources participating as transmission
resources, as described in the
Commission’s Policy Statement,249
should not incur transmission charges
for charging demand is premature
because CAISO has not yet filed a
proposal to allow electric storage
resources to provide transmission or
reliability services under the Policy
Statement. We find that it is appropriate
to address CAISO’s concerns related to
resources that might seek to recover
their costs through both regulated
transmission rates and the wholesale
markets in the context of a specific
proposal involving resources that
provide multiple services and seek to
recover their costs through both costbased and market-based rates
concurrently. We therefore deny
clarification that such resources should
not incur transmission charges for
charging demand and decline to address
CAISO’s concerns here.
123. In response to concerns regarding
the Commission’s finding that it may be
appropriate, on a case-by-case basis, for
distribution utilities to assess a charge
on electric storage resources similar to
those assessed to the market participant
in PJM Interconnection L.L.C.,250 we
grant EEI’s requested clarification.
Specifically, we clarify that the
Commission will not dismiss as per se
unreasonable any proposal to establish
a non-facility-specific rate for wholesale
distribution service to an electric storage
resource for its charging. Rather, the
Commission will consider any proposal
249 See Utilization of Electric Storage Resources
for Multiple Services When Receiving Cost-Based
Rate Recovery, 158 FERC ¶ 61,051.
250 See Order No. 841, 162 FERC ¶ 61,127 at P 301
(citing PJM Interconnection L.L.C., 149 FERC
¶ 61,185 at P 12, order on reh’g, 151 FERC ¶ 61,231
at PP 16–18).
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to establish a rate for providing
wholesale distribution service to an
electric storage resource for its charging
(whether a facility-specific rate, a
wholesale distribution service rate that
applies to all or some subset of electric
storage resources, a generally applicable
wholesale distribution service tariff, or
any other rate mechanism) on a case-bycase basis in light of the record
evidence. Accordingly, we find that
Xcel Energy Services’ request for
rehearing of this issue is moot.
2. Metering and Accounting Practices
for Charging Energy
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a. Final Rule
124. To help implement the new
requirement in § 35.28(g)(9)(ii) of the
Commission’s regulations, in Order No.
841, the Commission required each
RTO/ISO to implement metering and
accounting practices as needed to
address the complexities of
implementing the requirement that the
sale of electric energy from the RTO/ISO
markets to an electric storage resource
that the resource then resells back to
those markets be at the wholesale
LMP.251 To this end, the Commission
required each RTO/ISO to directly meter
electric storage resources, so all the
energy entering and exiting the
resources is measured by that meter.
However, the Commission recognized
that some electric storage resources
(such as those located on a distribution
system or behind a customer meter) may
be subject to other metering
requirements that could be used in lieu
of a direct metering requirement by an
RTO/ISO. Therefore, the Commission
stated that it will consider, in the
individual RTO/ISO compliance filings,
alternative proposals that may not entail
direct metering but nonetheless address
the complexities of implementing the
requirement that the sale of electric
energy from the RTO/ISO markets to an
electric storage resource that the
resource then resells back to those
markets be at the wholesale LMP.
125. The Commission was not
persuaded by commenters who argued
that developing metering practices that
distinguish between wholesale and
retail activity is impractically
complex.252 The Commission noted that
CAISO provided two examples of how
it has achieved market rules that
accurately account for wholesale and
retail activities by using direct metering.
Additionally, the Commission stated
that retail metering infrastructure,
which is subject to state jurisdiction,
251 Id.
252 Id.
P 322.
P 323.
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may be able to work in concert with the
RTO/ISO requirements to lower the
overall metering costs for electric
storage resources. Therefore, the
Commission provided each RTO/ISO
with the flexibility to propose in its
compliance filing other reasonable
metering solutions that may help reduce
costs for developers.
126. The Commission further found
that developing new accounting
practices for electric storage resources in
response to this requirement will be
complex, but nonetheless found that
they are feasible to develop.253 The
Commission recognized that it may be
beneficial for each RTO/ISO to
coordinate accounting requirements in
cooperation with the distribution
utilities and RERRAs in its footprint to
help identify workable accounting
solutions for distributioninterconnected or behind-the-meter
electric storage resources to participate
in the RTO/ISO markets. The
Commission also found that metering
and accounting rules may need to differ
based on whether the resource is located
on the transmission system, the
distribution system, or behind the
meter.
127. As a related matter, the
Commission found that electric storage
resources should not be required to pay
both the wholesale and retail price for
the same charging energy because doing
so would create market inefficiencies
due to the double payment.254
Therefore, the Commission required
each RTO/ISO to prevent electric
storage resources from paying twice for
the same charging energy. The
Commission stated that, to the extent
that the host distribution utility is
unwilling or unable—due to a lack of
the necessary metering infrastructure
and accounting practices—to net out
any energy purchases associated with an
electric storage resource’s wholesale
charging activities from the host
customer’s retail bill, the RTO/ISO
would be prevented from charging that
resource electric wholesale rates for the
same charging energy that it is already
paying for through retail rates.
253 Id.
P 324.
P 326. Paragraph 326 of the preamble of
Order No. 841 used the term ‘‘resources using the
participation model for electric storage resources’’
with respect to the requirements set forth therein
(e.g., ‘‘we require each RTO/ISO to prevent
resources using the participation model for electric
storage resources from paying twice for the same
charging energy’’). However, § 35.28(g)(9)(ii) of the
Commission’s regulations (as modified by Order
No. 841), which these requirements are intended to
implement, specifies that it applies to electric
storage resources. Thus, the Commission used the
incorrect term in paragraph 326 of Order No. 841.
In this order, we use the correct term throughout.
254 Id.
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128. Finally, the Commission stated
that it was not persuaded by
commenters’ suggestion that electric
storage resources must choose to
participate in either wholesale or retail
markets due to the complexity of the
metering and accounting practices.255
The Commission found that it is
possible for electric storage resources
that are selling retail services also to be
technically capable of providing
wholesale services, and it would
adversely affect competition in the
RTO/ISO markets if these technically
capable resources were excluded from
participation.
b. Requests for Rehearing or
Clarification
129. Several petitioners request
rehearing or clarification with respect to
Order No. 841’s requirements related to
metering and accounting practices.
First, CAISO requests that the
Commission clarify or, in the
alternative, grant rehearing that the
RTO/ISO does not need to be the entity
that directly meters electric storage
resources. CAISO explains that it is a
common and useful practice in RTOs/
ISOs for third parties, such as a
scheduling coordinator, to perform the
metering, validation, estimation, and
editing to submit settlement quality
meter data to the RTO/ISO, which the
RTO/ISO then ensures is accurate.
CAISO argues that a requirement for the
RTO/ISO to be the sole entity directly
metering electric storage resources is
inconsistent with previous precedent,
inconsistent with RTOs’/ISOs’ current
just and reasonable metering practices,
and unnecessarily restrictive for electric
storage resources and RTOs/ISOs.256
130. With respect to Order No. 841’s
requirement that, to the extent that the
host distribution utility is unable or
unwilling to net out any energy
purchases associated with an electric
storage resource’s wholesale charging
activities from the host customer’s retail
bill, the RTO/ISO may not charge that
resource for the charging energy for
which it is already paying retail rates,
CAISO states that it is unclear what
constitutes a utility that is unwilling or
unable to net out wholesale charging
energy from an electric storage
resource’s total demand. Therefore,
CAISO asks the Commission to clarify
or, in the alternative, grant rehearing
that an RTO/ISO could require
verification from the host distribution
utility that it is unable or unwilling to
255 Id.
P 325.
Rehearing Request at 6–8 (citing Cal.
Indep. Sys. Operator Corp., Docket No. ER17–949–
000 (Mar. 31, 2017) (delegated order)).
256 CAISO
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net wholesale demand from retail
settlement before the RTO/ISO ceases to
settle an electric storage resources’
wholesale demand at the wholesale
LMP. CAISO contends that this
clarification is especially critical for
electric storage resources that are
located on the distribution system or
behind the meter and participating in
the CAISO market because they may be
providing services to other entities.257
131. Relatedly, CAISO asks the
Commission to clarify or, in the
alternative, grant rehearing that, when
an RTO/ISO cannot verify that the host
distribution utility is unable or
unwilling to net wholesale demand
from retail settlement, the RTO/ISO can
either (1) require the electric storage
resource to use a participation model
designed for retail customer
participation (such as demand response)
or (2) continue settling the electric
storage resource’s charging demand at
the wholesale LMP. According to
CAISO, this clarification is necessary
because prohibiting certain electric
storage resources from having their
demand settled at the wholesale LMP
(1) will require new participation
models, modeling, and software
upgrades; (2) could materially affect
how that resource bids, potentially
distorting the market; and (3) could
negatively affect the host utility
distribution company’s settlement
charges, in the form of unaccounted for
energy, for example.258
132. Both TAPS and Xcel Energy
Services request rehearing of the
Commission’s decision in Order No. 841
to decline to require electric storage
resources located on the distribution
system or behind the meter to
participate exclusively either in the
wholesale markets or at retail.259 Xcel
Energy Services contends that it is
difficult to see how an RTO/ISO can
differentiate between the wholesale and
retail activities of an electric storage
resource located on the distribution
system or behind the meter without
compelling entities that are not
Commission jurisdictional, such as
loads and distribution utilities, to
provide information on their sales to
and purchases from such a resource.260
133. TAPS states that, to ensure that
an electric storage resource that is
located on the distribution system or
behind the meter does not ‘‘improperly
evade the distribution utility’s retail
service’’ through its participation in the
RTO/ISO markets, the Commission must
ensure that any energy that such
resources purchase from the RTO/ISO
markets is resold.261 TAPS further
argues that allowing an electric storage
resource located on the distribution
system or behind the meter to
participate both in the wholesale
markets and at retail could provide its
owner with the opportunity to
simultaneously purchase energy at retail
and sell energy to the wholesale market
at a higher price, thus shifting costs to
other retail customers without ever
changing the physical State of Charge of
its electric storage resource.262
134. According to TAPS, normal
revenue-quality metering is inadequate
to address these concerns because it
requires knowledge of two separate
energy level balances (one for wholesale
energy and one for retail energy) rather
than simply the total energy balance.
TAPS contends that maintaining and
auditing a system to track this
information would be complicated and
expensive.263 TAPS adds that the
market rules in CAISO that the
Commission claimed accurately account
for wholesale and retail activities do not
address the issues that TAPS has
identified.264
135. Similarly, Xcel Energy Services
argues that the Commission’s reliance
on CAISO’s market rules to support its
decision not to preclude electric storage
resources located on the distribution
system or behind the meter from
participating both in the wholesale
markets and at retail was misplaced.
Specifically, Xcel Energy Services
contends that CAISO’s market rules do
not provide for tracking retail
purchases, retail sales, wholesale
purchases, and wholesale sales all at the
same time, and thus they do not allow
an RTO/ISO to distinguish between the
wholesale and retail activities of electric
storage resources located on the
distribution system or behind the meter
that seek to participate in its markets.
Xcel Energy Services states that, instead,
CAISO’s market rules only account for
resources that are selling exclusively at
wholesale or at retail at a given point in
time (as opposed to providing services
at wholesale and at retail during the
same time period). According to Xcel
Energy Services, CAISO’s market rules
also fail to account for multiple
resources and retail loads behind a
single meter. Xcel Energy Services adds
that, even if CAISO’s market rules were
23923
sufficient, they do not support a finding
that other RTOs/ISOs, whose member
utilities all have their own requirements
for metering, billing systems, and other
supporting software and Information
Technology (IT) platforms, could
necessarily adopt them.265
136. Finally, TAPS also argues that
the Commission’s decision on TAPS’s
proposal to require distributionconnected electric storage resources to
choose between wholesale and retail
participation was premature given that
the issues that TAPS raised are within
the scope of the distributed energy
resource aggregation-related issues
which the Commission determined in
Order No. 841 that it did not have
sufficient information to act upon.
Therefore, TAPS argues that the
Commission should have deferred its
decision until after the technical
conference in Docket No. RM18–9–
000.266
137. EEI asks the Commission to
clarify that it is the responsibility of the
electric storage resource located on the
distribution system or behind the meter
to pay for any metering or other costs
associated with distinguishing between
its wholesale and retail activities; if they
are not given that responsibility, then
EEI argues that the entire load can and
should be treated as retail load. EEI
contends that this clarification reflects
the statement in Order No. 841 that the
finding regarding charging energy does
not address payment of the retail rate for
energy or charging a device off of colocated generation resources.267
c. Commission Determination
138. As an initial matter, we clarify,
in response to CAISO, that the RTO/ISO
itself does not need to be the entity that
directly meters electric storage
resources. We also grant CAISO’s
request to clarify that an RTO/ISO could
require verification from the host
distribution utility that it is unable or
unwilling to net wholesale demand
from retail settlement before the RTO/
ISO ceases to settle an electric storage
resource’s wholesale demand at the
wholesale LMP. While Order No. 841
stated that each RTO/ISO must prevent
electric storage resources from paying
twice for the same charging energy,268 it
did not specify how each RTO/ISO must
implement this requirement. Therefore,
we clarify that the Commission will
consider on compliance each RTO’s/
265 Xcel
Energy Services Rehearing Request at 17–
20.
257 Id.
at 9–11.
at 10–11.
259 TAPS Rehearing Request at 12; Xcel Energy
Services Rehearing Request at 17, 20.
260 Xcel Energy Services Rehearing Request at 20.
258 Id.
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261 TAPS
Rehearing Request at 13.
at 14.
263 Id. at 14–15.
264 Id. at 15 (citing Order No. 841, 162 FERC
¶ 61,127 at P 318).
262 Id.
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266 TAPS
Rehearing Request at 16–17.
Request for Rehearing and Clarification at
12 (citing Order No. 841, 162 FERC ¶ 61,127 at P
299).
268 Order No. 841, 162 FERC ¶ 61,127 at P 326.
267 EEI
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ISO’s proposal to identify whether a
distribution utility is unable or
unwilling to net out from a host
customer’s retail bill the wholesale
energy purchases associated with
charging an electric storage resource
that is participating in the RTO/ISO
market from the host customer’s retail
bill.
139. However, we deny CAISO’s
request for clarification or, in the
alternative, rehearing that when an
RTO/ISO cannot verify the host
distribution utility’s inability or
unwillingness to net out wholesale
charging energy, the RTO/ISO can
require the electric storage resource to
use a participation model designed for
retail customer participation. In Order
No. 841, the Commission stated that
each RTO/ISO must prevent electric
storage resources from paying twice for
the same charging energy.269 While the
Commission provided flexibility with
respect to how each RTO/ISO
implements that requirement, we find it
inappropriate for an RTO/ISO to meet
that requirement by requiring an electric
storage resource to use a participation
model designed for retail customer
participation. Consistent with Order No.
841, we reiterate that, to the extent that
the host distribution utility is unable or
unwilling to net out any energy
purchases associated with a resource
using the participation model for
electric storage resources’ wholesale
charging activities from the host
customer’s retail bill, the RTO/ISO must
determine how it will prevent an
electric storage resource participating in
its markets from being charged
wholesale rates for charging energy for
which it already is paying retail rates.270
140. We deny TAPS’ and Xcel Energy
Services’ requests for rehearing
regarding the Commission’s decision to
decline to require electric storage
resources to choose to participate
exclusively in either wholesale or retail
markets due to the complexity of the
metering and accounting practices.
While we agree with TAPS and Xcel
Energy Services that appropriate
metering and accounting practices will
be necessary to distinguish between
wholesale and retail activity, we
disagree that these practices would be
prohibitively complex or costly to
develop and implement given the
flexibility provided to the RTOs/ISOs to
propose reasonable approaches.271 As
the Commission stated in Order No.
841, retail metering infrastructure also
may be able to work in concert with the
RTO/ISO requirements to lower the
overall metering costs.272
141. Further, TAPS and Xcel Energy
Services argue that CAISO’s metering
and accounting practices are insufficient
to allow for the implementation of
Order No. 841’s requirement that the
sale of electric energy from the RTO/ISO
markets to an electric storage resource
that the resource then resells back to
those markets be at the wholesale LMP.
Therefore, TAPS and Xcel Energy
Services argue that the Commission’s
reliance on these practices as evidence
that establishing such metering and
accounting practices is possible is
misplaced. We disagree. The
Commission relied on CAISO’s metering
and accounting practices to demonstrate
that direct metering for behind-themeter resources can remove barriers to
their participation in RTO/ISO markets,
not necessarily as an example of
metering and accounting that would
comply with the requirements of the
final rule. Moreover, in Order No. 841,
the Commission chose not to prescribe
particular metering and accounting
practices that each RTO/ISO must
adopt, instead providing flexibility for
each RTO/ISO to develop practices that
reflect its unique market rules and its
member utilities’ requirements for
metering, billing systems, and other
supporting software and IT platforms.
142. TAPS also argues that the
Commission’s decision not to require
electric storage resources to choose to
participate exclusively in either
wholesale or retail markets will allow
resources using the participation model
for electric storage resources to evade
the distribution utility’s retail service or
simultaneously buy electricity at the
retail rate and sell it at the wholesale
LMP. While we acknowledge these
concerns, we believe that each RTO/ISO
can address these issues by developing
its metering and accounting
requirements in cooperation with the
distribution utilities and RERRAs in its
footprint, as the Commission recognized
in Order No. 841.273 In addition, we
note that, when the Commission stated
in Order No. 841 that the sale of electric
energy from the RTO/ISO markets to an
electric storage resource that the
resource then resells back to those
markets be at the wholesale LMP, it was
referring to the sale of energy from the
grid that is used to charge electric
storage resources for later resale into the
energy or ancillary service markets.274
To the extent that TAPS has concerns
that a particular RTO’s/ISO’s proposed
269 Id.
272 Id.
270 Id.
273 Id.
271 See
P 323.
P 324.
274 Id. P 294.
id. PP 323–324.
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metering and accounting practices do
not address these issues, TAPS may
raise these concerns in response to the
RTO’s/ISO’s compliance filing.
143. Finally, we disagree with TAPS’
contention that the Commission should
have deferred action on this issue until
after the technical conference in Docket
No. RM18–9–000. The technical
conference in Docket No. RM18–9–000
focused on issues relating to distributed
energy resource aggregations, while
Order No. 841 addresses the
participation of non-aggregated electric
storage resources in RTO/ISO markets.
We find that the Commission had
sufficient record evidence before it to
determine whether to require electric
storage resources to choose to
participate exclusively in either
wholesale or retail markets, regardless
of its decision to gather more
information with respect to its proposals
to remove barriers to the participation of
distributed energy resource aggregations
in RTO/ISO markets in Docket No.
RM18–9–000.275
144. In response to EEI, we decline to
clarify whether an electric storage
resource located on the distribution
system or behind the meter is
responsible for paying for any metering
or other costs associated with
distinguishing between its wholesale
and retail activities. While EEI contends
that its requested clarification relates to
the Commission’s statement in Order
No. 841 that its finding regarding
charging energy does not address
payment of the retail rate for energy or
charging a device off of co-located
generation resources, Order No. 841 did
not establish any requirement with
respect to which entity should bear the
costs of metering. Therefore, we find
that this issue is outside the scope of
this proceeding.
III. Compliance Requirements
A. Final Rule
145. In the final rule, the Commission
required each RTO/ISO to file the tariff
changes needed to implement the
requirements of Order No. 841 within
270 days of the publication date of
Order No. 841 in the Federal
Register.276 The Commission also
allowed each RTO/ISO a further 365
days from that date to implement the
tariff provisions. The Commission found
that, given the modifications and
clarifications to the NOPR made in
Order No. 841, particularly the omission
of the reforms relevant to distributed
energy resource aggregations, and the
275 Id.
276 Id.
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record in this proceeding in support of
the reforms that the Commission
finalized therein, the implementation
schedule was reasonable.277
146. Additionally, the Commission
noted that many of the RTOs/ISOs
already have rules in place to enable the
participation of electric storage
resources in their markets.278 The
Commission further stated that the
additional time that it provided for the
RTOs/ISOs to make their compliance
filings, along with the ability of the
RTOs/ISOs to use existing tariff
provisions to demonstrate compliance
with aspects of the final rule, would
mean that the RTOs/ISOs can meet the
deadlines established therein. Finally,
the Commission noted that it was
allowing regional flexibility to the
extent possible throughout the final
rule, which it believed would assist the
RTOs/ISOs in meeting the compliance
and implementation deadlines.
B. Requests for Rehearing or
Clarification
147. MISO, AMP/APPA/NRECA, and
EEI raise issues relating to the
relationship between the
implementation of Order No. 841 and
the Commission’s decision therein to
defer consideration of its proposals with
respect to the participation of
distributed energy resource aggregations
in RTO/ISO markets. Both AMP/APPA/
NRECA and EEI assert that, because
some electric storage resources may be
distributed energy resources, and a
single electric storage resource may
constitute a distributed energy resource
aggregation, many of the issues raised at
the technical conference in Docket No.
RM18–9–000 are applicable to electric
storage resources located on the
distribution system or behind the
meter.279 They contend that it is unclear
how the Commission can reasonably
adopt final rules governing the
participation of electric storage
resources located on the distribution
system or behind the meter in RTO/ISO
markets while finding that additional
information is needed prior to allowing
distributed energy resource
aggregations, which can include electric
storage resources, to participate in those
same markets.280
148. MISO asks the Commission to
grant rehearing of the compliance date
and extend Order No. 841’s
implementation timetable by at least six
months with respect to matters that
277 Id.
P 349.
P 350.
279 APPA/NRECA Rehearing Request at 16; EEI
Rehearing Request at 10.
280 APPA/NRECA Rehearing Request at 16; EEI
Rehearing Request at 11.
278 Id.
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affect the potential participation of
electric storage resources as distributed
energy resources in RTO/ISO
markets.281 Moreover, MISO contends
that it wishes to avoid devoting
significant effort and expense to develop
software and system adjustments to
address the participation of distributionconnected electric storage resources,
which may be significantly impacted by
a final rule in Docket No. RM18–9–
000.282 According to MISO, the cost and
time needed to ‘‘ensure the synergy of
[electric storage resource] and
[distributed energy resource]-related
software changes are likely to be
significant.’’ 283 Therefore, MISO ask the
Commission to further adjust the
implementation timeframe for Order No.
841 if necessitated by any electric
storage-resource related requirements in
a final rule in Docket No. RM18–9–
000.284
149. To ensure consistency, AMP/
APPA/NRECA ask the Commission to
clarify that the wholesale market
participation by electric storage
resources located on a distribution
system or behind a retail meter will be
subject to any final rule in Docket No.
RM18–9–000.285 Likewise, EEI asks the
Commission to clarify that rules on the
participation in the RTO/ISO markets of
electric storage resources located on the
distribution system or behind the meter
should be informed by the discussion in
Docket No. RM18–9–000.286 Both AMP/
APPA/NRECA and EEI also ask the
Commission to determine that the RTO/
ISO tariff revisions related to electric
storage resources located on a
distribution system or behind a retail
meter made in compliance with Order
No. 841 will not become effective until
the effective date of the RTO/ISO tariff
revisions related to distributed energy
resource aggregations made in
compliance with any final rule in
Docket No. RM18–9–000.287
150. Xcel Energy Services contends
that the Commission offered no
evidence in Order No. 841 explaining
why it chose a period of 270 days for
each RTO/ISO to submit a compliance
filing and a further 365 days to
implement the tariff revisions proposed
therein.288 Xcel Energy Services argues
that Order No. 841’s inflexible
compliance schedule appears
inconsistent with other provisions in in
281 MISO
Rehearing Request at 13.
at 9–10.
283 Id. at 11.
284 Id. at 11, 13.
285 AMP/APPA/NRECA Rehearing Request at 17.
286 EEI Rehearing Request at 11.
287 AMP/APPA/NRECA Rehearing Request at 17;
EEI Rehearing Request at 11.
288 Xcel Energy Services Rehearing Request at 21.
282 Id.
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Order No. 841 that acknowledge that
each RTO/ISO will have to revise its
tariff in a manner that recognizes the
unique physical and operational
characteristics of their markets and the
effects of integrating electric storage
resources.289 Xcel Energy Services adds
that, while the Commission
acknowledged that the tariff revisions
could require significant work on the
part of the RTOs/ISOs, it did not explain
what that significant work would
encompass, the expected timeframe for
completion, or why a longer time period
may not be necessary to comply.290 Xcel
Energy Services also contends that
implementing Order No. 841 will
require IT systems that tie together
transmission and distribution systems,
along with wholesale and retail markets
and metering. Thus, Xcel Energy
Services asks the Commission to grant
rehearing to permit RTO/ISOs to
propose their own implementation
schedules that more appropriately
reflect the unique characteristics of their
systems.291
151. Xcel Energy Services also asks
the Commission to grant rehearing to
require RTOs/ISOs to collaborate with
distribution utilities to develop a cost
recovery mechanism for distribution
utility upgrades and improvements
required to implement Order No. 841.292
Xcel Energy Services argues that, for
distribution utilities, Order No. 841’s
implementation costs are
disproportionate to the benefits they
will receive, given that the beneficiaries
of Order No. 841 are the RTO/ISO
markets and their market
participants.293 Xcel Energy Services
argues that, under FPA section 205, the
costs that the distribution utilities incur
must be commensurate with the benefits
that they receive.294 Xcel Energy
Services argues that Order No. 841 will
burden distribution utilities and their
ratepayers because they will need to
harden the underlying distribution
system to support bidirectional power
flows and pay for substantial metering
upgrades for electric storage
resources.295 Xcel Energy Services adds
that IT improvements to allow electric
storage resources to engage in retail and
wholesale transactions and to
289 Id.
at 21.
at 22 (citing Order No. 841, 162 FERC
¶ 61,127 at P 343).
