The Federal Energy Regulatory Commission (FERC) recently sided with the North Carolina Eastern Municipal Power Agency (NCEMPA), allowing the joint action agency to use energy storage devices to reduce demand under a contract between NCEMPA and Duke Energy Progress LLC.
NCEMPA filed a petition for a declaratory order with FERC on Dec. 23, 2019, asking FERC to interpret the fifth restated Full Requirements Power Purchase Agreement (FRPPA) NCEMPA signed with Duke with respect to the use of energy storage as demand side management and demand response tools under the agreement. NCEMPA and Duke were at odds over whether the FRPPA permitted the use of energy storage for these purposes.
NCEMPA had anticipated charging batteries during off-peak periods and discharging the stored energy during peak load periods to reduce the coincident peak hour demands of NCEMPA members. NCEMPA also noted that it and its members would use the discharged energy within their distribution system and would not inject it into Duke’s transmission grid.
Duke disputed NCEMPA’s interpretation of the FRPPA and argued that the proposed use of battery storage would distort or mask the accurate measurement of NCEMPA’s metered coincident peak billing demand and violate the plain meaning of the contract.
Duke also said the FRPPA must be read in context as a full requirements contract, which requires Duke to treat NCEMPA’s load as if it was its own native load for planning purposes.
In the Sept. 17 order (Docket No. EL20-15-000), FERC rejected Duke’s “restrictive interpretation” of the FRPPA.
In general, FERC concluded that NCEMPA’s proposed use of battery storage was consistent with its contractual right to engage in demand side management activities. The Commission observed in this respect that “when used as NCEMPA proposes, battery storage technology is inherently a load-shape modifying device, designed not to reduce a customer’s overall load but to shift the incidence of such load, i.e., to manage the customer’s demands.”
FERC said Duke’s analysis “presumes that battery storage is a form of generation” and Duke’s assertion that NCEMPA can only use certain categories of distributed generation to self serve its load and must purchase all of its remaining requirements ignores the fact that NCEMPA still would be purchasing its full energy requirements from Duke.
FERC also rejected Duke’s arguments that the plain language of the FRPPA requires an actual reduction in consumption as opposed to a shift in the timing of demand through the use of storage. Pointing to the applicable sections of the contract, FERC observed that “The plain language of neither section 9.4 nor section 9.5 refers to reductions in consumption,” but “merely refer to reductions in ‘demands and/or loads.’”
In terms of the scope and function of energy storage, FERC also noted its Order 841 “does not preclude electric storage resources from continuing to participate in demand response programs,” adding, however, that the order is not relevant to the matter at hand because it applies to the role of energy storage in regional transmission organization and independent system operator markets.
NCEMPA also asked FERC for an exemption from the filing fee associated with a petition for a declaratory order.
FERC granted this exemption, citing NCEMPA’s status as a joint action agency under North Carolina law.