FERC Issues Final Rule on Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators

Energy StorageThe Federal Energy Regulatory Commission (FERC) issued a Final Rule (the Final Rule) on February 15, 2018 (Docket Nos. RM16-23-000; AD16-20-000; Order No. 841) pursuant to which FERC amended its regulations under the Federal Power Act to remove barriers to the participation of electric storage resources in the capacity, energy, and ancillary service markets operated by Regional Transmission Organizations (RTO) and Independent System Operators (ISO) (RTO/ISO markets). Specifically, FERC has required (a) each RTO and ISO to revise its tariff to establish a participation model consisting of market rules that, recognizing the physical and operational characteristics of electric storage resources, facilitates their participation in the RTO/ISO markets and (b) that the participation model must (1) ensure that a resource using the participation model is eligible to provide all capacity, energy, and ancillary services that the resource is technically capable of providing in the RTO/ISO markets; (2) ensure that a resource using the participation model can be dispatched and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer consistent with existing market rules that govern when a resource can set the wholesale price; (3) account for the physical and operational characteristics of electric storage resources through bidding parameters or other means; and (4) establish a minimum size requirement for participation in the RTO/ISO markets that does not exceed 100 kW. FERC has stated that it is taking this action to ensure that RTO/ISO tariffs are just and reasonable.  The Final Rule also requires that the sale of electric energy from the RTO or ISO market to an electric storage resource that the resource then resells back to those markets must be at the wholesale locational marginal price. FERC has stated that with respect to compliance, the Final Rule responds to comments requesting additional time for compliance and requires that each RTO and ISO file any tariff changes needed to implement the requirements of the Final Rule within 270 days of its publication in the Federal Register. The Final Rule further states, however, that FERC will allow each RTO or ISO a further 365 days from that date to implement the tariff provisions.

In the related Notice of Proposed Rulemaking (NOPR), FERC had also proposed reforms related to distributed energy resource aggregations. While FERC continues to believe that removing barriers to distributed energy resource aggregations in the RTO/ISO markets is important, it has determined that more information is needed with respect to those proposals; and therefore, has not taken final action on the proposed distributed energy resource aggregation reforms. Instead, FERC is convening a technical conference on April 10th and 11th 2018. FERC intends to use the technical conference to gather additional information to help FERC determine what action to take on the distributed energy resource aggregation reforms proposed in the NOPR. In addition to discussing the proposed reforms, FERC will use the technical conference as an opportunity to discuss other technical considerations for the bulk power system related to distributed energy resources.

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