Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators, 33853-33861 [2021-13442]
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33853
Rules and Regulations
Federal Register
Vol. 86, No. 121
Monday, June 28, 2021
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 35
[Docket No. RM18–9–003; Order No. 2222–
B]
Participation of Distributed Energy
Resource Aggregations in Markets
Operated by Regional Transmission
Organizations and Independent
System Operators
Federal Energy Regulatory
Commission, Department of Energy.
AGENCY:
ACTION:
Final rule.
In this order, the Federal
Energy Regulatory Commission
(Commission) addresses arguments
raised on rehearing, sets aside in part
and clarifies in part Order No. 2222–A.
DATES: This rule will become effective
August 27, 2021.
FOR FURTHER INFORMATION CONTACT:
David Kathan (Technical Information),
Office of Energy Policy and
Innovation, Federal Energy Regulatory
Commission, 888 First Street NE,
Washington, DC 20426, (202) 502–
6404
Nicole Businelli (Technical
Information), Office of Energy Market
Regulation, Federal Energy Regulatory
Commission, 888 First Street NE,
Washington, DC 20426, (202) 502–
8253
Christopher Chaulk (Legal Information),
Office of the General Counsel—Energy
Markets, Federal Energy Regulatory
Commission, 888 First Street NE,
SUMMARY:
Washington, DC 20426, (202) 502–
6720
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph Nos.
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I. Introduction ...............................................................................................................................................................................
II. Discussion ................................................................................................................................................................................
A. Order No. 719 Demand Response Opt-Out .....................................................................................................................
a. Requests for Rehearing ..............................................................................................................................................
i. Jurisdiction ...........................................................................................................................................................
ii. Adequate Notice .................................................................................................................................................
iii. Reasoned Decision-Making ...............................................................................................................................
b. Commission Determination .......................................................................................................................................
B. Definition of Demand Response for Purposes of Applying the Order No. 719 Opt-Out to Heterogeneous Distributed Energy Resource Aggregations ..................................................................................................................................
a. Request for Clarification ............................................................................................................................................
b. Commission Determination .......................................................................................................................................
C. Double Counting and Compensation for Behind-the-Meter Distributed Energy Resources That Reduce Load .........
a. Request for Clarification or Rehearing ......................................................................................................................
b. Commission Determination .......................................................................................................................................
III. Information Collection Statement ..........................................................................................................................................
IV. Regulatory Flexibility Act ......................................................................................................................................................
V. Document Availability ............................................................................................................................................................
VI. Effective Date and Congressional Notification .....................................................................................................................
I. Introduction
1. On September 17, 2020, the Federal
Energy Regulatory Commission
(Commission) issued its final rule (final
rule or Order No. 2222) adopting
reforms to remove barriers to the
participation of distributed energy
resource 1 aggregations in the Regional
1 Order No. 2222 amended the Commission’s
regulations to define a distributed energy resource
as any resource located on the distribution system,
any subsystem thereof or behind a customer meter.
Participation of Distributed Energy Resource
Aggregations in Markets Operated by Regional
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Transmission Organization (RTO) and
Independent System Operator (ISO)
Transmission Organizations and Independent
System Operators, Order No. 2222, 85 FR 67094
(Oct. 1, 2020), 172 FERC ¶ 61,247, at P 1 n.1 (2020),
corrected, 85 FR 68450 (Oct. 29, 2020), order on
reh’g, Order No. 2222–A, 86 FR 16511 (Mar. 24,
2011), 174 FERC ¶ 61,197 (2021); 18 CFR
35.28(b)(10). These resources may include, but are
not limited to, resources that are in front of and
behind the customer meter, electric storage
resources, intermittent generation, distributed
generation, demand response, energy efficiency,
thermal storage, and electric vehicles and their
supply equipment. Order No. 2222, 172 FERC
¶ 61,247 at PP 1 n.1, 114.
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markets (RTO/ISO markets).2
Specifically, the Commission found that
existing RTO/ISO market rules are
unjust and unreasonable in light of
barriers that they present to the
participation of distributed energy
resource aggregations in RTO/ISO
markets, which reduce competition and
2 For purposes of Order No. 2222, the
Commission defined RTO/ISO markets as the
capacity, energy, and ancillary services markets
operated by the RTOs and ISOs. Order No. 2222,
172 FERC ¶ 61,247 at P 1 n.2; see also 18 CFR
35.28(b)(11).
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fail to ensure just and reasonable rates.3
To help ensure that 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. 2222, modified § 35.28 5 of
the Commission’s regulations to require
each RTO/ISO to revise its tariff to
ensure that its market rules facilitate the
participation of distributed energy
resource aggregations.6
2. More specifically, Order No. 2222
requires each RTO/ISO to revise its tariff
to establish distributed energy resource
aggregators as a type of market
participant that can register distributed
energy resource aggregations under one
or more participation models in the
RTO/ISO tariff that accommodate the
physical and operational characteristics
of each distributed energy resource
aggregation.7
3. On March 18, 2021, the
Commission issued Order No. 2222–A,
which addressed arguments raised on
rehearing, set aside in part, and clarified
in part the Commission’s
determinations in Order No. 2222.
While the Commission largely affirmed
its findings in Order No. 2222, the
Commission set aside the finding that
the participation of demand response in
distributed energy resource aggregations
is subject to the opt-out and opt-in
requirements of Order Nos. 719 and
719–A.8 The Commission stated that if
a distributed energy resource
aggregation is composed solely of
resources that participate as demand
response resources, then the Order No.
719 opt-out would apply to that
aggregation, but if a distributed energy
resource aggregation contains any
resources that participate as another
type of distributed energy resource, then
the Order No. 719 opt-out would not
apply to that aggregation.9 In addition,
as relevant here, the Commission
provided clarification regarding
restrictions to avoid double counting of
services.10
4. On April 19, 2021, the Edison
Electric Institute (EEI); the Louisiana
Public Service Commission and the
3 Order
No. 2222, 172 FERC ¶ 61,247 at P 1.
U.S.C. 824e.
5 18 CFR 35.28.
6 Order No. 2222, 172 FERC ¶ 61,247 at P 1.
7 Id. P 6.
8 Order No. 2222–A, 174 FERC ¶ 61,197 at P 22;
see Wholesale Competition in Regions with
Organized Electric Markets, Order No. 719, 73 FR
64100 (Oct. 28, 2008), 125 FERC ¶ 61,071, at P 155
(2008), order on reh’g, Order No. 719–A, 74 FR
37776 (July 29, 2009), 128 FERC ¶ 61,059, order on
reh’g, Order No. 719–B, 129 FERC ¶ 61,252 (2009).
9 Order No. 2222–A, 174 FERC ¶ 61,197 at PP 22–
23.
10 Id. PP 63–64.
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Mississippi Public Service Commission
(together, the Southern Regulators); the
National Association of Regulatory
Utility Commissioners (NARUC); the
North Carolina Utilities Commission
(the North Carolina Commission); and
the MISO Transmission Owners 11 filed
timely requests for rehearing of Order
No. 2222–A. On April 19, 2021,
Advanced Energy Economy and
Advanced Energy Management Alliance
(together, AEE/AEMA) filed a request
for clarification, or in the alternative,
rehearing of Order No. 2222–A. On
April 19, 2021, Voltus, Inc. (Voltus)
filed a request for clarification of Order
No. 2222–A. On April 30, 2021, the
Midcontinent Independent System
Operator, Inc. (MISO) filed an answer in
response to the rehearing requests. On
May 4, 2021, ISO New England Inc.
(ISO–NE) filed an answer to AEE/
AEMA’s request. On May 14, 2021,
AEE/AEMA filed an answer in response
to ISO–NE’s answer. On May 28, 2021,
AEE/AEMA filed an answer in response
to the requests for rehearing and MISO’s
answer.12
5. Pursuant to Allegheny Defense
Project v. FERC,13 the rehearing requests
filed in this proceeding may be deemed
denied by operation of law. However, as
permitted by section 313(a) of the
FPA,14 we modify the discussion in
11 The MISO Transmission Owners consist of
Ameren Services Company, as agent for Union
Electric Company d/b/a Ameren Missouri, Ameren
Illinois Company d/b/a Ameren Illinois and
Ameren Transmission Company of Illinois; Big
Rivers Electric Corporation; Central Minnesota
Municipal Power Agency; City Water, Light &
Power (Springfield, IL); Cleco Power LLC;
Cooperative Energy; Dairyland Power Cooperative;
Duke Energy Business Services, LLC for Duke
Energy Indiana, LLC; East Texas Electric
Cooperative; Entergy Arkansas, LLC; Entergy
Louisiana, LLC; Entergy Mississippi, LLC; Entergy
New Orleans, LLC; Entergy Texas, Inc; Great River
Energy; GridLiance Heartland LLC; Hoosier Energy
Rural Electric Cooperative, Inc.; Indiana Municipal
Power Agency; Indianapolis Power & Light
Company; Lafayette Utilities System; MidAmerican
Energy Company; Minnesota Power (and its
subsidiary Superior Water, L&P); Missouri River
Energy Services; Montana-Dakota Utilities Co.;
Northern Indiana Public Service Company LLC;
Northern States Power Company, a Minnesota
corporation, and Northern States Power Company,
a Wisconsin corporation, subsidiaries of Xcel
Energy Inc.; Northwestern Wisconsin Electric
Company; Otter Tail Power Company; Prairie
Power, Inc.; Illinois Power Cooperative; Southern
Indiana Gas & Electric Company (d/b/a Vectren
Energy Delivery of Indiana); Southern Minnesota
Municipal Power Agency; Wabash Valley Power
Association, Inc.; and Wolverine Power Supply
Cooperative, Inc.
12 Rule 713(d)(1) of the Commission’s Rules of
Practice and Procedure, 18 CFR 385.713(d)(1),
prohibits an answer to a request for rehearing.
Accordingly, we reject ISO–NE’s, MISO’s, and AEE/
AEMA’s answers.
13 964 F.3d 1 (D.C. Cir. 2020) (en banc).
14 16 U.S.C. 825l(a) (‘‘Until the record in a
proceeding shall have been filed in a court of
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Order No. 2222–A and set aside the
decision, in part, and clarify in part, as
discussed below.15
6. Specifically, we set aside the
decision in Order No. 2222–A to decline
to extend the opt-out and opt-in
requirements of Order Nos. 719 and
719–A to demand response resources
participating in heterogeneous
distributed energy resource
aggregations. We also provide further
clarification regarding appropriate
restrictions to avoid double counting of
services and the compensation of
demand response resources that
participate in heterogeneous distributed
energy resource aggregations, as
discussed further below.
II. Discussion
A. Order No. 719 Demand Response
Opt-Out
7. In Order No. 2222, the Commission
stated that the final rule does not affect
the ability of relevant electric retail
regulatory authorities (RERRA) to
prohibit retail customers’ demand
response from being bid into RTO/ISO
markets by aggregators pursuant to
Order No. 719.16 The Commission also
stated that, because the definition of a
distributed energy resource includes
demand response resources, an
aggregator of demand response could
participate as a distributed energy
resource aggregator, but that the final
rule does not affect existing demand
response rules.17 The Commission
further found that the participation of
demand response in distributed energy
resource aggregations is subject to the
opt-out and opt-in requirements of
Order Nos. 719 and 719–A.18 The
Commission therefore clarified that if
the RERRA for a demand response
resource has either chosen to opt out or
has not opted in, then the demand
response resource may not participate in
a distributed energy resource
aggregation.
8. In Order No. 2222–A, the
Commission set aside in part the
Commission’s conclusion that the
participation of demand response in
distributed energy resource aggregations
is subject to the opt-out and opt-in
requirements of Order Nos. 719 and
appeals, as provided in subsection (b), the
Commission may at any time, upon reasonable
notice and in such manner as it shall deem proper,
modify or set aside, in whole or in part, any finding
or order made or issued by it under the provisions
of this chapter.’’).
15 Allegheny Def. Project, 964 F.3d at 16–17.
16 Order No. 2222, 172 FERC ¶ 61,247 at P 59
(citing 18 CFR 35.28(g)(1)(iii)).
17 Id. P 118.
18 Id. P 145.
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719–A.19 The Commission stated that,
upon reconsideration, it declined to
extend this opt-out to demand response
resources that participate in
heterogeneous distributed energy
resource aggregations—i.e., distributed
energy resource aggregations that are
made up of different types of resources
including demand response.20 The
Commission found that heterogeneous
distributed energy resource aggregations
that include demand response resources
do not fall squarely within the Order
No. 719 opt-out, as set forth in the
Commission’s regulations, because they
are not solely aggregations of retail
customers.21 The Commission stated
that the Order No. 719 opt-out will
continue to apply to aggregations made
up solely of resources that participate as
demand response resources, consistent
with the Commission’s regulations.22
9. The Commission found that
extending the Order No. 719 opt-out to
demand response resources in
heterogeneous distributed energy
resource aggregations would undermine
the potential of Order No. 2222 to break
down barriers to competition, which
would interfere with the Commission’s
responsibility to ensure that wholesale
rates are just and reasonable.23
Specifically, the Commission concluded
that extending the Order No. 719 optout to demand response resources that
seek to participate in heterogeneous
distributed energy resource aggregations
would undermine the ability of
aggregations to take advantage of the
different resources’ operational
attributes and complementary
capabilities.24 The Commission stated
that ensuring that demand response
resources can combine with other forms
of distributed energy resources has the
potential to increase both the number
and the variety of distributed energy
resource aggregations.25 The
Commission explained that, in addition
to enhancing competition, diversity in
distributed energy resource aggregations
facilitates these non-traditional
resources’ ability to provide a wide
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19 Order
No. 2222–A, 174 FERC ¶ 61,197 at P 22.
20 Id. PP 22–23.
21 Id. P 23 (citing 18 CFR 35.28(g)(1)(iii); 18 CFR
35.28(b)(10), (g)(12); Order No. 2222, 172 FERC
¶ 61,247 at P 114); id. P 28 (concluding that if a
distributed energy resource aggregator aggregates
only demand response resources, it is materially
indistinct from the aggregations of retail customers
subject to the Order No. 719 opt-out).
22 Id. P 22 (emphasis in original).
23 Id. P 23 (citing Order No. 2222, 172 FERC
¶ 61,247 at PP 1, 3, 142; Nat’l Ass’n of Regul. Util.
Comm’rs v. FERC, 964 F.3d 1177, 1189 (D.C. Cir.
2020) (NARUC)).
24 Id. P 24.
25 Id. P 25.
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range of services in RTO/ISO markets.26
The Commission stated that applying
the Order No. 719 opt-out to
aggregations that contain a combination
of demand response and other types of
distributed energy resources could
prevent distributed energy resource
aggregators from incorporating the
complementary capabilities of existing
and future demand response
technologies. The Commission also
found that precluding demand response
from participating in heterogeneous
distributed energy resource aggregations
would undermine the Commission’s
goal of ‘‘ensur[ing] a technology-neutral
approach to distributed energy resource
aggregations, which will ensure that
more resources are able to participate in
such aggregations, thereby helping to
enhance competition and ensure just
and reasonable rates.’’ 27
10. The Commission stated that it did
not propose to overturn the Order No.
