Electricity Markets
Energy Storage

Association, others file appeal of FERC’s energy storage order

The American Public Power Association joined other power industry groups on July 15 in filing a petition for review with the U.S. Court of Appeals for the DC Circuit, initiating an appeal of the Federal Energy Regulatory Commission’s Order Nos. 841 and 841-A, which address the participation of energy storage resources (ESRs) in markets operated by regional transmission organizations and independent system operators.

The Association was joined on the petition by the National Rural Electric Cooperative Association, the Edison Electric Institute, and American Municipal Power.

Order No. 841, issued in February 2018, adopted rules aimed at removing barriers to the participation of ESRs in wholesale power markets operated by RTOs and ISOs. At the time, several organizations, including the Association, asked FERC to reconsider some aspects of Order No. 841, arguing that FERC was overstepping its jurisdictional authority and encroaching on state and local authority over distribution utilities and networks. The Association also argued that FERC should have given state and local authorities the ability to opt out of allowing ESRs in their jurisdictions from participating in wholesale markets, as the Commission did for demand response aggregation in Order Nos. 719 and 719-A. FERC largely rejected these arguments in Order No. 841-A, issued in May.  These issues will be front and center in the appeal.

“The Association supports having storage resources participate in the wholesale markets,” said Delia Patterson, senior vice president of advocacy and communications and general counsel at the Association. “With these Orders, however, FERC has overstepped its jurisdictional bounds. We cannot stand by while FERC continues to erode state and local authority.”

The National Association of Regulatory Utility Commissioners also filed an appeal with the DC Circuit Court regarding FERC’s energy storage orders. NARUC is seeking an order and judgment that “portions of the FERC Rehearing Order and FERC Order are arbitrary and capricious” and “not in accordance with the law.” In its filing, NARUC also asserts that the orders are beyond FERC’s “jurisdiction, authority or power” and seeks to overturn the regulator’s decision “to deny states the ability to fully manage energy storage resources that are connected to distribution facilities or located behind a retail meter.”

NARUC said it would like to see states and relevant electric retail regulatory authorities have the same ability to manage energy storage resources as they do to manage demand response aggregation.

The Association and other parties filing the petition for review have until Aug. 15 to enumerate the issues they intend to raise on appeal. Under the Federal Power Act, only arguments included in the parties’ requests for rehearing of Order No. 841 may be raised on appeal.

In their March Petition for Rehearing, the Association, the National Rural Electric Cooperative Association, and American Municipal Power said they support FERC’s efforts to reform wholesale markets to facilitate greater participation of energy storage, but they objected that FERC’s final rule “suggests that ESRs located on a distribution system or behind a retail meter may circumvent restrictions under state or local law on retail customers directly purchasing from, or selling into, the wholesale market – actions that are beyond the Commission’s jurisdiction to authorize.”

The petitioners requested that FERC explicitly state that ESR participation in wholesale markets is governed by the rules of the ISOs and RTOs and that ESRs would not be authorized “to violate state or local laws or regulations or contract rights governing retail electric service or the local distribution of electric energy. The petitioners also requested that FERC adopt an opt-in/opt-out mechanism for ESRs as it did for aggregated demand response resources in Order No. 719.

In addition, the petitioners asked FERC to take two further actions. First, they asked that distribution-connected ESRs should be subject not to Order No. 841 but to a separate, but related, proceeding on distributed energy resource (DER) aggregation. And, second, the petitioners asked that the tariff provisions of Order 841 would not become effective for distribution-connected ESRs until FERC issues a final rule on DER aggregation.  FERC declined in Order No. 841-A to delay implementation of its ESR requirements until the DER aggregation rules are finalized.