291 Id. at 22.
292 Id. at 24–25.
293 Id. at 22–23.
294 Id. at 23 (citing Ill. Commerce Comm’n v.
FERC, 576 F.3d 470, 477 (7th Cir. 2009); El Paso
Elec. Co. v. FERC, 832 F.3d 495, 506 (5th Cir. 2016)
(explaining that the Commission ‘‘need only
roughly correlate costs to benefits’’)).
295 Id. at 23–24.
290 Id.
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Federal Register / Vol. 84, No. 100 / Thursday, May 23, 2019 / Rules and Regulations
communicate with the RTO/ISO and
distribution utility will be costly and
will be of comparatively little benefit to
distribution ratepayers and their
utility.296
152. AES Companies ask the
Commission to clarify that Order No.
841’s compliance timeframe aligns with
the Commission’s compliance directive
in Docket No. EL17–8–000.297 AES
Companies explain that, on February 1,
2017, the Commission issued an
order 298 in Docket No. EL17–8–000
granting in part and denying in part a
complaint filed by Indianapolis Power &
Light Company, a member of AES
Companies.299 AES Companies explain
that the Commission found in the
February 1 Order that MISO’s tariff
‘‘unreasonably restricts competition by
preventing electric storage resources
from providing all the services that they
are technically capable of providing,
which could lead to unjust and
unreasonable rates.’’ 300 AES Companies
note that the Commission required
MISO to submit a compliance filing
proposing tariff revisions, within 60
days of the date of that order.301 AES
Companies therefore ask the
Commission to clarify the scope and
timing of MISO’s existing compliance
obligation resulting from the February 1
Order, given that Order No. 841’s
requirements are similar to the
compliance directive that the
Commission issued in the February 1
Order.302
153. If the Commission determines
that Order No. 841’s requirements
supersede the tariff changes that the
Commission directed in the February 1
Order, such that MISO need not comply
with the directives of the February 1
Order until the implementation date for
Order No. 841’s requirements, AES
Companies argue that the Commission
should direct MISO to examine and
asses any modifications to its business
practice manuals or software that could
accommodate existing, presentlyinterconnected electric storage
resources. AES Companies further ask
the Commission to direct MISO to
submit quarterly informational filings
describing these efforts.303
296 Id.
at 24.
Companies Rehearing Request at 1–2.
298 Indianapolis Power & Light Co. v.
Midcontinent Indep. Sys. Operator, Inc., 158 FERC
¶ 61,107 (2017) (February 1 Order).
299 AES Companies Rehearing Request at 2.
300 Id. (citing February 1 Order, 158 FERC
¶ 61,107 at P 69).
301 Id. at 2–3 (citing February 1 Order, 158 FERC
¶ 61,107 at P 72).
302 Id. at 4–5.
303 Id. at 5–6.
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C. Commission Determination
154. We deny the rehearing requests
that seek to change the compliance
deadlines established in Order No. 841.
We continue to find that the timeline for
compliance and implementation is
reasonable.304 Moreover, in establishing
Order No. 841’s compliance and
implementation schedule, the
Commission indicated that it was
already ‘‘[t]aking into account that the
Commission is not implementing the
distributed energy resource aggregation
reforms [proposed in the NOPR] at this
time. . . .’’ 305 Also, because we find
that Order No. 841’s compliance
timeframe is reasonable, we will not
allow the individual RTOs/ISOs to
propose their own timeframes.
155. We also decline to adjust the
compliance timeframe to consider
matters that affect distributed energy
resources. In Order No. 841, the
Commission found that more
information was needed with respect to
certain proposed reforms related to
distributed energy resource aggregations
and decided to continue to explore
those proposed reforms in a separate
proceeding in Docket No. RM18–9–
000.306 While Order No. 841 addresses
the participation model for nonaggregated electric storage resources
participating directly in the RTO/ISO
markets, the proceeding in Docket No.
RM18–9–000 involves issues related to
RTO/ISO market rules for distributed
energy resources participating through
aggregations. Thus, no topic addressed
in Docket No. RM18–9–000 limits the
ability of the RTOs/ISOs to move
forward with implementation of Order
No. 841, and we do not find that it is
necessary to delay the implementation
of the reforms for electric storage
resources located on the distribution
system or behind the meter in Order No.
841 pending the outcome of the
proceeding on distributed energy
resource aggregations in Docket No.
RM18–9–000.
156. Additionally, we deny Xcel
Energy Services’ request for rehearing
regarding a cost recovery mechanism for
distribution utility upgrades and
improvements required to implement
Order No. 841. The requirements of
Order No. 841 apply to the RTOs/ISOs,
not distribution utilities, and therefore
this request is outside the scope of this
proceeding. As stated in Order No. 841,
304 Order
No. 841, 162 FERC ¶ 61,127 at P 349.
P 348. See also id. P 349 (noting that some
commenters provided feedback on the NOPR
indicating that acting on only the electric storage
components would expedite compliance and
implementation).
306 Id. P 5.
we are not changing the responsibilities
of the distribution utilities or their
ability to allocate any costs that they
incur in operating and maintaining their
respective power systems.307
157. We find that AES Companies’
concerns regarding the February 1 Order
are moot. Since AES Companies
requested rehearing in this docket, the
Commission has issued orders 308
addressing these rehearing requests and
MISO’s compliance obligations in that
separate proceeding. Any concerns AES
Companies may have regarding MISO’s
compliance obligations in that separate
proceeding are appropriately addressed
in that proceeding and accordingly the
Commission will not consider them
here.
IV. Document Availability
158. 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 (https://
www.ferc.gov) and in the Commission’s
Public Reference Room during normal
business hours (8:30 a.m. to 5:00 p.m.
Eastern time) at 888 First Street NE,
Room 2A, Washington, DC 20426.
159. 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 of this
document, excluding the last three
digits, in the docket number field.
160. 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. Email
the Public Reference Room at
public.referenceroom@ferc.gov.
List of Subjects in 18 CFR Part 35
Electric power rates, Electric utilities.
Issued: May 16, 2019.
Kimberly D. Bose,
Secretary.
In consideration of the foregoing, the
Commission amends part 35, chapter I,
title 18 of the Code of Federal
Regulations as follows:
305 Id.
PO 00000
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Fmt 4701
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307 Id.
P 274.
308 Indianapolis
Power & Light Co. v.
Midcontinent Indep. Sys. Operator, Inc., 162 FERC
¶ 61,266 (2018); Midcontinent Indep. Sys. Operator,
Inc., 164 FERC ¶ 61,109 (2018).
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Federal Register / Vol. 84, No. 100 / Thursday, May 23, 2019 / Rules and Regulations
§ 35.28 Non-discriminatory open access
transmission tariff.
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. In § 35.28, paragraph (g)(9)(i)(B) is
revised as follows:
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■
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*
*
*
*
(g) * * *
(9) * * *
(i) * * *
(B) Enables a resource using the
participation model for electric storage
resources to be dispatched and ensures
PO 00000
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23927
that such a dispatchable resource can
set the wholesale market clearing price
as both a wholesale seller and wholesale
buyer consistent with rules that govern
the conditions under which a resource
can set the wholesale price;
*
*
*
*
*
[FR Doc. 2019–10742 Filed 5–22–19; 8:45 am]
BILLING CODE 6717–01–P
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]]>Agencies
[Federal Register Volume 84, Number 100 (Thursday, May 23, 2019)]
[Rules and Regulations]
[Pages 23902-23927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10742]
[[Page 23901]]
Vol. 84
Thursday,
No. 100
May 23, 2019
Part IV
Department of Energy
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Federal Energy Regulatory Commission
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18 CFR Part 35
Electric Storage Participation in Markets Operated by Regional
Transmission Organizations and Independent System Operators; Final Rule
Federal Register / Vol. 84 , No. 100 / Thursday, May 23, 2019 / Rules
and Regulations
[[Page 23902]]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 35
[Docket Nos. RM16-23-001; AD16-20-001; Order No. 841-A]
Electric Storage Participation in Markets Operated by Regional
Transmission Organizations and Independent System Operators
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Order on rehearing and clarification.
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SUMMARY: The Federal Energy Regulatory Commission addresses petitions
for rehearing and clarification and generally affirms its
determinations in Order No. 841, amending its regulations under the
Federal Power Act to remove barriers to the participation of electric
storage resources in the capacity, energy, and ancillary service
markets operated by Regional Transmission Organizations and Independent
System Operators.
DATES: This order on rehearing and clarification will become effective
August 21, 2019.
FOR FURTHER INFORMATION CONTACT:
Kaitlin Johnson (Technical Information), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426, (202) 502-8542, [email protected]
Karin Herzfeld (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, (202) 502-8459, [email protected]
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph No.
I. Introduction...................................... 1
II. Discussion....................................... 5
A. Definition of Electric Storage Resource....... 5
1. Final Rule................................ 5
2. Requests for Rehearing or Clarification... 11
3. Commission Determination.................. 30
B. Participation Model for Electric Storage 63
Resources.......................................
1. Final Rule................................ 63
2. Requests for Rehearing or Clarification... 64
3. Commission Determination.................. 65
C. Eligibility of Electric Storage Resources To 66
Participate in the RTO/ISO Markets..............
1. Final Rule................................ 66
2. Requests for Rehearing or Clarification... 67
3. Commission Determination.................. 68
D. Participation in the RTO/ISO Markets as Supply 69
and Demand......................................
1. Eligibility To Participate as a Wholesale 69
Seller and Wholesale Buyer..................
2. Participation as Price Takers............. 82
E. Physical and Operational Characteristics of 86
Electric Storage Resources......................
1. Requirement To Incorporate Bidding 86
Parameters as Part of the Electric Storage
Resource Participation Model................
F. Minimum Size Requirement...................... 94
1. Final Rule................................ 94
2. Requests for Rehearing or Clarification... 98
3. Commission Determination.................. 102
G. Energy Used To Charge Electric Storage 107
Resources (Charging Energy).....................
1. Price for Charging Energy................. 107
2. Metering and Accounting Practices for 124
Charging Energy.............................
III. Compliance Requirements......................... 145
A. Final Rule.................................... 145
B. Requests for Rehearing or Clarification....... 147
C. Commission Determination...................... 154
IV. Document Availability............................ 158
I. Introduction
1. On February 15, 2018, the Federal Energy Regulatory Commission
(Commission) issued Order No. 841, which established reforms to remove
barriers to the participation of electric storage resources \1\ in the
Regional Transmission Organization and Independent System Operator
markets (RTO/ISO markets).\2\ The Commission found that existing RTO/
ISO market rules are unjust and unreasonable in light of barriers that
they present to the participation of electric storage resources in the
RTO/ISO markets, thereby reducing competition and failing to ensure
just and reasonable rates.\3\ To help ensure that the RTO/ISO markets
produce just and reasonable rates, pursuant to the Commission's legal
authority under Federal Power Act (FPA) section 206,\4\ the Commission
in Order No. 841 modified Sec. 35.28 of the Commission's regulations
\5\ to require each RTO/ISO to revise its tariff to establish market
rules that, recognizing the physical and operational characteristics of
electric storage resources, facilitate their participation in the RTO/
ISO markets.\6\
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\1\ Electric Storage Participation in Markets Operated by
Regional Transmission Organizations and Independent System
Operators, Order No. 841, 83 FR 9580, 162 FERC ] 61,127, at P 1
(2018). Order No. 841 defined an electric storage resource as a
resource capable of receiving electric energy from the grid and
storing it for later injection of electric energy back to the grid.
Id. P 1 n.1.
\2\ For purposes of Order No. 841, the Commission defined RTO/
ISO markets as the capacity, energy, and ancillary services markets
operated by the RTOs and ISOs. Id. P 1 n.2.
\3\ Id. P 1.
\4\ 16 U.S.C. 824e (2012).
\5\ 18 CFR 35.28 (2018).
\6\ Order No. 841, 162 FERC ] 61,127 at P 1.
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2. More specifically, Order No. 841 required each RTO/ISO to revise
its tariff to establish a participation model consisting of market
rules that, recognizing the physical and
[[Page 23903]]
operational characteristics of electric storage resources, facilitates
their participation in the RTO/ISO markets.\7\ For each RTO/ISO, the
tariff provisions for the participation model for electric storage
resources must (1) ensure that a resource using the participation model
for electric storage resources is eligible to provide all capacity,
energy, and ancillary services that it is technically capable of
providing in the RTO/ISO markets; (2) ensure that a resource using the
participation model for electric storage resources can be dispatched
and can set the wholesale market clearing price as both a wholesale
seller and wholesale buyer consistent with existing market rules that
govern when a resource can set the wholesale price; (3) account for the
physical and operational characteristics of electric storage resources
through bidding parameters or other means; and (4) establish a minimum
size requirement for participation in the RTO/ISO markets that does not
exceed 100 kW.\8\ Additionally, Order No. 841 directed each RTO/ISO to
specify that the sale of electric energy from the RTO/ISO markets to an
electric storage resource that the resource then resells back to those
markets must be at the wholesale locational marginal price (LMP).
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\7\ Id. P 3. In Order No. 841, the Commission used the term
``participation model'' to refer to distinct tariff provisions that
an RTO/ISO creates for a particular type of resource when that type
of resource has unique physical and operational characteristics or
other attributes that warrant distinctive treatment from other
market participants. The Commission further explained that it was
requiring a participation model for electric storage resources that
will help facilitate the participation of electric storage resources
in the RTO/ISO markets. Id.
\8\ Id. P 4.
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3. The following petitioners filed timely requests for rehearing or
rehearing and clarification of Order No. 841: AES Companies; American
Municipal Power, Inc., American Public Power Association, and National
Rural Electric Cooperative Association (collectively, AMP/APPA/NRECA);
California Energy Storage Alliance; California Independent System
Operator Corporation (CAISO); Edison Electric Institute (EEI);
Midcontinent Independent System Operator, Inc. (MISO); National
Association of Regulatory Utility Commissioners (NARUC); Transmission
Access Policy Study Group (TAPS); and Xcel Energy Services Inc. (Xcel
Energy Services).\9\ Organization of MISO States; Pacific Gas and
Electric Company; PJM Interconnection, L.L.C. (PJM); and Southwest
Power Pool, Inc. (SPP) filed requests for clarification. For the
reasons discussed below, we deny the requests for rehearing and deny in
part and grant in part the requests for clarification.
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\9\ Advanced Energy Economy, Energy Storage Association, and
Monitoring Analytics, LLC acting in its capacity as the Independent
Market Monitor for PJM filed answers to the requests for rehearing
or clarification. Title 18 CFR 385.713(d)(1), Rule 713(d)(1) of the
Commission's Rules of Practice and Procedure, prohibits an answer to
a request for rehearing. Accordingly, we reject these answers.
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4. Specifically, we grant SPP's request for clarification that
Order No. 841 does not require an RTO/ISO to create and provide a
capacity product that an RTO/ISO market does not otherwise offer. We
also grant PJM's request for clarification that the final rule allows
for flexibility in how RTOs/ISOs account for the physical and
operational characteristics of electric storage resources, including
State of Charge. We further grant EEI's request to clarify that the
Commission will not dismiss as per se unreasonable any proposal to
establish a non-facility-specific rate for wholesale distribution
service to an electric storage resource for its charging. We also grant
CAISO's request to clarify that an RTO/ISO could require verification
from the host distribution utility that it is unable or unwilling to
net wholesale demand from retail settlement before the RTO/ISO ceases
to settle an electric storage resource's wholesale demand at the
wholesale LMP. Finally, we grant clarification of the Commission's
finding that applicable transmission charges should apply when an
electric storage resource is charging to resell energy at a later time.
We also modify Sec. 35.28(g)(9)(i)(B) of the Commission's regulations
to clarify that each RTO/ISO is required to allow resources using the
participation model for electric storage resources to participate in
the RTO/ISO markets as dispatchable resources, not that such resources
are required to be dispatchable to use that participation model.
II. Discussion
A. Definition of Electric Storage Resource
1. Final Rule
5. In Order No. 841, the Commission revised Sec. 35.28(b) of the
Commission's regulations to define an electric storage resource as ``a
resource capable of receiving electric energy from the grid and storing
it for later injection of electric energy back to the grid.'' \10\ The
Commission stated that this definition is intended to cover electric
storage resources capable of receiving electric energy from the grid
and storing it for later injection of electric energy back to the grid,
regardless of their storage medium (e.g., batteries, flywheels,
compressed air, and pumped-hydro). Additionally, the Commission stated
that electric storage resources located on the interstate transmission
system, on a distribution system, or behind the meter fall under this
definition. The Commission stated that, by including all electric
storage technologies, and by allowing resources that are interconnected
to the transmission system, distribution system, or behind the meter to
use the participation model for electric storage resources, the
Commission was ensuring that the market rules will not be designed for
any particular electric storage technology.\11\
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\10\ Order No. 841, 162 FERC ] 61,127 at P 29.
\11\ Id.
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6. The Commission observed that an electric storage resource that
injects electric energy back to the grid for purposes of participating
in an RTO/ISO market engages in a sale of electric energy at wholesale
in interstate commerce.\12\ As a result, the Commission found that such
an electric storage resource must fulfill certain responsibilities set
forth in the FPA and the Commission's rules and regulations.\13\
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\12\ Id. P 30. The Commission also observed that injections of
electric energy back to the grid do not necessarily trigger the
Commission's jurisdiction. Id. n.49 (citing Sun Edison LLC, 129 FERC
] 61,146 (2009), reh'g granted on other grounds, 131 FERC ] 61,213
(2010) (the Commission's jurisdiction would arise only when a
facility operating under a state net metering program produces more
power than it consumes over the relevant netting period);
MidAmerican Energy Co., 94 FERC ] 61,340 (2001)).
\13\ Id. P 30. The Commission provided the following examples of
such responsibilities: Filing rates under FPA section 205
(potentially including obtaining market-based rate authority);
submitting FPA sections 203 and 204 filings related to corporate
mergers and other activities; and fulfilling FPA section 301
accounting obligations and FPA section 305(b) interlocking
directorate obligations. Id. (citing 16 U.S.C. 824b, 824c, 824d,
825, 825d(b)).
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7. The Commission disagreed with commenters who asserted that the
definition of an electric storage resource should be limited to those
electric storage resources that are interconnected to the transmission
system.\14\ The Commission found that electric storage resources
interconnected to the distribution system are already participating in
the RTO/ISO markets \15\ and that they should continue to be able to do
so. The Commission stated that such a limitation also would be
inconsistent with the participation of other types of resources because
various types of traditional generation and demand-side resources that
are not connected directly to the transmission
[[Page 23904]]
system currently participate in the RTO/ISO markets.
---------------------------------------------------------------------------
\14\ Id. P 31.
\15\ Id. (citing PJM Interconnection L.L.C., 149 FERC ] 61,185
(2014), order on reh'g, 151 FERC ] 61,231 (2015)).
---------------------------------------------------------------------------
8. The Commission also explained that, by ``capable of . . . later
injection of electric energy back to the grid,'' it meant that the
electric storage resource is both physically designed and configured to
inject electric energy back onto the grid and, as relevant, is
contractually permitted to do so (e.g., per the interconnection
agreement between an electric storage resource that is interconnected
on a distribution system or behind-the-meter with the distribution
utility to which it is interconnected).\16\ Consequently, the
Commission found that the definition of an electric storage resource
excludes a resource that is either (1) physically incapable of
injecting electric energy back onto the grid due to its design or
configuration or (2) contractually barred from injecting electric
energy back onto the grid. Further, the Commission explained that Order
No. 841 requires each RTO/ISO to implement market rules applicable to
electric storage resources, as defined therein, that voluntarily seek
to participate in the RTO/ISO markets; Order No. 841 does not require
electric storage resources to participate in those markets.\17\
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\16\ Id. P 33.
\17\ Id. P 35.
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9. The Commission stated that it has exclusive jurisdiction over
the wholesale markets and the criteria for participation in those
markets, including the wholesale market rules for participation of
resources connected at or below distribution-level voltages.\18\ The
Commission also noted its understanding that numerous resources
connected to the distribution system participate in the RTO/ISO markets
today.\19\ Under those circumstances, the Commission was not persuaded
to grant commenters' request that the Commission allow states to decide
whether electric storage resources in their state that are located
behind a retail meter or on the distribution system are permitted to
participate in the RTO/ISO markets through the electric storage
resource participation model.
---------------------------------------------------------------------------
\18\ Id. (citing FERC v. Elec. Power Supply Ass'n, 136 S. Ct.
760 (2016) (EPSA); Advanced Energy Economy, 161 FERC ] 61,245, at PP
59-60 (2017) (AEE), reh'g denied, 163 FERC ] 61,030 (2018) (AEE
Rehearing Order)).
\19\ Id. (citing Southern California Edison Co., Docket No.
ER10-1356-000 (2010) (accepting Southern California Edison's
Wholesale Distribution Access Tariff); PJM Interconnection, L.L.C.,
Docket No. ER11-3148-000 (2011) (delegated letter order) (accepting
Wholesale Market Participation Agreement among PJM, CleanLight
Power, L.L.C. and Public Service Electric and Gas Company); PJM
Manual 14C, section 1.3 (discussing requirements of Wholesale Market
Participation Agreements)).
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10. That said, the Commission emphasized the ongoing, vital role of
the states with respect to the development and operation of electric
storage resources.\20\ The Commission noted that such state
responsibilities include, among other things, retail services and
matters related to the distribution system, including design,
operations, power quality, reliability, and system costs. The
Commission added that nothing in Order No. 841 was intended to affect
or implicate the responsibilities of distribution utilities to maintain
the safety and the reliability of the distribution system or their use
of electric storage resources on their systems. Further, in Order No.
841, the Commission added Sec. 35.28(g)(9)(ii) to the Commission's
regulations to require that the sale of electric energy from the RTO/
ISO markets to an electric storage resource that the resource then
resells back to those markets be at the wholesale LMP.\21\
---------------------------------------------------------------------------
\20\ Id. P 36.
\21\ The substantive requirements of this determination are
discussed further in section II.G. (Energy Used to Charge Electric
Storage Resources).
---------------------------------------------------------------------------
2. Requests for Rehearing or Clarification
11. Petitioners raise several issues concerning the Commission's
authority with respect to electric storage resources' participation in
RTO/ISO markets. First, some petitioners contend that the Commission
must, or should, provide relevant electric retail regulatory
authorities (RERRA) with an electric storage resource opt-out similar
to that afforded for demand response in Order No. 719. Second,
petitioners raise concerns about the Commission's authority to require
that the sale of electric energy from the RTO/ISO markets to an
electric storage resource that the resource then resells back to those
markets be at the wholesale LMP.
12. Several petitioners \22\ ask the Commission to grant rehearing
or clarification of the Commission's denial of requests to ``allow
states to decide whether electric storage resources in their state that
are located behind a retail meter or on the distribution system are
permitted to participate in the RTO/ISO markets through the electric
storage resource participation model.'' \23\ Generally, these
petitioners contend that the Commission's decision to decline to adopt
an electric storage resource opt-out is a violation of FPA section 201,
which expressly excludes from Commission jurisdiction retail electric
service and facilities for the local distribution of electric
energy.\24\ Petitioners also cite to the Commission's demand response
rule in Order No. 719 and the U.S. Supreme Court's decision in EPSA to
support their proposition that the Commission must adopt an electric
storage resource opt-out.\25\
---------------------------------------------------------------------------
\22\ See e.g., AMP/APPA/NRECA; EEI; NARUC; Organization of MISO
States; TAPS; and Xcel Energy Services.
\23\ Order No. 841, 162 FERC ] 61,127 at P 35 (referred to
herein as the decision not to adopt an ``electric storage resource
opt-out'').
\24\ See, e.g., AMP/APPA/NRECA Rehearing Request at 8 (citing 16
U.S.C. 824(b); NARUC Rehearing Request at 3 (citing 16 U.S.C.
824(b), 824o(i); Cal. Indep. Sys. Operator Corp. v. FERC, 372 F.3d
395, 398-99 (D.C. Cir. 2004)); Xcel Energy Services Rehearing
Request at 8.
\25\ See Wholesale Competition in Regions with Organized
Electric Markets, Order No. 719, 125 FERC ] 61,071 (2008), order on
reh'g, Order No. 719-A, 128 FERC ] 61,059, order on reh'g, Order No.
719-B, 129 FERC ] 61,252 (2009); EPSA, 136 S. Ct. 760.