719 opt-out in this rulemaking and, to
the extent that parties asked the
Commission to do so on rehearing, it
found that such requests were out of
scope.28 The Commission also clarified
that the small utility opt-in adopted in
Order No. 2222 still applies to all
distributed energy resource
aggregations, including those containing
demand response resources.
a. Requests for Rehearing
i. Jurisdiction
11. Some petitioners argue that the
Commission’s opt-out finding in Order
No. 2222–A violated the Commission’s
jurisdiction under the FPA or usurped
state authority.29 The Southern
Regulators argue that the Commission
failed to properly balance the
jurisdictional limitations of the FPA
with the states’ exclusive jurisdiction
over retail issues in its decision to
exercise authority over retail demand
response.30
12. The Southern Regulators argue
that the Commission contravened EPSA
because, in their view, the Supreme
Court concluded that it is precisely a
state’s right to opt out of participation
by retail customers in an RTO demand
response wholesale market that ensures
the balance of federal and state power
under the FPA.31 The Southern
26 Id. P 26 (citing Order No. 2222, 172 FERC
¶ 61,247 at P 141).
27 Id. P 27 (quoting Order No. 2222, 172 FERC
¶ 61,247 at P 26).
28 Id. P 28.
29 NARUC Request for Rehearing at 3, 5; Southern
Regulators Request for Rehearing at 12.
30 Southern Regulators Request for Rehearing at
12.
31 Id. at 13 (citing FERC v. EPSA, 136 S. Ct. 760,
779–80 (2016) (EPSA)).
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Regulators argue that EPSA requires a
careful balancing of the interests of the
states and those of the Commission in
order to determine whether the
Commission has and/or should exercise
jurisdiction under the FPA. The
Southern Regulators argue that in Order
No. 2222–A the Commission
disregarded the concept of cooperative
federalism upon which the Court relied
to reach its decision, a concept
fundamental to the balance of
overlapping jurisdiction under the
FPA.32 The Southern Regulators argue
that the Court concluded that, when it
comes to retail customer participation in
wholesale markets, states have the last
word.33 The Southern Regulators argue
that the Commission’s historic practice
in areas where federal and state
jurisdiction overlap has been to
recognize that balance, as it did in Order
No. 1000.34 The Southern Regulators
argue that Order No. 2222–A offers no
discussion of or replacement for the
state opt-out authority that would
evidence the Commission’s
‘‘compliance with § 824(b)’s allocation
of federal and state authority.’’ 35
13. The North Carolina Commission
similarly argues that the Commission
did not account for the long-standing
authority of the states and the
traditional, cooperative roles played by
federal and state regulators in promoting
adequate, reliable, safe, clean, and
affordable electric services.36 The North
Carolina Commission argues that the
cooperative federalism inherent in the
FPA and the regulation of wholesale
and retail electric service requires a role
for both federal and state regulators.37
The North Carolina Commission
maintains that the Commission’s action
does not encourage utility participation
in an RTO/ISO or encourage a state
commission to allow a utility’s RTO/ISO
participation.38
14. NARUC argues that, by
eliminating the opt-out for demand
response resources in heterogeneous
aggregations, the Commission usurped
authority from states that used the Order
32 Id.
at 12.
at 14 (citing EPSA, 136 S. Ct. at 780).
34 Id. at 13–14 (citing Transmission Planning and
Cost Allocation by Transmission Owning and
Operating Public Utilities, Order No. 1000, 76 FR
49842 (Aug. 11, 2011), 136 FERC ¶ 61,051, at PP
225–27, 287 (2011), order on reh’g, Order No. 1000–
A, 77 FR 32184 (May 31, 2012), 139 FERC ¶ 61,132,
at P 392, order on reh’g and clarification, Order No.
1000–B, 77 FR 64890 (Oct. 24, 2012), 141 FERC
¶ 61,044 (2012), aff’d sub nom. S.C. Pub. Serv.
Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014)).
35 Id. at 15 (quoting EPSA, 136 S. Ct. at 780).
36 North Carolina Commission Request for
Rehearing at 10.
37 Id. at 11.
38 Id. at 10.
33 Id.
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No. 719 opt-out and built a legal
framework for that regulatory scheme.39
NARUC argues that Order No. 2222–A
allows a demand response resource to
disregard the judgment of state
regulators by joining a third-party
aggregation with other types of
resources.40 In addition, NARUC argues,
the order allows third-party aggregators
of demand response resources to add a
solitary unit of a different type of
distributed energy resource to its
aggregations to circumvent state law.
15. NARUC disputes the
Commission’s position that ‘‘[b]ecause
the terms of wholesale market
participation are a matter under
exclusive Commission jurisdiction,
today’s order does not infringe upon or
otherwise diminish state authority.’’ 41
NARUC argues that the Commission’s
action in Order No. 2222–A is unlike
the Commission’s decisions in Order
Nos. 841 and 2222 because there were
no state regulations already in place.42
NARUC explains that there was no need
prior to Order No. 841 for states to
prohibit storage resources on the
distribution system or behind the meter
from participating in wholesale markets
because that was not possible before the
order.43 NARUC points out that the
challenge to Order No. 841 in NARUC
was a facial challenge and argues that
NARUC does not address as-applied
challenges.44 NARUC explains that prior
to Order No. 2222–A, some states had
regulations that applied to demand
response aggregations on the
distribution system or behind the meter
because Order No. 719 permitted such
participation in the wholesale
markets.45 NARUC argues that Order
No. 2222–A takes away this authority
over demand response resources.46
ii. Adequate Notice
16. Multiple petitioners argue that the
Commission violated the Administrative
Procedure Act (APA) by effectively
eliminating the Order No. 719 opt-out
without providing adequate notice and
without soliciting comments and
evidence from RERRAs that have
adopted and relied upon that opt-out.47
The Southern Regulators and NARUC
argue that the procedurally proper
39 NARUC
Request for Rehearing at 3, 5.
at 6.
41 Id. (quoting Order No. 2222–A, 174 FERC
¶ 61,197 at P 12 n.36).
42 Id. at 5.
43 Id. at 6.
44 Id. (citing NARUC, 964 F.3d at 1188–89).
45 Id. at 6–7 (emphasis in original).
46 Id. at 7.
47 Southern Regulators Request for Rehearing at
10; EEI Request for Rehearing at 4; North Carolina
Commission Request for Rehearing at 8–9.
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method to modify the opt-out is in the
proceeding in Docket No. RM21–14–000
that was noticed for this purpose.48 The
Southern Regulators argue that nothing
in the Notice of Proposed Rulemaking in
Docket No. RM16–23–000 49 indicated
an effort or intent by the Commission to
reconsider the Order No. 719 opt-out.50
17. The Southern Regulators argue
that they were prejudiced by the
Commission’s failure to provide notice
that the Order No. 719 opt-out was at
risk in Docket No. RM18–9.51 The
Southern Regulators and the North
Carolina Commission explain that they
have provisions restricting aggregators
of retail customers in their respective
jurisdictions.52 The Southern Regulators
maintain that, because the NOPR offered
no hint that the opt-out was in jeopardy,
they had no reason to oppose
elimination of the opt-out in the
rulemaking docket or actively
participate in the other portions of the
rulemaking affecting demand response
resources.
18. In addition, NARUC and the
Southern Regulators argue that
eliminating the Order No. 719 opt-out
for demand response resources in
heterogeneous aggregations is outside
the scope of Order No. 2222.53
iii. Reasoned Decision-Making
19. Several petitioners argue that the
Commission acted arbitrarily and
capriciously by departing from its
policy in Order Nos. 719 and 719–A in
Order. No. 2222–A without
acknowledgment, an adequate
explanation, or an examination of the
policy considerations in support of the
opt-out.54 The MISO Transmission
Owners further argue that the
Commission did not adequately address
how it will enforce the policy of
avoiding unduly burdening states and
retail regulators or why the policy
considerations are no longer relevant.55
The Southern Regulators contend that
the Commission’s reasons for
48 Southern Regulators Request for Rehearing at
10; NARUC Request for Rehearing at 8.
49 Electric Storage Participation in Markets
Operated by Regional Transmission Organizations
and Independent System Operators, 81 FR 86522
(Nov. 30, 2016), 157 FERC ¶ 61,121 (2016) (NOPR).
50 Southern Regulators Request for Rehearing at
10.
51 Id. at 11.
52 Southern Regulators Request for Rehearing at
11; North Carolina Commission Request for
Rehearing at 2–3.
53 NARUC Request for Rehearing at 8; Southern
Regulators Request for Rehearing at 7.
54 See, e.g., MISO Transmission Owners
Rehearing Request at 6; NARUC Rehearing Request
at 8; North Carolina Commission Rehearing Request
at 5; Southern Regulators Rehearing Request at 9.
55 MISO Transmission Owners Rehearing Request
at 8–9, 11.
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eliminating the opt-out in Order No.
2222–A were present at the time Order
No. 719 was issued, and that the
Commission has not explained why
those reasons now require elimination
of the opt-out.56
20. Next, several petitioners claim
that the Commission failed to
acknowledge the states’ role in
overseeing demand response activities
within their borders.57 The MISO
Transmission Owners assert that the
Commission failed to consider the effect
that limiting the opt-out will have on
states’ ability to control consumer costs,
and the Southern Regulators argue that
the Commission’s opt-out decision
unreasonably restricts the ability of
states to protect retail customers.58
21. Next, some petitioners argue that
the Commission relies on a false
distinction between heterogeneous and
homogeneous distributed energy
resource aggregations to justify
eliminating state opt-out authority.59
22. NARUC challenges the
Commission’s finding that
‘‘heterogeneous distributed energy
resource aggregations that include
demand response resources do not fall
squarely within the Order No. 719 optout, as set forth in our regulations
because they are not solely aggregations
of retail customers,’’ because the
definition of ‘‘aggregator of retail
customers’’ that the Commission relies
upon does not say that the aggregations
are exclusively retail loads, just
‘‘mostly.’’ 60 NARUC argues that the
Commission acted capriciously by
changing the treatment of demand
response resources on the distribution
system and behind the meter without
further evidence of the types of load
involved or inquiry into the experience
of states that have employed the optout.61
23. Some petitioners also object to the
Commission’s characterization of
demand response resources in declining
to extend the opt-out to heterogeneous
distributed energy resource
aggregations. The Southern Regulators
criticize the Commission’s reliance on
the ability of distributed energy
resources to take advantage of operating
attributes and complementary
56 Southern
Regulators Rehearing Request at 8–9.
e.g., MISO Transmission Owners
Rehearing Request at 9–10 (citing EPSA, 136 S. Ct.
at 779).
58 MISO Transmission Owners Rehearing Request
at 9–10; Southern Regulators Rehearing Request at
15.
59 E.g., Southern Regulators Rehearing Request at
19.
60 NARUC Rehearing Request at 7 (quoting Order
No. 2222–A, 174 FERC ¶ 61,197 at P 23).
61 Id. at 8.
57 See,
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capabilities.62 The MISO Transmission
Owners argue that, in allowing demand
response resources to participate
through a heterogeneous aggregation,
the Commission did not distinguish
between injection and non-injection
resources, as it previously did when
maintaining the opt-out in Order Nos.
841 and 2222.63
24. Several petitioners further argue
that the Commission’s decision is
arbitrary and capricious because it
would allow distributed energy resource
aggregations comprised primarily of
demand response resources to evade
state regulations.64
25. Finally, EEI argues that it was
arbitrary and capricious for the
Commission to remove the opt-out
without allowing an opportunity for
public comment in Docket No. RM21–
14–000, where the Commission has
opened a far-reaching inquiry about
removing the demand response opt-out
from its regulations.65 EEI and the MISO
Transmission Owners argue that the
Commission has effectively undermined
that inquiry in Docket No. RM21–14–
000.66
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b. Commission Determination
26. Upon reviewing the requests for
rehearing, we set aside our prior
decision not to extend the Order No.
719 opt-out to demand response
resources that participate in
heterogeneous distributed energy
resource aggregations. As discussed
below, we find that these issues are
better addressed in Docket No. RM21–
14–000.67
27. As an initial matter, we disagree
with the arguments on rehearing that
62 Southern Regulators Rehearing Request at 20
(citing Order No. 2222–A, 174 FERC ¶ 61,197 at P
24).
63 MISO Transmission Owners Rehearing Request
at 7 (citing Order No. 841–A, 167 FERC ¶ 61,154 at
P 53).
64 EEI Rehearing Request at 4; MISO Transmission
Owners Rehearing Request at 6 n.13; North Carolina
Commission Rehearing Request at 7–8.
65 EEI Rehearing Request at 1–2; MISO
Transmission Owners Rehearing Request at 11.
66 EEI Rehearing Request at 4; MISO Transmission
Owners Rehearing Request at 8.
67 The Commission has broad discretion in how
to manage its proceedings. See Vt. Yankee Nuclear
Power Corp. v. Natural Res. Def. Council, Inc., 435
U.S. 519, 524–25 (1978) (recognizing that agencies
have broad discretion over the formulation of their
procedures); S.C. Pub. Serv. Auth. v. FERC, 762
F.3d 41, 81 (D.C. Cir. 2014) (affirming the
Commission’s discretion in how to manage the
proceedings before it); Tenn. Gas Pipeline Co. v.
FERC, 972 F.2d 376, 381 (D.C. Cir. 1992) (‘‘The
agency is entitled to make reasonable decisions
about when and in what type of proceeding it will
deal with an actual problem.’’) (citing Mobil Oil
Expl. & Producing Se. Inc. v. United Distrib. Cos.,
498 U.S. 211, 230 (1991) (‘‘An agency enjoys broad
discretion in determining how best to handle
related, yet discrete, issues in terms of procedures
. . . .’’)).
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the Commission’s interpretation of the
Order No. 719 opt-out in Order No.
2222–A would have exceeded the
Commission’s jurisdiction under the
FPA. The Southern Regulators rely on
EPSA to argue that the Commission
failed to properly balance the
jurisdictional limitations of the FPA. We
disagree. EPSA held that the
Commission’s regulation of demand
response participation in wholesale
markets is a practice that directly affects
wholesale rates.68 Further, the Court
also held that the Commission’s
regulation of demand response
resources does not regulate retail sales
in violation of FPA section 201(b).69 As
the D.C. Circuit explained in NARUC,
the Court in EPSA ‘‘did not condition its
holdings on the existence of an optout.’’ 70 Accordingly, we continue to
conclude that the Commission was not
legally required either to grant the optout in Order No. 719 or to extend that
opt-out in this proceeding.71
28. Nonetheless, we acknowledge
that, in implementing the opt-out in
Order No. 719, a number of states
broadly prohibited demand response
participation in RTO/ISO markets,72
68 EPSA, 136 S. Ct. at 774 (referring to the
Commission’s jurisdiction under FPA sections 205
and 206 to regulate practices affecting jurisdictional
rates); see also Order No. 2222, 172 FERC ¶ 61,247
at P 41 (discussing EPSA’s application to this
proceeding).
69 EPSA, 136 S. Ct. at 784; see also Order No.
2222, 172 FERC ¶ 61,247 at P 41.
70 NARUC, 964 F.3d at 1189–90; see Elec. Storage
Participation in Mkts. Operated by Reg’l
Transmission Orgs. and Indep. Sys. Operators,
Order No. 841, 83 FR 9580 (Mar. 6, 2018), 162 FERC
¶ 61,127 (2018), order on reh’g and clarification,
Order No. 841–A, 84 FR 23902 (May 23, 2019), 167
FERC ¶ 61,154, at P 40 (2019), aff’d sub nom.
