The Federal Energy Regulatory Commission on Oct. 17 approved compliance filings submitted by the PJM Interconnection and the Southwest Power Pool in response to a landmark 2018 FERC order that adopted rules aimed at removing barriers to the participation of energy storage resources (ESRs) in wholesale power markets operated by regional transmission organizations and independent system operators.
FERC’s action marks the first two orders implementing Order No. 841, the landmark storage rulemaking aimed at breaking down market barriers to electricity storage.
Enacted in February 2018, Order No. 841 addresses the participation of electric storage resources in the wholesale capacity, energy and ancillary service markets to more effectively integrate ESRs, enhance competition and help ensure that those markets produce just and reasonable rates.
The rule requires each regional transmission organization and independent system operator to revise its tariff to establish a participation model consisting of market rules that recognize the physical and operational characteristics of ESR and facilitate their participation in the wholesale markets they operate.
SPP, PJM compliance filings
FERC’s orders, which were approved at the Commission’s monthly open meeting, address the Order No. 841 compliance filings of SPP and PJM.
FERC found that the two grid operators generally complied with the rule and therefore largely accepted their filings but provided additional directives for further action. The Commission also initiated proceedings under section 206 of the Federal Power Act to address the specific issue of minimum run-time requirements.
FERC found that both SPP’s and PJM’s proposals generally enable ESRs to provide all services they are capable of providing, allow electric storage resources to be compensated for those services in the same manner as other resources, and appropriately recognize the unique physical and operational characteristics of electric storage resources.
FERC also directed both SPP and PJM to submit further compliance filings within 60 days.
Though FERC found that the tariffs for both market operators generally satisfy Order No. 841’s directive allowing ESRs to de-rate their capacity to meet minimum run-time requirements, it also determined that neither market includes in its tariff minimum run-time requirements for resource adequacy and capacity.
Explaining that such requirements affect rates, terms and conditions of service, the Commission instituted 206 proceedings, and directed SPP and PJM to submit tariff provisions reflecting their rules and practices regarding resource adequacy minimum run-time requirements and capacity minimum run-time requirements, respectively, for all resource types.
SPP and PJM must submit these tariff provisions no later than 45 days after the 206 notice is published in the Federal Register.
FERC also established paper hearing procedures to examine PJM’s minimum run-time rules and procedures as applied to capacity storage resources.
Storage has been a priority for FERC Chairman
“Storage has been and remains one of my top priorities,” said FERC Chairman Neil Chatterjee. “It’s an issue I frequently talk about because I firmly believe that storage technologies have the power to transform the grid and this is an area where we can directly benefit consumers through lower costs and enhanced reliability.”
Chatterjee asked FERC staff to provide additional context as to why the orders instituted the Section 206 proceedings and elaborate on any differences between the two proceedings.
“The decisions as to whether an item should be placed in a tariff or in a business practice manual are guided by the Commission’s rule of reason policy,” noted Karin Herzfeld of the FERC Office of the General Counsel – Energy Markets.
Under that policy, provisions that significantly effect rates, terms and conditions of service must be included in a tariff.
FERC’s PJM and SPP orders determined that minimum run-time rules and procedures “for all resources do significantly effect rates, terms and conditions of service,” she said.
“However, unlike other RTOs and ISOs, SPP and PJM’s tariffs don’t include these rules,” Herzfeld said. The orders therefore instituted separate Section 206 proceedings and directed the two grid operators to submit tariff revisions reflecting the rules and practices for minimum run time requirements.
She said the record in the PJM proceeding “also raises concerns that PJM’s application of its minimum run time to capacity storage resources may be unjust, unreasonable, unduly discriminatory or preferential. These same concerns were not raised in the SPP proceeding,” which is why the PJM paper hearing was initiated.
McNamee issues concurrences to orders
FERC Commissioner Bernard McNamee issued concurrences for both orders.
The Commissioner expressed his continuing concern that the Commission exceeded its statutory authority under the Federal Power Act by asserting jurisdiction over electric storage resources interconnecting either to a distribution system or behind-the-meter “and should have, at the very least, provided states the opportunity to opt-out of the participation model” created by Order Nos. 841 and 841-A.
FERC largely upheld storage order in May
FERC on May 16 issued an order in which it largely upheld determinations it made in Order No. 841.
At that time, McNamee raised jurisdictional concerns over FERC’s action, saying he was troubled that Order 841 and the order on rehearing (Order 841-A) “do not fully respect or consider the impact they may have on local distribution systems, the states that regulate those local distributions systems, and local retail customers,” concerns that were previously raised by the American Public Power Association, American Municipal Power and the National Rural Electric Cooperative Association.