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a. Whether the Commission Is Required To Adopt an Opt-Out
13. AMP/APPA/NRECA ask the Commission to grant rehearing and
declare that Order No. 841 is limited to RTO/ISO market rules, and
nothing in Order No. 841 overrides state laws or tariff requirements
that might prohibit or limit an electric storage resource
interconnected with the distribution system or behind a retail meter
from directly accessing the wholesale market.\26\ They assert that the
Commission does not have authority to disregard or override state and
local restrictions on the participation of distribution-level and
behind-the-meter electric storage resources in wholesale markets
because FPA section 201(b) reserves to the states the regulation of
retail service and specifically excludes local distribution facilities
from the Commission's jurisdiction.\27\ They further argue that the
Commission lacks authority to compel entities exempt from the
Commission's rate jurisdiction under FPA section 201(f), such as public
power and cooperative utilities, to allow retail behind-the-meter
electric storage resources to participate in wholesale markets.\28\
They contend that, while certain distribution-connected resources may
participate in wholesale markets, the Commission has indicated that
``the vast majority of small generator interconnections will be with
state jurisdictional facilities'' and that such interconnections will
be governed by state law.\29\ Therefore, they argue that
[[Page 23905]]
the Commission has exceeded its authority if Order No. 841 indicates
that an electric storage resource taking retail service from a
distribution utility may disregard retail service terms and conditions
that limit direct participation in the wholesale market.\30\
---------------------------------------------------------------------------
\26\ AMP/APPA/NRECA Rehearing Request at 8.
\27\ Id. at 9 (citing 16 U.S.C. 824(b)(1); EPSA, 136 S. Ct. at
775).
\28\ Id. at 9 n.25.
\29\ Id. at 9 (citing Standardization of Small Generator
Interconnection Agreements and Procedures, Order No. 2006-A, 113
FERC ] 61,195, at P 105 (2005), clarified, Order No. 2006-B, 116
FERC ] 61,046 (2006), corrected, 71 FR 53,965 (Sept. 13, 2006)).
\30\ Id. at 9.
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14. TAPS similarly asserts that states' exclusive jurisdiction to
set the terms and conditions of retail service includes conditioning
receipt of retail service on the customer's agreement as to whether and
how to interconnect behind-the-meter resources and what the customer
may do with such resources.\31\ Xcel Energy Services contends that
granting rehearing would not allow states to change the Commission's
criteria for participating in wholesale markets, but would require
electric storage resources connected at the distribution level or
behind the meter to also ensure that their activities are in accordance
with state legal requirements governing retail sales and use of the
distribution system.\32\
---------------------------------------------------------------------------
\31\ TAPS Rehearing Request at 7-8.
\32\ Xcel Energy Services Rehearing Request at 6-7.
---------------------------------------------------------------------------
15. Some petitioners argue that, while the Commission cites EPSA
\33\ for the proposition that it ``has exclusive jurisdiction over the
wholesale markets and the criteria for participation in those
markets,'' \34\ EPSA does not support the Commission's decision not to
adopt an electric storage resource opt-out.\35\ AMP/APPA/NRECA assert
that (1) EPSA concerned federal authority to regulate wholesale demand
response compensation, not state authority over demand response
resource participation,\36\ (2) the Order No. 719 opt-out rules were
not at issue in EPSA because the Supreme Court treated those rules as
an established part of the regulatory framework for demand
response,\37\ and (3) the authority of states to veto retail customer
participation in demand response aggregations was a reason for the
Court's finding that the Commission did not improperly intrude on
states' jurisdiction over retail sales.\38\ NARUC argues that, while
EPSA supports the assertion that the Commission may determine how
resources participate in the RTO/ISO markets because the Commission has
the authority to determine how prices are set, EPSA does not support
the finding that states cannot determine whether resources can
participate in the RTO/ISO markets.\39\
---------------------------------------------------------------------------
\33\ 136 S. Ct. 760.
\34\ Order No. 841, 162 FERC ] 61,127 at P 35.
\35\ See, e.g., AMP/APPA/NRECA, NARUC, and Xcel Energy Services.
\36\ AMP/APPA/NRECA Rehearing Request at 10-11 (citing Order No.
841, 162 FERC ] 61,127 at P 35; EPSA, 136 S. Ct. at 773).
\37\ Id. at 11 (citing EPSA, 136 S. Ct. at 771, 772, 779-80).
They assert that the Court had no reason to address and did not
address the scope of the Commission's authority to determine which
demand response resources are eligible to participate in the
wholesale market in the first place, nor did it suggest that the
Commission may override retail service terms and conditions that
might restrict or condition such eligibility. Id.
\38\ Id. (citing EPSA, 136 S. Ct. at 779-80).
\39\ NARUC Rehearing Request at 6 (citing EPSA, 136 S. Ct. at
771, 773, 780).
---------------------------------------------------------------------------
16. Xcel Energy Services claims that the Supreme Court permitted
the Commission's demand response pricing changes in EPSA because,
there, the Commission addressed only ``transactions occurring on the
wholesale market,'' and ``every aspect of the regulatory plan
happen[ed] exclusively on the wholesale market and govern[ed]
exclusively that market's rules.'' \40\ Xcel Energy Services argues
that, unlike the indirect effects on retail sales that the Supreme
Court permitted in EPSA, Order No. 841 directly affects retail sales
because it allows distribution-connected and behind-the-meter electric
storage resources to make wholesale sales and purchases, which
fundamentally changes how retail sales occur and directly interferes
with a state's ability to regulate retail sales.\41\ For instance, Xcel
Energy Services argues that, if a retail customer sells into the
wholesale market and sells more than it purchases for the applicable
billing period, then what had previously been a retail sale by the
distribution company is now a wholesale sale within the Commission's
jurisdiction.\42\ Xcel Energy Services adds that, because Order No. 841
entitles an electric storage resource to purchase at wholesale from the
RTO/ISO market, Order No. 841 removes what was previously a franchised
retail sale by the distribution provider, which could preempt the
distribution utility's state-granted franchise.\43\ Xcel Energy
Services also claims that, unlike Order No. 745, which was at issue in
EPSA, Order No. 841 will require distribution utilities to establish
extensive and expensive processes to assist the market participation of
distribution-connected and behind-the-meter electric storage resources,
including (1) processes that allow electric storage resources to use
their wires to transmit energy to and from the electric transmission
grid, and (2) processes to separately track retail and wholesale sales
and purchases.\44\ Xcel Energy Services further argues that Order No.
841 will require distribution providers to manage both state-regulated
and Commission-jurisdictional interconnections, interfere with state
regulation of distribution system reliability, permit resources to
cycle in and out of state jurisdiction, and force states to accommodate
the Commission's electric storage policy.\45\
---------------------------------------------------------------------------
\40\ Xcel Energy Services Rehearing Request at 7 (citing EPSA,
136 S. Ct. at 764, 777).
\41\ Id. at 7.
\42\ Id. at 8 (citing Order No. 841, 162 FERC ] 61,127 at P 289
(``The Commission has found that the sale of energy from the grid
that is used to charge electric storage resources for later resale
into the energy or ancillary service markets constitutes a sale for
resale in interstate commerce.'')).
\43\ Id. at 8-9 (citing Order No. 841, 162 FERC ] 61,127 at P
56).
\44\ Id. at 9.
\45\ Id. at 10-12.
---------------------------------------------------------------------------
17. Some petitioners further argue that the Commission's decision
not to adopt an opt-out is inconsistent with other provisions of Order
No. 841 that, according to petitioners, indicate that RERRAs and
distribution utilities have the authority to limit the ability of
electric storage resources to access the RTO/ISO markets.\46\ Some of
these petitioners point to the Commission's finding that ``[t]o the
extent that the host distribution utility is unable . . . or unwilling
to net out any energy purchases associated with . . . electric storage
resources' wholesale charging activities from the host customer's
retail bill, the RTO/ISO would be prevented from charging that resource
wholesale rates for the charging energy for which it is already paying
retail rates.'' \47\ These petitioners also argue that, by finding that
an electric storage resource is not eligible, by definition, for
participation in the RTO/ISO markets if it is ``contractually barred
from injecting electric energy back onto the grid,'' the Commission
acknowledged that an electric storage resource could be barred from
participation by a distribution interconnection agreement.\48\ NARUC
asserts that the Commission failed, however, to acknowledge that the
states have jurisdiction over those agreements.\49\
---------------------------------------------------------------------------
\46\ See, e.g., AMP/APPA/NRECA, NARUC, Organization of MISO
States, and TAPS.
\47\ AMP/APPA/NRECA Rehearing Request at 6; TAPS Rehearing
Request at 7 (citing Order No. 841, 162 FERC ] 61,127 at P 326).
\48\ AMP/APPA/NRECA Rehearing Request at 6 (citing Order No.
841, 162 FERC ] 61,127 at P 33 (``per the interconnection agreement
between an electric storage resource that is interconnected on a
distribution system or behind-the-meter with a distribution utility
to which it is interconnected'')); NARUC Rehearing Request at 8
(citing Order No. 841, 162 FERC ] 61,127 at P 33).
\49\ NARUC Rehearing Request at 8.
---------------------------------------------------------------------------
18. NARUC also adds that PJM Manual 14C, which the Commission cited
as support for the finding that
[[Page 23906]]
distribution-level resources currently participate in the wholesale
markets, indicates that the Commission does not determine whether
distribution-level resources can participate in wholesale markets.\50\
NARUC asserts that PJM's Manual 14C specifies that the only reason for
a Wholesale Market Participation Agreement is to facilitate
participation by distribution-level generators over which the
Commission lacks jurisdiction.\51\ According to NARUC, the Commission
and PJM generally are not involved in the physical interconnection of
distribution-level facilities using the Wholesale Market Participation
Agreement; rather, it is a product of federal-state comity that should
not be mistaken for an exercise of exclusive federal jurisdiction.\52\
---------------------------------------------------------------------------
\50\ Id. at 6.
\51\ Id. at 6-7 (citing PJM Manual 14C, Generation and
Transmission Interconnection Facility Construction, Revision 12,
section 1.3 (``Generators planning to connect to the local
distribution systems at locations that are not under FERC
jurisdiction and wish to participate in PJM's market need to execute
a PJM Wholesale Market Participation Agreement'')).
\52\ Id. (citing PJM Manual 14C: Generation and Transmission
Interconnection Facility Construction, Revision 12, section 1.3
(``Generators planning to connect to the local distribution systems
at locations that are not under FERC jurisdiction and wish to
participate in PJM's market need to execute a PJM Wholesale Market
Participation Agreement''); PJM Manual 14A: New Service Request
Process, Revision 20, 4.3 (``Developers interconnecting to non-FERC
jurisdictional facilities who intend on participating in the PJM
wholesale market will receive a three party agreement known as a
[Wholesale Market Participation Agreement]. The [Wholesale Market
Participation Agreement] is a non-Tariff agreement which must be
filed with the FERC. The [Wholesale Market Participation Agreement]
is essentially an ISA without interconnection provisions.'')
(emphasis added)).
---------------------------------------------------------------------------
19. AMP/APPA/NRECA, NARUC, and TAPS also point to the Commission's
acknowledgment in Order No. 2006-A that the vast majority of
distribution-level interconnections are subject to state, rather than
Commission, jurisdiction.\53\ TAPS asserts that, because the Commission
has acknowledged that the vast majority of distribution-level
interconnections are subject to RERRA jurisdiction, the language in
Order No. 841 requiring an electric storage resource to be
``contractually permitted'' to inject electric energy back to the grid
gives RERRAs a veto over wholesale sales by distribution-connected and
behind-the-retail-meter electric storage resources.\54\ TAPS adds that,
while the Commission has reached into the distribution systems of
public utilities in narrow circumstances where the purpose of the
interconnection is for wholesale sales and the distribution facilities
at issue are already subject to the public utility's open access
transmission tariff (OATT), facilities behind the retail meter are
plainly beyond the scope of facilities ``included in a public utility's
Commission-filed OATT.'' \55\ TAPS also states that, with respect to
net metering, the Commission allows the RERRA to set the netting
interval to determine whether a distributed resource makes a net sale
of electricity subject to the Commission's jurisdiction.\56\ TAPS
asserts that, because electric storage resources that rely on energy
purchases to charge always purchase more energy than they sell, if the
RERRA sets a netting interval for such a resource that is longer than
its charge/discharge cycle, there does not appear to be a net sale of
electricity from that resource under the ``MidAmerican standard.'' \57\
---------------------------------------------------------------------------
\53\ AMP/APPA/NRECA Rehearing Request at 9; NARUC Rehearing
Request at 3; TAPS Rehearing Request at 6 n.8 (citing Order No.
2006-A, 113 FERC ] 61,195 at P 105).
\54\ TAPS Rehearing Request at 6 (quoting Order No. 2006-A, 113
FERC ] 61,195 at P 105 (``Order No. 2006 in no way affects rules
adopted by the states for the interconnection of generators with
state jurisdictional facilities. We expect that the vast majority of
small generator interconnections will be with state jurisdictional
facilities. The Commission encourages development of state
interconnection programs, and interconnections with state
jurisdictional facilities continue to be governed by state law.'')).
\55\ Id. at 6 n.8 (quoting Standardization of Generator
Interconnection Agreements and Procedures, Order No. 2003-A, 106
FERC ] 61,220, at PP 710, 730, order on reh'g, Order No. 2003-B, 109
FERC ] 61,287 (2004), order on reh'g, Order No. 2003-C, 111 FERC ]
61,401 (2005), aff'd sub nom. Nat'l Ass'n of Regulatory Util.
Comm'rs v. FERC, 475 F.3d 1277 (D.C. Cir. 2007); Standardization of
Small Generator Interconnection Agreements and Procedures, Order No.
2006, 111 FERC ] 61,220, at P 481, order on reh'g, Order No. 2006-A,
113 FERC ] 61,195 (2005), order granting clarification, Order No.
2006-B, 116 FERC ] 61,046 (2006)).
\56\ TAPS Rehearing Request at 6 n.9 (citing MidAmerican Energy
Co., 94 FERC ] 61,340, at 62,263 (2001); Order No. 2003-A, 106 FERC
] 61,220 at P 747; Sun Edison LLC, 129 FERC ] 61,146, at P 19
(2009), on reh'g, 131 FERC ] 61,213 (2010)).
\57\ Id. at 6 n.9.
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20. Organization of MISO States argues that being ``contractually
permitted'' to inject electric energy back onto the grid could be
interpreted broadly to include the rules surrounding operation and
interconnection to the distribution system or narrowly to address only
technical interconnection rules.\58\ Organization of MISO States asks
the Commission to clarify that nothing in Order No. 841 is intended to
impact existing rules related to interconnection or operation of
resources connected to the distribution system and that each RTO/ISO
may adopt tariff provisions that require compliance with applicable
rules as confirmed by the distribution utility and RERRA before an
asset can be authorized to participate in the RTO/ISO markets.\59\
---------------------------------------------------------------------------
\58\ Organization of MISO States Rehearing Request at 5.
\59\ Id. at 5-6.
---------------------------------------------------------------------------
21. MISO seeks clarification with respect to the Commission's
statement that it did not intend Order No. 841 ``to affect or implicate
the responsibilities of distribution utilities to maintain the safety
and the reliability of the distribution system or their use of electric
storage resources on their systems.'' MISO requests that the Commission
clarify that each RTO/ISO may require a distribution-connected electric
storage resource to comply with interconnection and/or operating
requirements intended to address, to the reasonable satisfaction of the
RTO/ISO, any potential material adverse reliability impacts on the
distribution system raised by the relevant local distribution company.
If the Commission declines to provide this clarification, MISO seeks
rehearing on this issue.
Organization of MISO States similarly asks the Commission to
clarify that an RTO/ISO may propose tariff provisions recognizing a
unique regional situation that requires additional RERRA oversight of
resources connected to the distribution system that participate in
wholesale markets.
b. Whether the Commission Should Exercise Its Discretion and Adopt an
Opt-Out
22. Several petitioners argue that, even if the Commission
concludes that it is not required to adopt an electric storage resource
opt-out, the Commission's decision not to adopt an opt-out is an
unexplained departure from Order No. 719, in which the Commission
reasoned that its demand response resource opt-out properly balanced
the Commission's goal of removing barriers to the development of demand
response resources in the organized wholesale markets with the
interests and concerns of state and local regulatory authorities.\60\
EEI contends that the Commission's sole reason for declining to pursue
a path of cooperative federalism by adopting an opt-out is that
distribution-connected resources already participate in the wholesale
market, which lacks factual support as to penetration and impact.\61\
AMP/APPA/NRECA and TAPS claim that the Commission's decision in Order
No. 841 not to adopt an opt-out for
[[Page 23907]]
electric storage resources is arbitrary or inconsistent because an
electric storage resource may still choose to participate in RTO/ISO
markets as demand response, in which case it would be subject to the
RERRA opt-out rules.\62\
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\60\ See, e.g., AMP/APPA/NRECA, EEI, NARUC, TAPS, and Xcel
Energy Services.
\61\ EEI Rehearing Request at 7 (citing Order No. 841, 162 FERC
] 61,127 at P 35).
\62\ AMP/APPA/NRECA Rehearing Request at 14 n.48 (citing Order
No. 841, 162 FERC ] 61,127 at P 56; 18 CFR 35.28(g)(1)(iii)); TAPS
Rehearing Request at 4 (citing Order No. 841, 162 FERC ] 61,127 at
PP 32, 55-56) (arguing that the electric storage resource owner's
choice of which construct to use to participate in the RTO/ISO
markets should not strip away the RERRA's authority that the
Commission has previously recognized).
---------------------------------------------------------------------------
23. AMP/APPA/NRECA, EEI, and TAPS argue that there is a more
compelling argument for the Commission to adopt an opt-out in Order No.
841 than there was in Order No. 719 because electric storage resources
inject power into the distribution system, thereby creating more
significant operational, safety, and reliability concerns for retail
customer interconnections and distribution systems than demand response
resources.\63\ EEI adds that, in some regions, the infrastructure,
technology and resources are not in place to support large numbers of
distribution-connected electric storage resources participating in the
wholesale markets.\64\ Organization of MISO States notes that, in AEE,
the Commission cited the distinction between wholesale energy
efficiency resources and demand response resources, finding that
``[energy efficiency resources] are not likely to present the same
operational and day-to-day planning complexity.'' \65\ Organization of
MISO States argues that the potential moment-to-moment changes in
utilization of electric storage resources are more in line with demand
response than energy efficiency.\66\
---------------------------------------------------------------------------
\63\ See, e.g., EEI Rehearing Request at 5 (claiming that the
charging and discharging activity of distribution-connected electric
storage resources could raise complicated interactions between
wholesale and retail market activity that the distribution utility
and RERRA will need to address); TAPS Rehearing Request at 4
(claiming that the need for deference is especially high for behind-
the-retail-meter electric storage resources that may involve retail
customers using retail interconnections to make wholesale purchases
and sales).
\64\ EEI Rehearing Request at 5.
\65\ Organization of MISO States Rehearing Request at 3 (citing
Order No. 841, 162 FERC ] 61,127 at P 35; AEE, 161 FERC ] 61,245 at
P 63).
\66\ Id. at 3.
---------------------------------------------------------------------------
24. TAPS asserts that the lack of an opt-out creates confusion that
will undermine investment and create market uncertainty.\67\ Therefore,
TAPS argues that, instead of leaving RERRA policies to be implemented
on a case-by-case basis, the Commission should provide a
straightforward mechanism to enable RTOs/ISOs to implement RERRA
decisions in a systematic and orderly way.\68\ TAPS argues that the
opt-out approach afforded for demand response in Order No. 719 has a
proven record and can be implemented easily by RTOs/ISOs because they
already use the mechanism for demand response resources. According to
TAPS, this approach could help avoid the need to consider disruptive
market re-runs or alternative enforcement mechanisms if an RTO/ISO
accepts supply offers or demand bids from distribution-connected or
behind-the-retail-meter electric storage resources that are barred from
making such sales or purchases under state law.\69\
---------------------------------------------------------------------------
\67\ TAPS Rehearing Request at 9.
\68\ Id. at 10.
\69\ Id. at 11.
---------------------------------------------------------------------------
25. NARUC also expresses concern that the Commission's decision not
to adopt an opt-out in Order No. 841 could inhibit state energy storage
initiatives and posits that adopting an opt-out would provide clarity
that would advance federal and state policymakers' shared interest in a
resilient electric system with a diverse resource mix. If the
Commission does not grant rehearing on the opt-out, NARUC asks the
Commission to defer the determination of this jurisdictional issue to
Docket No. RM18-9-000.\70\
---------------------------------------------------------------------------
\70\ NARUC Rehearing Request at 9.
---------------------------------------------------------------------------
26. If the Commission does not grant rehearing and provide an opt-
out for electric storage resources, Xcel Energy Services requests that
the Commission allow states, in conjunction with RTOs/ISOs, to
determine the appropriate minimum capacity threshold at which electric
storage resources connected to the distribution system or located
behind a retail meter can participate in wholesale markets.\71\
---------------------------------------------------------------------------
\71\ Excel Energy Services Rehearing Request at 16.
---------------------------------------------------------------------------
c. Other Issues
27. SPP seeks clarification regarding whether it is the
responsibility of the RTO/ISO to ensure that the necessary contractual
arrangements are in place to permit an electric storage resource to
inject energy onto the grid, or whether it is sufficient for an RTO/ISO
to require an electric storage resource to attest that it has all the
necessary contractual arrangements in place.\72\ SPP states that it has
taken the attestation approach in the area of demand response
aggregation and seeks confirmation that such an approach would be
sufficient for SPP to determine that a facility meets that particular
qualification for an electric storage resource.\73\
---------------------------------------------------------------------------
\72\ SPP Motion for Clarification at 2 (citing Order No. 841,
162 FERC ] 61,127 at P 33), 13.
\73\ Id. at 2-3.
---------------------------------------------------------------------------
28. SPP also seeks clarification that, while nothing in Order No.
841 requires an electric storage resource to participate in an RTO/ISO
market, this does not supersede other reasons outside of the context of
Order No. 841 that an electric storage resource might be required to
comply with provisions of RTO/ISO tariffs applicable to all resources
and loads.\74\ SPP argues that these generally applicable requirements
are critical as they give SPP awareness of the loads and resources that
may exist within its markets and ensure that its tariff is administered
in a manner that is not unduly discriminatory to any type of load or
resource.\75\
---------------------------------------------------------------------------
\74\ Id. at 3 (citing Order No. 841, 162 FERC ] 61,127 at P 35).
For example, SPP states that it requires all loads and resources
within the SPP region to register with SPP and it has certain must-
offer requirements that apply to all available registered resources.
SPP also states that it requires behind-the-meter resources of 10 MW
or greater to register. Id. at 3-4.
\75\ Id. at 4.
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29. Finally, AMP/APPA/NRECA claim that the assertion of
jurisdiction over the purchase of charging energy as a wholesale sale
presupposes that the electric storage resource may bypass the
distribution utility and purchase directly from the wholesale
market.\76\ TAPS argues that the Commission does not have the authority
to authorize retail customers to purchase energy from entities other
than their distribution utility because the decision to allow a retail
customer to purchase directly from suppliers other than its retail
utility is a matter of state law or voluntary choice by the public-
utility distribution company.\77\
---------------------------------------------------------------------------
\76\ AMP/APPA/NRECA Rehearing Request at 10 (citing Order No.
841, 162 FERC ] 61,127 at P 294 (requiring that the sale of electric
energy from the RTO/ISO markets to an electric storage resource that
the resource then resells back to those markets be at the wholesale
LMP)).
\77\ TAPS Rehearing Request at 8 n.11 (citing New York v. FERC,
535 U.S. 1, 12 n.9, 13, 20, 23 (2002) (quoting Promoting Wholesale
Competition Through Open Access Non-Discriminatory Transmission
Services by Public Utilities; Recovery of Stranded Costs by Public
Utilities and Transmitting Utilities, Order No. 888, FERC Stats. &
Regs. ] 31,036, at 31,782-83, 31,969 (1996), (cross-referenced at 77
FERC ] 61,080), order on reh'g, Order No. 888-A, FERC Stats. & Regs.
] 31,048, (cross-referenced at 78 FERC ] 61,220), order on reh'g,
Order No. 888-B, 81 FERC ] 61,248 (1997), order on reh'g, Order No.
888-C, 82 FERC ] 61,046 (1998), aff'd in relevant part sub nom.
Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C.
Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002)).
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3. Commission Determination
30. We deny rehearing. As a preliminary matter, we decline to defer
the determination of whether to adopt an electric storage resource opt-
out to
[[Page 23908]]
Docket No. RM18-9-000.\78\ That proceeding is focused on issues
relating to distributed energy resource aggregations, while Order No.
841 addresses the participation of non-aggregated electric storage
resources in RTO/ISO markets. We find that the Commission had
sufficient record evidence before it to determine whether to adopt an
electric storage resource opt-out, regardless of its decision to gather
more information with respect to its proposals to remove barriers to
the participation of distributed energy resource aggregations in RTO/
ISO markets in Docket No. RM18-9-000.\79\
---------------------------------------------------------------------------
\78\ See NARUC Rehearing Request at 9.
\79\ See Order No. 841, 162 FERC ] 61,127 at P 5.
---------------------------------------------------------------------------
31. We continue to find that the Commission's establishing the
criteria for participation in the RTO/ISO markets of electric storage
resources, including those resources located on the distribution system
or behind the meter, is essential to the Commission's ability to
fulfill its statutory responsibility to ensure that wholesale rates are
just and reasonable.\80\ Below, we outline the relevant precedent with
respect to the Commission's authority over electric storage
participation in RTO/ISO markets, and then we address arguments raised
by petitioners and the dissent concerning the Commission's decision not
to adopt an electric storage resource opt-out. Finally, we address
arguments that the Commission does not have authority to require that
the sale of electric energy from the RTO/ISO markets to an electric
storage resource that the resource then resells back to those markets
be at the wholesale LMP.