NARUC, 964 F.3d 1177 (explaining that the Court
in EPSA described how its ‘‘analysis of FERC’s
regulatory authority proceeds’’ without referring to
an opt-out, and explaining that, when the Court
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,’’ that statement was not a
determinative part of its analysis) (quoting EPSA,
136 S. Ct. at 773, 779).
71 See Order No. 2222, 172 FERC ¶ 61,247 at P 59
(explaining that the Commission was not obligated
to provide an opt-out in Order No. 719 but did so
as an exercise of its discretion); see also NARUC,
964 F.3d at 1187 (‘‘[B]ecause FERC has the
exclusive authority to determine who may
participate in the wholesale markets, the
Supremacy Clause . . . requires that [s]tates not
interfere.’’).
72 See, e.g., North Carolina Commission Request
for Rehearing at 2–3 (quoting 2010 North Carolina
Commission decision ordering that ‘‘under North
Carolina law and its traditional regulatory structure,
Dominion’s retail customers cannot participate in
PJM’s wholesale markets through its demand
response programs individually or through
aggregation by a third party not regulated by the
Commission’’); Southern Regulators Request for
Rehearing at 11 n.33 (citing Notice of Intent of
Entergy Mississippi, LLC to Change Rates by Filing
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33857
and that those states—and other entities
affected by the opt-out—may not have
anticipated that this proceeding would
call into question those broad
prohibitions. Given the importance of
these issues, which affect both federal
and state regulatory interests,73 we
believe that the better course is to
provide them full consideration through
the Notice of Inquiry (NOI) issued
contemporaneously with Order No.
2222–A. The record under development
in that proceeding bears on many of
those federal and state interests and will
provide an opportunity for all interested
views to be heard and considered by the
Commission.74 Specifically, the NOI
Market Valued Demand Response Rider, 2019 WL
5212152, at *1 (Miss. Pub. Serv. Comm’n Sept. 10,
2019) (‘‘The Commission further finds that [Market
Valued Demand Response] Schedule MVDR–1 is
the only vehicle through which end-use retail
customers and/or [aggregators of retail customers]
will be permitted to participate as DR resources in
the MISO wholesale market. Entergy Mississippi
will be the sole Market Participant [ ] in MISO for
all DR resources provided by Participants in
[Entergy Mississippi’s] service territory.’’)).
73 Compare Order No. 2222–A, 174 FERC
¶ 61,197 (Christie, Comm’r, dissenting at P 6)
(‘‘Providing such flexibility to the states and other
RERRAs [to fully opt-out] would allow them to
manage the deployment of behind-the-meter
[distributed energy resources] in ways necessary to
meet their own unique challenges.’’); NARUC
Request for Rehearing at 6–7 (arguing that the
Commission in Order No. 2222–A took away the
authority of those states that had regulations that
applied to wholesale market participation of
demand response aggregations on the distribution
system or behind the meter); with Order No. 2222–
A, 174 FERC ¶ 61,197 at P 23 (‘‘find[ing] that
extending the Order No. 719 opt-out to demand
response resources in heterogeneous distributed
energy resource aggregations would undermine the
potential of Order No. 2222 to break down barriers
to competition’’).
74 For example, the Commission in the NOI asked:
‘‘What are the potential benefits of removing the
[Order No. 719 opt-out], including any benefits not
considered by the Commission in Order Nos. 719
and 719–A, and considering any changed
circumstances that may be relevant?’’ Participation
of Aggregators of Retail Demand Response
Customers in Markets Operated by Regional
Transmission Organizations and Independent
System Operators, 86 FR 15933 (Mar. 25, 2021), 174
FERC ¶ 61,198, at P 24 (2021) (question five)
(emphasis added); see id. P 25 (question 9) (‘‘To
what extent has the [Order No. 719 opt-out]
prevented interference with the operation of
existing retail demand response programs, or
avoided placing an undue burden on state and local
retail regulatory entities, as noted in Order No.
719?’’); id. P 24 (question 6) (‘‘What are the
potential benefits of creating more consistency
between the participation models for [aggregators of
retail customers] and distributed energy resource
aggregators by removing the [Order No. 719 optout]? In light of market participation opportunities
for energy efficiency resources, electric storage
resources, and distributed energy resource
aggregations, would eliminating the [Order No. 719
opt-out] established in Order Nos. 719 and 719–A
enhance clarity for market participants and prevent
disputes regarding the eligibility of resource
aggregations to participate in wholesale markets?’’);
id. (question 8) (‘‘Is there any other evidence to
suggest that RTO/ISO market rules reflecting the
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states that the Commission is ‘‘exploring
whether to revise the Commission’s
regulations to remove the [Order No.
719 opt-out], recognizing that the
Commission, when it established the
[Order No. 719 opt-out], balanced the
interests and concerns of state and local
regulatory authorities with the
Commission’s goal of removing barriers
to demand response resource
participation in RTO/ISO markets.
Circumstances may have changed in the
years since the issuance of Order Nos.
719 and 719–A, such that the balance
reflected in those orders adopting the
[Order No. 719 opt-out] may have
shifted and the RTO/ISO market rules
reflecting the [Order No. 719 opt-out]
may no longer be just and
reasonable.’’ 75 To ensure an adequate
opportunity for interested entities to
comment on the Order No. 719 opt-out
in light of our decision to set aside
Order No. 2222–A in part, concurrently
with this decision, the Commission is
issuing a notice extending the comment
periods in Docket No. RM21–14–000.76
29. Because we set aside our prior
decision in Order No. 2222–A to not
extend the Order No. 719 opt-out to
demand response resources that
participate in heterogeneous distributed
energy resource aggregations, we find
that, as the Commission stated in Order
No. 2222, ‘‘the participation of demand
response in distributed energy resource
aggregations is subject to the opt-out
and opt-in requirements of Order Nos.
719 and 719–A. Therefore, if the
relevant electric retail regulatory
authority where a demand response
resource is located has either chosen to
opt out or has not opted in [pursuant to
Order Nos. 719 and 719–A], then the
demand response resource may not
participate in a distributed energy
resource aggregation.’’ 77
B. Definition of Demand Response for
Purposes of Applying the Order No. 719
Opt-Out to Heterogeneous Distributed
Energy Resource Aggregations
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30. Order No. 2222 requires each
RTO/ISO to revise its tariff to allow
market participation by heterogeneous
distributed energy resource
[Order No. 719 opt-out] are no longer just and
reasonable?’’).
75 Id. P 21.
76 Notice of Extension of Time for Filing Initial
and Reply Comments, Participation of Aggregators
of Retail Demand Response Customers in Markets
Operated by Regional Transmission Organizations
and Independent System Operators, Docket No.
RM21–14–000 (June 17, 2021) (extending time to
and including July 23, 2021 to file initial comments,
and to and including August 23, 2021 to file reply
comments).
77 Order No. 2222, 172 FERC ¶ 61,247 at P 145.
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aggregations.78 The Commission found
that requiring each RTO/ISO to allow
heterogeneous aggregations will further
enhance competition in RTO/ISO
markets by ensuring that
complementary resources, including
those with different physical and
operational characteristics, can meet
qualification and performance
requirements such as minimum run
times, which will help ensure that these
markets produce just and reasonable
rates.
31. In Order No. 2222–A, for purposes
of applying the opt-out, the Commission
clarified the definition of heterogeneous
aggregations as ‘‘those that are made up
of different types of resources including
demand response as opposed to those
made up solely of demand response.’’ 79
The Commission found that ‘‘[t]he optout will continue to apply to
aggregations made up solely of resources
that participate as demand response
resources, consistent with [its]
regulations’’ (i.e., consistent with the
opt-out requirements of Order No. 719).
The Commission clarified that, ‘‘if an
individual distributed energy resource
can be configured to engage in either
demand response or injection of energy
onto the grid to make wholesale sales
(e.g., a behind-the-meter generator), it
may choose to participate in the
wholesale markets by reducing a
customer’s metered load on the grid
from the customer’s expected
consumption (i.e., as a demand response
resource subject to Order No. 719) or it
may choose to participate by injecting
energy onto the grid to make wholesale
sales (i.e., as a different type of
distributed energy resource).’’ 80 The
Commission stated that, ‘‘if a distributed
energy resource aggregation is
composed solely of resources that
participate as demand response
resources, then the Order No. 719 optout would apply to that aggregation.’’
But, the Commission stated, ‘‘if a
distributed energy resource aggregation
contains any resources that participate
as another type of distributed energy
resource, then the Order No. 719 opt-out
would not apply to that aggregation.’’
a. Request for Clarification
32. Voltus requests clarification that
demand response paired with a behindthe-meter distributed energy resource
constitutes a heterogeneous distributed
energy resource aggregation not subject
to the Order No. 719 opt-out.81 Voltus
argues that the Commission stated that
78 Id.
P 142.
No. 2222–A, 174 FERC ¶ 61,197 at P 22.
80 Id. P 29.
81 Voltus Request for Clarification at 1, 4.
79 Order
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resources ‘‘made up solely of demand
response’’ are subject to the opt-out.
Voltus maintains that the Commission
could have easily stated that demand
response paired with behind-the-meter
distributed energy resources to reduce
load is a demand response resource
subject to the opt-out, but it did not
draw this distinction.82
33. Voltus argues that clarification is
necessary because paragraph 29 of
Order No. 2222–A has caused MISO to
propose that an aggregation of demand
response using behind-the-meter
generation and/or storage to reduce load
would be subject to the Order No. 719
opt-out.83 Voltus argues that this
conclusion is based on an overly broad
reading of a single paragraph, which
draws no distinction regarding whether
a distributed energy resource acts to
reduce load. Voltus maintains that it
would be needlessly complicated if a
resource could evade the opt-out
because it is configured to inject but
never actually does.84
34. Voltus argues that classifying
demand response paired with behindthe-meter resources as a heterogeneous
aggregation is consistent with AEE/
AEMA’s request for clarification that a
behind-the-meter distributed energy
resource used to serve onsite load
should be paid at the locational
marginal price (LMP), as required by
Order No. 745. Voltus argues that LMP
payments are proper because Order No.
2222–A did not change Order No. 745’s
payment structure for resources that
reduce load to the bulk power system.85
b. Commission Determination
35. Because we set aside the
Commission’s decision in Order No.
2222–A to decline to extend the Order
No. 719 opt-out to heterogeneous
distributed energy resource
aggregations, we find that Voltus’s
request for clarification is largely moot.
36. Nevertheless, with respect to
potential confusion underlying Voltus’s
request for clarification, we note that the
Commission has stated previously that
load reductions in demand response
programs can be facilitated by a variety
of technologies and still constitute
demand response.86 Thus, we clarify
82 Id.
at 5.
at 1, 4, 5.
84 Id. at 5.
85 Id. at 6.
86 See, e.g., Demand Response Supporters v. N.Y.
Indep. Sys. Operator, Inc., 155 FERC ¶ 61,151, at P
13 (2016) (‘‘[A] reduction in metered load on the
grid, even a reduction facilitated by behind-themeter generation, is still a reduction and thus is
appropriately considered demand response as
defined in section 35.28(d)(4).’’); Demand Response
Compensation in Organized Wholesale Energy
Markets, Order No. 745, 76 FR 16658 (Mar. 24,
83 Id.
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that a behind-the-meter resource that is
solely used to facilitate demand
response, i.e., deployed solely to reduce
customer load from expected
consumption, would itself be
considered a demand response
resource.87
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C. Double Counting and Compensation
for Behind-the-Meter Distributed Energy
Resources That Reduce Load
37. In Order No. 2222, the
Commission clarified that the
requirements in Order No. 745 would
apply to demand response resources
participating in heterogeneous
aggregations.88 The Commission also
stated that ‘‘this final rule does not
affect existing demand response
rules.’’ 89 In Order No. 2222–A, the
Commission stated that ensuring that
demand response resources can
combine with other forms of distributed
energy resources has the potential to
increase both the number and the
variety of distributed energy resource
aggregations, thereby enhancing
competition and furthering its mandate
to ensure that Commissionjurisdictional rates are just and
reasonable.90
38. With respect to double counting,
the Commission in Order No. 2222
required each RTO/ISO to include any
appropriate restrictions on distributed
energy resource participation in RTO/
ISO markets through distributed energy
resource aggregations, if narrowly
designed to avoid counting more than
once the services provided by
distributed energy resources in RTO/
ISO markets.91 The Commission stated
that, for instance, if a distributed energy
resource is offered into an RTO/ISO
market and is not added back to a
2011), 134 FERC ¶ 61,187, order on reh’g and
clarification, Order No. 745–A, 137 FERC ¶ 61,215,
at P 66 (2011), reh’g denied, Order No. 745–B, 138
FERC ¶ 61,148 (2012), vacated sub nom. Elec.
Power Supply Ass’n v. FERC, 753 F.3d 216 (D.C.
Cir. 2014), rev’d & remanded sub nom. EPSA, 136
S. Ct. 760 (‘‘[T]he manner in which a customer is
able to produce such a load reduction from its
validly established baseline (whether by shifting
production, using internal generation, consuming
less electricity, or other means) does not change the
effect or value of the reduction to the wholesale
grid.’’).
87 See 18 CFR 35.28(b)(4).
88 Order No. 2222, 172 FERC ¶ 61,247 at P 145.
In Order No. 2222, the Commission stated that
‘‘[d]emand response means a reduction in the
consumption of electric energy by customers from
their expected consumption in response to an
increase in the price of electric energy or to
incentive payments designed to induce lower
consumption of electric energy.’’ Id. P 2 n.8 (citing
18 CFR 35.28(b)(4)).
89 Id. P 118.
90 Order No. 2222–A, 174 FERC ¶ 61,197 at P 25
(citing 16 U.S.C. 824e).
91 Order No. 2222, 172 FERC ¶ 61,247 at PP 160–
161.
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utility’s or other load serving entity’s
load profile, then that resource will be
double counted as both load reduction
and a supply resource.92 In Order No.
2222–A, the Commission clarified that,
when the Commission stated that ‘‘if a
distributed energy resource is offered
into an RTO/ISO market and is not
added back to a utility’s or other load
serving entity’s load profile, then that
resource will be double counted as both
load reduction and a supply
resource,’’ 93 the Commission was
indicating that, for planning purposes,
double counting of services would occur
if the same distributed energy resource
reduces the amount of a service that an
RTO/ISO procures on a forward-looking
basis in a certain time period while also
acting as a provider of that same service
in that same delivery period.
a. Request for Clarification or Rehearing
39. AEE/AEMA seek clarification—or,
in the alternative, rehearing—that
behind-the-meter distributed energy
resources used to serve onsite load,
therefore reducing power consumption
from the bulk power system, should be
compensated at full locational marginal
price (LMP) in compliance with Order
No. 745 with no need to eliminate retail
savings generated by the distributed
energy resource, and that payment of
full LMP to behind-the-meter
distributed energy resources does not
constitute double counting.94 AEE/
AEMA ask the Commission to confirm
that double counting does not occur
when a distributed energy resource
participating in an aggregation is
compensated for acting as a provider of
a service, whether procured on a
forward-looking basis or in real-time,
and reduces an end-use customer’s load
on the bulk power system, resulting in
retail savings.95
40. AEE/AEMA maintain that the
Supreme Court in EPSA held that the
Commission has authority to authorize
RTOs/ISOs to pay demand response
resources full LMP.96 AEE/AEMA
contend that the Commission has
clarified that payment of full LMP to
demand response resources does not
constitute double counting—regardless
of the existence of behind-the-meter
distributed energy resources or other
manner of load reduction to the bulk
power system.97 AEE/AEMA argue that
92 Id.
P 161.
No. 2222–A, 174 FERC ¶ 61,197 at P 63
(citing Order No. 2222, 172 FERC ¶ 61,247 at P 161).
