Distributed Energy Resources
Press Release

Defer to Local Decision-Making in Aggregating Distributed Energy, Association Tells FERC

Washington D.C., June 26, 2018 — Aggregating distributed energy resources (DERs) like rooftop solar and battery storage could make it easier for public power utilities to meet the demand for electricity more efficiently and economically. Therefore the American Public Power Association (Association) supports efforts by the Federal Energy Regulatory Commission (FERC) to remove barriers to aggregating DERs in wholesale electricity markets operated by regional transmission organizations and independent system operators. However, the Association calls for flexibility and support for local decision-making.

While permitting DERs to participate in the markets, FERC must allow state and local regulators to make decisions that affect their regions to ensure that DER aggregation will not impact the reliability and safety of the distribution grid. Rates must also remain reasonable for all grid users.

“FERC should consider whether rules facilitating DER aggregation will provide benefits to end-use customers. The benefits are not clear,” said John McCaffrey, regulatory counsel for the Association. “While DERs can benefit the grid, their aggregation into wholesale markets presents challenges for public power utilities. Aggregation could increase costs for utilities when they are already grappling with the impact of retail distributed energy, a rapidly evolving resource mix, growth in electric vehicles, and increasingly complex market rules,” he added.

In comments submitted today, the Association recommended that FERC should

  • Defer to the retail regulatory authorities on whether or not DERs should participate in wholesale aggregation programs.
  • At least allow smaller utilities — including most public power utilities – to opt out of allowing participation in wholesale DER aggregation.
  • Not limit the ability of state and local regulators to adopt policies and rates that will allow for the recovery and fair allocation of DER aggregation costs incurred by utilities.
  • Prevent DERs that are participating in a state retail compensation program from also participating in wholesale market aggregation. 
  • Give electric utilities the right to approve or deny the participation of individual DER assets in an aggregation.
  • Allow utilities to override RTO/ISO dispatch instructions for DERs located on their distribution systems to address reliability and operational issues.

The American Public Power Association will continue to work with FERC to ensure that DER aggregation programs yield reliable and affordable power for public power customers.