---------------------------------------------------------------------------
\80\ See id. PP 1, 35.
---------------------------------------------------------------------------
a. Whether the Commission Must Adopt an Opt-Out
32. As discussed below, we find that the FPA and relevant precedent
does not legally compel the Commission to adopt an opt-out with respect
to participation in RTO/ISO markets by electric storage resources
interconnected on a distribution system or located behind a retail
meter. FPA section 201 \81\ authorizes the Commission to regulate the
transmission of electric energy in interstate commerce and the
wholesale sale of electric energy in interstate commerce, as well as
all facilities used for such transmission or sale of electric energy.
Section 201 also defines a public utility as ``any person who owns or
operates facilities subject to the jurisdiction of the Commission.''
\82\ FPA sections 205 \83\ and 206 \84\ provide the Commission with
jurisdiction over all rates and charges made, demanded, or received by
any public utility for or in connection with the transmission or sale
of electric energy subject to the Commission's jurisdiction. Those
sections also provide the Commission with jurisdiction over all rules,
regulations, practices, or contracts affecting jurisdictional rates,
charges, or classifications.
---------------------------------------------------------------------------
\81\ 16 U.S.C. 824.
\82\ Id. 824(e).
\83\ Id. 824d.
\84\ Id. 824e.
---------------------------------------------------------------------------
33. In EPSA, the U.S. Supreme Court interpreted those FPA sections
to uphold the Commission's jurisdiction over the participation in RTO/
ISO markets of demand response resources: A type of non-traditional
resource that, by definition, is located behind a customer meter and
generally is located on the distribution system.\85\ The Court did not
find the Commission's authority to be lessened by the location of
demand response resources behind the retail customer meter.
---------------------------------------------------------------------------
\85\ See EPSA, 136 S. Ct. 760; 18 CFR 35.28(b)(4) (defining
demand response as ``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'').
---------------------------------------------------------------------------
34. First, the Court found that the Commission's regulation of
demand response participation in wholesale markets met the
``affecting'' standard in FPA sections 205 and 206 ``with room to
spare.'' \86\ In making this finding, the Court approved a ``common-
sense'' construction of the FPA's language, previously articulated by
the U.S. Court of Appeals for the District of Columbia Circuit (D.C.
Circuit), that ``limit[s] [the Commission]'s `affecting' jurisdiction
to rules or practices that directly affect the wholesale rate.'' \87\
The Court then described, among other considerations, how RTOs/ISOs
employ demand response bids in competitive auctions that balance
wholesale supply and wholesale demand and thereby set wholesale prices.
For these reasons, the Court found that ``[w]holesale demand response,
in short, is all about reducing wholesale rates; so too, then, the
rules and practices that determine how those programs operate.'' \88\
The Court concluded that ``[c]ompensation for demand response thus
directly affects wholesale prices. Indeed, it is hard to think of a
practice that does so more.'' \89\
---------------------------------------------------------------------------
\86\ EPSA, 136 S. Ct. at 774 (referring to the Commission's
jurisdiction under FPA sections 205 and 206 to regulate practices
affecting jurisdictional rates).
\87\ Id. (citing Cal. Indep. Sys. Operator Corp. v. FERC, 372
F.3d 395, 403 (2004) (internal quotation marks omitted)).
\88\ Id. at 774.
\89\ Id. at 775.
---------------------------------------------------------------------------
35. Second, the Court found that the Commission's regulation of
demand response resources did not regulate retail sales in violation of
FPA section 201(b).\90\ In making that finding, the Court rejected
EPSA's arguments that the Commission (1) effectively regulated the
retail price by increasing effective retail rates and (2) forced retail
customers to respond to wholesale price signals for the express purpose
of overriding state policy. Rather, the Court held that the
Commission's regulation did ``anything but increase retail prices'' and
that, ``[i]n promoting demand response, [the Commission] did no more
than follow the dictates of its regulatory mission to improve the
competitiveness, efficiency, and reliability of the wholesale market.''
\91\
---------------------------------------------------------------------------
\90\ Id. at 784.
\91\ Id. at 778-79.
---------------------------------------------------------------------------
36. Finally, the Court stated that the ``finishing blow to both of
EPSA's arguments comes from [the Commission]'s notable solicitude
toward the States.'' \92\ Describing and commenting on the opt-out for
states that the Commission included in Order No. 745, the Court stated
that
---------------------------------------------------------------------------
\92\ Id. at 779. Earlier in its decision, the Court described
the Commission's action as follows: ``Pointing to the Commission's
analysis in Order No. 719, [Order No. 745] explained that the FPA
gives [the Commission] jurisdiction over such bids because they
directly affect wholesale rates. Nonetheless, [Order No. 745] noted,
[the Commission] would continue Order No. 719's policy of allowing
any state regulatory body to prohibit consumers in its retail market
from taking part in wholesale demand response programs.'' Id. at
772.
the Rule allows any State regulator to prohibit its consumers from
making demand response bids in the wholesale market. Although
claiming the ability to negate such state decisions, the Commission
chose not to do so in recognition of the linkage between wholesale
and retail markets and the States' role in overseeing retail sales.
The veto power thus granted to the States belies EPSA's view that
FERC aimed to `obliterate[ ]' their regulatory authority or
`override' their pricing policies. And that veto gives States the
means to block whatever `effective' increases in retail rates demand
response programs might be thought to produce. Wholesale demand
response as implemented in the Rule is a program of cooperative
federalism, in which the States retain the last word. That feature
of the Rule removes any conceivable doubt as to its compliance with
824(b)'s allocation of federal and state authority.\93\
---------------------------------------------------------------------------
\93\ Id. at 779-80 (internal citations omitted).
37. Consistent with EPSA, the Commission found in AEE that,
although the Commission in Order Nos. 719 and 745 granted RERRAs an
opt-out
[[Page 23909]]
from allowing retail customers to participate as wholesale demand
response, the Commission was not obligated to do so.\94\ Like
compensation for demand response, the Commission held that it has
jurisdiction over the participation of energy efficiency resources in
RTO/ISO markets as a practice directly affecting wholesale markets,
rates, and prices.\95\ The Commission found that, because it has
exclusive jurisdiction to regulate the participation of energy
efficiency resources in RTO/ISO markets, RERRAs may not bar, restrict,
or otherwise condition the participation of energy efficiency resources
in RTO/ISO markets unless the Commission expressly gives RERRAs such
authority.\96\ The Commission explained that, as part and parcel of the
participation of energy efficiency resources in RTO/ISO markets, the
terms of eligibility of energy efficiency resource participation in the
RTO/ISO markets has a direct effect on wholesale rates and that the
Commission may set the terms of transactions occurring in the RTO/ISO
markets, including which resources are eligible to participate, to
ensure the reasonableness of wholesale prices and the reliability of
the interstate grid.\97\ The Commission thus concluded that a provision
directly restricting retail customers' participation in RTO/ISO
markets, even if contained in the terms of retail service, nonetheless
intrudes on the Commission's jurisdiction over those markets and
prevents the Commission from carrying out its statutory authority to
ensure that wholesale electricity markets produce just and reasonable
rates.\98\
---------------------------------------------------------------------------
\94\ AEE, 161 FERC ] 61,245 at P 62 (citing EPSA, 136 S. Ct. at
776).
\95\ Id. P 60.
\96\ Id. P 61.
\97\ Id. (citing EPSA, 136 S. Ct. 760 at 784).
\98\ AEE Rehearing Order, 163 FERC ] 61,030 at P 37 (citing
Oneok, Inc. v. Learjet, Inc., 135 S. Ct. 1591, 1600 (2015) (finding
that the proper test for determining whether a state action is
preempted is ``whether the challenged measures are `aimed directly
at interstate purchasers and wholesalers for resale' or not'')
(Oneok) (quoting N. Natural Gas Co. v. State Corp. Comm'n of Kan.,
372 U.S. 84, 94 (1963)); Nantahala Power & Light Co. v. Thornburg,
476 U.S. 953, 970 (finding that ``a State may not exercise its
undoubted jurisdiction over retail sales to prevent the wholesaler-
as-seller from recovering the costs of paying the FERC-approved
rate'')).
---------------------------------------------------------------------------
38. Several of these findings are relevant to the Commission's
decision to apply Order No. 841 to electric storage resources,
including those connected at distribution-level voltages or behind the
meter, without adopting an electric storage resource opt-out.\99\ The
Commission has exclusive jurisdiction over the wholesale markets and
the criteria for participation in those markets, including the
wholesale market rules for participation of resources connected at
distribution-level voltages or behind the meter.\100\ As the Commission
previously has found, the authority to determine which resources are
eligible to participate in the RTO/ISO markets is a fundamental
component of the regulation of the RTO/ISO markets.\101\ By applying
Order No. 841 to electric storage resources connected at distribution-
level voltages or behind the meter, and by finding that the Commission
is not required to adopt an electric storage resource opt-out, the
Commission is not specifying any terms of sale at retail. Rather, the
Commission is merely exercising its authority under the FPA to
``regulate what takes place in the wholesale market'' by ensuring that
technically capable resources are eligible and able to participate in
those markets.\102\
---------------------------------------------------------------------------
\99\ See Order No. 841, 162 FERC ] 61,127 at P 35.
\100\ Id. P 35 (citing EPSA, 136 S. Ct. 760).
\101\ See AEE Rehearing Order, 163 FERC ] 61,030 at P 36.
\102\ See EPSA, 136 S. Ct. at 776.
---------------------------------------------------------------------------
39. We disagree with assertions by petitioners and the dissent
that, unless the Commission adopts an opt-out, the Commission's
regulation of the RTO/ISO market participation of distribution-
connected and behind-the-meter electric storage resources violates FPA
section 201.\103\ We find that the Supreme Court's jurisdictional
findings in EPSA regarding wholesale demand response apply with at
least as much force to participation in RTO/ISO markets by electric
storage resources engaged in wholesale sales in interstate commerce,
even where those resources are interconnected on a distribution system
or located behind a retail meter. Order No. 841 directed changes to
wholesale RTO/ISO markets to remove barriers to the participation of
resources that directly engage in sales for resale under the FPA, an
objective that is at the very core of the Commission's jurisdictional
responsibilities. We acknowledge that the Commission's actions in Order
No. 841 to improve wholesale markets will have impacts beyond those
markets. However, as the Supreme Court stated in EPSA, ``[w]hen FERC
regulates what takes place on the wholesale market, as part of carrying
out its charge to improve how that market runs, then no matter the
effect on retail rates, Sec. 824(b) imposes no bar.'' \104\
---------------------------------------------------------------------------
\103\ See, e.g., AMP/APPA/NRECA Rehearing Request at 8; NARUC
Rehearing Request at 3; Xcel Energy Services Rehearing Request at 8;
Electric Storage Participation in Markets Operated by Regional
Transmission Organizations and Independent System Operators, Order
No. 841-A, 167 FERC ] 61,154, at PP 5-12 (McNamee, Comm'r,
concurring in part and dissenting in part) (Dissent).
\104\ EPSA, 136 S. Ct. at 776.
---------------------------------------------------------------------------
40. Further, contrary to the petitioners' arguments, the Court's
jurisdictional conclusion in EPSA did not rest upon the fact that
states were granted an opt-out. As alluded to above, the Court
described how its ``analysis of FERC's regulatory authority proceeds''
without referring to an opt-out, stating:
First, the practices at issue in the Rule--market operators'
payments for demand response commitments--directly affect wholesale
rates. Second, in addressing those practices, the Commission has not
regulated retail sales. Taken together, those conclusions establish
that the Rule complies with the FPA's plain terms.\105\
---------------------------------------------------------------------------
\105\ Id. at 773. Similarly, after concluding its discussion of
the first of these two points, the Court stated, ``The above
conclusion does not end our inquiry into the Commission's statutory
authority; to uphold the Rule, we also must determine that it does
not regulate retail electricity sales.'' Id. at 775.
When the Court then stated that it viewed the opt-out merely as the
``finishing blow'' to EPSA's already losing arguments that the
Commission ``aimed to obliterate [states'] regulatory authority or
override their pricing policies,'' \106\ that statement was not a
determinative part of its analysis.\107\ Thus, we find that the Court's
overall analysis of the Commission's jurisdiction with respect to
participation by demand response resources in RTO/ISO markets makes
clear that the Commission is not legally compelled to adopt an opt-out
with respect to participation in RTO/ISO markets by electric storage
resources interconnected on a distribution system or located behind a
retail meter. Moreover, as the Commission noted in Order No. 841, there
are already numerous distribution-connected resources participating in
the RTO/ISO markets that are subject to the RTO/ISO tariffs.\108\ For
these reasons, contrary to petitioners' arguments, EPSA does not
require the Commission
[[Page 23910]]
to adopt an electric storage resource opt-out.\109\
---------------------------------------------------------------------------
\106\ Id. at 779 (internal quotations omitted).
\107\ In his dissent, Justice Scalia shared this understanding
of the Court's analysis, stating, ``Moreover, the rule itself allows
States to forbid their retail customers to participate in the
existing demand response scheme. The majority accepts FERC's
argument that this is merely a matter of grace, and claims that it
puts the `finishing blow' to respondents' argument that 16 U.S.C.
824(b)(1) prohibits the scheme.'' Id. at 789 (Scalia, J.,
dissenting).
\108\ Order No. 841, 162 FERC ] 61,127 at P 35. Contrary to
EEI's assertion that this statement lacks factual support, the
Commission cited to wholesale market participation programs in both
PJM and CAISO. As further evidence that numerous distribution-
connected resources are participating in the RTO/ISO markets, we
note the filing of Wholesale Market Participation Agreements and
Wholesale Distribution Access Tariffs that allow such resources to
participate in the RTO/ISO markets.
\109\ See, e.g., AMP/APPA/NRECA Rehearing Request at 10-11;
NARUC Rehearing Request at 5-6.
---------------------------------------------------------------------------
41. We also disagree with assertions that states can dictate
whether resources are allowed to participate in the RTO/ISO markets
through conditions on the receipt of retail service.\110\ We
acknowledge that states have the authority to include conditions in
their own retail distributed energy resource or retail electric storage
resource programs that prohibit any participating resources from also
selling into the RTO/ISO markets. In that scenario, the owner of a
resource has a choice between participating in the retail market or
wholesale market. However, states may not take away that choice by
broadly prohibiting all retail customers from participating in RTO/ISO
markets. As explained above, the Commission has exclusive jurisdiction
over the terms of eligibility for participation in the RTO/ISO
markets.\111\ Therefore, such conditions aimed directly at the RTO/ISO
markets, even if contained in the terms of retail service, would
intrude on the Commission's jurisdiction over the RTO/ISO markets.\112\
Just as the Commission cannot issue ``a regulation compelling every
consumer to buy a certain amount of electricity on the retail market''
\113\ because such a regulation would specify terms of sale at retail,
states cannot intrude on the Commission's jurisdiction by prohibiting
all consumers from selling into the wholesale market.
---------------------------------------------------------------------------
\110\ See AMP/APPA/NRECA Rehearing Request at 9; TAPS Rehearing
Request at 7-8.
\111\ See AEE, 161 FERC ] 61,245 at P 61.
\112\ See AEE Rehearing Order, 163 FERC ] 61,030 at P 37
(finding that a provision directly restricting retail customers'
participation in RTO/ISO markets, even if contained in the terms of
retail service, nonetheless intrudes on the Commission's
jurisdiction over the wholesale markets). See also Oneok, 135 S. Ct.
at 1600 (finding that the proper test for determining whether a
state action is preempted is ``whether the challenged measures are
`aimed directly at interstate purchasers and wholesalers for resale'
or not'') (quoting N. Natural Gas Co. v. State Corp. Comm'n of Kan.,
372 U.S. 84, 94 (1963)); Nantahala Power & Light Co. v. Thornburg,
476 U.S. 953, 970 (finding that ``a State may not exercise its
undoubted jurisdiction over retail sales to prevent the wholesaler-
as-seller from recovering the costs of paying the FERC-approved
rate'').
\113\ EPSA, 136 S. Ct. at 776.
---------------------------------------------------------------------------
42. We thus also disagree with petitioners' arguments that the
requirement in Order No. 841 that an electric storage resource be
``contractually permitted'' to inject electric energy back to the grid
gives RERRAs a ``veto'' over the participation in wholesale markets of
electric storage resources that are interconnected to the distribution
system or located behind a retail meter.\114\ Rather, we clarify that
the requirement to be contractually permitted to inject energy onto the
grid is intended to ensure that the definition of electric storage
resource does not encompass any resource that does not have the
requisite permits, agreements, or other necessary documentation in
place that would ensure its ability to inject electric energy back to
the grid and therefore engage in a wholesale sale. As the Commission
stated in Order No. 841, the Commission recognizes a vital role for the
states with respect to ``retail services and matters related to the
distribution system, including design, operations, power quality,
reliability, and system costs.'' \115\ We acknowledge that states have
jurisdiction over the interconnections of certain resources to the
distribution system and the requirements reasonably related to those
interconnections, such as a requirement to upgrade the distribution
system to facilitate the injection of electric energy back to the grid,
a requirement to install certain technologies to mitigate a reliability
or safety concern, or a charge for wholesale distribution service. We
further understand that interconnection agreements may include
technical requirements to safeguard against reliability or safety
concerns, such as utility curtailment and anti-islanding provisions, or
requirements to install equipment that forces resources to trip offline
during extreme frequency, voltage, or fault current incidents. Indeed,
such requirements could address the concerns raised by petitioners
regarding the physical and operational impacts of electric storage
resources on the distribution system. However, a broad prohibition on
participating in the RTO/ISO markets is not reasonably related to the
interconnection of a particular resource to the distribution system. We
therefore disagree with assertions that state authority over certain
interconnections necessitates that the Commission adopt an opt-out for
electric storage resources connected to the distribution system or
behind the meter.
---------------------------------------------------------------------------
\114\ See, e.g., AMP/APPA/NRECA Rehearing Request at 6; NARUC
Rehearing Request at 7-8; TAPS Rehearing Request at 6.
\115\ Order No. 841, 162 FERC ] 61,127 at P 36.
---------------------------------------------------------------------------
43. We also are not persuaded by Xcel Energy Services' assertion
that, unlike the ``indirect'' effects permitted in EPSA, Order No. 841
directly affects retail sales because it ``fundamentally changes how
retail sales occur and directly interferes with a state's ability to
regulate retail sales.'' \116\ The Court in EPSA recognized that,
because the wholesale and retail markets are not ``hermetically
sealed,'' Commission regulation of the ``wholesale market ha[s] natural
consequences at the retail level.'' \117\ The Court concluded, however,
that when the Commission ``regulates what takes place on the wholesale
market, as part of carrying out its charge to improve how that market
runs,'' the effects on the retail market have ``no legal consequence''
and FPA section 201 ``imposes no bar'' on the Commission's action.\118\
---------------------------------------------------------------------------
\116\ See Xcel Energy Services Rehearing Request at 7.
\117\ EPSA, 136 S. Ct. at 776.
\118\ Id. (``When FERC sets a wholesale rate, when it changes
wholesale market rules, when it allocates electricity as between
wholesale purchasers--in short, when it takes virtually any action
respecting wholesale transactions--it has some effect, in either the
short or the long term, on retail rates. That is of no legal
consequence.'').
---------------------------------------------------------------------------
44. Like the Commission's regulation of demand response
participation in the wholesale market, Order No. 841 ``addresses--and
addresses only--transactions occurring on the wholesale market.'' \119\
In addition, as with Order No. 745, the Commission's justifications for
Order No. 841 ``are all about, and only about, improving the wholesale
market.'' \120\ And, just as the Court explained with respect to demand
response, the Commission did not ``invent'' wholesale market
participation of electric storage resources and the practice did not
emerge as a ``Commission power grab.'' \121\ Rather ``the impetus came
from wholesale market operators'' that ``sought, and obtained, [the
Commission's] approval to institute such programs.'' \122\ Accordingly,
Order No. 841 does not regulate retail sales and the effects that the
order may have on retail sales are of ``no legal consequence.'' \123\
---------------------------------------------------------------------------
\119\ Id.
\120\ Id. at 779.
\121\ Id.
\122\ Id. See, e.g., Midwest Indep. Trans. Sys. Operator, Inc.,
129 FERC ] 61,303 (2009); New York Indep. Sys. Operator, Inc., 127
FERC ] 61,135 (2009); California Indep. Sys. Operator Corp., 132
FERC ] 61,211 (2010).
\123\ EPSA, 136 S. Ct. at 776.
---------------------------------------------------------------------------
45. Contrary to Xcel Energy Services' contention that Order No. 841
requires distribution utilities to establish expensive processes to
assist the market participation of distribution-connected and behind-
the-meter electric storage resources, the Commission is not imposing
any new requirements on distribution utilities to enable the
participation of electric storage resources in RTO/ISO markets. To the
extent that distribution utilities do incur costs associated with
enabling such
[[Page 23911]]
participation, the Commission is also not changing the ability of
distribution utilities to allocate any costs that they incur in
operating and maintaining their respective power systems.\124\ In any
event, any additional costs imposed on distribution utilities could be
outweighed by the overall benefits from increased competition due to
greater participation of electric storage resources in RTO/ISO markets.
---------------------------------------------------------------------------
\124\ See Order No. 841, 162 FERC ] 61,127 at P 274.
---------------------------------------------------------------------------
46. In response to Xcel Energy Services' argument that Order No.
841 interferes with state regulation of the reliability of the
distribution system and MISO's request to clarify that each RTO/ISO may
require a distribution-connected electric storage resource to comply
with interconnection or operating requirements to address any potential
material adverse reliability impacts on the distribution system, we
reiterate that nothing in Order No. 841 preempts the states' right to
regulate the safety and reliability of the distribution system and that
all electric storage resources must comply with any applicable
interconnection and operating requirements. As noted above, we
understand that electric storage resources located on the distribution
system are subject to various technical requirements that should help
alleviate any concerns related to the safety and reliability of the
distribution system due to RTO/ISO dispatch. As to Xcel Energy
Services' concern that a distribution utility's retail sale to its
customer could become a wholesale sale if that customer participates in
the wholesale markets and sells more than it purchases for a billing
period, we find that concern regarding a distribution utility's sale of
energy to an electric storage resource to be outside the scope of this
proceeding. The Commission's findings in Order No. 841 are limited to
sales in RTO/ISO markets and do not address what retail customers may
do with energy purchased at retail.\125\
---------------------------------------------------------------------------
\125\ Moreover, to the extent that Xcel Energy Services is
concerned that retail customers could attempt to make purchases
under a state-regulated retail tariff and then sell that energy into
the Commission-jurisdictional wholesale market, nothing in Order No.
841 prevents states from prohibiting the resale of energy purchased
under a retail tariff in the terms and conditions of retail service.
---------------------------------------------------------------------------
47. The dissent suggests that today's order ``mandates'' that
electric storage resources ``be permitted to use distribution
facilities so that they may access the wholesale market.'' \126\ That
is incorrect. As explained above, Order No. 841 addressed only the
rules governing electric storage resources' participation in the
wholesale market.\127\ Order No. 841 did not mandate that electric
storage resources must have access to the distribution system. Instead,
Order No. 841 concluded that states cannot directly prohibit electric
storage resources from participating in the wholesale market because
doing so would invade the Commission's ``exclusive jurisdiction over
the wholesale markets and the criteria for participation in those
markets.'' \128\ In reaching that conclusion, the Commission recognized
explicitly, as it must, that the states have authority to regulate the
distribution system, ``including [its] design, operations, power
quality, reliability, and system costs.'' \129\
---------------------------------------------------------------------------
\126\ Dissent at P 5.
\127\ See supra P 44 (``[A]s with Order No. 745, the
Commission's justifications for Order No. 841 `are all about, and
only about, improving the wholesale market.' '' (quoting EPSA, 136
S. Ct. at 779)).
\128\ See supra P 38; supra P 41 (explaining that ``conditions
aimed directly at the RTO/ISO markets, even if contained in the
terms of retail service, would intrude on the Commission's
jurisdiction over the RTO/ISO markets'' (citing Oneok, 135 S. Ct. at
1600)).
\129\ Order No. 841, 162 FERC ] 61,127 at P 36.
---------------------------------------------------------------------------
48. The dissent also characterizes today's order as ``hav[ing] the
effect of directing that [electric storage resources] have access to
distribution facilities.'' \130\ That too is incorrect. Although Order
No. 841 provides that states may not prohibit electric storage
resources from participating in wholesale markets,\131\ that
requirement does not amount to an effective right of access to the
distribution system itself.\132\ As noted, Order No. 841 does not
modify states' authority to regulate the distribution system, including
the terms of access, provided that they do not ``aim[ ] directly at the
RTO/ISO markets.'' \133\ Consistent with the FPA's cooperative
federalist foundation, where electric storage resources interconnected
with the distribution system are participating in RTO/ISO markets, it
will be under circumstances that are consistent with states' authority
to regulate the distribution system. Accordingly, Order No. 841 does
not amount to regulation of the distribution system, effectively or
otherwise.\134\
---------------------------------------------------------------------------
\130\ Dissent at n.18.