94 AEE/AEMA Request for Clarification at 2–3, 5–
6.
95 Id. at 2, 5.
96 Id. at 3–4 (citing EPSA, 136 S. Ct. 760).
97 Id. at 4 (citing Order No. 745, 134 FERC
¶ 61,187 at PP 64, 66).
93 Order
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33859
the principles of Order No. 745 apply to
all reductions in load from the
perspective of the bulk power system,
regardless of the method or methods
used to achieve that reduction, even
though Order No. 2222 defined demand
response resources more narrowly as
reductions to usage by a customer.98
41. AEE/AEMA state that their
members are encountering continued
confusion in ongoing RTO/ISO
stakeholder processes regarding the
double counting restrictions in Order
No. 2222, specifically regarding
compensation for wholesale market
services provided by aggregations.99
AEE/AEMA argue that, absent
clarification, RTO/ISO compliance
submissions may not fully comply with
Order Nos. 745 and 2222–A and may
result in significant stakeholder
discussions that could delay
implementation of new participation
rules and deployment of distributed
energy resources.100 AEE/AEMA assert
that Order No. 2222 proposals that pay
demand response resources less than
full LMP would not enhance
competition or ensure just and
reasonable rates.101
b. Commission Determination
42. We grant, in part, AEE/AEMA’s
request for clarification. As an initial
matter, we disagree with AEE/AEMA’s
claim that Order No. 2222 modified the
definition of demand response. In Order
Nos. 745 and 2222, the Commission
cited to the same definition of demand
response contained in the Commission’s
regulations.102 Further, we disagree
with AEE/AEMA’s suggestion that all
reductions in load from the perspective
of the bulk power system should be
compensated consistent with Order No.
745. Only those reductions that meet the
definition of demand response in the
Commission’s regulations and are used
to reduce customer load from a validly
established baseline pursuant to Order
Nos. 745 and 745–A must be
compensated consistent with those
orders.103
43. We clarify that payment of full
LMP in the energy market to behind-the98 Id. at 5 (citing Order No. 745–A, 137 FERC
¶ 61,215 at P 66; Order No. 2222, 172 FERC ¶ 61,247
at P 2 n.8).
99 Id. at 2, 6.
100 Id. at 6.
101 Id.
102 Order No. 745, 134 FERC ¶ 61,187 at P 2 n.2;
Order No. 2222, 172 FERC ¶ 61,247 at P 2 n.8 (citing
18 CFR 35.28(b)(4)) (‘‘Demand response means a
reduction in the consumption of electric energy by
customers from their expected consumption in
response to an increase in the price of electric
energy or to incentive payments designed to induce
lower consumption of electric energy.’’).
103 See supra P 36.
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meter distributed energy resources
participating as demand response
resources in distributed energy resource
aggregations does not constitute double
counting, so long as the requirements of
Order No. 745, including the net
benefits test, are satisfied.104 Order No.
2222 provided that the requirements of
Order No. 745 apply to demand
response resources participating in
heterogeneous aggregations.105 In Order
No. 745, the Commission found that
when a demand response resource is
participating in an RTO/ISO market and
dispatch of that demand response
resource is cost-effective as determined
by the net benefits test, that demand
response resource must be compensated
in the energy market at the LMP.106
Accordingly, in circumstances in which
the net benefits test is satisfied, paying
LMP to behind-the-meter distributed
energy resources participating as
demand response resources in
distributed energy resource
aggregations, without reflecting the
savings load realized from not having to
purchase electricity, does not reflect a
double payment.107 We will evaluate,
on compliance, any proposed
distributed energy resource aggregation
compensation rules regarding demand
response for consistency with the
requirements of Order No. 745.
However, with respect to compensation
issues beyond the scope of Order No.
745, such as if a behind-the-meter
resource participates as another type of
distributed energy resource, we will not
prejudge RTO/ISO proposals but rather
evaluate them on compliance.
44. With respect to the participation
of demand response resources in
distributed energy resource
aggregations, we clarify that, if an
individual distributed energy resource
is a behind-the-meter generator, it may
participate within a distributed energy
resource aggregation as a demand
response resource or as a different type
of distributed energy resource. If the
distributed energy resource participates
as demand response, the requirements
in Order No. 745 would apply, and the
RTOs/ISOs are required to allow that
distributed energy resource to aggregate
with other types of distributed energy
resources in a heterogeneous distributed
energy resource aggregation.108 If the
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104 See
Order No. 2222, 172 FERC ¶ 61,247 at P
145.
105 Id.
106 Order No. 745–A, 137 FERC ¶ 61,215 at P 64
(citing Order No. 745, 134 FERC ¶ 61,187 at P 61).
107 See id.
108 See Order No. 2222, 172 FERC ¶ 61,247 at P
142 (requiring RTOs/ISOs to allow heterogeneous
DER aggregations); id. P 145 (clarifying that the
requirements in Order No. 745 apply to demand
VerDate Sep<11>2014
15:59 Jun 25, 2021
Jkt 253001
behind-the-meter resource participates
as another type of distributed energy
resource (i.e., not as a demand response
resource), the requirements in Order No.
745 would not apply.
45. We reiterate, however, that we
will evaluate each RTO’s/ISO’s
‘‘proposal submitted on compliance to
determine whether it meets the goals of
this final rule to allow distributed
energy resources to provide all services
that they are technically capable of
providing through aggregation,’’ 109 and
accordingly, whether it appropriately
compensates distributed energy
resources for providing such services.
III. Information Collection Statement
46. The burden estimates have not
changed from the final rule.
IV. Regulatory Flexibility Act
47. The Regulatory Flexibility Act of
1980 (RFA) 110 generally requires a
description and analysis of final rules
that will have significant economic
impact on a substantial number of small
entities. Pursuant to section 605(b) of
the RFA, we still conclude that this rule
will not have a significant economic
impact on a substantial number of small
entities.
V. Document Availability
48. 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). At this time, the
Commission has suspended access to
the Commission’s Public Reference
Room due to the President’s March 13,
2020 proclamation declaring a National
Emergency concerning the Novel
Coronavirus Disease (COVID–19).
49. From the Commission’s Home
Page on the internet, this information is
available on eLibrary. The full text of
this document is available on eLibrary
in PDF and Microsoft Word format for
viewing, printing, and/or downloading.
To access this document in eLibrary,
type the docket number excluding the
last three digits of this document in the
docket number field.
50. User assistance is available for
eLibrary and the Commission’s website
during normal business hours from
FERC Online Support at (202)–502–
6652 (toll free at 1–866–208–3676) or
email at ferconlinesupport@ferc.gov, or
response resources participating in heterogeneous
aggregations).
109 Order No. 2222, 172 FERC ¶ 61,247 at P 130.
110 5 U.S.C. 601–612.
PO 00000
Frm 00008
Fmt 4700
Sfmt 4700
the Public Reference Room at (202) 502–
8371, TTY (202) 502–8659. Email the
Public Reference Room at
public.referenceroom@ferc.gov.
VI. Effective Date and Congressional
Notification
51. This rule is effective August 27,
2021.
By the Commission.
Commissioner Chatterjee is
concurring with a separate statement
attached.
Commissioner Danly is concurring
with a separate statement attached.
Commissioner Christie is concurring
in part and dissenting in part with a
separate statement attached.
Issued: June 17, 2021.
Debbie-Anne A. Reese,
Deputy Secretary.
Department of Energy
Federal Energy Regulatory Commission
Participation of Distributed Energy
Resource Aggregations in Markets
Operated by Regional Transmission
Organizations and Independent System
Operators
Docket No. RM18–9–003
CHATTERJEE, Commissioner,
concurring:
1. I concur with today’s order because
it continues to find that the Commission
was under no legal obligation to provide
the Order No. 719 opt-out.1
2. I write separately to reiterate and
emphasize my support for eliminating
the Order No. 719 opt-out, which has for
years prevented demand response
resources in many states from
participating in our wholesale markets.
The outdated Order No. 719 opt-out
cannot be reconciled with the
competitive principles underpinning
Order No. 2222 and the Commission’s
statutory responsibility to ensure rates
subject to the Commission’s jurisdiction
are just and reasonable and not unduly
discriminatory or preferential.2 There is
no reasonable explanation as to why the
Commission should maintain the Order
No. 719 opt-out and treat demand
response resources differently from all
other distributed energy resources.
1 Participation of Distributed Energy Resource
Aggregations in Markets Operated by Regional
Transmission Organizations and Independent
System Operators, Order No. 2222–B, 175 FERC
¶ 61,227 at P 27 (2021). See Order No. 2222, 172
FERC ¶ 61,247 at P 59 (explaining that the
Commission was not obligated to provide an optout in Order No. 719 but did so as an exercise of
its discretion); see also NARUC, 964 F.3d at 1187
(‘‘[B]ecause FERC has the exclusive authority to
determine who may participate in the wholesale
markets, the Supremacy Clause . . . requires that
[s]tates not interfere.’’).
2 16 U.S.C. 824e.
E:\FR\FM\28JNR1.SGM
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Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Rules and Regulations
Accordingly, to ensure consumers can
realize the full benefits of Order No.
2222 and the wholesale market services
demand response resources can provide,
I urge the Commission to press forward
to eliminate the Order No. 719 opt-out
once and for all.
For these reasons, I respectfully
concur.
Neil Chatterjee,
Commissioner.
Federal Energy Regulatory Commission
Participation of Distributed Energy
Resource Aggregations in Markets
Operated by Regional Transmission
Organizations and Independent System
Operators
Docket No. RM18–9–003
DANLY, Commissioner, concurring:
1. I agree with the Commission’s order
today granting rehearing to extend the
states’ existing rights to opt-out of
wholesale demand response programs 1
including demand response resources
that participate in ‘‘heterogeneous
distributed energy resource
aggregations.’’ 2 In other words, states
can choose to prohibit demand response
resources within their boundaries from
participating in multi-state, wholesale
distributed energy resource programs.
This order represents the correct
division of authority between state and
federal jurisdiction.
2. I write separately to highlight that
even if the Commission is correct that
it has jurisdiction over distributed
energy resource aggregations—including
those ‘‘aggregations’’ comprised of a
single resource 3—the Commission still
should have chosen not to exercise such
jurisdiction in Order No. 2222.4 This
order on rehearing returns authority
over demand response resources—
which often are included in distributed
energy resource aggregations—to the
states, letting the states choose whether
demand response resources can
khammond on DSKJM1Z7X2PROD with RULES
1 See
Wholesale Competition in Regions with
Organized Electric Markets, Order No. 719, 125
FERC ¶ 61,071, at P 155 (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).
2 Participation of Distributed Energy Res.
Aggregations in Mkts. Operated by Reg’l
Transmission Orgs. & Indep. Sys. Operators, 175
FERC ¶ 61,227, at P 26 (2021) (Order).
3 See Participation of Distributed Energy Res.
Aggregations in Mkts. Operated by Reg’l
Transmission Orgs. & Indep. Sys. Operators, Order
No. 2222, 85 FR 67,094 (Oct. 21, 2020), 172 FERC
¶ 61,247, at P 1 n.1 (2020), corrected, 85 FR 68,450
(Oct. 29, 2020), order on reh’g, Order No. 2222–A,
174 FERC ¶ 61,197 (2021) (Danly, Comm’r,
dissenting) (discussing single resource
‘‘aggregations’’); 18 CFR 35.28(b)(10) (2020).
4 See Order, 175 FERC ¶ 61,227 at P 27
(discussing case law on jurisdiction).
17:53 Jun 25, 2021
James P. Danly,
Commissioner.
Department of Energy
Department of Energy
VerDate Sep<11>2014
participate in wholesale distributed
energy resource aggregations. This
correctly preserves the traditional
allocation of authority between the
individual states and the federal
government.
For these reasons, I respectfully
concur.
Jkt 253001
Federal Energy Regulatory Commission
Participation of Distributed Energy
Resource Aggregations in Markets
Operated by Regional Transmission
Organizations and Independent System
Operators
Docket No. RM18–9–003
CHRISTIE, Commissioner, concurring
in part and dissenting in part:
1. I concur with the first sentence of
Paragraph 26 and other provisions of the
order which set ‘‘aside our prior
decision [in Order No. 2222–A] not to
extend the Order No. 719 opt-out to
demand response resources that
participate in heterogeneous distributed
energy resource aggregations . . . .’’ 1
2. As the second sentence in
Paragraph 26 and other provisions in
today’s order indicate, however, there is
no decision affirmatively to preserve
those Order No. 719 opt-out
provisions; 2 on the contrary, the
prospect of ultimately removing even
these opt-out provisions is very much
alive as a result of the NOI proceeding
in Docket No. RM21–14–000.3
3. Beyond the parts of this order that
restore, at least temporarily, those optout provisions, I dissent from the
remainder of the order, because I would
have voted against Order No. 2222 had
I been a member of the Commission at
that time and I did vote against Order
No. 2222–A. As I said in my dissent to
the latter:
Today the majority . . . sides against
the consumers who for years to come
will almost surely pay billions of dollars
for grid expenditures likely to be rate-
33861
based in the name of ‘‘Order 2222
compliance.’’
. . .
Sadly, instead of making the states,
municipal and public-power authorities
and electric co-operatives truly equal
partners in managing the timing and
conditions of deployment of behind-themeter DERs in ways that are sensitive to
local needs and challenges—both
technical and economic—today’s order
denies them any meaningful control by
prohibiting any opt-out or opt-in
options except in relatively tiny
circumstances. This order—and its
predecessor—intentionally seize from
the states and other authorities their
historic authority to balance the
competing interests of deploying new
technologies while maintaining grid
reliability and protecting consumers
from unaffordable costs . . . .4
4. To ameliorate at least some of the
damaging effects caused by Order Nos.
2222 and 2222–A, I would authorize
states and other RERRAs the right to
exercise an opt-out from the
requirements of those orders, if not
permanently then at least for some
period of years to enable them better to
prepare for the impacts on retail
customers and distribution grids they
now face.
For these reasons, I respectfully
concur in part and dissent in part.
Mark C. Christie,
Commissioner.
[FR Doc. 2021–13442 Filed 6–25–21; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Parts 1300, 1301, and 1304
[Docket No. DEA–459]
RIN 1117–AB43
Registration Requirements for Narcotic
Treatment Programs With Mobile
Components
Drug Enforcement
Administration, Department of Justice.
ACTION: Final rule.
AGENCY:
1 Participation
of Distributed Energy Resource
Aggregations in Markets Operated by Regional
Transmission Organizations and Independent
System Operators, Order No. 2222, 85 FR 67094
(Oct. 1, 2020), 172 FERC ¶ 61,247 (2020), corrected,
85 FR 68450 (Oct. 29, 2020), order on reh’g, Order
No. 2222–A, 174 FERC 61,197 (2021), order on reh’g
and clarification, Order No. 2222–B, 175 FERC
¶ 61,227, at P 26 (2021).
2 Order No. 2222–B at P 26.
3 Participation of Aggregators of Retail Demand
Response Customers in Markets Operated by
Regional Transmission Organizations and
Independent System Operators, Notice of Inquiry,
174 FERC ¶ 61,198 (2021) (NOI); see also Order No.
2222–B at P 28.
PO 00000
Frm 00009
Fmt 4700
Sfmt 4700
The Drug Enforcement
Administration (DEA) is publishing this
final rule to revise existing regulations
for narcotic treatment programs (NTPs)
to allow the operation of a mobile
SUMMARY:
4 Order No. 2222–A (Christie, Comm’r, dissenting
at PP 1, 3 (emphasis in original) (footnotes omitted)
(available at https://www.ferc.gov/news-events/
news/item-e-1-commissioner-mark-c-christiedissent-regarding-participation-distributed)).
