On February 15, 2018, the Federal Energy Regulatory Commission (Commission) held its February 2018 open meeting. Among other things, the Commission acted on two major rulemakings and took significant action regarding transmission planning in PJM.
Order No. 841 (Docket Nos. RM16-23-000, AD16-20-000)
The Commission voted 5-0 to approve Order No. 841 to facilitate full participation of electric storage resources in the markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs). The order followed a Notice of Proposed Rulemaking (NOPR) issued by the Commission on November 17, 2016. It has the potential to be a major landmark in the development and proliferation of energy storage technology.
Order No. 841 removes barriers to the participation of electric storage resources in RTO/ISOs’ capacity, energy, and ancillary service markets. An “electric storage resource” is “a resource capable of receiving electric energy from the grid and storing it for later injection of electric energy back to the grid.” Order No. 841 at 29.
The Commission directed each RTO/ISO “to revise its tariffs to establish a participation model consisting of market rules that, recognizing the physical and operational characteristics of electric storage resources, facilitates their participation in the RTO/ISO markets.” Order No. 841 at 3. The participation model must:
- “ensure that a resource using the participation model for electric storage resources is eligible to provide all capacity, energy, and ancillary services that it is technically capable of providing in the RTO/ISO markets;”
- “ensure that a resource using the participation model for electric storage resources can be dispatched and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer consistent with existing market rules that govern when a resource can set the wholesale price;”
- “account for the physical and operational characteristics of electric storage resources through bidding parameters or other means;” and
- “establish a minimum size requirement for participation in the RTO/ISO markets that does not exceed 100 kW.” Order No. 841 at 4.
In addition, the Commission required that each RTO/ISO specify that “the sale of electric energy from the RTO/ISO markets to an electric storage resource that the resource then resells back to those markets must be at the wholesale locational marginal price (LMP).” (Order No. 841 at P 4).
The Commission elected not to adopt reforms proposed in its NOPR to allow “distributed energy resource aggregators” to participate directly in the organized wholesale electric markets. The proposed reforms would have essentially treated such aggregators the same as electric storage resources. The Commission determined that more information is needed before adopting such a measure and will hold a technical conference on April 10 and 11, 2018, to discuss the participation of distributed energy resource aggregations in RTO/ISO markets and, more broadly, the potential effects of distributed energy resources on the bulk power systems. The Commission has posted a Notice of Tech Conference AD18-10 in new Docket No. AD18-10-000.
Each RTO/ISO must file the tariff changes required by Order No. 841 within 270 days of publication of the order in the Federal Register. Each ISO/RTO then has up to a further 365 days from that date to implement the tariff provisions. Order No. 841 at 343.
Order No. 841 was approved with the strong support of all five Commissioners. Chairperson McIntyre stated that by the order
we recognize and we incorporate into official Commission policy the proposition that storage resources should be allowed to participate in our organized markets alongside all other types of resources and that the market can then decide which resources are to be called upon to serve the needs that apply. Our job is not to pick winners and losers among different types of resources, but rather to ensure that the market rules that we oversee allow all resources to participate and compete fairly.
Chairperson McIntyre further noted that “the resilience of our bulk power system is a priority of the Commission, and establishing a playing field where more resources with different attributes can compete in our organized markets will only help to support resilience.”
Commissioner LaFleur referred to electric storage as “like a Swiss Army Knife that can serve customers in multiple ways.”
The Commissioners also looked ahead to the technical conference on distributed energy resource aggregation. Commission LaFleur identified two broad sets of issues to be addressed concerning both how the payment for the services would work (“who pays what to whom for what”) and operational coordination. Commissioner Powelson similarly identified as topics of particular importance “the nexus between wholesale and retail rate structures, operational characteristics and system reliability, and cost allocation.”
Order No. 842 (Docket No. RM16-6-000)
The Commission also voted 5-0 to approve Order No. 842 concerning generating facilities’ provision of primary frequency response as a condition of interconnection, which will be effective 70 days after the publication in the Federal Register. With the exception of certain combined heat and power facilities and nuclear generating facilities, the primary frequency response requirements in Order No. 842 will apply to new generation facilities that execute, or request the unexecuted filing of, a Large Generator Interconnection Agreement (LGIA) or Small Generator Interconnection Agreement (SGIA) after the effective date of the order, along with existing facilities that take action requiring the submission of a new interconnection request that results in the filing of an executed or unexecuted interconnection agreement on or after the effective date of the order. Order No. 842 at 2, 132.
Frequency response “is a measure of an Interconnection’s ability to arrest and stabilize frequency deviations following the sudden loss of generation or load, and is affected by the collective responses of generation and load throughout the Interconnection.” Order No. 842 at 6. Primary frequency response actions “begin within seconds after system frequency changes and are mostly provided by the automatic and autonomous actions (i.e., outside of system operator control) of turbine-governors, while some response is provided by frequency responsive loads.” Order No. 842 at 5. They are “intended to arrest abnormal frequency deviations and ensure that system frequency remains within acceptable bounds.” Order No. 842 at 5.
Pursuant to Order No. 842, the Commission modifies the pro forma LGIA and the pro forma SGIA to require “new large and small generating facilities including both synchronous and non-synchronous, interconnecting through a LGIA or SGIA to install, maintain, and operate equipment capable of providing primary frequency response as a condition of interconnection.” Order No. 842 at 1. The modifications also establish “certain uniform minimum operating requirements in the pro forma LGIA and pro forma SGIA, including maximum droop and deadband parameters and provisions for timely and sustained response.” Order No. 842 at 1.
Each public utility transmission provider that has a pro forma LGIA and/or pro forma SGIA within its OATT must submit a compliance filing within 70 days following publication of the order in the Federal Register. Order No. 842 at 253.
Chairperson McIntyre indicated his support for the order; he believes it will “encourage the provision of an essential service that will help support the reliability and resilience of our bulk power system in the face of an evolving generation resource mix.” In expressing her support for the order and the determination not to require compensation or to direct a mandatory NERC standard, Commission LaFleur noted that “the Commission should continue to monitor the impact of today’s rule on frequency response performance and consider additional actions to ensure adequate frequency response if and as appropriate.” Finally, in response to a question by Commissioner Chatterjee, Commission staff confirmed that, while the order establishes a uniform rule, it provides a few different mechanisms for transmission providers to propose variances to address regional differences. See Order No. 842 at 234-235.
PJM Transmission Planning (Docket Nos. EL16-71-000, ER17-179-000)
As part of its consent agenda, the Commission approved an order finding that the PJM Transmission Owners’ practices in planning Supplemental Projects are inconsistent with Order No. 890, particularly with Order No. 890’s coordination and transparency principles. The Commission directed revisions to the PJM Operating Agreement and PJM OATT to address compliance with the Order No. 890 requirements.
In her opening remarks, Commissioner LaFleur addressed this proceeding, noting that “I’ve frequently spoken about my concern about the amount of transmission planning in various regions around the country; that is, the amount of transmission spend that is being directed to categories that are not subject to competitive bidding under Order 1000 and in some cases subject to very little transmission planning just done privately by the transmission owners.” Commission LaFleur stated that “it’s obviously our responsibility to make sure that if customers are paying for transmission, it’s needed; that regional needs are considered; that things aren’t done individually; and that the process is fair and transparent; and I think today’s order is part of that responsibility.”