\131\ See supra PP 38, 41.
\132\ To paraphrase the Court in EPSA, the word ``effect[ ] is
doing quite a lot of work in that argument.'' EPSA, 136 S. Ct. at
777.
\133\ See supra PP 38, 41.
\134\ In addition, the D.C. Circuit has held that the Commission
properly may exercise jurisdiction with respect to distribution
facilities in certain circumstances. See Nat'l Ass'n of Regulatory
Util. Comm'rs v. FERC, 475 F.3d 1277 at 1282. Like the orders in
that case, Order No. 841 also ``leave[s] state law completely
undisturbed'' and thus the Commission is not impermissibly
``commandeering'' the states, as the dissent argues. Id. at 1283.
---------------------------------------------------------------------------
49. Some petitioners cite the Commission's interconnection policies
generally to argue that the Commission must adopt an electric storage
resource opt-out.\135\ However, Order No. 841 did not reform or address
any procedures pertaining to the interconnection of resources to
transmission or distribution facilities. The Commission cited to
certain RTO/ISO interconnection and market participation procedures,
but merely to demonstrate that many distribution-connected resources
are currently participating in those markets.\136\ As the Commission
found in Order No. 841, an electric storage resource that injects
electric energy back into the grid for purposes of participating in an
RTO/ISO market engages in a sale of electric energy at wholesale in
interstate commerce \137\ and the sale of charging energy to an
electric storage resource that the resource then resells into an RTO/
ISO market is also a sale for resale in interstate commerce.\138\
---------------------------------------------------------------------------
\135\ See, e.g., AMP/APPA/NRECA Rehearing Request at 9; NARUC
Rehearing Request at 3; TAPS Rehearing Request at 6 n.8 (citing the
Commission's acknowledgment in Order No. 2006-A that the vast
majority of distribution-level interconnections are subject to state
jurisdiction); Xcel Energy Services Rehearing Request at 10 (arguing
that Order No. 841 will convert distribution facilities into
Commission-regulated transmission facilities for interconnection
purposes).
\136\ See Order No. 841, 162 FERC ] 61,127 at P 35 n.56.
\137\ Id. P 26.
\138\ See id. P 295.
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b. Whether the Commission Should Exercise Its Discretion and Adopt an
Opt-Out
50. We also disagree that the Commission's decision not to exercise
its discretion and adopt an opt-out in Order No. 841 is an unexplained
departure from the demand response resource opt-out adopted in Order
No. 719.\139\ As the Commission explained in AEE, Order No. 719
expressly provided that it only applies to demand response
resources;\140\ therefore, the Commission's decision not to adopt an
electric storage resource opt-out is not a change in policy.\141\
---------------------------------------------------------------------------
\139\ See EEI Rehearing Request at 7; NARUC Rehearing Request at
3; TAPS Rehearing Request at 3-4; Xcel Energy Services Rehearing
Request at 13-15.
\140\ AEE, 161 FERC ] 61,245 at P 65.
\141\ Even if it were a policy change, the Commission ``need not
demonstrate . . . that the reasons for the new policy are better
than the reasons for the old one; it suffices that the new policy is
permissible under the statute, that there are good reasons for it,
and that the agency believes it to be better.'' FCC v. Fox
Television Stations, 556 U.S. 502, 513 (2009).
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[[Page 23912]]
51. Further, the resources that will use the electric storage
resource participation model under Order No. 841 differ significantly
from the demand response resources at issue in Order No. 719. Most
notably, unlike demand response, electric storage resources are capable
of engaging in sales for resale of electricity and those electric
storage resources making sales in the RTO/ISO markets are public
utilities subject to the Commission's jurisdiction.\142\
---------------------------------------------------------------------------
\142\ See Order No. 841, 162 FERC ] 61,127 at P 30 (observing
that an electric storage resource that injects electric energy back
to the grid for purposes of participating in an RTO/ISO market
engages in a sale of electric energy at wholesale in interstate
commerce and must fulfill certain responsibilities set forth in the
FPA and the Commission's rules and regulations); EnergyConnect,
Inc., 130 FERC ] 61,031, at P 30 (2010) (finding that an entity only
engaged in the provision of demand response services that makes no
sales of electric energy for resale would not be a public utility
required to have a rate on file with the Commission).
---------------------------------------------------------------------------
52. In addition, unlike in the case of demand response resources,
RERRAs and distribution utilities do not have a longstanding history of
managing and regulating programs for electric storage resources within
their boundaries. Prior to the Commission's issuance of Order No. 719,
many RERRAs supported the use of demand response resources in their
boundaries, either requiring the distribution utilities that they
regulate to establish demand response programs and compensate retail
customers for their participation, or approving distribution utility-
developed demand response programs. Such entities were concerned that,
as a result of Order No. 719, the ``best'' demand response resources
would choose to participate in the wholesale markets instead of retail
programs, depriving load serving entities of important resources used
to keep rates down for all consumers.\143\ The Commission adopted the
opt-out in Order No. 719 in part to help address that concern.\144\
With respect to electric storage resources, fewer states have policies
that involve electric storage resources, and those policies that exist
were implemented fairly recently.\145\ Accordingly, we find that the
record in these proceedings does not indicate that a comparable opt-out
is appropriate for energy storage resources.
---------------------------------------------------------------------------
\143\ See Order No. 719, 125 FERC ] 61,071 at P 141.
\144\ See id. P 155 (explaining that ``[t]he Commission's intent
was not to interfere with the operation of successful demand
response programs'').
\145\ For instance, among the many comments on the NOPR
submitted by various state agencies and representatives, only
California, Connecticut, Massachusetts and New York mentioned any
specific state electric storage initiatives. See California
Commission Comments (RM16-23-000) at 4-5, 10-13; Connecticut
Commission Comments (RM16-23-000) at 4-5; Massachusetts Commission
Comments (RM16-23-000) at 3, 6-8; New York Commission Comments
(RM16-23-000) at 8.
---------------------------------------------------------------------------
53. We further reject AMP/APPA/NRECA's and TAPS's argument that,
because an electric storage device may choose to participate in RTO/ISO
markets as demand response and thus become subject to opt-out rules,
the Commission's decision not to adopt an electric storage resource
opt-out is arbitrary or inconsistent.\146\ As the Commission stated in
Order No. 841, participation by demand response resources in an RTO/ISO
market does not involve a sale of electric energy at wholesale in
interstate commerce.\147\ Although electric storage resources
participate in the RTO/ISO markets by injecting electric energy back to
the grid, demand response participates in the RTO/ISO markets as a
``reduction in the consumption of electricity.'' \148\ Therefore, when
an electric storage device chooses to participate in the RTO/ISO
markets as demand response, it is not participating as an ``electric
storage resource'' or injecting electricity onto the grid and should
not be subject to the market rules applicable to electric storage
resources. Accordingly, because demand response and electric storage
resources have differing ways of interacting with RTO/ISO markets and
are subject to different market rules, it is not arbitrary or
inconsistent for the Commission to take different policy approaches
when integrating those resources into the RTO/ISO markets.
---------------------------------------------------------------------------
\146\ See AMP/APPA/NRECA Rehearing Request at 14 n.48; TAPS
Rehearing Request at 4.
\147\ See EnergyConnect, Inc., 130 FERC ] 61,031 at P 30.
\148\ 18 CFR 35.28(b)(4).
---------------------------------------------------------------------------
54. We also disagree with Organization of MISO States' argument
that electric storage resources are more similar to demand response
resources than energy efficiency resources due to the operational
challenges that they present and therefore the Commission should adopt
an opt-out here.\149\ As discussed above, electric storage resources
are capable of engaging in sales for resale of electricity, and those
electric storage resources making sales in the RTO/ISO markets are
public utilities subject to the Commission's jurisdiction. These
characteristics distinguish electric storage resources making sales in
the RTO/ISO markets from both demand response resources and energy
efficiency resources.
---------------------------------------------------------------------------
\149\ See Organization of MISO States Rehearing Request at 3.
---------------------------------------------------------------------------
55. In response to TAPS' concern about whether there is a net sale
of electricity from an electric storage resource under the MidAmerican
standard, we note that MidAmerican applies only to retail customers
participating in retail net metering programs, which is consistent with
the Commission's acknowledgement in Order No. 841 that injections of
electric energy back to the grid do not necessarily trigger the
Commission's jurisdiction.\150\ If an electric storage resource were to
participate in a retail net metering program and in the RTO/ISO
markets--which the Commission did not prohibit in Order No. 841--
Commission jurisdiction would arise only where the electric storage
resource participates in the wholesale market by making a Commission-
jurisdictional sale for resale. It would be the responsibility of the
RTO/ISO to establish metering and accounting practices to measure which
actions taken by that electric storage resource are wholesale actions
in the RTO/ISO markets.\151\
---------------------------------------------------------------------------
\150\ See Order No. 841, 162 FERC ] 61,127 at P 30 n.49.
\151\ See id. P 317.
---------------------------------------------------------------------------
56. We recognize, as did the Court in EPSA, that sales for resale
of electricity necessarily have effects on the distribution
system.\152\ We have considered those effects in evaluating whether to
exercise our discretion to grant an opt-out, but find that the benefits
of allowing electric storage resources broader access to the wholesale
market outweigh any policy considerations in favor of an opt-out. In
particular, Order No. 841 found that the benefits of removing barriers
to the participation of electric storage resources in RTO/ISO markets
are significant and, in light of those benefits, we are not persuaded
to adopt an opt-out that could limit that participation. In addition,
as discussed in the preceding section, there are several ways that
RERRAs may address any concerns about effects on the distribution
system without broadly prohibiting the participation of distribution-
connected and behind-the-meter resources in RTO/ISO markets.
---------------------------------------------------------------------------
\152\ See EPSA, 136 S. Ct. 760 at 776.
---------------------------------------------------------------------------
c. Other Issues
57. Finally, we deny rehearing regarding the Commission's authority
to require that the sale of electric energy from the RTO/ISO markets to
an electric storage resource that the resource then resells back to
those markets be at the wholesale LMP. We find to be misplaced
suggestions that Order No. 841 ``authorizes'' retail customers (in this
case, electric storage resources) to purchase energy from entities
other than their distribution utility or ``entitles'' electric storage
resources to bypass the
[[Page 23913]]
distribution utility by purchasing from the RTO/ISO market.\153\ The
Commission is not preempting distribution utilities' franchised right
to continue to make retail sales to their retail customers, as Xcel
Energy Services suggests.
---------------------------------------------------------------------------
\153\ See AMP/APPA/NRECA Rehearing Request at 10; TAPS Rehearing
Request at 8 n.11; Xcel Energy Services Rehearing Request at 8.
---------------------------------------------------------------------------
58. First, an electric storage resource purchasing charging energy
directly from the RTO/ISO markets that it will resell back to those
markets is not a retail customer making a purchase of retail energy but
rather is a public utility engaging in a wholesale purchase and a
wholesale sale.\154\ Therefore, such a purchase of charging energy from
the RTO/ISO markets does not infringe upon a distribution utility's
right to sell at retail because that energy will be resold in the RTO/
ISO markets.
---------------------------------------------------------------------------
\154\ Because such a resource is making wholesale sales in
interstate commerce, it is a public utility that must fulfill
certain responsibilities set forth in the FPA and the Commission's
rules and regulations. See Order No. 841, 162 FERC ] 61,127 at P 30.
---------------------------------------------------------------------------
59. Second, in Order No. 841, the Commission did not purport to
authorize electric storage resources who are retail customers to bypass
their distribution utilities and make purchases of energy directly from
RTO/ISO markets. Order No. 841 does not require electric storage
resources to participate in the RTO/ISO markets; it only directs RTOs/
ISOs to adopt market rules that apply to electric storage resources
that voluntarily seek to participate in the RTO/ISO markets.
Furthermore, Order No. 841 only addresses sales for resale; for this
reason, the Commission only addressed pricing issues related to the
wholesale sales addressed therein and did not preclude other options
for electric storage resources to obtain charging energy.\155\
---------------------------------------------------------------------------
\155\ Id. P 299.
---------------------------------------------------------------------------
60. To further eliminate the potential for confusion on this point,
we clarify that, in declining requests to allow states to decide
whether electric storage resources in their state that are located
behind a retail meter or on the distribution system are permitted to
``participate'' in the RTO/ISO markets through the electric storage
resource participation model, the Commission was referring to the
ability of electric storage resources to sell into the RTO/ISO markets.
Given this clarification, we also dismiss as moot the argument that
there is inconsistency between the Commission's finding that an RTO/ISO
is prevented from charging a resource wholesale rates if the host
distribution utility is unable or unwilling to net out wholesale energy
purchases and the Commission's decision to decline to adopt an opt-
out.\156\
---------------------------------------------------------------------------
\156\ See AMP/APPA/NRECA Rehearing Request at 6; TAPS Rehearing
Request at 7 (citing Order No. 841, 162 FERC ] 61,127 at P 326).
---------------------------------------------------------------------------
61. In response to SPP's request for clarification regarding
whether it is sufficient for an RTO/ISO to require an electric storage
resource to attest that it has all the necessary contractual
arrangements in place to permit that resource to inject energy onto the
grid,\157\ we clarify that Order No. 841 did not specify how an RTO/ISO
must determine whether a particular resource seeking to participate in
its markets qualifies as an electric storage resource under the
definition set forth therein. Therefore, we clarify for SPP that, on
compliance, it may propose the attestation approach that it has taken
for demand response. Based on the full record before it, the Commission
will consider on compliance whether allowing a resource to attest that
it meets the definition of electric storage resources, including the
associated requirement that it be contractually permitted to inject
energy onto the grid, is just and reasonable.
---------------------------------------------------------------------------
\157\ SPP Motion for Clarification at 2 (citing Order No. 841,
162 FERC ] 61,127 at P 33), 13.
---------------------------------------------------------------------------
62. In response to Organization of MISO States' request for
clarification that RTOs/ISOs may propose tariff provisions that require
electric storage resources to comply with applicable RERRA and
distribution utility rules, we note that any resources subject to a
RERRA's jurisdiction must comply with that RERRA's rules assuming that
such rules do not conflict with the requirements of Order No. 841
(e.g., by placing a broad prohibition on participating in the RTO/ISO
markets).\158\ Similarly, in response to SPP's request for
clarification regarding whether the requirements of Order No. 841
supersede RTO/ISO tariff provisions that apply to all resources, we
clarify that the requirements of Order No. 841 do not absolve electric
storage resources from complying with RTO/ISO tariff provisions of
general applicability as long as those tariff provisions do not
conflict with the requirements of Order No. 841.
---------------------------------------------------------------------------
\158\ See id. at 5-6.
---------------------------------------------------------------------------
B. Participation Model for Electric Storage Resources
1. Final Rule
63. In Order No. 841, the Commission added Sec. 35.28(g)(9)(i) to
the Commission's regulations to require each RTO/ISO to revise its
tariff to include a participation model consisting of market rules
that, recognizing the physical and operational characteristics of
electric storage resources, facilitates their participation in the RTO/
ISO markets.\159\ In adopting this requirement, the Commission stated
that it was not convinced by commenters who argued that separate
participation models are necessary for different types of electric
storage resources (e.g., slower, faster, or aggregated).\160\
Specifically, the Commission noted that it believed that the physical
differences between electric storage resources can be represented by
complying with the final rule's requirements for bidding parameters
\161\ and that a single participation model can be designed to be
flexible enough to accommodate any type of electric storage resource.
However, the Commission stated that, to the extent an RTO/ISO seeks to
include in its tariff additional market rules that accommodate electric
storage resources with specific physical and operational
characteristics, the RTO/ISO may propose such revisions to its tariff
through a separate FPA section 205 filing.\162\
---------------------------------------------------------------------------
\159\ Order No. 841, 162 FERC ] 61,127 at P 51.
\160\ Id. P 54.
\161\ In Order No. 841, the Commission added Sec.
35.28(g)(9)(i)(C) to the Commission's regulations to require each
RTO/ISO to have tariff provisions providing a participation model
for electric storage resources that accounts for the physical and
operational characteristics of electric storage resources through
bidding parameters or other means. Id. P 191.
\162\ Id. P 54 (referencing 16 U.S.C. 824d).
---------------------------------------------------------------------------
2. Requests for Rehearing or Clarification
64. In their rehearing request, AES Companies argue that there are
significant differences in operating characteristics, such as response
speeds, among the technologies that fall under Order No. 841's
definition of an electric storage resource. According to AES Companies,
legacy RTO/ISO software is incapable of supporting a participation
model that all such technologies can use, and the RTOs/ISOs cannot
anticipate all yet-to-be-developed technologies. AES Companies
therefore argue that, because multiple participation models are needed
to remove the barriers to the participation of electric storage
resources that the Commission identified in Order No. 841, the
Commission's directive to each RTO/ISO to establish a single
participation model for all electric storage resources is an impossible
task, invariably excluding some resources. AES Companies add that the
Commission's statement that an RTO/ISO may propose additional market
[[Page 23914]]
rules to accommodate electric storage resources with specific physical
and operational characteristics through a separate FPA section 205
filing is insufficient to address these concerns.\163\
---------------------------------------------------------------------------
\163\ AES Companies Rehearing Request at 11-13.
---------------------------------------------------------------------------
3. Commission Determination
65. We deny AES Companies' request for rehearing. While we agree
with AES Companies that the various technologies that qualify as an
electric storage resource under the definition that the Commission
adopted in the final rule may have different operating characteristics
and that new electric storage technologies will likely emerge, we
continue to find that a single participation model can be designed to
be flexible enough to accommodate any type of electric storage
resource.\164\ Specifically, Order No. 841's requirement that each RTO/
ISO must establish tariff provisions providing a participation model
for electric storage resources that accounts for the physical and
operational characteristics of electric storage resources through
bidding parameters or other means should allow for the representation
of the physical and operational differences between different types of
electric storage resources. For this reason, we remain unpersuaded that
the Commission must require separate participation models for different
types of electric storage resources to remove barriers to their
participation in RTO/ISO markets.
---------------------------------------------------------------------------
\164\ Order No. 841, 162 FERC ] 61,127 at P 54.
---------------------------------------------------------------------------
C. Eligibility of Electric Storage Resources To Participate in the RTO/
ISO Markets
1. Final Rule
66. Order No. 841 added Sec. 35.28(g)(9)(i)(A) to the Commission's
regulations to require each RTO/ISO to establish market rules so that a
resource using the participation model for electric storage resources
is eligible to provide all capacity, energy, and ancillary services
that it is technically capable of providing, including services that
the RTOs/ISOs do not procure through an organized market.\165\ While
noting that there is significant variation in how each RTO/ISO
approaches resource adequacy, the Commission found that it is important
for electric storage resources that can provide value in those resource
adequacy constructs to be eligible to participate.\166\ The Commission
further stated that, if an RTO/ISO does not have existing tariff
provisions that enable electric storage resources to provide capacity,
it must propose such rules on compliance.
---------------------------------------------------------------------------
\165\ Id. P 76.
\166\ Id. P 100.
---------------------------------------------------------------------------
2. Requests for Rehearing or Clarification
67. SPP seeks clarification that Order No. 841 does not require an
RTO/ISO to create and provide a capacity product that an RTO/ISO market
does not otherwise offer, noting that SPP does not currently operate a
forward capacity market or offer capacity as a biddable product on its
system.\167\
---------------------------------------------------------------------------
\167\ SPP Motion for Clarification at 4-5.
---------------------------------------------------------------------------
3. Commission Determination
68. We grant SPP's request for clarification. Order No. 841 does
not require an RTO/ISO that does not have a capacity product in its
markets to create such a product to comply with the final rule.
However, to the extent that an RTO/ISO has a resource adequacy
construct, the RTO/ISO must demonstrate on compliance that the existing
market rules governing its resource adequacy construct provide a means
for electric storage resources to participate in that construct if
electric storage resources are technically capable of doing so.\168\
---------------------------------------------------------------------------
\168\ Order No. 841, 162 FERC ] 61,127 at P 76. See also id. P
100.
---------------------------------------------------------------------------
D. Participation in the RTO/ISO Markets as Supply and Demand
1. Eligibility To Participate as a Wholesale Seller and Wholesale Buyer
a. Final Rule
69. In Order No. 841, the Commission added Sec. 35.28(g)(9)(i)(B)
to the Commission's regulations to require each RTO/ISO to revise its
tariff to ensure that a resource using the participation model for
electric storage resources can be dispatched as supply and demand and
can set the wholesale market clearing price as both a wholesale seller
and wholesale buyer, consistent with rules that govern the conditions
under which a resource can set the wholesale price.\169\ The Commission
found that, for a resource using the participation model for electric
storage resources to be able to set prices in the RTO/ISO markets as
either a wholesale seller or a wholesale buyer, it must be available to
the RTO/ISO as a dispatchable resource. Moreover, the Commission
required that resources using the participation model for electric
storage resources must be allowed to participate in the RTO/ISO markets
as price takers, consistent with the existing rules for self-scheduled
resources.
---------------------------------------------------------------------------
\169\ See id. P 142.
---------------------------------------------------------------------------
70. Additionally, the Commission required in Order No. 841 that
RTOs/ISOs must accept wholesale bids from resources using the
participation model for electric storage resources to buy energy.\170\
The Commission further stated that allowing electric storage resources
to participate in the RTO/ISO markets as dispatchable load will allow
these resources to set the market clearing price under certain
circumstances, thus better reflecting the value of the marginal
resource and ensuring that electric storage resources are dispatched in
accordance with the highest value service that they are capable of
providing during a set market interval.\171\
---------------------------------------------------------------------------
\170\ See id.
\171\ See id. P 143.
---------------------------------------------------------------------------
b. Requests for Rehearing or Clarification
71. AES Companies seek rehearing of what they construe as Order No.
841's requirement that all resources using an RTO's/ISO's participation
model for electric storage resources be dispatchable, citing to the
Commission's determinations in Order No. 841 that (1) to set prices in
the RTO/ISO markets as either a wholesale seller or a wholesale buyer,
a resource using the participation model for electric storage resources
must be available to the RTO/ISO as a dispatchable resource and (2) an
electric storage resource participation model must ensure that a
resource using it can be dispatched.\172\ AES Companies argue that
these requirements codify the existing unjust, unreasonable, unduly
discriminatory and preferential status quo that prevents resources that
provide services automatically from participating in RTO/ISO markets
without risking the physical damage to their equipment that can occur
if they are subject to RTO/ISO dispatch. AES Companies argue that,
contrary to Order No. 841's statement that a participation model for
electric storage resources must recognize the physical and operational
characteristics of electric storage resources, predicating
participation on dispatchability fails to recognize the physical and
operational characteristics of these electric storage resources.\173\
---------------------------------------------------------------------------
\172\ AES Companies Rehearing Request at 7 (citing Order No.
841, 162 FERC ] 61,127 at PP 142, 4).
\173\ Id. at 8-11.
---------------------------------------------------------------------------
72. In addition, AES Companies argue that Order No. 841
unreasonably limits its application of the term ``dispatch'' to an
activity performed exclusively by RTO/ISO software. According to AES
[[Page 23915]]
Companies, the term ``dispatch'' should instead be ``inclusive of
scheduling an electric storage resource to operate autonomously, and
ordered outside of the RTO/ISO software by the Reliability
Coordinator.'' \174\
---------------------------------------------------------------------------
\174\ Id. at 9.
---------------------------------------------------------------------------
73. SPP seeks clarification that Order No. 841 will not require an
RTO/ISO that does not currently offer a real-time dispatchable load
service, such as SPP, to create a new service to dispatch an electric
storage resource as load or negative generation. To the extent that
Order No. 841 requires the development of such a new service, SPP asks
whether the Commission will provide each RTO/ISO with flexibility to
develop such service consistent with its existing market design
constructs, with a full opportunity to evaluate the potential system
impacts, and with flexibility to propose its own timeline for
developing and implementing such a service.\175\
---------------------------------------------------------------------------
\175\ SPP Motion for Clarification at 5-6.
---------------------------------------------------------------------------
c. Commission Determination
74. In their rehearing request, AES Companies argue that Order No.
841 requires a resource seeking to participate in RTO/ISO markets under
the electric storage resource participation model to be available to
the RTO/ISO as a dispatchable resource. We disagree with this
characterization of Order No. 841's requirements and thus, deny AES
Companies' request for rehearing. However, we find it is necessary to
modify Sec. 35.28(g)(9)(i)(B) of the Commission's regulations to
clarify that, to the extent electric storage resources are
dispatchable, the RTO/ISO is required to allow them to participate as
dispatchable resources and to set the clearing price in the RTO/ISO
markets as part of the participation model. We clarify that not all
electric storage resources that seek to use the electric storage
resource participation model need to be dispatchable to use that
participation model.
75. Order No. 841 added Sec. 35.28(g)(9)(i)(B) to the Commission's
regulations to require each RTO/ISO to revise its tariff to provide a
participation model for electric storage resources that ensures that a
resource using the participation model can be dispatched and can set
the wholesale market clearing price.\176\
---------------------------------------------------------------------------
\176\ 18 CFR 35.28(g)(9)(i)(B); Order No. 841, 162 FERC ] 61,127
at P 142.