E:\FR\FM\28JNR1.SGM
28JNR1
]]>Agencies
[Federal Register Volume 86, Number 121 (Monday, June 28, 2021)]
[Rules and Regulations]
[Pages 33853-33861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13442]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Rules
and Regulations
[[Page 33853]]
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 35
[Docket No. RM18-9-003; Order No. 2222-B]
Participation of Distributed Energy Resource Aggregations in
Markets Operated by Regional Transmission Organizations and Independent
System Operators
AGENCY: Federal Energy Regulatory Commission, Department of Energy.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this order, the Federal Energy Regulatory Commission
(Commission) addresses arguments raised on rehearing, sets aside in
part and clarifies in part Order No. 2222-A.
DATES: This rule will become effective August 27, 2021.
FOR FURTHER INFORMATION CONTACT:
David Kathan (Technical Information), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426, (202) 502-6404
Nicole Businelli (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426, (202) 502-8253
Christopher Chaulk (Legal Information), Office of the General Counsel--
Energy Markets, Federal Energy Regulatory Commission, 888 First Street
NE, Washington, DC 20426, (202) 502-6720
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph Nos.
I. Introduction...................................... 1
II. Discussion....................................... 7
A. Order No. 719 Demand Response Opt-Out......... 7
a. Requests for Rehearing.................... 11
i. Jurisdiction.......................... 11
ii. Adequate Notice...................... 16
iii. Reasoned Decision-Making............ 19
b. Commission Determination.................. 26
B. Definition of Demand Response for Purposes of 30
Applying the Order No. 719 Opt-Out to
Heterogeneous Distributed Energy Resource
Aggregations....................................
a. Request for Clarification................. 32
b. Commission Determination.................. 35
C. Double Counting and Compensation for Behind- 37
the-Meter Distributed Energy Resources That
Reduce Load.....................................
a. Request for Clarification or Rehearing.... 39
b. Commission Determination.................. 42
III. Information Collection Statement................ 46
IV. Regulatory Flexibility Act....................... 47
V. Document Availability............................. 48
VI. Effective Date and Congressional Notification.... 51
I. Introduction
1. On September 17, 2020, the Federal Energy Regulatory Commission
(Commission) issued its final rule (final rule or Order No. 2222)
adopting reforms to remove barriers to the participation of distributed
energy resource \1\ aggregations in the Regional Transmission
Organization (RTO) and Independent System Operator (ISO) markets (RTO/
ISO markets).\2\ Specifically, the Commission found that existing RTO/
ISO market rules are unjust and unreasonable in light of barriers that
they present to the participation of distributed energy resource
aggregations in RTO/ISO markets, which reduce competition and
[[Page 33854]]
fail to ensure just and reasonable rates.\3\ To help ensure that 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. 2222, modified Sec. 35.28 \5\ of
the Commission's regulations to require each RTO/ISO to revise its
tariff to ensure that its market rules facilitate the participation of
distributed energy resource aggregations.\6\
---------------------------------------------------------------------------
\1\ Order No. 2222 amended the Commission's regulations to
define a distributed energy resource as any resource located on the
distribution system, any subsystem thereof or behind a customer
meter. Participation of Distributed Energy Resource Aggregations in
Markets Operated by Regional Transmission Organizations and
Independent System Operators, Order No. 2222, 85 FR 67094 (Oct. 1,
2020), 172 FERC ] 61,247, at P 1 n.1 (2020), corrected, 85 FR 68450
(Oct. 29, 2020), order on reh'g, Order No. 2222-A, 86 FR 16511 (Mar.
24, 2011), 174 FERC ] 61,197 (2021); 18 CFR 35.28(b)(10). These
resources may include, but are not limited to, resources that are in
front of and behind the customer meter, electric storage resources,
intermittent generation, distributed generation, demand response,
energy efficiency, thermal storage, and electric vehicles and their
supply equipment. Order No. 2222, 172 FERC ] 61,247 at PP 1 n.1,
114.
\2\ For purposes of Order No. 2222, the Commission defined RTO/
ISO markets as the capacity, energy, and ancillary services markets
operated by the RTOs and ISOs. Order No. 2222, 172 FERC ] 61,247 at
P 1 n.2; see also 18 CFR 35.28(b)(11).
\3\ Order No. 2222, 172 FERC ] 61,247 at P 1.
\4\ 16 U.S.C. 824e.
\5\ 18 CFR 35.28.
\6\ Order No. 2222, 172 FERC ] 61,247 at P 1.
---------------------------------------------------------------------------
2. More specifically, Order No. 2222 requires each RTO/ISO to
revise its tariff to establish distributed energy resource aggregators
as a type of market participant that can register distributed energy
resource aggregations under one or more participation models in the
RTO/ISO tariff that accommodate the physical and operational
characteristics of each distributed energy resource aggregation.\7\
---------------------------------------------------------------------------
\7\ Id. P 6.
---------------------------------------------------------------------------
3. On March 18, 2021, the Commission issued Order No. 2222-A, which
addressed arguments raised on rehearing, set aside in part, and
clarified in part the Commission's determinations in Order No. 2222.
While the Commission largely affirmed its findings in Order No. 2222,
the Commission set aside the finding that the participation of demand
response in distributed energy resource aggregations is subject to the
opt-out and opt-in requirements of Order Nos. 719 and 719-A.\8\ The
Commission stated that if a distributed energy resource aggregation is
composed solely of resources that participate as demand response
resources, then the Order No. 719 opt-out would apply to that
aggregation, but if a distributed energy resource aggregation contains
any resources that participate as another type of distributed energy
resource, then the Order No. 719 opt-out would not apply to that
aggregation.\9\ In addition, as relevant here, the Commission provided
clarification regarding restrictions to avoid double counting of
services.\10\
---------------------------------------------------------------------------
\8\ Order No. 2222-A, 174 FERC ] 61,197 at P 22; see Wholesale
Competition in Regions with Organized Electric Markets, Order No.
719, 73 FR 64100 (Oct. 28, 2008), 125 FERC ] 61,071, at P 155
(2008), order on reh'g, Order No. 719-A, 74 FR 37776 (July 29,
2009), 128 FERC ] 61,059, order on reh'g, Order No. 719-B, 129 FERC
] 61,252 (2009).
\9\ Order No. 2222-A, 174 FERC ] 61,197 at PP 22-23.
\10\ Id. PP 63-64.
---------------------------------------------------------------------------
4. On April 19, 2021, the Edison Electric Institute (EEI); the
Louisiana Public Service Commission and the Mississippi Public Service
Commission (together, the Southern Regulators); the National
Association of Regulatory Utility Commissioners (NARUC); the North
Carolina Utilities Commission (the North Carolina Commission); and the
MISO Transmission Owners \11\ filed timely requests for rehearing of
Order No. 2222-A. On April 19, 2021, Advanced Energy Economy and
Advanced Energy Management Alliance (together, AEE/AEMA) filed a
request for clarification, or in the alternative, rehearing of Order
No. 2222-A. On April 19, 2021, Voltus, Inc. (Voltus) filed a request
for clarification of Order No. 2222-A. On April 30, 2021, the
Midcontinent Independent System Operator, Inc. (MISO) filed an answer
in response to the rehearing requests. On May 4, 2021, ISO New England
Inc. (ISO-NE) filed an answer to AEE/AEMA's request. On May 14, 2021,
AEE/AEMA filed an answer in response to ISO-NE's answer. On May 28,
2021, AEE/AEMA filed an answer in response to the requests for
rehearing and MISO's answer.\12\
---------------------------------------------------------------------------
\11\ The MISO Transmission Owners consist of Ameren Services
Company, as agent for Union Electric Company d/b/a Ameren Missouri,
Ameren Illinois Company d/b/a Ameren Illinois and Ameren
Transmission Company of Illinois; Big Rivers Electric Corporation;
Central Minnesota Municipal Power Agency; City Water, Light & Power
(Springfield, IL); Cleco Power LLC; Cooperative Energy; Dairyland
Power Cooperative; Duke Energy Business Services, LLC for Duke
Energy Indiana, LLC; East Texas Electric Cooperative; Entergy
Arkansas, LLC; Entergy Louisiana, LLC; Entergy Mississippi, LLC;
Entergy New Orleans, LLC; Entergy Texas, Inc; Great River Energy;
GridLiance Heartland LLC; Hoosier Energy Rural Electric Cooperative,
Inc.; Indiana Municipal Power Agency; Indianapolis Power & Light
Company; Lafayette Utilities System; MidAmerican Energy Company;
Minnesota Power (and its subsidiary Superior Water, L&P); Missouri
River Energy Services; Montana-Dakota Utilities Co.; Northern
Indiana Public Service Company LLC; Northern States Power Company, a
Minnesota corporation, and Northern States Power Company, a
Wisconsin corporation, subsidiaries of Xcel Energy Inc.;
Northwestern Wisconsin Electric Company; Otter Tail Power Company;
Prairie Power, Inc.; Illinois Power Cooperative; Southern Indiana
Gas & Electric Company (d/b/a Vectren Energy Delivery of Indiana);
Southern Minnesota Municipal Power Agency; Wabash Valley Power
Association, Inc.; and Wolverine Power Supply Cooperative, Inc.
\12\ Rule 713(d)(1) of the Commission's Rules of Practice and
Procedure, 18 CFR 385.713(d)(1), prohibits an answer to a request
for rehearing. Accordingly, we reject ISO-NE's, MISO's, and AEE/
AEMA's answers.
---------------------------------------------------------------------------
5. Pursuant to Allegheny Defense Project v. FERC,\13\ the rehearing
requests filed in this proceeding may be deemed denied by operation of
law. However, as permitted by section 313(a) of the FPA,\14\ we modify
the discussion in Order No. 2222-A and set aside the decision, in part,
and clarify in part, as discussed below.\15\
---------------------------------------------------------------------------
\13\ 964 F.3d 1 (D.C. Cir. 2020) (en banc).
\14\ 16 U.S.C. 825l(a) (``Until the record in a proceeding shall
have been filed in a court of appeals, as provided in subsection
(b), the Commission may at any time, upon reasonable notice and in
such manner as it shall deem proper, modify or set aside, in whole
or in part, any finding or order made or issued by it under the
provisions of this chapter.'').
\15\ Allegheny Def. Project, 964 F.3d at 16-17.
---------------------------------------------------------------------------
6. Specifically, we set aside the decision in Order No. 2222-A to
decline to extend the opt-out and opt-in requirements of Order Nos. 719
and 719-A to demand response resources participating in heterogeneous
distributed energy resource aggregations. We also provide further
clarification regarding appropriate restrictions to avoid double
counting of services and the compensation of demand response resources
that participate in heterogeneous distributed energy resource
aggregations, as discussed further below.
II. Discussion
A. Order No. 719 Demand Response Opt-Out
7. In Order No. 2222, the Commission stated that the final rule
does not affect the ability of relevant electric retail regulatory
authorities (RERRA) to prohibit retail customers' demand response from
being bid into RTO/ISO markets by aggregators pursuant to Order No.
719.\16\ The Commission also stated that, because the definition of a
distributed energy resource includes demand response resources, an
aggregator of demand response could participate as a distributed energy
resource aggregator, but that the final rule does not affect existing
demand response rules.\17\ The Commission further found that the
participation of demand response in distributed energy resource
aggregations is subject to the opt-out and opt-in requirements of Order
Nos. 719 and 719-A.\18\ The Commission therefore clarified that if the
RERRA for a demand response resource has either chosen to opt out or
has not opted in, then the demand response resource may not participate
in a distributed energy resource aggregation.
---------------------------------------------------------------------------
\16\ Order No. 2222, 172 FERC ] 61,247 at P 59 (citing 18 CFR
35.28(g)(1)(iii)).
\17\ Id. P 118.
\18\ Id. P 145.
---------------------------------------------------------------------------
8. In Order No. 2222-A, the Commission set aside in part the
Commission's conclusion that the participation of demand response in
distributed energy resource aggregations is subject to the opt-out and
opt-in requirements of Order Nos. 719 and
[[Page 33855]]
719-A.\19\ The Commission stated that, upon reconsideration, it
declined to extend this opt-out to demand response resources that
participate in heterogeneous distributed energy resource aggregations--
i.e., distributed energy resource aggregations that are made up of
different types of resources including demand response.\20\ The
Commission found that heterogeneous distributed energy resource
aggregations that include demand response resources do not fall
squarely within the Order No. 719 opt-out, as set forth in the
Commission's regulations, because they are not solely aggregations of
retail customers.\21\ The Commission stated that the Order No. 719 opt-
out will continue to apply to aggregations made up solely of resources
that participate as demand response resources, consistent with the
Commission's regulations.\22\
---------------------------------------------------------------------------
\19\ Order No. 2222-A, 174 FERC ] 61,197 at P 22.
\20\ Id. PP 22-23.
\21\ Id. P 23 (citing 18 CFR 35.28(g)(1)(iii); 18 CFR
35.28(b)(10), (g)(12); Order No. 2222, 172 FERC ] 61,247 at P 114);
id. P 28 (concluding that if a distributed energy resource
aggregator aggregates only demand response resources, it is
materially indistinct from the aggregations of retail customers
subject to the Order No. 719 opt-out).
\22\ Id. P 22 (emphasis in original).
---------------------------------------------------------------------------
9. The Commission found that extending the Order No. 719 opt-out to
demand response resources in heterogeneous distributed energy resource
aggregations would undermine the potential of Order No. 2222 to break
down barriers to competition, which would interfere with the
Commission's responsibility to ensure that wholesale rates are just and
reasonable.\23\ Specifically, the Commission concluded that extending
the Order No. 719 opt-out to demand response resources that seek to
participate in heterogeneous distributed energy resource aggregations
would undermine the ability of aggregations to take advantage of the
different resources' operational attributes and complementary
capabilities.\24\ The Commission stated that ensuring that demand
response resources can combine with other forms of distributed energy
resources has the potential to increase both the number and the variety
of distributed energy resource aggregations.\25\ The Commission
explained that, in addition to enhancing competition, diversity in
distributed energy resource aggregations facilitates these non-
traditional resources' ability to provide a wide range of services in
RTO/ISO markets.\26\ The Commission stated that applying the Order No.
719 opt-out to aggregations that contain a combination of demand
response and other types of distributed energy resources could prevent
distributed energy resource aggregators from incorporating the
complementary capabilities of existing and future demand response
technologies. The Commission also found that precluding demand response
from participating in heterogeneous distributed energy resource
aggregations would undermine the Commission's goal of ``ensur[ing] a
technology-neutral approach to distributed energy resource
aggregations, which will ensure that more resources are able to
participate in such aggregations, thereby helping to enhance
competition and ensure just and reasonable rates.'' \27\
---------------------------------------------------------------------------
\23\ Id. P 23 (citing Order No. 2222, 172 FERC ] 61,247 at PP 1,
3, 142; Nat'l Ass'n of Regul. Util. Comm'rs v. FERC, 964 F.3d 1177,
1189 (D.C. Cir. 2020) (NARUC)).
\24\ Id. P 24.
\25\ Id. P 25.
\26\ Id. P 26 (citing Order No. 2222, 172 FERC ] 61,247 at P
141).
\27\ Id. P 27 (quoting Order No. 2222, 172 FERC ] 61,247 at P
26).
