FERC Issues Final Rule Requiring RTOs to Provide for Participation of Electric Storage Resources in Organized Markets

On February 15, 2018, the Federal Energy Regulatory Commission (“FERC”) issued Order No. 841, Electric Storage in Markets Operated by Regional Transmission Organizations and Independent System Operators. Order No. 841 requires tariff reforms in order to facilitate the participation of electric storage resources in capacity, energy, and ancillary services markets operated by Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”).

After soliciting public input on its Notice of Proposed Rulemaking (“NOPR”), FERC concluded that existing market rules designed for traditional generation resources create barriers to entry for many electric storage resources. Order No. 841 requires each RTO and ISO to propose tariff revisions (the “participation model”) that properly recognize the physical and operational characteristics of electric storage resources, and to allow those resources to participate in organized markets.

Each tariff’s participation model must ensure that a resource using the model: (1) is eligible to provide all capacity, energy, and ancillary services that it is technically capable of providing; (2) can be dispatched and is a price maker in the wholesale market as both a seller and buyer, consistent with existing market rules; (3) accounts for the physical and operational characteristics of electric storage resources through bidding parameters or other means; and, (4) establishes a minimum size requirement, which may not exceed 100 kilowatts. The Final Rule also requires that the sale of electric energy from the wholesale electricity market to an electric storage resource that the resource then resells back to those markets must be at the wholesale locational marginal price.

In its NOPR, FERC also had proposed reforms related to distributed energy resource aggregation. However, in issuing Order No. 841, FERC concluded that it had insufficient information to proceed with those proposed reforms. Instead, the Commission scheduled a Technical Conference in RM18-9-000 for April 10-11, 2018 to gather additional information on distributed energy resource aggregation. This Technical Conference will also provide an opportunity to discuss other impacts of distributed generation on the bulk power system. Attendance is open to all interested persons, but those wishing to participate in the conference must submit a nomination by March 15, 2018.

Order No. 841 will take effect 90 days after publication in the Federal Register. Compliance filings by RTOs and ISOs are due 270 days after the effective date. The RTOs and ISOs then will have an additional 365 days to implement the tariff revisions.

(FERC Docket Nos. RM16-23-000 | RM18-9-000 | AD16-20-000)

For more information on this topic or other energy matters, please contact any of the following attorneys at Jennings, Strouss & Salmon, P.L.C.

Debra Roby – droby@jsslaw.com
Andrea Sarmentero Garzon – asarmentero@jsslaw.com
Joel Greene – jgreene@jsslaw.com
Gerit Hull – ghull@jsslaw.com
Gary Newell – gnewell@jsslaw.com
Alan I. Robbins – arobbins@jsslaw.com
Matt Ross – mross@jsslaw.com
Debbie Swanstrom – dswanstrom@jsslaw.com
Omar Bustami – obustami@jsslaw.com