---------------------------------------------------------------------------
76. We clarify here that this requirement was not intended to
require that a resource using the participation model for electric
storage resources be dispatchable. Rather, by stating that this was to
be ``consistent with rules that govern the conditions under which a
resource can set the wholesale price,'' Order No. 841 requires each
RTO/ISO to revise its tariff to include a participation model for
electric storage resources enabling the RTO/ISO to dispatch a resource
using that model to the extent that the resource has indicated to the
RTO/ISO, whether through its offers to sell or bids to buy or some
other mechanism, that it desires to be dispatchable. Our clarification
is consistent with Order No. 841's findings that (1) resources using
the participation model for electric storage resources must be allowed
to participate in the RTO/ISO markets as price takers, consistent with
the existing market rules for self-scheduled resources \177\ and (2) to
ensure consistent treatment in the RTO/ISO markets, electric storage
resources must maintain the same ability to self-schedule their
resource as other market participants.\178\
---------------------------------------------------------------------------
\177\ See Order No. 841, 162 FERC ] 61,127 at P 142.
\178\ See id. P 144.
---------------------------------------------------------------------------
77. To remove the ambiguity, we revise Sec. 35.28(g)(9)(i)(B) of
the Commission's regulations to require each RTO/ISO to revise its
tariff to provide a participation model for electric storage resources
that enables a resource using the participation model for electric
storage resources to be dispatched and ensures that such a dispatchable
resource can set the wholesale market clearing price.
78. This modification clarifies that each RTO/ISO is required to
allow resources using the participation model for electric storage
resources to participate in the RTO/ISO markets as dispatchable
resources, not that such resources must be dispatchable to use that
participation model. We reiterate, however, that the Commission will
continue to require that resources using the participation model for
electric storage resources can only set prices in the RTO/ISO markets
as either a wholesale seller or a wholesale buyer if they are available
to the RTO/ISO as a dispatchable resource.\179\
---------------------------------------------------------------------------
\179\ See id. P 142.
---------------------------------------------------------------------------
79. AES Companies request that the Commission expand our use of the
term dispatch beyond those ``activities performed by RTO/ISO
software.'' However, as clarified above, Order No. 841 only required
that each RTO/ISO must be capable of dispatching resources using the
participation model for electric storage resources and allow such
dispatchable resources to set prices in the RTO/ISO markets. Given this
clarification, we do not find it necessary to expand our use of the
term dispatch beyond RTO/ISO activities, as requested by AES Companies.
80. We deny SPP's request for clarification that it need not revise
its market rules to allow for dispatchable load. In Order No. 841, the
Commission required each RTO/ISO to create a participation model for
electric storage resources that ensures that a resource using that
model can be dispatched as a wholesale buyer.\180\ Additionally, the
Commission required that RTOs/ISOs accept wholesale bids from resources
using the participation model for electric storage resources to buy
energy.\181\ As the Commission stated in Order No. 841, allowing
electric storage resources to participate in the RTO/ISO markets as
dispatchable load will allow these resources to set the market clearing
price under certain circumstances, thus better reflecting the value of
the marginal resource and ensuring that electric storage resources are
dispatched in accordance with the highest value service that they are
capable of providing during a set market interval.\182\
---------------------------------------------------------------------------
\180\ See id.; 18 CFR 35.28 (g)(9)(i)(B).
\181\ Order No. 841, 162 FERC ] 61,127 at P 142. See also id. P
150 (``This final rule requires an electric storage resource to be
eligible to participate in the RTO/ISO markets as a wholesale buyer
and for each RTO/ISO to be able to dispatch them as such. Such a
mechanism would entail participation in the energy markets, not the
provision of a new service . . . .'').
\182\ See id. P 143.
---------------------------------------------------------------------------
81. We clarify for SPP that Order No. 841 provides flexibility for
each RTO/ISO to develop a participation model for electric storage
resources consistent with its existing market design constructs, as SPP
requests. Order No. 841 did not, however, provide each RTO/ISO with
flexibility to propose its own timeline for developing and implementing
any aspect of the participation model for electric storage resources,
including the requirement that RTOs/ISOs must ensure a resource using
the participation model for electric storage resources can be
dispatched as a wholesale buyer.
2. Participation as Price Takers
a. Final Rule
82. In the final rule, the Commission required that resources using
the participation model for electric storage resources must be allowed
to participate in the RTO/ISO markets as price takers, consistent with
the existing rules for self-scheduled resources.\183\ The Commission
rejected assertions that an RTO/ISO must decide whether to allow
electric storage resources to be price takers, finding that, to ensure
consistent
[[Page 23916]]
treatment in the RTO/ISO markets, electric storage resources must
maintain the same ability to self-schedule their resource as other
market participants.\184\ Additionally, to ensure that electric storage
resources are treated consistently with the ability of self-scheduled
load resources and traditional generation resources to participate in
the RTO/ISO markets, the Commission determined that the ability of
electric storage resources to participate as price takers should not be
limited to their participation as load.\185\
---------------------------------------------------------------------------
\183\ Id. P 142.
\184\ Id. P 144.
\185\ Id. P 148.
---------------------------------------------------------------------------
b. Requests for Rehearing or Clarification
83. MISO requests clarification that, in complying with the
directive to allow electric storage resources to be price takers as
self-scheduled resources,\186\ MISO may also consider treating an
electric storage resource as a self-scheduled price-taker if the
electric storage resource uses its State of Charge to lock its energy
output to a very narrow range. MISO explains that, in real time, an
electric storage resource could use its State of Charge to lock its MW
amount around its day-ahead position, and that locking energy output to
a very narrow range may result in capacity that cleared in the capacity
market not being fully available to the day-ahead market, counter to
the day-ahead must-offer obligation.\187\
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\186\ MISO Request for Rehearing at 7 (citing Order No. 841, 162
FERC ] 61,127 at P 142).
\187\ MISO states that such a limitation would be consistent
with the principle articulated in Order No. 841 that an [electric
storage resource] ``must not de-rate its capacity below any capacity
obligations it has assumed, such as any applicable must-offer
requirement.'' Id. at 7-8 (citing Order No. 841, 162 FERC ] 61,127
at P 99).
---------------------------------------------------------------------------
c. Commission Determination
84. We deny MISO's request for clarification. We reiterate that
RTOs/ISOs must provide electric storage resources with the same ability
to self-schedule as other market participants.\188\ We therefore find
that, to the extent that a resource using the participation model for
electric storage resources has not elected to be a self-scheduled price
taker, it would be unreasonable for an RTO/ISO to designate that
resource as a self-scheduled price taker solely based on the State of
Charge parameters that the resource has submitted. We find that the
RTO/ISO must provide resources using the electric storage resource
participation model with the opportunity to determine whether to self-
schedule, consistent with the RTO's/ISO's existing rules for self-
scheduled resources.
---------------------------------------------------------------------------
\188\ See Order No. 841, 162 FERC ] 61,127 at P 144.
---------------------------------------------------------------------------
85. However, in response to MISO's concern that, if a resource
using the participation model for electric storage resources restricts
its energy output to a very narrow range through its State of Charge,
any of its capacity that cleared in the capacity market may not be
fully available to the day-ahead market, we agree that a resource using
the participation model for electric storage resources may not use a
bidding parameter, such as State of Charge, to circumvent its
obligations in the RTO/ISO markets, including any day-ahead must-offer
obligation for capacity resources.
E. Physical and Operational Characteristics of Electric Storage
Resources
1. Requirement To Incorporate Bidding Parameters as Part of the
Electric Storage Resource Participation Model
a. Final Rule
86. In the final rule, the Commission added Sec. 35.28(g)(9)(i)(C)
to the Commission's regulations to require each RTO/ISO to have tariff
provisions providing a participation model for electric storage
resources that accounts for the physical and operational
characteristics of electric storage resources through bidding
parameters or other means.\189\ Specifically, the Commission required
that each RTO's/ISO's participation model for electric storage
resources must account for 13 different physical and operational
characteristics, as defined in the final rule.\190\ In adopting this
requirement, the Commission noted that it was persuaded by commenters'
arguments that there may be other means of accounting for the physical
and operational characteristics of electric storage resources than
bidding parameters and that greater regional flexibility than the
Commission proposed in the Notice of Proposed Rulemaking (NOPR) is
appropriate.\191\ In particular, the Commission stated that different
RTOs/ISOs may be able to more effectively account for the physical and
operational characteristics of electric storage resources through
different mechanisms given their unique market designs.
---------------------------------------------------------------------------
\189\ Id. P 191.
\190\ Id. P 236. Those physical and operating characteristics
are as follows: (1) State of Charge, (2) Maximum State of Charge,
(3) Minimum State of Charge, (4) Maximum Charge Limit, (5) Maximum
Discharge Limit, (6) Minimum Charge Time, (7) Maximum Charge Time,
(8) Minimum Run Time, (9) Maximum Run Time, (10) Minimum Discharge
Limit, (11) Minimum Charge Limit, (12) Discharge Ramp Rate, and (13)
Charge Ramp Rate. Relevant to the discussion of MISO's request for
clarification below, the final rule defined State of Charge as ``the
amount of energy stored in proportion to the limit on the amount of
energy that can be stored, typically expressed as a percentage. It
represents the forecasted starting State of Charge for the market
interval being offered into.'' Minimum Charge Limit is the ``minimum
[megawatt] level that a resource using the participation model for
electric storage resources can receive from the grid'' and Minimum
Discharge Limit is the ``minimum [megawatt] output level that a
resource using the participation model for electric storage
resources can inject onto the grid.'' Discharge Ramp Rate and Charge
Ramp Rate are the speed at which a resource using the participation
model for electric storage resources can move from zero output to
its Maximum Discharge Limit and Maximum Charge Limit, respectively.
Id.
\191\ Id. P 190; NOPR (Docket Nos. RM16-23-000; AD16-20-000), 81
FR 86522.
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b. Requests for Rehearing or Clarification
87. MISO requests clarification on whether it may require electric
storage resources to submit their State of Charge forecasts at the
beginning of a particular market interval. MISO contends that such a
requirement will allow it to derive the charging or discharging status
of a resource for every interval, eliminating the need for MISO to
introduce a binary variable to determine the charging or discharging
mode of a resource in its co-optimization process and in turn avoiding
potential adverse impacts on its market clearing and commitment
processes.\192\
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\192\ MISO Request for Rehearing at 6.
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88. MISO also requests clarification that, if an electric storage
resource does not provide minimum charge and discharge limits and can
be moved smoothly between negative and positive, MISO may require the
resource to submit a single hourly ramp rate for the day-ahead market
and for its Look Ahead Commitment process. According to MISO, it has
currently adopted this practice with respect to other resources. MISO
argues that such a requirement would allow it to avoid the nonlinearity
caused by a megawatt dependent ramp curve and additional integer
variables. MISO also asks the Commission to clarify that it may apply
its current practice of allowing three ramp rates and ramp rate curves
for regulating, up, and down movement to electric storage
resources.\193\
---------------------------------------------------------------------------
\193\ Id. at 6-7.
---------------------------------------------------------------------------
89. PJM seeks clarification that the final rule allows for
flexibility in how RTOs/ISOs account for the physical and operational
characteristics of electric storage resources, including State of
Charge.\194\ Specifically, PJM argues that there are different
approaches to
[[Page 23917]]
implementing Order No. 841's requirement that an electric storage
resource participation model account for electric storage resources'
physical and operational characteristics, which involve different
degrees of modeling and operational changes and challenges.\195\
---------------------------------------------------------------------------
\194\ PJM Motion for Clarification at 1 (citing Order No. 841,
162 FERC ] 61,127 at PP 189-194, 211-216, 220-224).
\195\ Id. at 2-3.
---------------------------------------------------------------------------
c. Commission Determination
90. In response to MISO's request for clarification, we clarify
that, on compliance, MISO may propose to require a resource using the
electric storage resource participation model to submit its forecasted
State of Charge at the beginning of any market interval in which it
intends to participate. With that said, we make no findings on the
proposal that MISO outlines in its request for clarification. Order No.
841 provided flexibility to the RTOs/ISOs on how to account for the
physical and operational characteristics of electric storage
resources.\196\ We will not prejudge any particular approach to
implementing Order No. 841's requirement that each RTO/ISO establish a
participation model for electric storage resources that accounts for
the physical and operational characteristics of electric storage
resources through bidding parameters or other means; rather, we will
evaluate MISO's proposal on compliance with the full record before us.
---------------------------------------------------------------------------
\196\ See Order No. 841, 162 FERC ] 61,127 at P 191.
---------------------------------------------------------------------------
91. Similarly, in response to MISO's clarification request
regarding ramp rates, we clarify that MISO may propose for an electric
storage resource that does not provide minimum charge and discharge
limits and can be moved smoothly between negative and positive to
submit a single hourly ramp rate for the day-ahead market and for its
Look Ahead Commitment process. However, we also make no findings on the
merits of the proposal that MISO outlines in its request for
clarification.
92. Order No. 841 also states that, to the extent that an RTO/ISO
proposes to comply with the final rule using its existing bidding
parameters or other market mechanisms, it must demonstrate in its
compliance filing how its existing market rules account for these
characteristics of electric storage resources.\197\ We therefore
clarify that MISO may propose to apply its current practice of allowing
three ramp rates and ramp rate curves for regulating, up, and down
movement to resources using the electric storage resource participation
model, but that it must demonstrate in its compliance filing how this
practice accounts for Discharge Ramp Rate and Charge Ramp Rate. The
Commission will determine on compliance whether MISO's proposal
complies with the requirements of Order No. 841.
---------------------------------------------------------------------------
\197\ Id. P 229.
---------------------------------------------------------------------------
93. We also grant PJM's request for clarification. The Order No.
841 requirement that each RTO/ISO establish tariff provisions providing
a participation model for electric storage resources that accounts for
the physical and operational characteristics of electric storage
resources through bidding parameters or other means, allows for
regional flexibility.\198\ Specifically, in Order No. 841, the
Commission noted that it was persuaded by commenters' arguments that
there may be other means of accounting for the physical and operational
characteristics of electric storage resources than bidding parameters
and that greater regional flexibility than the Commission proposed in
the NOPR was appropriate. In particular, the Commission stated that
different RTOs/ISOs may be able to more effectively account for the
physical and operational characteristics of electric storage resources
through different mechanisms given their unique market designs.\199\
That said, we make no findings on the proposed approaches that PJM
outlines in its request for clarification. We will not prejudge any
particular approach to implementing the final rule's requirement that
each RTO/ISO establish a participation model for electric storage
resources that accounts for the physical and operational
characteristics of electric storage resources through bidding
parameters or other means; rather, we will evaluate PJM's proposal on
compliance with a full record before us.
---------------------------------------------------------------------------
\198\ See id. P 191.
\199\ Id. P 190.
---------------------------------------------------------------------------
F. Minimum Size Requirement
1. Final Rule
94. In Order No. 841, the Commission added Sec. 35.28(g)(9)(i)(D)
to the Commission's regulations to require each RTO/ISO to revise its
tariff to include a participation model for electric storage resources
that establishes a minimum size requirement for participation in the
RTO/ISO markets that does not exceed 100 kW.\200\ The Commission stated
that this minimum size requirement includes all minimum capacity
requirements, minimum offer to sell requirements, and minimum bid to
buy requirements for resources participating in these markets under the
participation model for electric storage resources. In support of the
requirement, the Commission found that requiring the RTOs/ISOs to
establish a minimum size requirement not to exceed 100 kW for the
participation model for electric storage resources balances the
benefits of increased competition with the potential need to update
RTO/ISO market clearing software to effectively model and dispatch
smaller resources.\201\
---------------------------------------------------------------------------
\200\ Id. P 270.
\201\ Id. P 271.
---------------------------------------------------------------------------
95. The Commission further found that the record shows that all
RTOs/ISOs are already accommodating the participation of smaller
resources in their markets.\202\ For example, the Commission stated
that the record shows that all RTOs/ISOs already have the modeling and
dispatch software capabilities to accommodate the participation of
resources that are as small as 100 kW. Specifically, the Commission
noted that both PJM and SPP have a minimum size requirement of 100 kW
for all resources, and all of the RTOs/ISOs have at least one
participation model that allows resources as small as 100 kW to
participate in their markets.\203\
---------------------------------------------------------------------------
\202\ Id. P 272.
\203\ Id. (citing CAISO Data Request Response at 10-11; ISO-NE
Data Request Response at 13-14; MISO Data Request Response at 10;
NYISO Data Request Response at 9; PJM Data Request Response at 10;
SPP Data Request Response at 5).
---------------------------------------------------------------------------
96. Moreover, in response to concerns about potential impacts on
the distribution systems and related costs, the Commission noted that
there are resources located on the distribution system that are already
participating in the RTO/ISO markets.\204\ The Commission stated that
establishing a standard minimum size requirement for resources using
the participation model for electric storage resources may potentially
result in more resources on the distribution systems participating in
the RTO/ISO markets. However, the Commission stated that it does not
change the responsibilities of the RTOs/ISOs or the distribution
utilities, and it does not change the ability of distribution utilities
to allocate any costs that they incur in operating and maintaining
their respective power systems.
---------------------------------------------------------------------------
\204\ Id. P 274.
---------------------------------------------------------------------------
97. With respect to concerns about the need to upgrade RTO/ISO
software to manage the potentially large number of resources using the
participation model for electric storage resources under the proposed
minimum size requirement, the Commission found that it was
[[Page 23918]]
providing the RTOs/ISOs with adequate time to develop the requisite
tariff language and update their modeling and dispatch software to
comply with Order No. 841.\205\ The Commission was also not concerned
about the potential availability of software solutions as multiple
RTOs/ISOs already provide a minimum size requirement of 100 kW for all
resources and have not expressed similar concerns regarding the minimum
size requirement. However, the Commission recognized that there are
currently fewer 100 kW resources than there may be in the future and
stated that it will consider future requests to increase the minimum
size requirement to the extent an RTO/ISO can show that it is
experiencing difficulty calculating efficient market results and there
is not a viable software solution for improving such calculations.
---------------------------------------------------------------------------
\205\ Id. P 275.
---------------------------------------------------------------------------
2. Requests for Rehearing or Clarification
98. In its rehearing request, EEI states that the Commission should
allow the RTOs/ISOs, in conjunction with the electric distribution
utilities, to establish a minimum size requirement for electric storage
resources that would be manageable for their markets while maintaining
reliability on both the bulk electric power system and the relevant
distribution systems.\206\ EEI argues that the Commission has provided
insufficient support for its proposed minimum size requirement, stating
that the evidence that the Commission cites is inadequate given the
concerns expressed in the record that the 100 kW minimum size
requirement may be too small due to software, settlement, and other
infrastructure limitations. For example, EEI contends that the
Commission does not provide evidence in the form of numbers of 100 kW
resources directly participating in the RTO/ISO markets or the number
of tariff provisions that permit participation at such size.\207\
---------------------------------------------------------------------------
\206\ EEI Rehearing Request at 9-10.
\207\ Id. at 8-9.
---------------------------------------------------------------------------
99. EEI argues that the number of electric storage resources that
could potentially seek to participate in the wholesale market at the
proposed threshold could become so voluminous that they (1) exceed the
ability of RTOs/ISOs to manage this volume of resources, (2) exceed the
ability of distribution utilities to address various reliability,
operational, and interconnection matters given that smaller resources
are far more likely to interconnect to the distribution system, and (3)
impose implementation costs significantly greater than corresponding
benefits, particularly in regions where resources of the 100 kW size
have other compensation options such as net energy metering. EEI argues
that allowing the RTOs/ISOs to make an after-the-fact showing of
difficulties in calculating efficient market outcomes does not
adequately account for these concerns or address the software and other
costs on both the transmission and distribution system of complying
with the final rule.\208\
---------------------------------------------------------------------------
\208\ Id. at 9 (citing Order No. 841, 162 FERC ] 61,127 at P
275).
---------------------------------------------------------------------------
100. MISO requests clarification or, in the alternative, rehearing
that it may phase in the implementation of the minimum size
requirement. Specifically, MISO seeks clarification that it may cap the
number of very small electric storage resources that can participate in
its markets at the number of such resources that its initial software
and system changes can handle in the first year of implementation.
According to MISO, it will increase the number of small electric
storage resources that it will allow in its market as it improves its
software's capability to manage them. MISO argues that this phased
approach is a reasonable precaution to proactively address the
potential for large numbers of small electric storage resources, rather
than waiting to react to adverse impacts of future high volumes of
small electric storage resources.\209\
---------------------------------------------------------------------------
\209\ MISO Rehearing Request at 4-5.
---------------------------------------------------------------------------
101. MISO also requests clarification or, in the alternative,
rehearing, that the 100 kW limit applies to the Maximum Charge Limit or
Maximum Discharge Limit and not to the Minimum Charge Limit or Minimum
Discharge Limit. MISO contends that small electric storage resources
can offer a smaller Minimum Charge Limit or Minimum Discharge Limit,
such as 0.0001 MW. MISO adds that, if the offered minimum limit is too
small, an RTO/ISO can round it to zero and assume that the resource can
smoothly move between the negative Maximum Charge Limit and positive
Maximum Discharge Limit. MISO argues that this rounding can avoid
unnecessarily limiting the range for clearing energy or reserve
products.\210\
---------------------------------------------------------------------------
\210\ Id. at 4 (citing Order No. 841, 162 FERC ] 61,127 at P
236).
---------------------------------------------------------------------------
3. Commission Determination
102. We deny EEI's request for clarification and rehearing. We
continue to find that requiring each RTO/ISO to establish a minimum
size requirement not to exceed 100 kW for the participation model for
electric storage resources balances the benefits of increased
competition with the potential need to update RTO/ISO market clearing
software to effectively model and dispatch smaller resources.\211\ We
disagree with EEI that the Commission lacked sufficient evidence to
support a minimum size requirement of 100 kW. As the Commission stated
in Order No. 841, both PJM and SPP have a minimum size requirement of
100 kW for all resources, and all of the RTOs/ISOs have at least one
participation model that allows resources as small as 100 kW to
participate in their markets.\212\ We continue to find this evidence
sufficient to demonstrate that all RTOs/ISOs already have the modeling
and dispatch software capabilities to accommodate the participation of
resources that are as small as 100 kW.
---------------------------------------------------------------------------
\211\ See Order No. 841, 162 FERC ] 61,127 at P 271.
\212\ Id. P 272 (citing CAISO Data Request Response at 10-11;
ISO-NE Data Request Response at 13-14; MISO Data Request Response at
10; NYISO Data Request Response at 9; PJM Data Request Response at
10; SPP Data Request Response at 5).
---------------------------------------------------------------------------
103. EEI argues that the implementation costs of the minimum size
requirement will outweigh any benefits and RTOs/ISOs and distribution
utilities may not be able to manage the volume of smaller resources to
participate in RTO/ISO markets and interconnect to the distribution
system. We disagree. As stated in the final rule, we acknowledge that
the 100 kW minimum size requirement is a balance between the benefits
of increased competition fostered by the opportunity for smaller
resources to participate in the RTO/ISO markets using the electric
storage resource participation model and the potential need to update
RTO/ISO market clearing software to effectively model and dispatch
these smaller resources.\213\ Based on the record before us, we find
that the benefits of increased competition will outweigh implementation
costs, especially given that all RTOs/ISOs are already accommodating
the participation of smaller resources in their markets, as
demonstrated in the final rule.\214\
---------------------------------------------------------------------------
\213\ See id. P 271.
\214\ See id. P 272 (citing CAISO Data Request Response at 10-
11; ISO-NE Data Request Response at 13-14; MISO Data Request
Response at 10; NYISO Data Request Response at 9; PJM Data Request
Response at 10; SPP Data Request Response at 5).
---------------------------------------------------------------------------
104. With respect to EEI's and MISO's concerns about the volume of
smaller resources that may seek to participate in RTO/ISO markets and
interconnect to the distribution system, in the final rule,
[[Page 23919]]
the Commission recognized that there are currently fewer 100 kW
resources than there may be in the future. While we recognize that EEI
argues for greater flexibility for each RTO/ISO to establish its own
minimum size requirement as an initial matter, for the reasons
discussed above,\215\ we continue to find that it is reasonable to
establish a minimum size requirement not to exceed 100 kW for the
participation model for electric storage resources.
---------------------------------------------------------------------------
\215\ See supra P 103.
---------------------------------------------------------------------------
105. For these reasons, we also deny MISO's request for
clarification or, in the alternative, rehearing that it may phase in
the implementation of the minimum size requirement. We continue to
believe that, given the record showing that all RTOs/ISOs are already
accommodating the participation of smaller resources in their markets
\216\ and the Commission's willingness to consider requests to increase
the minimum size requirement in the future, we are providing the RTOs/
ISOs with adequate time to develop the requisite tariff language and
update their modeling and dispatch software to comply with Order No.
841.\217\ MISO's arguments on rehearing do not convince us otherwise.
As the Commission stated in the final rule, upon implementation, if an
RTO/ISO, including MISO, finds that it is experiencing difficulty
calculating efficient market results and there is not a viable software
solution for improving such calculations, it may file with the
Commission demonstrating such and proposing to increase the minimum
size requirement for its electric storage resource participation
model.\218\ Further, as stated in the final rule, a minimum size
requirement that does not exceed 100 kW does not change the
responsibilities of the RTOs/ISOs or the distribution utilities, and it
does not change the ability of distribution utilities to allocate any
costs that they incur in operating and maintaining their respective
power systems.\219\
---------------------------------------------------------------------------
\216\ See Order No. 841, 162 FERC ] 61,127 at P 272 (citing
CAISO Data Request Response at 10-11; ISO-NE Data Request Response
at 13-14; MISO Data Request Response at 10; NYISO Data Request
Response at 9; PJM Data Request Response at 10; SPP Data Request
Response at 5).