---------------------------------------------------------------------------
10. The Commission stated that it did not propose to overturn the
Order No. 719 opt-out in this rulemaking and, to the extent that
parties asked the Commission to do so on rehearing, it found that such
requests were out of scope.\28\ The Commission also clarified that the
small utility opt-in adopted in Order No. 2222 still applies to all
distributed energy resource aggregations, including those containing
demand response resources.
---------------------------------------------------------------------------
\28\ Id. P 28.
---------------------------------------------------------------------------
a. Requests for Rehearing
i. Jurisdiction
11. Some petitioners argue that the Commission's opt-out finding in
Order No. 2222-A violated the Commission's jurisdiction under the FPA
or usurped state authority.\29\ The Southern Regulators argue that the
Commission failed to properly balance the jurisdictional limitations of
the FPA with the states' exclusive jurisdiction over retail issues in
its decision to exercise authority over retail demand response.\30\
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\29\ NARUC Request for Rehearing at 3, 5; Southern Regulators
Request for Rehearing at 12.
\30\ Southern Regulators Request for Rehearing at 12.
---------------------------------------------------------------------------
12. The Southern Regulators argue that the Commission contravened
EPSA because, in their view, the Supreme Court concluded that it is
precisely a state's right to opt out of participation by retail
customers in an RTO demand response wholesale market that ensures the
balance of federal and state power under the FPA.\31\ The Southern
Regulators argue that EPSA requires a careful balancing of the
interests of the states and those of the Commission in order to
determine whether the Commission has and/or should exercise
jurisdiction under the FPA. The Southern Regulators argue that in Order
No. 2222-A the Commission disregarded the concept of cooperative
federalism upon which the Court relied to reach its decision, a concept
fundamental to the balance of overlapping jurisdiction under the
FPA.\32\ The Southern Regulators argue that the Court concluded that,
when it comes to retail customer participation in wholesale markets,
states have the last word.\33\ The Southern Regulators argue that the
Commission's historic practice in areas where federal and state
jurisdiction overlap has been to recognize that balance, as it did in
Order No. 1000.\34\ The Southern Regulators argue that Order No. 2222-A
offers no discussion of or replacement for the state opt-out authority
that would evidence the Commission's ``compliance with Sec. 824(b)'s
allocation of federal and state authority.'' \35\
---------------------------------------------------------------------------
\31\ Id. at 13 (citing FERC v. EPSA, 136 S. Ct. 760, 779-80
(2016) (EPSA)).
\32\ Id. at 12.
\33\ Id. at 14 (citing EPSA, 136 S. Ct. at 780).
\34\ Id. at 13-14 (citing Transmission Planning and Cost
Allocation by Transmission Owning and Operating Public Utilities,
Order No. 1000, 76 FR 49842 (Aug. 11, 2011), 136 FERC ] 61,051, at
PP 225-27, 287 (2011), order on reh'g, Order No. 1000-A, 77 FR 32184
(May 31, 2012), 139 FERC ] 61,132, at P 392, order on reh'g and
clarification, Order No. 1000-B, 77 FR 64890 (Oct. 24, 2012), 141
FERC ] 61,044 (2012), aff'd sub nom. S.C. Pub. Serv. Auth. v. FERC,
762 F.3d 41 (D.C. Cir. 2014)).
\35\ Id. at 15 (quoting EPSA, 136 S. Ct. at 780).
---------------------------------------------------------------------------
13. The North Carolina Commission similarly argues that the
Commission did not account for the long-standing authority of the
states and the traditional, cooperative roles played by federal and
state regulators in promoting adequate, reliable, safe, clean, and
affordable electric services.\36\ The North Carolina Commission argues
that the cooperative federalism inherent in the FPA and the regulation
of wholesale and retail electric service requires a role for both
federal and state regulators.\37\ The North Carolina Commission
maintains that the Commission's action does not encourage utility
participation in an RTO/ISO or encourage a state commission to allow a
utility's RTO/ISO participation.\38\
---------------------------------------------------------------------------
\36\ North Carolina Commission Request for Rehearing at 10.
\37\ Id. at 11.
\38\ Id. at 10.
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14. NARUC argues that, by eliminating the opt-out for demand
response resources in heterogeneous aggregations, the Commission
usurped authority from states that used the Order
[[Page 33856]]
No. 719 opt-out and built a legal framework for that regulatory
scheme.\39\ NARUC argues that Order No. 2222-A allows a demand response
resource to disregard the judgment of state regulators by joining a
third-party aggregation with other types of resources.\40\ In addition,
NARUC argues, the order allows third-party aggregators of demand
response resources to add a solitary unit of a different type of
distributed energy resource to its aggregations to circumvent state
law.
---------------------------------------------------------------------------
\39\ NARUC Request for Rehearing at 3, 5.
\40\ Id. at 6.
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15. NARUC disputes the Commission's position that ``[b]ecause the
terms of wholesale market participation are a matter under exclusive
Commission jurisdiction, today's order does not infringe upon or
otherwise diminish state authority.'' \41\ NARUC argues that the
Commission's action in Order No. 2222-A is unlike the Commission's
decisions in Order Nos. 841 and 2222 because there were no state
regulations already in place.\42\ NARUC explains that there was no need
prior to Order No. 841 for states to prohibit storage resources on the
distribution system or behind the meter from participating in wholesale
markets because that was not possible before the order.\43\ NARUC
points out that the challenge to Order No. 841 in NARUC was a facial
challenge and argues that NARUC does not address as-applied
challenges.\44\ NARUC explains that prior to Order No. 2222-A, some
states had regulations that applied to demand response aggregations on
the distribution system or behind the meter because Order No. 719
permitted such participation in the wholesale markets.\45\ NARUC argues
that Order No. 2222-A takes away this authority over demand response
resources.\46\
---------------------------------------------------------------------------
\41\ Id. (quoting Order No. 2222-A, 174 FERC ] 61,197 at P 12
n.36).
\42\ Id. at 5.
\43\ Id. at 6.
\44\ Id. (citing NARUC, 964 F.3d at 1188-89).
\45\ Id. at 6-7 (emphasis in original).
\46\ Id. at 7.
---------------------------------------------------------------------------
ii. Adequate Notice
16. Multiple petitioners argue that the Commission violated the
Administrative Procedure Act (APA) by effectively eliminating the Order
No. 719 opt-out without providing adequate notice and without
soliciting comments and evidence from RERRAs that have adopted and
relied upon that opt-out.\47\ The Southern Regulators and NARUC argue
that the procedurally proper method to modify the opt-out is in the
proceeding in Docket No. RM21-14-000 that was noticed for this
purpose.\48\ The Southern Regulators argue that nothing in the Notice
of Proposed Rulemaking in Docket No. RM16-23-000 \49\ indicated an
effort or intent by the Commission to reconsider the Order No. 719 opt-
out.\50\
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\47\ Southern Regulators Request for Rehearing at 10; EEI
Request for Rehearing at 4; North Carolina Commission Request for
Rehearing at 8-9.
\48\ Southern Regulators Request for Rehearing at 10; NARUC
Request for Rehearing at 8.
\49\ Electric Storage Participation in Markets Operated by
Regional Transmission Organizations and Independent System
Operators, 81 FR 86522 (Nov. 30, 2016), 157 FERC ] 61,121 (2016)
(NOPR).
\50\ Southern Regulators Request for Rehearing at 10.
---------------------------------------------------------------------------
17. The Southern Regulators argue that they were prejudiced by the
Commission's failure to provide notice that the Order No. 719 opt-out
was at risk in Docket No. RM18-9.\51\ The Southern Regulators and the
North Carolina Commission explain that they have provisions restricting
aggregators of retail customers in their respective jurisdictions.\52\
The Southern Regulators maintain that, because the NOPR offered no hint
that the opt-out was in jeopardy, they had no reason to oppose
elimination of the opt-out in the rulemaking docket or actively
participate in the other portions of the rulemaking affecting demand
response resources.
---------------------------------------------------------------------------
\51\ Id. at 11.
\52\ Southern Regulators Request for Rehearing at 11; North
Carolina Commission Request for Rehearing at 2-3.
---------------------------------------------------------------------------
18. In addition, NARUC and the Southern Regulators argue that
eliminating the Order No. 719 opt-out for demand response resources in
heterogeneous aggregations is outside the scope of Order No. 2222.\53\
---------------------------------------------------------------------------
\53\ NARUC Request for Rehearing at 8; Southern Regulators
Request for Rehearing at 7.
---------------------------------------------------------------------------
iii. Reasoned Decision-Making
19. Several petitioners argue that the Commission acted arbitrarily
and capriciously by departing from its policy in Order Nos. 719 and
719-A in Order. No. 2222-A without acknowledgment, an adequate
explanation, or an examination of the policy considerations in support
of the opt-out.\54\ The MISO Transmission Owners further argue that the
Commission did not adequately address how it will enforce the policy of
avoiding unduly burdening states and retail regulators or why the
policy considerations are no longer relevant.\55\ The Southern
Regulators contend that the Commission's reasons for eliminating the
opt-out in Order No. 2222-A were present at the time Order No. 719 was
issued, and that the Commission has not explained why those reasons now
require elimination of the opt-out.\56\
---------------------------------------------------------------------------
\54\ See, e.g., MISO Transmission Owners Rehearing Request at 6;
NARUC Rehearing Request at 8; North Carolina Commission Rehearing
Request at 5; Southern Regulators Rehearing Request at 9.
\55\ MISO Transmission Owners Rehearing Request at 8-9, 11.
\56\ Southern Regulators Rehearing Request at 8-9.
---------------------------------------------------------------------------
20. Next, several petitioners claim that the Commission failed to
acknowledge the states' role in overseeing demand response activities
within their borders.\57\ The MISO Transmission Owners assert that the
Commission failed to consider the effect that limiting the opt-out will
have on states' ability to control consumer costs, and the Southern
Regulators argue that the Commission's opt-out decision unreasonably
restricts the ability of states to protect retail customers.\58\
---------------------------------------------------------------------------
\57\ See, e.g., MISO Transmission Owners Rehearing Request at 9-
10 (citing EPSA, 136 S. Ct. at 779).
\58\ MISO Transmission Owners Rehearing Request at 9-10;
Southern Regulators Rehearing Request at 15.
---------------------------------------------------------------------------
21. Next, some petitioners argue that the Commission relies on a
false distinction between heterogeneous and homogeneous distributed
energy resource aggregations to justify eliminating state opt-out
authority.\59\
---------------------------------------------------------------------------
\59\ E.g., Southern Regulators Rehearing Request at 19.
---------------------------------------------------------------------------
22. NARUC challenges the Commission's finding that ``heterogeneous
distributed energy resource aggregations that include demand response
resources do not fall squarely within the Order No. 719 opt-out, as set
forth in our regulations because they are not solely aggregations of
retail customers,'' because the definition of ``aggregator of retail
customers'' that the Commission relies upon does not say that the
aggregations are exclusively retail loads, just ``mostly.'' \60\ NARUC
argues that the Commission acted capriciously by changing the treatment
of demand response resources on the distribution system and behind the
meter without further evidence of the types of load involved or inquiry
into the experience of states that have employed the opt-out.\61\
---------------------------------------------------------------------------
\60\ NARUC Rehearing Request at 7 (quoting Order No. 2222-A, 174
FERC ] 61,197 at P 23).
\61\ Id. at 8.
---------------------------------------------------------------------------
23. Some petitioners also object to the Commission's
characterization of demand response resources in declining to extend
the opt-out to heterogeneous distributed energy resource aggregations.
The Southern Regulators criticize the Commission's reliance on the
ability of distributed energy resources to take advantage of operating
attributes and complementary
[[Page 33857]]
capabilities.\62\ The MISO Transmission Owners argue that, in allowing
demand response resources to participate through a heterogeneous
aggregation, the Commission did not distinguish between injection and
non-injection resources, as it previously did when maintaining the opt-
out in Order Nos. 841 and 2222.\63\
---------------------------------------------------------------------------
\62\ Southern Regulators Rehearing Request at 20 (citing Order
No. 2222-A, 174 FERC ] 61,197 at P 24).
\63\ MISO Transmission Owners Rehearing Request at 7 (citing
Order No. 841-A, 167 FERC ] 61,154 at P 53).
---------------------------------------------------------------------------
24. Several petitioners further argue that the Commission's
decision is arbitrary and capricious because it would allow distributed
energy resource aggregations comprised primarily of demand response
resources to evade state regulations.\64\
---------------------------------------------------------------------------
\64\ EEI Rehearing Request at 4; MISO Transmission Owners
Rehearing Request at 6 n.13; North Carolina Commission Rehearing
Request at 7-8.
---------------------------------------------------------------------------
25. Finally, EEI argues that it was arbitrary and capricious for
the Commission to remove the opt-out without allowing an opportunity
for public comment in Docket No. RM21-14-000, where the Commission has
opened a far-reaching inquiry about removing the demand response opt-
out from its regulations.\65\ EEI and the MISO Transmission Owners
argue that the Commission has effectively undermined that inquiry in
Docket No. RM21-14-000.\66\
---------------------------------------------------------------------------
\65\ EEI Rehearing Request at 1-2; MISO Transmission Owners
Rehearing Request at 11.
\66\ EEI Rehearing Request at 4; MISO Transmission Owners
Rehearing Request at 8.
---------------------------------------------------------------------------
b. Commission Determination
26. Upon reviewing the requests for rehearing, we set aside our
prior decision not to extend the Order No. 719 opt-out to demand
response resources that participate in heterogeneous distributed energy
resource aggregations. As discussed below, we find that these issues
are better addressed in Docket No. RM21-14-000.\67\
---------------------------------------------------------------------------
\67\ The Commission has broad discretion in how to manage its
proceedings. See Vt. Yankee Nuclear Power Corp. v. Natural Res. Def.
Council, Inc., 435 U.S. 519, 524-25 (1978) (recognizing that
agencies have broad discretion over the formulation of their
procedures); S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41, 81 (D.C.
Cir. 2014) (affirming the Commission's discretion in how to manage
the proceedings before it); Tenn. Gas Pipeline Co. v. FERC, 972 F.2d
376, 381 (D.C. Cir. 1992) (``The agency is entitled to make
reasonable decisions about when and in what type of proceeding it
will deal with an actual problem.'') (citing Mobil Oil Expl. &
Producing Se. Inc. v. United Distrib. Cos., 498 U.S. 211, 230 (1991)
(``An agency enjoys broad discretion in determining how best to
handle related, yet discrete, issues in terms of procedures . . .
.'')).
---------------------------------------------------------------------------
27. As an initial matter, we disagree with the arguments on
rehearing that the Commission's interpretation of the Order No. 719
opt-out in Order No. 2222-A would have exceeded the Commission's
jurisdiction under the FPA. The Southern Regulators rely on EPSA to
argue that the Commission failed to properly balance the jurisdictional
limitations of the FPA. We disagree. EPSA held that the Commission's
regulation of demand response participation in wholesale markets is a
practice that directly affects wholesale rates.\68\ Further, the Court
also held that the Commission's regulation of demand response resources
does not regulate retail sales in violation of FPA section 201(b).\69\
As the D.C. Circuit explained in NARUC, the Court in EPSA ``did not
condition its holdings on the existence of an opt-out.'' \70\
Accordingly, we continue to conclude that the Commission was not
legally required either to grant the opt-out in Order No. 719 or to
extend that opt-out in this proceeding.\71\
---------------------------------------------------------------------------
\68\ EPSA, 136 S. Ct. at 774 (referring to the Commission's
jurisdiction under FPA sections 205 and 206 to regulate practices
affecting jurisdictional rates); see also Order No. 2222, 172 FERC ]
61,247 at P 41 (discussing EPSA's application to this proceeding).
