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State of California / Public Utilities CommissionSan Francisco
M E M O R A N D U M
Date:February 3, 2017
To:The Commissions
(Meeting of February9, 2017)
From:Rachel McMahon, Energy Division
Christopher Clay, Legal Division
Subject:Staff request for authority to submit comments in Federal Energy Regulatory Commission Notice of Proposed Rulemaking, Electric Storage Participation in Regional Transmission Organizations and Independent System Operators, Docket Nos. RM16-23-000;
AD16-20-000.
Energy Division and Legal Division staff (collectively, Staff) seek Commission authority to file comments at the Federal Energy Regulatory Commission in the electric storage rulemaking referenced above.
BACKGROUND
On November 17, 2016 the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking proposing reforms to remove barriers to the participation of electric storage resources[1] in the organized wholesale electric markets run by regional transmission organizations and independent system operators (RTOs and ISOs). In addition, the FERC is proposing reforms to eliminate barriers to the participation of distributed energy resource aggregations in RTO and ISO markets.
In the NOPR, the FERC proposes requiring the RTOs and ISOs to amend their tariffs to incorporate market rules, or participation models, that recognize the unique physical and operational characteristics of electric storage resources thus allowing them to participate more fully in the wholesale electric markets. According to FERC, currently electric storage resources are subject to a patchwork of market rules that limit the types of resources that can participate and the services that they can provide. Many of the rules were developed when traditional generation resources were the only resources participating in the RTO and ISO markets.
FERC is also proposing to require RTOs and ISOs to amend their tariffs to allow distributed energy aggregators to participate directly in the ISO and RTO markets. To that end, the FERC proposes requiring RTOs and ISOs to define distributed energy aggregators as market participants that can participate in the wholesale electric markets under rules, or participation models, that best accommodate the physical and operational characteristics of the distributed energy resources in their aggregations.
FERC seeks comments from interested parties on the proposed rules by February 13, 2017.
STAFF REQUEST FOR AUTHORITY
Staff request authority to file comments in FERC’s electric storage NOPR consistent with the discussion, below.
Staff generally supports FERC’s proposed effort to remove barriers to participation by electric storage resources and distributed energy resource aggregators in the RTO and ISO markets. In a nutshell, implementing uniform rules that increase revenue stream opportunities nationwide for these resources should enableincreased deployment of storage resources as grid assets and expansion of the market. Indeed, the California ISO, in conjunction with the Commission, is already doing much of the work that is outlined in the NOPR.
Therefore, Staff proposes filing comments at FERC expressing the Commission’s general support for the goals in the NOPR. Staff would provide background on the Commission’s storage mandate and the statutory requirements under AB 2514 (Skinner), as well as procurement, and policy development efforts to date. Staff will highlight the coordination and process with the CAISO, and will addresstwo issues included in the NOPR that the Commission is currently considering in the active storage Rulemaking, R.15-03-011 – station power and multi-use applications.
Station Power
The NOPR raises the question of how to treat behind-the-meter electric storage resources that will charge at a wholesale rate but that will also discharge to serve a retail customer. The concern raised by IOUs is that retail customers could avoid paying the retail rate under these circumstances. FERC solicits comment on whether metering and accounting practices aimed at distinguishing between retail and wholesale usage need to be in the RTO and ISO tariffs.
An important issue for energy storage is distinguishing between wholesale charging energy that will be resold and “station power,” which is energy consumed to operate a generator provided by the load-serving entities. In the NOPR, FERC appears to be considering rules that would affect the calculation of station power. Staff would explain to FERC how the Commission has been working closely with the California Independent Operator (CAISO) to address the station powerissue (and numerous others) through collaboration in the Commission’s storage rulemaking (R.15-03-011) and the CAISO’s Energy Storage and Distributed Energy Resources (ESDER) stakeholder process.
Multiple-Use Applications
FERC proposes prohibiting distributed energy resource aggregations that receive compensation from retail programs such as net energy metering from participating in the ISO and RTO markets. The rationale is that this could result in a form of double payment. However, when the CAISO drafted its Distributed Energy Resource Aggregation tariff, after consultation with the Commission,it left it to the local regulatory authority to determine whether resources benefiting from a retail compensation program could participate in the CAISO markets. And, notably, FERC approved this tariff. In practice, the California NEM customers are not currently able to participate in the CAISO’s DER Aggregation tariff despite the FERC approved tariff that provides for deference to the LRAs, but the CPUC supported the tariff language that provisions for this to change in the future.
It is also notable that the FERC held a technical conference on November 9, 2016, and adopted a policy statement on January 19, 2017, both of which deal directly with multiple use applications for storage systems, though the topic has not been directly integrated into the NOPR itself.
Therefore, Staff proposes pointing out the collaborative approach taken by the Commission and the CAISO as a model for FERC.
For questions, contact Rachel McMahon (, ext. 3-1606) or Chris Clay (, ext. 3-1123).
174237204
[1] FERC defines “electric storage resources” as a resource capable of receiving electric energy from the grid and storing it for later injection of electricity back to the grid regardless of where the resource is located on the electrical system.