A Big Day at the FERC Open Meeting
At today's open meeting, the Federal Energy Regulatory Commission (FERC) adopted a new rule that may be particularly helpful for variable energy resources (wind and solar) that, in the past, have been hit with pricey imbalance penalties, and for the transmission providers who have struggled to integrate those resources. The new rule adopted today requires transmission providers to provide generators with the option of scheduling transmission service on 15-minute intervals, rather than the typical 60-minute interval. With the shorter scheduling interval, generators will be able to better mitigate imbalance penalties, and transmission providers should be able to maintain reserves that more closely match the variable generation that is expected to be online. The bottom line--cost savings!
FERC also issued a Notice of Proposed Rulemaking (NOPR) in which FERC proposes to revise its policies governing the sale of ancillary services at market-based rates. FERC also proposes to require transmission providers outside of organized markets (e.g. WECC) to take into account resource speed and accuracy in determining regulation and frequency response reserve requirements. That consideration may help to establish a stated need for fast-acting resources, such as certain energy storage technologies. The NOPR also suggests other regulatory changes that, in part, aim to provide energy storage technologies with better access to providing ancillary services.
We will soon issue full clients alerts on the results of today's open meeting at FERC. If you would like to receive an electronic copy of our Energy Law Alerts, please follow this link: Sign Up - Stoel Rives Energy Law Alerts
FERC Seeks Comments on Ancillary Markets and Energy Storage
On June 16, 2011, the Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) seeking comments on what it described as two separate but related issues, both of which apply to electric energy storage (EES).
First, because FERC is interested in facilitating the development of robust competitive markets to provide ancillary services from all resources types, it seeks comment on “existing restrictions on third-party provision of ancillary services, irrespective of the technologies used for such provision.” In soliciting these comments, FERC noted the growing interest in rate flexibility among sellers of ancillary services, and a desire from those obligated to purchase those services to increase the available supply. Although a variety of resources can provide ancillary services, FERC believes that many are discouraged from doing so by the Commission’s restrictions on market-based pricing coupled with a lack of access to information that could help satisfy the requirements of those policies. Access to information is particularly difficult outside of areas served by RTOs/ISOs, which areas are often with the greatest need for an ancillary services market.
FERC pointedly invites comments on whether it should revise or replace the restriction set forth in Avista Corp., 87 FERC ¶ 61,223, order on reh’g, 89 FERC ¶ 61,136 (1999), which prohibits, absent a study showing lack of market power, third-party market-based sales of ancillary services to transmission providers seeking to meet their ancillary services obligations under the Open Access Transmission Tariff (OATT). Assuming that FERC revises or replaces the Avista restriction to facilitate the provision of ancillary services, it also seeks input on how it should contemporaneously ensure just and reasonable rates. In a related inquiry, the Commission is seeking comments on whether the various cost-based compensation methods for frequency regulation that exist in regions outside of organized markets can be adjusted to address the speed and accuracy issues identified in FERC’s recent Frequency Regulation Notice of Proposed Rulemaking for organized wholesale energy markets. See Frequency Regulation Compensation in the Organized Wholesale Power Markets, 76 FR 11177 (March 1, 2011), Notice of Proposed Rulemaking, FERC States & Regs ¶ 32,672 (2011). The June 16 NOI, when considered in context with this year’s NOPR on Frequency Regulation and last year’s NOI on EES, could signal that a broader rulemaking regarding EES is on the horizon.
Recognizing that “the role of electric storage and other new market entrants play in competitive markets is still evolving,” the Commission seeks comments on whether it should revise “current accounting and reporting requirements as they pertain to the oversight of jurisdictional entities using electric storage technologies” other than pumped storage hydro (for which FERC has established methods of accounting, reporting and rate recovery). Current utility accounting requirements do not appropriately fit EES due to the technology’s abilities to act like generation, transmission, and distribution assets. Accordingly, FERC is soliciting “specific details regarding whether and, if so, how to amend the current accounting and reporting requirements to specifically account for and report energy storage operations and activities.”
The NOI was published in the Federal Register on June 22, 2011, and comments are due sixty (60) days from that date.
Thanks to my colleague Jason Johns for his comments on this posting!