\69\ EPSA, 136 S. Ct. at 784; see also Order No. 2222, 172 FERC
] 61,247 at P 41.
\70\ NARUC, 964 F.3d at 1189-90; see Elec. Storage Participation
in Mkts. Operated by Reg'l Transmission Orgs. and Indep. Sys.
Operators, Order No. 841, 83 FR 9580 (Mar. 6, 2018), 162 FERC ]
61,127 (2018), order on reh'g and clarification, Order No. 841-A, 84
FR 23902 (May 23, 2019), 167 FERC ] 61,154, at P 40 (2019), aff'd
sub nom. NARUC, 964 F.3d 1177 (explaining that the Court in EPSA
described how its ``analysis of FERC's regulatory authority
proceeds'' without referring to an opt-out, and explaining that,
when the Court 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,'' that statement was not a
determinative part of its analysis) (quoting EPSA, 136 S. Ct. at
773, 779).
\71\ See Order No. 2222, 172 FERC ] 61,247 at P 59 (explaining
that the Commission was not obligated to provide an opt-out in Order
No. 719 but did so as an exercise of its discretion); see also
NARUC, 964 F.3d at 1187 (``[B]ecause FERC has the exclusive
authority to determine who may participate in the wholesale markets,
the Supremacy Clause . . . requires that [s]tates not interfere.'').
---------------------------------------------------------------------------
28. Nonetheless, we acknowledge that, in implementing the opt-out
in Order No. 719, a number of states broadly prohibited demand response
participation in RTO/ISO markets,\72\ and that those states--and other
entities affected by the opt-out--may not have anticipated that this
proceeding would call into question those broad prohibitions. Given the
importance of these issues, which affect both federal and state
regulatory interests,\73\ we believe that the better course is to
provide them full consideration through the Notice of Inquiry (NOI)
issued contemporaneously with Order No. 2222-A. The record under
development in that proceeding bears on many of those federal and state
interests and will provide an opportunity for all interested views to
be heard and considered by the Commission.\74\ Specifically, the NOI
[[Page 33858]]
states that the Commission is ``exploring whether to revise the
Commission's regulations to remove the [Order No. 719 opt-out],
recognizing that the Commission, when it established the [Order No. 719
opt-out], balanced the interests and concerns of state and local
regulatory authorities with the Commission's goal of removing barriers
to demand response resource participation in RTO/ISO markets.
Circumstances may have changed in the years since the issuance of Order
Nos. 719 and 719-A, such that the balance reflected in those orders
adopting the [Order No. 719 opt-out] may have shifted and the RTO/ISO
market rules reflecting the [Order No. 719 opt-out] may no longer be
just and reasonable.'' \75\ To ensure an adequate opportunity for
interested entities to comment on the Order No. 719 opt-out in light of
our decision to set aside Order No. 2222-A in part, concurrently with
this decision, the Commission is issuing a notice extending the comment
periods in Docket No. RM21-14-000.\76\
---------------------------------------------------------------------------
\72\ See, e.g., North Carolina Commission Request for Rehearing
at 2-3 (quoting 2010 North Carolina Commission decision ordering
that ``under North Carolina law and its traditional regulatory
structure, Dominion's retail customers cannot participate in PJM's
wholesale markets through its demand response programs individually
or through aggregation by a third party not regulated by the
Commission''); Southern Regulators Request for Rehearing at 11 n.33
(citing Notice of Intent of Entergy Mississippi, LLC to Change Rates
by Filing Market Valued Demand Response Rider, 2019 WL 5212152, at
*1 (Miss. Pub. Serv. Comm'n Sept. 10, 2019) (``The Commission
further finds that [Market Valued Demand Response] Schedule MVDR-1
is the only vehicle through which end-use retail customers and/or
[aggregators of retail customers] will be permitted to participate
as DR resources in the MISO wholesale market. Entergy Mississippi
will be the sole Market Participant [ ] in MISO for all DR resources
provided by Participants in [Entergy Mississippi's] service
territory.'')).
\73\ Compare Order No. 2222-A, 174 FERC ] 61,197 (Christie,
Comm'r, dissenting at P 6) (``Providing such flexibility to the
states and other RERRAs [to fully opt-out] would allow them to
manage the deployment of behind-the-meter [distributed energy
resources] in ways necessary to meet their own unique
challenges.''); NARUC Request for Rehearing at 6-7 (arguing that the
Commission in Order No. 2222-A took away the authority of those
states that had regulations that applied to wholesale market
participation of demand response aggregations on the distribution
system or behind the meter); with Order No. 2222-A, 174 FERC ]
61,197 at P 23 (``find[ing] that extending the Order No. 719 opt-out
to demand response resources in heterogeneous distributed energy
resource aggregations would undermine the potential of Order No.
2222 to break down barriers to competition'').
\74\ For example, the Commission in the NOI asked: ``What are
the potential benefits of removing the [Order No. 719 opt-out],
including any benefits not considered by the Commission in Order
Nos. 719 and 719-A, and considering any changed circumstances that
may be relevant?'' Participation of Aggregators of Retail Demand
Response Customers in Markets Operated by Regional Transmission
Organizations and Independent System Operators, 86 FR 15933 (Mar.
25, 2021), 174 FERC ] 61,198, at P 24 (2021) (question five)
(emphasis added); see id. P 25 (question 9) (``To what extent has
the [Order No. 719 opt-out] prevented interference with the
operation of existing retail demand response programs, or avoided
placing an undue burden on state and local retail regulatory
entities, as noted in Order No. 719?''); id. P 24 (question 6)
(``What are the potential benefits of creating more consistency
between the participation models for [aggregators of retail
customers] and distributed energy resource aggregators by removing
the [Order No. 719 opt-out]? In light of market participation
opportunities for energy efficiency resources, electric storage
resources, and distributed energy resource aggregations, would
eliminating the [Order No. 719 opt-out] established in Order Nos.
719 and 719-A enhance clarity for market participants and prevent
disputes regarding the eligibility of resource aggregations to
participate in wholesale markets?''); id. (question 8) (``Is there
any other evidence to suggest that RTO/ISO market rules reflecting
the [Order No. 719 opt-out] are no longer just and reasonable?'').
\75\ Id. P 21.
\76\ Notice of Extension of Time for Filing Initial and Reply
Comments, Participation of Aggregators of Retail Demand Response
Customers in Markets Operated by Regional Transmission Organizations
and Independent System Operators, Docket No. RM21-14-000 (June 17,
2021) (extending time to and including July 23, 2021 to file initial
comments, and to and including August 23, 2021 to file reply
comments).
---------------------------------------------------------------------------
29. Because we set aside our prior decision in Order No. 2222-A to
not extend the Order No. 719 opt-out to demand response resources that
participate in heterogeneous distributed energy resource aggregations,
we find that, as the Commission stated in Order No. 2222, ``the
participation of demand response in distributed energy resource
aggregations is subject to the opt-out and opt-in requirements of Order
Nos. 719 and 719-A. Therefore, if the relevant electric retail
regulatory authority where a demand response resource is located has
either chosen to opt out or has not opted in [pursuant to Order Nos.
719 and 719-A], then the demand response resource may not participate
in a distributed energy resource aggregation.'' \77\
---------------------------------------------------------------------------
\77\ Order No. 2222, 172 FERC ] 61,247 at P 145.
---------------------------------------------------------------------------
B. Definition of Demand Response for Purposes of Applying the Order No.
719 Opt-Out to Heterogeneous Distributed Energy Resource Aggregations
30. Order No. 2222 requires each RTO/ISO to revise its tariff to
allow market participation by heterogeneous distributed energy resource
aggregations.\78\ The Commission found that requiring each RTO/ISO to
allow heterogeneous aggregations will further enhance competition in
RTO/ISO markets by ensuring that complementary resources, including
those with different physical and operational characteristics, can meet
qualification and performance requirements such as minimum run times,
which will help ensure that these markets produce just and reasonable
rates.
---------------------------------------------------------------------------
\78\ Id. P 142.
---------------------------------------------------------------------------
31. In Order No. 2222-A, for purposes of applying the opt-out, the
Commission clarified the definition of heterogeneous aggregations as
``those that are made up of different types of resources including
demand response as opposed to those made up solely of demand
response.'' \79\ The Commission found that ``[t]he opt-out will
continue to apply to aggregations made up solely of resources that
participate as demand response resources, consistent with [its]
regulations'' (i.e., consistent with the opt-out requirements of Order
No. 719). The Commission clarified that, ``if an individual distributed
energy resource can be configured to engage in either demand response
or injection of energy onto the grid to make wholesale sales (e.g., a
behind-the-meter generator), it may choose to participate in the
wholesale markets by reducing a customer's metered load on the grid
from the customer's expected consumption (i.e., as a demand response
resource subject to Order No. 719) or it may choose to participate by
injecting energy onto the grid to make wholesale sales (i.e., as a
different type of distributed energy resource).'' \80\ The Commission
stated that, ``if a distributed energy resource aggregation is composed
solely of resources that participate as demand response resources, then
the Order No. 719 opt-out would apply to that aggregation.'' But, the
Commission stated, ``if a distributed energy resource aggregation
contains any resources that participate as another type of distributed
energy resource, then the Order No. 719 opt-out would not apply to that
aggregation.''
---------------------------------------------------------------------------
\79\ Order No. 2222-A, 174 FERC ] 61,197 at P 22.
\80\ Id. P 29.
---------------------------------------------------------------------------
a. Request for Clarification
32. Voltus requests clarification that demand response paired with
a behind-the-meter distributed energy resource constitutes a
heterogeneous distributed energy resource aggregation not subject to
the Order No. 719 opt-out.\81\ Voltus argues that the Commission stated
that resources ``made up solely of demand response'' are subject to the
opt-out. Voltus maintains that the Commission could have easily stated
that demand response paired with behind-the-meter distributed energy
resources to reduce load is a demand response resource subject to the
opt-out, but it did not draw this distinction.\82\
---------------------------------------------------------------------------
\81\ Voltus Request for Clarification at 1, 4.
\82\ Id. at 5.
---------------------------------------------------------------------------
33. Voltus argues that clarification is necessary because paragraph
29 of Order No. 2222-A has caused MISO to propose that an aggregation
of demand response using behind-the-meter generation and/or storage to
reduce load would be subject to the Order No. 719 opt-out.\83\ Voltus
argues that this conclusion is based on an overly broad reading of a
single paragraph, which draws no distinction regarding whether a
distributed energy resource acts to reduce load. Voltus maintains that
it would be needlessly complicated if a resource could evade the opt-
out because it is configured to inject but never actually does.\84\
---------------------------------------------------------------------------
\83\ Id. at 1, 4, 5.
\84\ Id. at 5.
---------------------------------------------------------------------------
34. Voltus argues that classifying demand response paired with
behind-the-meter resources as a heterogeneous aggregation is consistent
with AEE/AEMA's request for clarification that a behind-the-meter
distributed energy resource used to serve onsite load should be paid at
the locational marginal price (LMP), as required by Order No. 745.
Voltus argues that LMP payments are proper because Order No. 2222-A did
not change Order No. 745's payment structure for resources that reduce
load to the bulk power system.\85\
---------------------------------------------------------------------------
\85\ Id. at 6.
---------------------------------------------------------------------------
b. Commission Determination
35. Because we set aside the Commission's decision in Order No.
2222-A to decline to extend the Order No. 719 opt-out to heterogeneous
distributed energy resource aggregations, we find that Voltus's request
for clarification is largely moot.
36. Nevertheless, with respect to potential confusion underlying
Voltus's request for clarification, we note that the Commission has
stated previously that load reductions in demand response programs can
be facilitated by a variety of technologies and still constitute demand
response.\86\ Thus, we clarify
[[Page 33859]]
that a behind-the-meter resource that is solely used to facilitate
demand response, i.e., deployed solely to reduce customer load from
expected consumption, would itself be considered a demand response
resource.\87\
---------------------------------------------------------------------------
\86\ See, e.g., Demand Response Supporters v. N.Y. Indep. Sys.
Operator, Inc., 155 FERC ] 61,151, at P 13 (2016) (``[A] reduction
in metered load on the grid, even a reduction facilitated by behind-
the-meter generation, is still a reduction and thus is appropriately
considered demand response as defined in section 35.28(d)(4).'');
Demand Response Compensation in Organized Wholesale Energy Markets,
Order No. 745, 76 FR 16658 (Mar. 24, 2011), 134 FERC ] 61,187, order
on reh'g and clarification, Order No. 745-A, 137 FERC ] 61,215, at P
66 (2011), reh'g denied, Order No. 745-B, 138 FERC ] 61,148 (2012),
vacated sub nom. Elec. Power Supply Ass'n v. FERC, 753 F.3d 216
(D.C. Cir. 2014), rev'd & remanded sub nom. EPSA, 136 S. Ct. 760
(``[T]he manner in which a customer is able to produce such a load
reduction from its validly established baseline (whether by shifting
production, using internal generation, consuming less electricity,
or other means) does not change the effect or value of the reduction
to the wholesale grid.'').
\87\ See 18 CFR 35.28(b)(4).
---------------------------------------------------------------------------
C. Double Counting and Compensation for Behind-the-Meter Distributed
Energy Resources That Reduce Load
37. In Order No. 2222, the Commission clarified that the
requirements in Order No. 745 would apply to demand response resources
participating in heterogeneous aggregations.\88\ The Commission also
stated that ``this final rule does not affect existing demand response
rules.'' \89\ In Order No. 2222-A, the Commission stated that ensuring
that demand response resources can combine with other forms of
distributed energy resources has the potential to increase both the
number and the variety of distributed energy resource aggregations,
thereby enhancing competition and furthering its mandate to ensure that
Commission-jurisdictional rates are just and reasonable.\90\
---------------------------------------------------------------------------
\88\ Order No. 2222, 172 FERC ] 61,247 at P 145. In Order No.
2222, the Commission stated that ``[d]emand response means a
reduction in the consumption of electric energy by customers from
their expected consumption in response to an increase in the price
of electric energy or to incentive payments designed to induce lower
consumption of electric energy.'' Id. P 2 n.8 (citing 18 CFR
35.28(b)(4)).
\89\ Id. P 118.
\90\ Order No. 2222-A, 174 FERC ] 61,197 at P 25 (citing 16
U.S.C. 824e).
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38. With respect to double counting, the Commission in Order No.
2222 required each RTO/ISO to include any appropriate restrictions on
distributed energy resource participation in RTO/ISO markets through
distributed energy resource aggregations, if narrowly designed to avoid
counting more than once the services provided by distributed energy
resources in RTO/ISO markets.\91\ The Commission stated that, for
instance, if a distributed energy resource is offered into an RTO/ISO
market and is not added back to a utility's or other load serving
entity's load profile, then that resource will be double counted as
both load reduction and a supply resource.\92\ In Order No. 2222-A, the
Commission clarified that, when the Commission stated that ``if a
distributed energy resource is offered into an RTO/ISO market and is
not added back to a utility's or other load serving entity's load
profile, then that resource will be double counted as both load
reduction and a supply resource,'' \93\ the Commission was indicating
that, for planning purposes, double counting of services would occur if
the same distributed energy resource reduces the amount of a service
that an RTO/ISO procures on a forward-looking basis in a certain time
period while also acting as a provider of that same service in that
same delivery period.
