FERC Open Commission Meeting September 17, 2020
Good morning Mr. Chairman and Commissioners.
Item E-1 is a draft final rule that revises the Commission’s regulations to remove barriers to the participation of distributed energy resource (or DER) aggregations in the Regional Transmission Organization and Independent System Operator markets (RTO/ISO markets). This draft final rule largely adopts the proposals in the November 2016 Notice of Proposed Rulemaking issued in Docket Nos. RM16-23-000 and AD16-20-000, but with certain modifications. The draft final rule reflects input from the April 2018 Commission technical conference, post-technical conference comments, and responses to the Commission’s September 2019 Data Requests to RTOs/ISOs on policies and procedures that affect the interconnection of DERs.
The draft final rule finds that existing RTO/ISO market rules are unjust and unreasonable in light of barriers that they present to the participation of DER aggregations in the RTO/ISO markets. As discussed in the draft final rule, DERs tend to be too small to meet the minimum size requirements to participate in the RTO/ISO markets on a stand-alone basis, and may be unable to meet certain qualification and performance requirements because of the operational constraints they may have as small resources. Existing participation models for aggregated resources, including DERs, often require those resources to participate in the RTO/ISO markets as demand response, which limits the services that they are eligible to provide to the markets. Such conditions create barriers to the participation of DERs that are technically capable of providing some services on their own or through aggregation. This restriction on competition can reduce the efficiency of the RTO/ISO markets, potentially leading an RTO/ISO to dispatch more expensive resources to meet its system needs. By removing barriers to the participation of such resource aggregations in the RTO/ISO markets, this draft final rule will enhance competition and, in turn, help to ensure that the RTO/ISO markets produce just and reasonable rates.
This draft final rule requires each RTO/ISO to revise its tariff to ensure that its market rules facilitate the participation of DER aggregations.
This draft final rule defines a DER as any resource located on the distribution system, any subsystem thereof or behind a customer meter and defines a DER aggregator as the entity that aggregates one or more DERs for purposes of participation in the capacity, energy and/or ancillary service markets of the RTOs and/or ISOs.
Each RTO/ISO must develop tariff provisions that allow DER aggregations to participate directly in RTO/ISO markets and establish DER aggregators as a type of market participant that can register DER aggregations under one or more participation models that accommodate their physical and operational characteristics.
The tariff provisions must also establish a minimum size requirement for DER aggregations that does not exceed 100 kW. And the tariff provisions must address various technical and operational issues, such as locational requirements, bidding parameters, metering and telemetry, coordination between relevant parties and authorities, modifications to aggregations, and market participation agreements.
This draft final rule declines to include a mechanism for all relevant electric retail regulatory authorities to prohibit all DERs from participating in the RTO/ISO markets through DER aggregations, otherwise known as an opt-out. However, the draft final rule recognizes the potentially significant indirect costs borne by smaller entities to facilitate DER participation in wholesale markets. To address this concern, the draft final rule establishes an opt-in mechanism for small utilities, similar to the opt-in provided in Order No. 719-A with respect to demand response. Specifically, the final rule requires that an RTO/ISO must not accept bids from a DER aggregator if its aggregation includes DERs that are customers of utilities that distributed 4 million megawatt-hours or less in the previous fiscal year, unless the relevant electric retail regulatory authority permits such customers to be bid into RTO/ISO markets by a DER aggregator.
Additionally, the Commission in this draft final rule declines to exercise jurisdiction over the interconnection of a DER to a distribution facility when that resource interconnects for the purpose of participating in RTO/ISO markets exclusively through a DER aggregation. Therefore, the draft final rule does not require standard Commission-jurisdictional interconnection procedures and agreements or wholesale distribution tariffs in connection with DER aggregations. Rather, state or local law would govern distribution-level interconnections for DERs participating in RTO/ISO markets exclusively through an aggregation.
The changes in this draft final rule will become effective 60 days after publication in the Federal Register. This draft final rule requires that each RTO/ISO file the tariff changes needed to implement the requirements of the draft final rule within 270 days of the publication date of this draft final rule in the Federal Register.
We are happy to answer any questions. Thank you.