\217\ See id. P 275. The Commission provided RTOs/ISOs with 270
days after the publication of the final rule in the Federal Register
to file the tariff changes (i.e., December 3, 2018) and a further
365 days from that date to implement the tariff provisions.
\218\ See id.
\219\ Id. P 274.
---------------------------------------------------------------------------
106. Finally, in response to MISO's request for clarification that
the 100 kW limit does not apply to the Minimum Charge Limit or Minimum
Discharge Limit, we clarify that the minimum size requirement does not
prohibit an RTO/ISO from establishing a minimum size limit that is
lower than 100 kW on any minimum capacity requirements, minimum offer
to sell requirements, or minimum bid to buy requirements. Therefore, it
is possible that the quantities for the Minimum Charge Limit and
Minimum Discharge Limit may be smaller than 100 kW for resources using
the participation model for electric storage resources. However, we do
not specify how the minimum size requirement may affect the quantities
submitted for some of the physical and operational characteristics of
electric storage resources, and will not prejudge how the RTOs/ISOs may
propose any such relationships between the minimum size requirement and
the physical and operational characteristics of resources using the
participation model for electric storage resources.
G. Energy Used To Charge Electric Storage Resources (Charging Energy)
1. Price for Charging Energy
a. Final Rule
107. In Order No. 841, the Commission added Sec. 35.28(g)(9)(ii)
to the Commission's regulations to require that the sale of electric
energy from the RTO/ISO markets to an electric storage resource that
the resource then resells back to those markets be at the wholesale
LMP.\220\ The Commission stated that this requirement will apply
regardless of whether the electric storage resource is using the
participation model for electric storage resources or another
participation model to participate in the RTO/ISO markets, as long as
the resource meets the definition of an electric storage resource set
forth in Order No. 841. The Commission noted that it found that the
sale of energy from the grid that is used to charge electric storage
resources for later resale into the energy or ancillary service markets
constitutes a sale for resale in interstate commerce.\221\ The
Commission stated that, as such, the just and reasonable rate for that
wholesale sale of energy used to charge that electric storage resource
is the RTO/ISO market's wholesale LMP, regardless of whether the
electric storage resource uses the participation model for electric
storage resources.\222\
---------------------------------------------------------------------------
\220\ Id. P 294.
\221\ Id. (citing Norton Energy Storage, 95 FERC at 62,701-02).
\222\ Id.
---------------------------------------------------------------------------
108. In addition, the Commission disagreed with some commenters'
contention that transmission charges that apply to load should not
apply to electric storage resources.\223\ The Commission stated that,
when an electric storage resource is charging to resell energy at a
later time, then its behavior is similar to other load-serving entities
and applicable transmission charges should apply. However, in response
to the concern that transmission charges should not apply when an
electric storage resource is dispatched by an RTO/ISO, the Commission
found that electric storage resources that are dispatched to consume
electricity to provide a service in the RTO/ISO markets (such as
frequency regulation or a downward ramping service) should not pay the
same transmission charges as load during the provision of that
service.\224\ The Commission found that this would be consistent with
the treatment afforded traditional generation resources that provide
ancillary services because they are not charged for their impacts on
the transmission system when they reduce their output to provide a
service such as frequency regulation down. Therefore, the Commission
found that electric storage resources should not be charged
transmission charges when they are dispatched by an RTO/ISO to provide
a service because (1) their physical impacts on the bulk power system
are comparable to traditional generators providing the same service and
(2) assessing transmission charges when they are dispatched to provide
a service would create a disincentive for them to provide the service.
---------------------------------------------------------------------------
\223\ Id. P 297.
\224\ Id. P 298.
---------------------------------------------------------------------------
109. With respect to concerns about electric storage resources' use
of the distribution system, the Commission noted that, in PJM
Interconnection LLC, the Commission permitted a distribution utility to
assess a wholesale distribution charge to an electric storage resource
participating in the PJM markets.\225\ Consistent with this precedent,
the Commission found that it may be appropriate, on a case-by-case
basis, for distribution utilities to assess a charge on electric
storage resources similar to those assessed to the market participant
in that proceeding.
---------------------------------------------------------------------------
\225\ Id. P 301 (citing PJM Interconnection L.L.C., 149 FERC ]
61,185 at P 12 (wholesale distribution charge that ComEd will assess
to Energy Vault is a weighted average carrying charge that is
applied on a case-by-case basis, depending on the distribution
facilities expected to be used in providing wholesale distribution
service), order on reh'g, 151 FERC ] 61,231 at PP 16-18).
---------------------------------------------------------------------------
[[Page 23920]]
b. Requests for Rehearing or Clarification
110. Pacific Gas and Electric requests that the Commission clarify
that nothing in Order No. 841 is intended to suggest that the state no
longer has jurisdiction to determine how power flowing from the
distribution grid, through the customer meter, and then into the
electric storage resource located behind the customer meter is to be
split between retail consumption and wholesale charging for later
discharge into the wholesale markets.\226\ Pacific Gas and Electric
argues that the final rule implies that the state has the authority to
determine whether the power flowing through the customer meter, or some
fraction of it, is appropriately categorized as wholesale charging or
whether all of it must be determined to be retail usage.\227\ Pacific
Gas and Electric asserts that, if the Commission were to conclude that
the state no longer has this authority, then a retail customer could
use its behind-the-retail-meter electric storage resource as a means to
completely bypass retail rates for its on-site electricity consumption
by claiming that the electricity is for later discharge into the
wholesale markets, whether or not that discharge actually occurs.\228\
---------------------------------------------------------------------------
\226\ Pacific Gas and Electric Rehearing Request at 2.
\227\ Id. (citing Order No. 841, 162 FERC ] 61,127 at P 325 (To
the extent that the host distribution utility is unable--due to a
lack of the necessary metering infrastructure and accounting
practices--or unwilling to net out any energy purchases associated
with a resource using the participation model for electric storage
resources' wholesale charging activities from the host customer's
retail bill, the RTO/ISO would be prevented from charging that
resource using the participation model for electric storage
resources electric wholesale rates for the charging energy for which
it is already paying retail rates.)).
\228\ Id. at 2-3.
---------------------------------------------------------------------------
111. Both California Energy Storage Alliance and CAISO contend that
the final rule presents conflicting positions on whether transmission
charges should apply to wholesale charging energy purchased for later
resale.\229\ Specifically, they note that, in paragraph 298 of Order
No. 841, the Commission found that ``electric storage resources should
not be charged transmission charges when they are dispatched by an RTO/
ISO to provide a service. . . .'' \230\ They point out that, in
contrast, in paragraph 297 of the final rule, the Commission stated
that ``[w]hen an electric storage resource is charging to resell energy
at a later time, then its behavior is similar to other load-serving
entities, and we find that applicable transmission charges should
apply.'' \231\
---------------------------------------------------------------------------
\229\ California Energy Storage Alliance Rehearing Request at 2;
CAISO Rehearing Request at 11.
\230\ California Energy Storage Alliance Rehearing Request at 2
(citing Order No. 841, 162 FERC ] 61,127 at P 298); CAISO Rehearing
Request at 11 (citing Order No. 841, 162 FERC ] 61,127 at P 298).
\231\ California Energy Storage Alliance Rehearing Request at 2
(citing Order No. 841, 162 FERC ] 61,127 at 297); CAISO Rehearing
Request at 11 (citing Order No. 841, 162 FERC ] 61,127 at P 297).
---------------------------------------------------------------------------
112. According to California Energy Storage Alliance, transmission
charges should not apply to wholesale charging energy that an electric
storage resource later resells. In support of its position, California
Energy Storage Alliance argues that applying transmission charges in
CAISO would result in an unreasonable ``double-application'' of those
charges: Once to the electric storage resource purchasing its charging
energy at wholesale and once to the load that the energy is used to
serve or the export transaction that it is needed to support.
California Energy Storage Alliance further contends that this double-
billing would be unduly and financially burdensome for electric storage
resources.\232\
---------------------------------------------------------------------------
\232\ California Energy Storage Alliance Rehearing Request at 2-
3.
---------------------------------------------------------------------------
113. CAISO argues that requiring an RTO/ISO to assess transmission
charges on an electric storage resource's charging demand could blunt
electric storage resources' market effectiveness and financial
viability and inappropriately shifts transmission costs into energy
markets, which is inconsistent with Commission precedent.\233\
According to CAISO, unlike load-serving entities with firm load and
little to no ability to curb or curtail demand, electric storage
resources can charge during periods of excess generation and low
prices, thereby shifting demand to combat over-generation, providing
ramping flexibility, addressing negative prices, and mitigating
potential reliability issues in systems like CAISO that operate with a
high degree of supply and demand variability. CAISO argues that
requiring RTOs/ISOs to assess transmission charges on electric storage
devices will force such resources to include those costs in their
market bids, thus affecting energy market prices.\234\
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\233\ CAISO Rehearing Request at 5-6, 11-13 (citing Cal. Indep.
Sys. Operator Corp., 132 FERC ] 61,211 (2010); Reform of Generator
Interconnection Procedures and Agreements, 157 FERC ] 61,212, at PP
226-230 (2017)).
\234\ Id. at 5-6, 11-13.
---------------------------------------------------------------------------
114. With respect to Commission precedent on this issue, CAISO
claims that requiring electric storage resources to pay transmission
charges would contravene prior Commission precedent, such as CAISO's
Commission-accepted non-generator resource model, which treats non-
generator resource demand as negative generation and does not require
it to pay transmission charges.\235\ CAISO maintains that, since the
acceptance of the non-generator resource model, the Commission has
noted in other proceedings that the negative generation model is a best
practice that ``may allow transmission providers to better account for
the transitions of electric storage resources between generation and
load and may better enable the use of existing generator
interconnection procedures and agreements due to their treatment as
negative generation instead of load.'' \236\
---------------------------------------------------------------------------
\235\ Id. at 12 (citing Cal. Indep. Sys. Operator Corp., 132
FERC ] 61,211 (2010)).
\236\ Id. (citing Reform of Generator Interconnection Procedures
and Agreements, 157 FERC ] 61,212 at PP 226-230).
---------------------------------------------------------------------------
115. For these reasons, CAISO asks the Commission to clarify that
RTOs/ISOs may, but are not required to, impose transmission charges on
electric storage resources when they are charging pursuant to RTO/ISO
dispatch. Alternatively, CAISO asks the Commission to clarify that each
RTO/ISO may determine (1) what types of charging activities would not
cause an electric storage resource to incur transmission charges, (2)
that those services are not limited to ancillary services, and (3) that
charging pursuant to economic dispatch may qualify as such a
service.\237\ According to CAISO, charging an electric storage resource
when it is economic to do so as instructed by the RTO/ISO to help
balance the system is a critically important ``service'' that electric
storage resources provide the grid.\238\
---------------------------------------------------------------------------
\237\ Id. at 5.
\238\ Id. at 5, 11.
---------------------------------------------------------------------------
116. Finally, CAISO seeks clarification that electric storage
resources participating as transmission resources under the
Commission's Policy Statement should not incur transmission charges for
their charging demand.\239\ CAISO notes that it may soon approve a
proposal to allow electric storage resources to provide reliability/
transmission services in its transmission planning process and that
these resources would then be eligible to recover some of their costs
through regulated transmission rates and the remainder through
participation in the wholesale markets. CAISO explains that whether
these resources will incur transmission charges for charging will
significantly affect their projected costs
[[Page 23921]]
in competitive solicitations, as well as how the resource intends to
recover those costs.\240\
---------------------------------------------------------------------------
\239\ Id. at 12-13 (referencing Utilization of Electric Storage
Resources for Multiple Services When Receiving Cost-Based Rate
Recovery, 158 FERC ] 61,051 (2017)).
\240\ Id. at 13.
---------------------------------------------------------------------------
117. EEI seeks clarification and Xcel Energy Services seeks
rehearing of the Commission's finding in Order No. 841 that it may be
appropriate, on a case-by-case basis, for distribution utilities to
assess a charge on electric storage resources similar to those assessed
to the market participant in PJM Interconnection LLC. They explain
that, in PJM Interconnection LLC, the Commission permitted the
distribution utility to establish a wholesale distribution rate that
was based on the carrying charges associated with the distribution
facilities that would be used to provide wholesale distribution service
to a particular electric storage resource. According to EEI and Xcel
Energy Services, a customer-specific methodology for assessing
wholesale distribution charges may no longer be appropriate when there
are a large number of distribution-connected electric storage resources
participating in the wholesale markets.\241\ EEI further argues that it
would be unduly burdensome to require a distribution utility to
establish a separate, facility-specific rate for each individual
electric storage resource's use of the distribution system,\242\ while
Xcel Energy Services contends that establishing such rates would
involve significant regulatory development and filing costs and could
even be unworkable given that the distribution system is periodically
reconfigured based on system conditions.\243\
---------------------------------------------------------------------------
\241\ EEI Rehearing Request at 12; Xcel Energy Services
Rehearing Request at 27-28.
\242\ EEI Rehearing Request at 12.
\243\ Xcel Energy Services Rehearing Request at 29.
---------------------------------------------------------------------------
118. Therefore, EEI seeks clarification on what the Commission
meant by ``case-by-case basis,'' stating that the Commission should not
dismiss as per se unreasonable a proposal to establish a non-facility-
specific rate for wholesale distribution service to charging load.\244\
Similarly, Xcel Energy Services asks the Commission to grant rehearing
of its decision to permit wholesale distribution charges on only a
``case-by-case basis'' and permit more generic wholesale distribution
rates or tariffs.\245\
---------------------------------------------------------------------------
\244\ EEI Rehearing Request at 11-12.
\245\ Xcel Energy Services Rehearing Request at 28, 30.
---------------------------------------------------------------------------
c. Commission Determination
119. We deny Pacific Gas and Electric's request to clarify that
states have jurisdiction to determine how power flowing from the
distribution grid into the electric storage resource located behind the
customer meter is split between retail consumption and wholesale
charging for later discharge into the wholesale markets. In the final
rule, the Commission noted that it found that the sale of energy from
the grid that is used to charge electric storage resources for later
resale into the energy or ancillary service markets constitutes a sale
for resale in interstate commerce; as such, the just and reasonable
rate for that wholesale sale of energy used to charge that electric
storage resource is the RTO/ISO market's wholesale LMP.\246\ However,
we reiterate that the Commission's finding regarding charging energy
did not address payment of the retail rate for energy. Thus, Order No.
841 does not authorize electric storage resources to bypass retail
rates for its on-site electricity consumption, as Pacific Gas &
Electric suggests.\247\
---------------------------------------------------------------------------
\246\ Order No. 841, 162 FERC ] 61,127 at P 294.
\247\ See id. PP 323-324.
---------------------------------------------------------------------------
120. In response to CAISO's arguments, we acknowledge that the
participation of electric storage resources in RTO/ISO markets may
convey a range of benefits, particularly under certain system
conditions, but we cannot conclude based on the record before us that
an electric storage resource charging when it is economic to do so
necessarily constitutes the provision of a service in the RTO/ISO
markets, though it may provide a service in some specific
circumstances. Thus, we decline to grant clarification that charging
pursuant to economic dispatch always qualifies as a service. However,
we clarify that services do not need to be limited to ancillary
services; they could include any service defined in an RTO/ISO tariff.
To the extent that an RTO/ISO seeks to create a new service that would
involve charging pursuant to economic dispatch under certain system
conditions, the RTO/ISO may propose such revisions to its tariff
through a separate FPA section 205 filing.\248\
---------------------------------------------------------------------------
\248\ See 16 U.S.C. 824d.
---------------------------------------------------------------------------
121. We also grant clarification of the Commission's finding in
paragraph 297 that applicable transmission charges should apply when an
electric storage resource is charging to resell energy at a later time.
In response to the concerns of CAISO and California Energy Storage
Alliance, we clarify that, in paragraph 297 of the final rule, the
Commission's use of the phrase ``applicable transmission charges'' was
intended to convey that an RTO/ISO may propose to apply its existing
rate structure for transmission charges to an electric storage resource
that is charging at wholesale but is not being dispatched by the RTO/
ISO to provide a service in the RTO/ISO markets. Thus, each RTO/ISO may
on compliance propose that any electric storage resource that is
charging at wholesale but is not being dispatched by the RTO/ISO to
provide a service should be assessed charges consistent with how the
RTO/ISO assesses transmission charges to wholesale load under its
existing rate structure. We further clarify that, if an RTO/ISO
proposes not to apply transmission charges to an electric storage
resource that is charging at wholesale but is not being dispatched by
the RTO/ISO to provide a service, then the RTO/ISO must demonstrate
that exempting such a resource from these charges is reasonable given
its existing rate structure for transmission charges.
122. We find that CAISO's request for clarification that electric
storage resources participating as transmission resources, as described
in the Commission's Policy Statement,\249\ should not incur
transmission charges for charging demand is premature because CAISO has
not yet filed a proposal to allow electric storage resources to provide
transmission or reliability services under the Policy Statement. We
find that it is appropriate to address CAISO's concerns related to
resources that might seek to recover their costs through both regulated
transmission rates and the wholesale markets in the context of a
specific proposal involving resources that provide multiple services
and seek to recover their costs through both cost-based and market-
based rates concurrently. We therefore deny clarification that such
resources should not incur transmission charges for charging demand and
decline to address CAISO's concerns here.
---------------------------------------------------------------------------
\249\ See Utilization of Electric Storage Resources for Multiple
Services When Receiving Cost-Based Rate Recovery, 158 FERC ] 61,051.
---------------------------------------------------------------------------
123. In response to concerns regarding the Commission's finding
that it may be appropriate, on a case-by-case basis, for distribution
utilities to assess a charge on electric storage resources similar to
those assessed to the market participant in PJM Interconnection
L.L.C.,\250\ we grant EEI's requested clarification. Specifically, we
clarify that the Commission will not dismiss as per se unreasonable any
proposal to establish a non-facility-specific rate for wholesale
distribution service to an electric storage resource for its charging.
Rather, the Commission will consider any proposal
[[Page 23922]]
to establish a rate for providing wholesale distribution service to an
electric storage resource for its charging (whether a facility-specific
rate, a wholesale distribution service rate that applies to all or some
subset of electric storage resources, a generally applicable wholesale
distribution service tariff, or any other rate mechanism) on a case-by-
case basis in light of the record evidence. Accordingly, we find that
Xcel Energy Services' request for rehearing of this issue is moot.
---------------------------------------------------------------------------
\250\ See Order No. 841, 162 FERC ] 61,127 at P 301 (citing PJM
Interconnection L.L.C., 149 FERC ] 61,185 at P 12, order on reh'g,
151 FERC ] 61,231 at PP 16-18).
---------------------------------------------------------------------------
2. Metering and Accounting Practices for Charging Energy
a. Final Rule
124. To help implement the new requirement in Sec. 35.28(g)(9)(ii)
of the Commission's regulations, in Order No. 841, the Commission
required each RTO/ISO to implement metering and accounting practices as
needed to address the complexities of implementing the requirement that
the sale of electric energy from the RTO/ISO markets to an electric
storage resource that the resource then resells back to those markets
be at the wholesale LMP.\251\ To this end, the Commission required each
RTO/ISO to directly meter electric storage resources, so all the energy
entering and exiting the resources is measured by that meter. However,
the Commission recognized that some electric storage resources (such as
those located on a distribution system or behind a customer meter) may
be subject to other metering requirements that could be used in lieu of
a direct metering requirement by an RTO/ISO. Therefore, the Commission
stated that it will consider, in the individual RTO/ISO compliance
filings, alternative proposals that may not entail direct metering but
nonetheless address the complexities of implementing the requirement
that the sale of electric energy from the RTO/ISO markets to an
electric storage resource that the resource then resells back to those
markets be at the wholesale LMP.
---------------------------------------------------------------------------
\251\ Id. P 322.
---------------------------------------------------------------------------
125. The Commission was not persuaded by commenters who argued that
developing metering practices that distinguish between wholesale and
retail activity is impractically complex.\252\ The Commission noted
that CAISO provided two examples of how it has achieved market rules
that accurately account for wholesale and retail activities by using
direct metering. Additionally, the Commission stated that retail
metering infrastructure, which is subject to state jurisdiction, may be
able to work in concert with the RTO/ISO requirements to lower the
overall metering costs for electric storage resources. Therefore, the
Commission provided each RTO/ISO with the flexibility to propose in its
compliance filing other reasonable metering solutions that may help
reduce costs for developers.
---------------------------------------------------------------------------
\252\ Id. P 323.
---------------------------------------------------------------------------
126. The Commission further found that developing new accounting
practices for electric storage resources in response to this
requirement will be complex, but nonetheless found that they are
feasible to develop.\253\ The Commission recognized that it may be
beneficial for each RTO/ISO to coordinate accounting requirements in
cooperation with the distribution utilities and RERRAs in its footprint
to help identify workable accounting solutions for distribution-
interconnected or behind-the-meter electric storage resources to
participate in the RTO/ISO markets. The Commission also found that
metering and accounting rules may need to differ based on whether the
resource is located on the transmission system, the distribution
system, or behind the meter.
---------------------------------------------------------------------------
\253\ Id. P 324.
---------------------------------------------------------------------------
127. As a related matter, the Commission found that electric
storage resources should not be required to pay both the wholesale and
retail price for the same charging energy because doing so would create
market inefficiencies due to the double payment.\254\ Therefore, the
Commission required each RTO/ISO to prevent electric storage resources
from paying twice for the same charging energy. The Commission stated
that, to the extent that the host distribution utility is unwilling or
unable--due to a lack of the necessary metering infrastructure and
accounting practices--to net out any energy purchases associated with
an electric storage resource's wholesale charging activities from the
host customer's retail bill, the RTO/ISO would be prevented from
charging that resource electric wholesale rates for the same charging
energy that it is already paying for through retail rates.
---------------------------------------------------------------------------
\254\ Id. P 326. Paragraph 326 of the preamble of Order No. 841
used the term ``resources using the participation model for electric
storage resources'' with respect to the requirements set forth
therein (e.g., ``we require each RTO/ISO to prevent resources using
the participation model for electric storage resources from paying
twice for the same charging energy''). However, Sec.
35.28(g)(9)(ii) of the Commission's regulations (as modified by
Order No. 841), which these requirements are intended to implement,
specifies that it applies to electric storage resources. Thus, the
Commission used the incorrect term in paragraph 326 of Order No.
841. In this order, we use the correct term throughout.
---------------------------------------------------------------------------
128. Finally, the Commission stated that it was not persuaded by
commenters' suggestion that electric storage resources must choose to
participate in either wholesale or retail markets due to the complexity
of the metering and accounting practices.\255\ The Commission found
that it is possible for electric storage resources that are selling
retail services also to be technically capable of providing wholesale
services, and it would adversely affect competition in the RTO/ISO
markets if these technically capable resources were excluded from
participation.
---------------------------------------------------------------------------
\255\ Id. P 325.
---------------------------------------------------------------------------
b. Requests for Rehearing or Clarification
129. Several petitioners request rehearing or clarification with
respect to Order No. 841's requirements related to metering and
accounting practices. First, CAISO requests that the Commission clarify
or, in the alternative, grant rehearing that the RTO/ISO does not need
to be the entity that directly meters electric storage resources. CAISO
explains that it is a common and useful practice in RTOs/ISOs for third
parties, such as a scheduling coordinator, to perform the metering,
validation, estimation, and editing to submit settlement quality meter
data to the RTO/ISO, which the RTO/ISO then ensures is accurate. CAISO
argues that a requirement for the RTO/ISO to be the sole entity
directly metering electric storage resources is inconsistent with
previous precedent, inconsistent with RTOs'/ISOs' current just and
reasonable metering practices, and unnecessarily restrictive for
electric storage resources and RTOs/ISOs.\256\
---------------------------------------------------------------------------
\256\ CAISO Rehearing Request at 6-8 (citing Cal. Indep. Sys.
Operator Corp., Docket No. ER17-949-000 (Mar. 31, 2017) (delegated
order)).
---------------------------------------------------------------------------
130. With respect to Order No. 841's requirement that, to the
extent that the host distribution utility is unable or unwilling to net
out any energy purchases associated with an electric storage resource's
wholesale charging activities from the host customer's retail bill, the
RTO/ISO may not charge that resource for the charging energy for which
it is already paying retail rates, CAISO states that it is unclear what
constitutes a utility that is unwilling or unable to net out wholesale
charging energy from an electric storage resource's total demand.
Therefore, CAISO asks the Commission to clarify or, in the alternative,
grant rehearing that an RTO/ISO could require verification from the
host distribution utility that it is unable or unwilling to
[[Page 23923]]
net wholesale demand from retail settlement before the RTO/ISO ceases
to settle an electric storage resources' wholesale demand at the
wholesale LMP. CAISO contends that this clarification is especially
critical for electric storage resources that are located on the
distribution system or behind the meter and participating in the CAISO
market because they may be providing services to other entities.\257\
---------------------------------------------------------------------------
\257\ Id. at 9-11.