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\91\ Order No. 2222, 172 FERC ] 61,247 at PP 160-161.
\92\ Id. P 161.
\93\ Order No. 2222-A, 174 FERC ] 61,197 at P 63 (citing Order
No. 2222, 172 FERC ] 61,247 at P 161).
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a. Request for Clarification or Rehearing
39. AEE/AEMA seek clarification--or, in the alternative,
rehearing--that behind-the-meter distributed energy resources used to
serve onsite load, therefore reducing power consumption from the bulk
power system, should be compensated at full locational marginal price
(LMP) in compliance with Order No. 745 with no need to eliminate retail
savings generated by the distributed energy resource, and that payment
of full LMP to behind-the-meter distributed energy resources does not
constitute double counting.\94\ AEE/AEMA ask the Commission to confirm
that double counting does not occur when a distributed energy resource
participating in an aggregation is compensated for acting as a provider
of a service, whether procured on a forward-looking basis or in real-
time, and reduces an end-use customer's load on the bulk power system,
resulting in retail savings.\95\
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\94\ AEE/AEMA Request for Clarification at 2-3, 5-6.
\95\ Id. at 2, 5.
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40. AEE/AEMA maintain that the Supreme Court in EPSA held that the
Commission has authority to authorize RTOs/ISOs to pay demand response
resources full LMP.\96\ AEE/AEMA contend that the Commission has
clarified that payment of full LMP to demand response resources does
not constitute double counting--regardless of the existence of behind-
the-meter distributed energy resources or other manner of load
reduction to the bulk power system.\97\ AEE/AEMA argue that the
principles of Order No. 745 apply to all reductions in load from the
perspective of the bulk power system, regardless of the method or
methods used to achieve that reduction, even though Order No. 2222
defined demand response resources more narrowly as reductions to usage
by a customer.\98\
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\96\ Id. at 3-4 (citing EPSA, 136 S. Ct. 760).
\97\ Id. at 4 (citing Order No. 745, 134 FERC ] 61,187 at PP 64,
66).
\98\ Id. at 5 (citing Order No. 745-A, 137 FERC ] 61,215 at P
66; Order No. 2222, 172 FERC ] 61,247 at P 2 n.8).
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41. AEE/AEMA state that their members are encountering continued
confusion in ongoing RTO/ISO stakeholder processes regarding the double
counting restrictions in Order No. 2222, specifically regarding
compensation for wholesale market services provided by
aggregations.\99\ AEE/AEMA argue that, absent clarification, RTO/ISO
compliance submissions may not fully comply with Order Nos. 745 and
2222-A and may result in significant stakeholder discussions that could
delay implementation of new participation rules and deployment of
distributed energy resources.\100\ AEE/AEMA assert that Order No. 2222
proposals that pay demand response resources less than full LMP would
not enhance competition or ensure just and reasonable rates.\101\
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\99\ Id. at 2, 6.
\100\ Id. at 6.
\101\ Id.
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b. Commission Determination
42. We grant, in part, AEE/AEMA's request for clarification. As an
initial matter, we disagree with AEE/AEMA's claim that Order No. 2222
modified the definition of demand response. In Order Nos. 745 and 2222,
the Commission cited to the same definition of demand response
contained in the Commission's regulations.\102\ Further, we disagree
with AEE/AEMA's suggestion that all reductions in load from the
perspective of the bulk power system should be compensated consistent
with Order No. 745. Only those reductions that meet the definition of
demand response in the Commission's regulations and are used to reduce
customer load from a validly established baseline pursuant to Order
Nos. 745 and 745-A must be compensated consistent with those
orders.\103\
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\102\ Order No. 745, 134 FERC ] 61,187 at P 2 n.2; Order No.
2222, 172 FERC ] 61,247 at P 2 n.8 (citing 18 CFR 35.28(b)(4))
(``Demand response means a reduction in the consumption of electric
energy by customers from their expected consumption in response to
an increase in the price of electric energy or to incentive payments
designed to induce lower consumption of electric energy.'').
\103\ See supra P 36.
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43. We clarify that payment of full LMP in the energy market to
behind-the-
[[Page 33860]]
meter distributed energy resources participating as demand response
resources in distributed energy resource aggregations does not
constitute double counting, so long as the requirements of Order No.
745, including the net benefits test, are satisfied.\104\ Order No.
2222 provided that the requirements of Order No. 745 apply to demand
response resources participating in heterogeneous aggregations.\105\ In
Order No. 745, the Commission found that when a demand response
resource is participating in an RTO/ISO market and dispatch of that
demand response resource is cost-effective as determined by the net
benefits test, that demand response resource must be compensated in the
energy market at the LMP.\106\ Accordingly, in circumstances in which
the net benefits test is satisfied, paying LMP to behind-the-meter
distributed energy resources participating as demand response resources
in distributed energy resource aggregations, without reflecting the
savings load realized from not having to purchase electricity, does not
reflect a double payment.\107\ We will evaluate, on compliance, any
proposed distributed energy resource aggregation compensation rules
regarding demand response for consistency with the requirements of
Order No. 745. However, with respect to compensation issues beyond the
scope of Order No. 745, such as if a behind-the-meter resource
participates as another type of distributed energy resource, we will
not prejudge RTO/ISO proposals but rather evaluate them on compliance.
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\104\ See Order No. 2222, 172 FERC ] 61,247 at P 145.
\105\ Id.
\106\ Order No. 745-A, 137 FERC ] 61,215 at P 64 (citing Order
No. 745, 134 FERC ] 61,187 at P 61).
\107\ See id.
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44. With respect to the participation of demand response resources
in distributed energy resource aggregations, we clarify that, if an
individual distributed energy resource is a behind-the-meter generator,
it may participate within a distributed energy resource aggregation as
a demand response resource or as a different type of distributed energy
resource. If the distributed energy resource participates as demand
response, the requirements in Order No. 745 would apply, and the RTOs/
ISOs are required to allow that distributed energy resource to
aggregate with other types of distributed energy resources in a
heterogeneous distributed energy resource aggregation.\108\ If the
behind-the-meter resource participates as another type of distributed
energy resource (i.e., not as a demand response resource), the
requirements in Order No. 745 would not apply.
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\108\ See Order No. 2222, 172 FERC ] 61,247 at P 142 (requiring
RTOs/ISOs to allow heterogeneous DER aggregations); id. P 145
(clarifying that the requirements in Order No. 745 apply to demand
response resources participating in heterogeneous aggregations).
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45. We reiterate, however, that we will evaluate each RTO's/ISO's
``proposal submitted on compliance to determine whether it meets the
goals of this final rule to allow distributed energy resources to
provide all services that they are technically capable of providing
through aggregation,'' \109\ and accordingly, whether it appropriately
compensates distributed energy resources for providing such services.
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\109\ Order No. 2222, 172 FERC ] 61,247 at P 130.
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III. Information Collection Statement
46. The burden estimates have not changed from the final rule.
IV. Regulatory Flexibility Act
47. The Regulatory Flexibility Act of 1980 (RFA) \110\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
Pursuant to section 605(b) of the RFA, we still conclude that this rule
will not have a significant economic impact on a substantial number of
small entities.
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\110\ 5 U.S.C. 601-612.
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V. Document Availability
48. 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). At
this time, the Commission has suspended access to the Commission's
Public Reference Room due to the President's March 13, 2020
proclamation declaring a National Emergency concerning the Novel
Coronavirus Disease (COVID-19).
49. From the Commission's Home Page on the internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
50. User assistance is available for eLibrary and the Commission's
website during normal business hours from FERC 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].
VI. Effective Date and Congressional Notification
51. This rule is effective August 27, 2021.
By the Commission.
Commissioner Chatterjee is concurring with a separate statement
attached.
Commissioner Danly is concurring with a separate statement
attached.
Commissioner Christie is concurring in part and dissenting in part
with a separate statement attached.
Issued: June 17, 2021.
Debbie-Anne A. Reese,
Deputy Secretary.
Department of Energy
Federal Energy Regulatory Commission
Participation of Distributed Energy Resource Aggregations in Markets
Operated by Regional Transmission Organizations and Independent System
Operators
Docket No. RM18-9-003
CHATTERJEE, Commissioner, concurring:
1. I concur with today's order because it continues to find that
the Commission was under no legal obligation to provide the Order No.
719 opt-out.\1\
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\1\ Participation of Distributed Energy Resource Aggregations in
Markets Operated by Regional Transmission Organizations and
Independent System Operators, Order No. 2222-B, 175 FERC ] 61,227 at
P 27 (2021). See Order No. 2222, 172 FERC ] 61,247 at P 59
(explaining that the Commission was not obligated to provide an opt-
out in Order No. 719 but did so as an exercise of its discretion);
see also NARUC, 964 F.3d at 1187 (``[B]ecause FERC has the exclusive
authority to determine who may participate in the wholesale markets,
the Supremacy Clause . . . requires that [s]tates not interfere.'').
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2. I write separately to reiterate and emphasize my support for
eliminating the Order No. 719 opt-out, which has for years prevented
demand response resources in many states from participating in our
wholesale markets. The outdated Order No. 719 opt-out cannot be
reconciled with the competitive principles underpinning Order No. 2222
and the Commission's statutory responsibility to ensure rates subject
to the Commission's jurisdiction are just and reasonable and not unduly
discriminatory or preferential.\2\ There is no reasonable explanation
as to why the Commission should maintain the Order No. 719 opt-out and
treat demand response resources differently from all other distributed
energy resources.
[[Page 33861]]
Accordingly, to ensure consumers can realize the full benefits of Order
No. 2222 and the wholesale market services demand response resources
can provide, I urge the Commission to press forward to eliminate the
Order No. 719 opt-out once and for all.
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\2\ 16 U.S.C. 824e.
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For these reasons, I respectfully concur.
Neil Chatterjee,
Commissioner.
Department of Energy
Federal Energy Regulatory Commission
Participation of Distributed Energy Resource Aggregations in Markets
Operated by Regional Transmission Organizations and Independent System
Operators
Docket No. RM18-9-003
DANLY, Commissioner, concurring:
1. I agree with the Commission's order today granting rehearing to
extend the states' existing rights to opt-out of wholesale demand
response programs \1\ including demand response resources that
participate in ``heterogeneous distributed energy resource
aggregations.'' \2\ In other words, states can choose to prohibit
demand response resources within their boundaries from participating in
multi-state, wholesale distributed energy resource programs. This order
represents the correct division of authority between state and federal
jurisdiction.
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\1\ See Wholesale Competition in Regions with Organized Electric
Markets, Order No. 719, 125 FERC ] 61,071, at P 155 (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).
\2\ Participation of Distributed Energy Res. Aggregations in
Mkts. Operated by Reg'l Transmission Orgs. & Indep. Sys. Operators,
175 FERC ] 61,227, at P 26 (2021) (Order).
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2. I write separately to highlight that even if the Commission is
correct that it has jurisdiction over distributed energy resource
aggregations--including those ``aggregations'' comprised of a single
resource \3\--the Commission still should have chosen not to exercise
such jurisdiction in Order No. 2222.\4\ This order on rehearing returns
authority over demand response resources--which often are included in
distributed energy resource aggregations--to the states, letting the
states choose whether demand response resources can participate in
wholesale distributed energy resource aggregations. This correctly
preserves the traditional allocation of authority between the
individual states and the federal government.
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\3\ See Participation of Distributed Energy Res. Aggregations in
Mkts. Operated by Reg'l Transmission Orgs. & Indep. Sys. Operators,
Order No. 2222, 85 FR 67,094 (Oct. 21, 2020), 172 FERC ] 61,247, at
P 1 n.1 (2020), corrected, 85 FR 68,450 (Oct. 29, 2020), order on
reh'g, Order No. 2222-A, 174 FERC ] 61,197 (2021) (Danly, Comm'r,
dissenting) (discussing single resource ``aggregations''); 18 CFR
35.28(b)(10) (2020).
\4\ See Order, 175 FERC ] 61,227 at P 27 (discussing case law on
jurisdiction).
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For these reasons, I respectfully concur.
James P. Danly,
Commissioner.
Department of Energy
Federal Energy Regulatory Commission
Participation of Distributed Energy Resource Aggregations in Markets
Operated by Regional Transmission Organizations and Independent System
Operators
Docket No. RM18-9-003
CHRISTIE, Commissioner, concurring in part and dissenting in part:
1. I concur with the first sentence of Paragraph 26 and other
provisions of the order which set ``aside our prior decision [in Order
No. 2222-A] not to extend the Order No. 719 opt-out to demand response
resources that participate in heterogeneous distributed energy resource
aggregations . . . .'' \1\
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\1\ Participation of Distributed Energy Resource Aggregations in
Markets Operated by Regional Transmission Organizations and
Independent System Operators, Order No. 2222, 85 FR 67094 (Oct. 1,
2020), 172 FERC ] 61,247 (2020), corrected, 85 FR 68450 (Oct. 29,
2020), order on reh'g, Order No. 2222-A, 174 FERC 61,197 (2021),
order on reh'g and clarification, Order No. 2222-B, 175 FERC ]
61,227, at P 26 (2021).
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2. As the second sentence in Paragraph 26 and other provisions in
today's order indicate, however, there is no decision affirmatively to
preserve those Order No. 719 opt-out provisions; \2\ on the contrary,
the prospect of ultimately removing even these opt-out provisions is
very much alive as a result of the NOI proceeding in Docket No. RM21-
14-000.\3\
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\2\ Order No. 2222-B at P 26.
\3\ Participation of Aggregators of Retail Demand Response
Customers in Markets Operated by Regional Transmission Organizations
and Independent System Operators, Notice of Inquiry, 174 FERC ]
61,198 (2021) (NOI); see also Order No. 2222-B at P 28.
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3. Beyond the parts of this order that restore, at least
temporarily, those opt-out provisions, I dissent from the remainder of
the order, because I would have voted against Order No. 2222 had I been
a member of the Commission at that time and I did vote against Order
No. 2222-A. As I said in my dissent to the latter:
Today the majority . . . sides against the consumers who for years
to come will almost surely pay billions of dollars for grid
expenditures likely to be rate-based in the name of ``Order 2222
compliance.''
. . .
Sadly, instead of making the states, municipal and public-power
authorities and electric co-operatives truly equal partners in managing
the timing and conditions of deployment of behind-the-meter DERs in
ways that are sensitive to local needs and challenges--both technical
and economic--today's order denies them any meaningful control by
prohibiting any opt-out or opt-in options except in relatively tiny
circumstances. This order--and its predecessor--intentionally seize
from the states and other authorities their historic authority to
balance the competing interests of deploying new technologies while
maintaining grid reliability and protecting consumers from unaffordable
costs . . . .\4\
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\4\ Order No. 2222-A (Christie, Comm'r, dissenting at PP 1, 3
(emphasis in original) (footnotes omitted) (available at https://www.ferc.gov/news-events/news/item-e-1-commissioner-mark-c-christie-dissent-regarding-participation-distributed)).
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4. To ameliorate at least some of the damaging effects caused by
Order Nos. 2222 and 2222-A, I would authorize states and other RERRAs
the right to exercise an opt-out from the requirements of those orders,
if not permanently then at least for some period of years to enable
them better to prepare for the impacts on retail customers and
distribution grids they now face.
For these reasons, I respectfully concur in part and dissent in
part.
Mark C. Christie,
Commissioner.
[FR Doc. 2021-13442 Filed 6-25-21; 8:45 am]
BILLING CODE 6717-01-P