---------------------------------------------------------------------------
131. Relatedly, CAISO asks the Commission to clarify or, in the
alternative, grant rehearing that, when an RTO/ISO cannot verify that
the host distribution utility is unable or unwilling to net wholesale
demand from retail settlement, the RTO/ISO can either (1) require the
electric storage resource to use a participation model designed for
retail customer participation (such as demand response) or (2) continue
settling the electric storage resource's charging demand at the
wholesale LMP. According to CAISO, this clarification is necessary
because prohibiting certain electric storage resources from having
their demand settled at the wholesale LMP (1) will require new
participation models, modeling, and software upgrades; (2) could
materially affect how that resource bids, potentially distorting the
market; and (3) could negatively affect the host utility distribution
company's settlement charges, in the form of unaccounted for energy,
for example.\258\
---------------------------------------------------------------------------
\258\ Id. at 10-11.
---------------------------------------------------------------------------
132. Both TAPS and Xcel Energy Services request rehearing of the
Commission's decision in Order No. 841 to decline to require electric
storage resources located on the distribution system or behind the
meter to participate exclusively either in the wholesale markets or at
retail.\259\ Xcel Energy Services contends that it is difficult to see
how an RTO/ISO can differentiate between the wholesale and retail
activities of an electric storage resource located on the distribution
system or behind the meter without compelling entities that are not
Commission jurisdictional, such as loads and distribution utilities, to
provide information on their sales to and purchases from such a
resource.\260\
---------------------------------------------------------------------------
\259\ TAPS Rehearing Request at 12; Xcel Energy Services
Rehearing Request at 17, 20.
\260\ Xcel Energy Services Rehearing Request at 20.
---------------------------------------------------------------------------
133. TAPS states that, to ensure that an electric storage resource
that is located on the distribution system or behind the meter does not
``improperly evade the distribution utility's retail service'' through
its participation in the RTO/ISO markets, the Commission must ensure
that any energy that such resources purchase from the RTO/ISO markets
is resold.\261\ TAPS further argues that allowing an electric storage
resource located on the distribution system or behind the meter to
participate both in the wholesale markets and at retail could provide
its owner with the opportunity to simultaneously purchase energy at
retail and sell energy to the wholesale market at a higher price, thus
shifting costs to other retail customers without ever changing the
physical State of Charge of its electric storage resource.\262\
---------------------------------------------------------------------------
\261\ TAPS Rehearing Request at 13.
\262\ Id. at 14.
---------------------------------------------------------------------------
134. According to TAPS, normal revenue-quality metering is
inadequate to address these concerns because it requires knowledge of
two separate energy level balances (one for wholesale energy and one
for retail energy) rather than simply the total energy balance. TAPS
contends that maintaining and auditing a system to track this
information would be complicated and expensive.\263\ TAPS adds that the
market rules in CAISO that the Commission claimed accurately account
for wholesale and retail activities do not address the issues that TAPS
has identified.\264\
---------------------------------------------------------------------------
\263\ Id. at 14-15.
\264\ Id. at 15 (citing Order No. 841, 162 FERC ] 61,127 at P
318).
---------------------------------------------------------------------------
135. Similarly, Xcel Energy Services argues that the Commission's
reliance on CAISO's market rules to support its decision not to
preclude electric storage resources located on the distribution system
or behind the meter from participating both in the wholesale markets
and at retail was misplaced. Specifically, Xcel Energy Services
contends that CAISO's market rules do not provide for tracking retail
purchases, retail sales, wholesale purchases, and wholesale sales all
at the same time, and thus they do not allow an RTO/ISO to distinguish
between the wholesale and retail activities of electric storage
resources located on the distribution system or behind the meter that
seek to participate in its markets. Xcel Energy Services states that,
instead, CAISO's market rules only account for resources that are
selling exclusively at wholesale or at retail at a given point in time
(as opposed to providing services at wholesale and at retail during the
same time period). According to Xcel Energy Services, CAISO's market
rules also fail to account for multiple resources and retail loads
behind a single meter. Xcel Energy Services adds that, even if CAISO's
market rules were sufficient, they do not support a finding that other
RTOs/ISOs, whose member utilities all have their own requirements for
metering, billing systems, and other supporting software and
Information Technology (IT) platforms, could necessarily adopt
them.\265\
---------------------------------------------------------------------------
\265\ Xcel Energy Services Rehearing Request at 17-20.
---------------------------------------------------------------------------
136. Finally, TAPS also argues that the Commission's decision on
TAPS's proposal to require distribution-connected electric storage
resources to choose between wholesale and retail participation was
premature given that the issues that TAPS raised are within the scope
of the distributed energy resource aggregation-related issues which the
Commission determined in Order No. 841 that it did not have sufficient
information to act upon. Therefore, TAPS argues that the Commission
should have deferred its decision until after the technical conference
in Docket No. RM18-9-000.\266\
---------------------------------------------------------------------------
\266\ TAPS Rehearing Request at 16-17.
---------------------------------------------------------------------------
137. EEI asks the Commission to clarify that it is the
responsibility of the electric storage resource located on the
distribution system or behind the meter to pay for any metering or
other costs associated with distinguishing between its wholesale and
retail activities; if they are not given that responsibility, then EEI
argues that the entire load can and should be treated as retail load.
EEI contends that this clarification reflects the statement in Order
No. 841 that the finding regarding charging energy does not address
payment of the retail rate for energy or charging a device off of co-
located generation resources.\267\
---------------------------------------------------------------------------
\267\ EEI Request for Rehearing and Clarification at 12 (citing
Order No. 841, 162 FERC ] 61,127 at P 299).
---------------------------------------------------------------------------
c. Commission Determination
138. As an initial matter, we clarify, in response to CAISO, that
the RTO/ISO itself does not need to be the entity that directly meters
electric storage resources. We also grant CAISO's request to clarify
that an RTO/ISO could require verification from the host distribution
utility that it is unable or unwilling to net wholesale demand from
retail settlement before the RTO/ISO ceases to settle an electric
storage resource's wholesale demand at the wholesale LMP. While Order
No. 841 stated that each RTO/ISO must prevent electric storage
resources from paying twice for the same charging energy,\268\ it did
not specify how each RTO/ISO must implement this requirement.
Therefore, we clarify that the Commission will consider on compliance
each RTO's/
[[Page 23924]]
ISO's proposal to identify whether a distribution utility is unable or
unwilling to net out from a host customer's retail bill the wholesale
energy purchases associated with charging an electric storage resource
that is participating in the RTO/ISO market from the host customer's
retail bill.
---------------------------------------------------------------------------
\268\ Order No. 841, 162 FERC ] 61,127 at P 326.
---------------------------------------------------------------------------
139. However, we deny CAISO's request for clarification or, in the
alternative, rehearing that when an RTO/ISO cannot verify the host
distribution utility's inability or unwillingness to net out wholesale
charging energy, the RTO/ISO can require the electric storage resource
to use a participation model designed for retail customer
participation. In Order No. 841, the Commission stated that each RTO/
ISO must prevent electric storage resources from paying twice for the
same charging energy.\269\ While the Commission provided flexibility
with respect to how each RTO/ISO implements that requirement, we find
it inappropriate for an RTO/ISO to meet that requirement by requiring
an electric storage resource to use a participation model designed for
retail customer participation. Consistent with Order No. 841, we
reiterate that, to the extent that the host distribution utility is
unable or unwilling to net out any energy purchases associated with a
resource using the participation model for electric storage resources'
wholesale charging activities from the host customer's retail bill, the
RTO/ISO must determine how it will prevent an electric storage resource
participating in its markets from being charged wholesale rates for
charging energy for which it already is paying retail rates.\270\
---------------------------------------------------------------------------
\269\ Id.
\270\ Id.
---------------------------------------------------------------------------
140. We deny TAPS' and Xcel Energy Services' requests for rehearing
regarding the Commission's decision to decline to require electric
storage resources to choose to participate exclusively in either
wholesale or retail markets due to the complexity of the metering and
accounting practices. While we agree with TAPS and Xcel Energy Services
that appropriate metering and accounting practices will be necessary to
distinguish between wholesale and retail activity, we disagree that
these practices would be prohibitively complex or costly to develop and
implement given the flexibility provided to the RTOs/ISOs to propose
reasonable approaches.\271\ As the Commission stated in Order No. 841,
retail metering infrastructure also may be able to work in concert with
the RTO/ISO requirements to lower the overall metering costs.\272\
---------------------------------------------------------------------------
\271\ See id. PP 323-324.
\272\ Id. P 323.
---------------------------------------------------------------------------
141. Further, TAPS and Xcel Energy Services argue that CAISO's
metering and accounting practices are insufficient to allow for the
implementation of Order No. 841's requirement that the sale of electric
energy from the RTO/ISO markets to an electric storage resource that
the resource then resells back to those markets be at the wholesale
LMP. Therefore, TAPS and Xcel Energy Services argue that the
Commission's reliance on these practices as evidence that establishing
such metering and accounting practices is possible is misplaced. We
disagree. The Commission relied on CAISO's metering and accounting
practices to demonstrate that direct metering for behind-the-meter
resources can remove barriers to their participation in RTO/ISO
markets, not necessarily as an example of metering and accounting that
would comply with the requirements of the final rule. Moreover, in
Order No. 841, the Commission chose not to prescribe particular
metering and accounting practices that each RTO/ISO must adopt, instead
providing flexibility for each RTO/ISO to develop practices that
reflect its unique market rules and its member utilities' requirements
for metering, billing systems, and other supporting software and IT
platforms.
142. TAPS also argues that the Commission's decision not to require
electric storage resources to choose to participate exclusively in
either wholesale or retail markets will allow resources using the
participation model for electric storage resources to evade the
distribution utility's retail service or simultaneously buy electricity
at the retail rate and sell it at the wholesale LMP. While we
acknowledge these concerns, we believe that each RTO/ISO can address
these issues by developing its metering and accounting requirements in
cooperation with the distribution utilities and RERRAs in its
footprint, as the Commission recognized in Order No. 841.\273\ In
addition, we note that, when the Commission stated in Order No. 841
that the sale of electric energy from the RTO/ISO markets to an
electric storage resource that the resource then resells back to those
markets be at the wholesale LMP, it was referring to the sale of energy
from the grid that is used to charge electric storage resources for
later resale into the energy or ancillary service markets.\274\ To the
extent that TAPS has concerns that a particular RTO's/ISO's proposed
metering and accounting practices do not address these issues, TAPS may
raise these concerns in response to the RTO's/ISO's compliance filing.
---------------------------------------------------------------------------
\273\ Id. P 324.
\274\ Id. P 294.
---------------------------------------------------------------------------
143. Finally, we disagree with TAPS' contention that the Commission
should have deferred action on this issue until after the technical
conference in Docket No. RM18-9-000. The technical conference in Docket
No. RM18-9-000 focused on issues relating to distributed energy
resource aggregations, while Order No. 841 addresses the participation
of non-aggregated electric storage resources in RTO/ISO markets. We
find that the Commission had sufficient record evidence before it to
determine whether to require electric storage resources to choose to
participate exclusively in either wholesale or retail markets,
regardless of its decision to gather more information with respect to
its proposals to remove barriers to the participation of distributed
energy resource aggregations in RTO/ISO markets in Docket No. RM18-9-
000.\275\
---------------------------------------------------------------------------
\275\ Id. P 5.
---------------------------------------------------------------------------
144. In response to EEI, we decline to clarify whether an electric
storage resource located on the distribution system or behind the meter
is responsible for paying for any metering or other costs associated
with distinguishing between its wholesale and retail activities. While
EEI contends that its requested clarification relates to the
Commission's statement in Order No. 841 that its finding regarding
charging energy does not address payment of the retail rate for energy
or charging a device off of co-located generation resources, Order No.
841 did not establish any requirement with respect to which entity
should bear the costs of metering. Therefore, we find that this issue
is outside the scope of this proceeding.
III. Compliance Requirements
A. Final Rule
145. In the final rule, the Commission required each RTO/ISO to
file the tariff changes needed to implement the requirements of Order
No. 841 within 270 days of the publication date of Order No. 841 in the
Federal Register.\276\ The Commission also allowed each RTO/ISO a
further 365 days from that date to implement the tariff provisions. The
Commission found that, given the modifications and clarifications to
the NOPR made in Order No. 841, particularly the omission of the
reforms relevant to distributed energy resource aggregations, and the
[[Page 23925]]
record in this proceeding in support of the reforms that the Commission
finalized therein, the implementation schedule was reasonable.\277\
---------------------------------------------------------------------------
\276\ Id. P 348.
\277\ Id. P 349.
---------------------------------------------------------------------------
146. Additionally, the Commission noted that many of the RTOs/ISOs
already have rules in place to enable the participation of electric
storage resources in their markets.\278\ The Commission further stated
that the additional time that it provided for the RTOs/ISOs to make
their compliance filings, along with the ability of the RTOs/ISOs to
use existing tariff provisions to demonstrate compliance with aspects
of the final rule, would mean that the RTOs/ISOs can meet the deadlines
established therein. Finally, the Commission noted that it was allowing
regional flexibility to the extent possible throughout the final rule,
which it believed would assist the RTOs/ISOs in meeting the compliance
and implementation deadlines.
---------------------------------------------------------------------------
\278\ Id. P 350.
---------------------------------------------------------------------------
B. Requests for Rehearing or Clarification
147. MISO, AMP/APPA/NRECA, and EEI raise issues relating to the
relationship between the implementation of Order No. 841 and the
Commission's decision therein to defer consideration of its proposals
with respect to the participation of distributed energy resource
aggregations in RTO/ISO markets. Both AMP/APPA/NRECA and EEI assert
that, because some electric storage resources may be distributed energy
resources, and a single electric storage resource may constitute a
distributed energy resource aggregation, many of the issues raised at
the technical conference in Docket No. RM18-9-000 are applicable to
electric storage resources located on the distribution system or behind
the meter.\279\ They contend that it is unclear how the Commission can
reasonably adopt final rules governing the participation of electric
storage resources located on the distribution system or behind the
meter in RTO/ISO markets while finding that additional information is
needed prior to allowing distributed energy resource aggregations,
which can include electric storage resources, to participate in those
same markets.\280\
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\279\ APPA/NRECA Rehearing Request at 16; EEI Rehearing Request
at 10.
\280\ APPA/NRECA Rehearing Request at 16; EEI Rehearing Request
at 11.
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148. MISO asks the Commission to grant rehearing of the compliance
date and extend Order No. 841's implementation timetable by at least
six months with respect to matters that affect the potential
participation of electric storage resources as distributed energy
resources in RTO/ISO markets.\281\ Moreover, MISO contends that it
wishes to avoid devoting significant effort and expense to develop
software and system adjustments to address the participation of
distribution-connected electric storage resources, which may be
significantly impacted by a final rule in Docket No. RM18-9-000.\282\
According to MISO, the cost and time needed to ``ensure the synergy of
[electric storage resource] and [distributed energy resource]-related
software changes are likely to be significant.'' \283\ Therefore, MISO
ask the Commission to further adjust the implementation timeframe for
Order No. 841 if necessitated by any electric storage-resource related
requirements in a final rule in Docket No. RM18-9-000.\284\
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\281\ MISO Rehearing Request at 13.
\282\ Id. at 9-10.
\283\ Id. at 11.
\284\ Id. at 11, 13.
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149. To ensure consistency, AMP/APPA/NRECA ask the Commission to
clarify that the wholesale market participation by electric storage
resources located on a distribution system or behind a retail meter
will be subject to any final rule in Docket No. RM18-9-000.\285\
Likewise, EEI asks the Commission to clarify that rules on the
participation in the RTO/ISO markets of electric storage resources
located on the distribution system or behind the meter should be
informed by the discussion in Docket No. RM18-9-000.\286\ Both AMP/
APPA/NRECA and EEI also ask the Commission to determine that the RTO/
ISO tariff revisions related to electric storage resources located on a
distribution system or behind a retail meter made in compliance with
Order No. 841 will not become effective until the effective date of the
RTO/ISO tariff revisions related to distributed energy resource
aggregations made in compliance with any final rule in Docket No. RM18-
9-000.\287\
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\285\ AMP/APPA/NRECA Rehearing Request at 17.
\286\ EEI Rehearing Request at 11.
\287\ AMP/APPA/NRECA Rehearing Request at 17; EEI Rehearing
Request at 11.
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150. Xcel Energy Services contends that the Commission offered no
evidence in Order No. 841 explaining why it chose a period of 270 days
for each RTO/ISO to submit a compliance filing and a further 365 days
to implement the tariff revisions proposed therein.\288\ Xcel Energy
Services argues that Order No. 841's inflexible compliance schedule
appears inconsistent with other provisions in in Order No. 841 that
acknowledge that each RTO/ISO will have to revise its tariff in a
manner that recognizes the unique physical and operational
characteristics of their markets and the effects of integrating
electric storage resources.\289\ Xcel Energy Services adds that, while
the Commission acknowledged that the tariff revisions could require
significant work on the part of the RTOs/ISOs, it did not explain what
that significant work would encompass, the expected timeframe for
completion, or why a longer time period may not be necessary to
comply.\290\ Xcel Energy Services also contends that implementing Order
No. 841 will require IT systems that tie together transmission and
distribution systems, along with wholesale and retail markets and
metering. Thus, Xcel Energy Services asks the Commission to grant
rehearing to permit RTO/ISOs to propose their own implementation
schedules that more appropriately reflect the unique characteristics of
their systems.\291\
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\288\ Xcel Energy Services Rehearing Request at 21.
\289\ Id. at 21.
\290\ Id. at 22 (citing Order No. 841, 162 FERC ] 61,127 at P
343).
\291\ Id. at 22.
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151. Xcel Energy Services also asks the Commission to grant
rehearing to require RTOs/ISOs to collaborate with distribution
utilities to develop a cost recovery mechanism for distribution utility
upgrades and improvements required to implement Order No. 841.\292\
Xcel Energy Services argues that, for distribution utilities, Order No.
841's implementation costs are disproportionate to the benefits they
will receive, given that the beneficiaries of Order No. 841 are the
RTO/ISO markets and their market participants.\293\ Xcel Energy
Services argues that, under FPA section 205, the costs that the
distribution utilities incur must be commensurate with the benefits
that they receive.\294\ Xcel Energy Services argues that Order No. 841
will burden distribution utilities and their ratepayers because they
will need to harden the underlying distribution system to support
bidirectional power flows and pay for substantial metering upgrades for
electric storage resources.\295\ Xcel Energy Services adds that IT
improvements to allow electric storage resources to engage in retail
and wholesale transactions and to
[[Page 23926]]
communicate with the RTO/ISO and distribution utility will be costly
and will be of comparatively little benefit to distribution ratepayers
and their utility.\296\
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\292\ Id. at 24-25.
\293\ Id. at 22-23.
\294\ Id. at 23 (citing Ill. Commerce Comm'n v. FERC, 576 F.3d
470, 477 (7th Cir. 2009); El Paso Elec. Co. v. FERC, 832 F.3d 495,
506 (5th Cir. 2016) (explaining that the Commission ``need only
roughly correlate costs to benefits'')).
\295\ Id. at 23-24.
\296\ Id. at 24.
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152. AES Companies ask the Commission to clarify that Order No.
841's compliance timeframe aligns with the Commission's compliance
directive in Docket No. EL17-8-000.\297\ AES Companies explain that, on
February 1, 2017, the Commission issued an order \298\ in Docket No.
EL17-8-000 granting in part and denying in part a complaint filed by
Indianapolis Power & Light Company, a member of AES Companies.\299\ AES
Companies explain that the Commission found in the February 1 Order
that MISO's tariff ``unreasonably restricts competition by preventing
electric storage resources from providing all the services that they
are technically capable of providing, which could lead to unjust and
unreasonable rates.'' \300\ AES Companies note that the Commission
required MISO to submit a compliance filing proposing tariff revisions,
within 60 days of the date of that order.\301\ AES Companies therefore
ask the Commission to clarify the scope and timing of MISO's existing
compliance obligation resulting from the February 1 Order, given that
Order No. 841's requirements are similar to the compliance directive
that the Commission issued in the February 1 Order.\302\
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\297\ AES Companies Rehearing Request at 1-2.
\298\ Indianapolis Power & Light Co. v. Midcontinent Indep. Sys.
Operator, Inc., 158 FERC ] 61,107 (2017) (February 1 Order).
\299\ AES Companies Rehearing Request at 2.
\300\ Id. (citing February 1 Order, 158 FERC ] 61,107 at P 69).
\301\ Id. at 2-3 (citing February 1 Order, 158 FERC ] 61,107 at
P 72).
\302\ Id. at 4-5.
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153. If the Commission determines that Order No. 841's requirements
supersede the tariff changes that the Commission directed in the
February 1 Order, such that MISO need not comply with the directives of
the February 1 Order until the implementation date for Order No. 841's
requirements, AES Companies argue that the Commission should direct
MISO to examine and asses any modifications to its business practice
manuals or software that could accommodate existing, presently-
interconnected electric storage resources. AES Companies further ask
the Commission to direct MISO to submit quarterly informational filings
describing these efforts.\303\
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\303\ Id. at 5-6.
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C. Commission Determination
154. We deny the rehearing requests that seek to change the
compliance deadlines established in Order No. 841. We continue to find
that the timeline for compliance and implementation is reasonable.\304\
Moreover, in establishing Order No. 841's compliance and implementation
schedule, the Commission indicated that it was already ``[t]aking into
account that the Commission is not implementing the distributed energy
resource aggregation reforms [proposed in the NOPR] at this time. . .
.'' \305\ Also, because we find that Order No. 841's compliance
timeframe is reasonable, we will not allow the individual RTOs/ISOs to
propose their own timeframes.
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\304\ Order No. 841, 162 FERC ] 61,127 at P 349.
\305\ Id. P 348. See also id. P 349 (noting that some commenters
provided feedback on the NOPR indicating that acting on only the
electric storage components would expedite compliance and
implementation).
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155. We also decline to adjust the compliance timeframe to consider
matters that affect distributed energy resources. In Order No. 841, the
Commission found that more information was needed with respect to
certain proposed reforms related to distributed energy resource
aggregations and decided to continue to explore those proposed reforms
in a separate proceeding in Docket No. RM18-9-000.\306\ While Order No.
841 addresses the participation model for non-aggregated electric
storage resources participating directly in the RTO/ISO markets, the
proceeding in Docket No. RM18-9-000 involves issues related to RTO/ISO
market rules for distributed energy resources participating through
aggregations. Thus, no topic addressed in Docket No. RM18-9-000 limits
the ability of the RTOs/ISOs to move forward with implementation of
Order No. 841, and we do not find that it is necessary to delay the
implementation of the reforms for electric storage resources located on
the distribution system or behind the meter in Order No. 841 pending
the outcome of the proceeding on distributed energy resource
aggregations in Docket No. RM18-9-000.
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\306\ Id. P 5.
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156. Additionally, we deny Xcel Energy Services' request for
rehearing regarding a cost recovery mechanism for distribution utility
upgrades and improvements required to implement Order No. 841. The
requirements of Order No. 841 apply to the RTOs/ISOs, not distribution
utilities, and therefore this request is outside the scope of this
proceeding. As stated in Order No. 841, we are not changing the
responsibilities of the distribution utilities or their ability to
allocate any costs that they incur in operating and maintaining their
respective power systems.\307\
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\307\ Id. P 274.
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157. We find that AES Companies' concerns regarding the February 1
Order are moot. Since AES Companies requested rehearing in this docket,
the Commission has issued orders \308\ addressing these rehearing
requests and MISO's compliance obligations in that separate proceeding.
Any concerns AES Companies may have regarding MISO's compliance
obligations in that separate proceeding are appropriately addressed in
that proceeding and accordingly the Commission will not consider them
here.
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\308\ Indianapolis Power & Light Co. v. Midcontinent Indep. Sys.
Operator, Inc., 162 FERC ] 61,266 (2018); Midcontinent Indep. Sys.
Operator, Inc., 164 FERC ] 61,109 (2018).
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IV. Document Availability
158. 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 (https://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE, Room 2A,
Washington, DC 20426.
159. 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 of this document, excluding the last three digits, in
the docket number field.
160. 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
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
[email protected].
List of Subjects in 18 CFR Part 35
Electric power rates, Electric utilities.
Issued: May 16, 2019.
Kimberly D. Bose,
Secretary.
In consideration of the foregoing, the Commission amends part 35,
chapter I, title 18 of the Code of Federal Regulations as follows:
[[Page 23927]]
PART 35--FILING OF RATE SCHEDULES AND TARIFFS
0
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.
0
2. In Sec. 35.28, paragraph (g)(9)(i)(B) is revised as follows:
Sec. 35.28 Non-discriminatory open access transmission tariff.
* * * * *
(g) * * *
(9) * * *
(i) * * *
(B) Enables a resource using the participation model for electric
storage resources to be dispatched and ensures that such a dispatchable
resource can set the wholesale market clearing price as both a
wholesale seller and wholesale buyer consistent with rules that govern
the conditions under which a resource can set the wholesale price;
* * * * *
[FR Doc. 2019-10742 Filed 5-22-19; 8:45 am]
BILLING CODE 6717-01-P
