FERC approves energy storage tariffs

U.S. utility regulators have approved the first two regional implementations of a landmark 2018 order designed to remove barriers to the participation of electricity storage in wholesale markets.

In 2018, the Federal Energy Regulatory Commission issued its Order No. 841, requiring each organized power market to revise its tariff to establish a "participation model" for electric storage resources in the capacity, energy and ancillary service markets. The rule requires each market's participation model to include market rules that recognize the physical and operational characteristics of electric storage resources and facilitate their participation in those markets. The Commission later affirmed the rule, through its Order No. 841-A.

Last week, the Commission issued two orders approving Order No. 841 compliance filings by Southwest Power Pool, Inc. and by PJM Interconnection. The Commission generally found that the SPP and PJM tariff revisions complied with the new rule, and largely accepted their filings. For example, the Commission found that both proposals "generally enable electric storage resources to provide all services they are capable of providing; allow electric storage resources to be compensated for those services in the same manner as other resources; and appropriately recognize the unique physical and operational characteristics of electric storage resources."

However, the Commission also provided directives for further compliance filings by SPP and PJM to be made within 60 days. The Commission found that while both filed tariffs generally satisfy Order No. 841’s directive allowing electric storage resources to de-rate their capacity to meet minimum run-time requirements, neither tariff included minimum run-time requirements for resource adequacy and capacity, respectively. Because "such requirements affect rates, terms and conditions of service," the Commission initiated proceedings under section 206 of the Federal Power Act to address the specific issue of minimum run-time requirements.

In a pair of separate statements (on SPP and on PJM), Commissioner McNamee concurred with the orders insofar as they found compliance with the Commission's orders and regulations. But Commissioner McNamee said, "I write separately, however, to express my continuing concern that the Commission exceeded its statutory authority under the Federal Power Act, and should have, at the very least, provided states the opportunity to opt-out of the participation model created by the Storage Orders." Commissioner McNamee also reiterated jurisdictional concerns he had previously raised in a partial concurrence to and partial dissent from Order No. 841-A, "to the extent the Commission’s Storage Orders exercised authority over the distribution system and behind-the-meter."

Other organized wholesale market operators, such as ISO New England, Inc., are also adopting tariff revisions to comply with Order No. 841, to enhance the ability of electric storage facilities to participate in regional wholesale electricity markets.

Southwest Power Pool to expand

The Federal Energy Regulatory Commission has largely accepted a proposal to expand the geographic footprint of the Southwest Power Pool, a regional power market that will soon include a significant portion of the Upper Great Plains.

Southwest Power Pool, Inc. (SPP) was founded in 1941 by a coalition of regional power companies interested in keeping an Arkansas aluminum factory supplied with power to meet critical defense needs.  Since 2004, SPP has been recognized by the FERC as a Regional Transmission Organization or RTO.  Today, SPP organizes and operates parts of the electric power grid in nine states: Arkansas, Kansas, Louisiana, Mississippi, Missouri, Nebraska, New Mexico, Oklahoma, and Texas. 

On September 11, 2014, pursuant to section 205 of the Federal Power Act (FPA), SPP submitted to the FERC proposed revisions to its governing documents to facilitate the decision of three major transmission owners of the so-called Integrated System in the Upper Great Plains to join SPP.  The three proposed member-owners are:

• Western Area Power Administration – Upper Great Plains Region: one of four regions of the United States Department of Energy's Western Area Power Administration. Western is a federal power marketing agency that markets federal power and owns and operates transmission facilities through 15 western and central states, encompassing a geographic area of 1.3 million square miles. Western ’s primary mission is to market federal power and transmission resources constructed with Congressional authorization. The federal generation marketed by Western is generated by power plants that were constructed by federal generating agencies, principally the Department of the Interior’s Bureau of Reclamation and the U.S. Army Corps of Engineers. In the Upper Great Plains Region , or Western - UGP, Western owns an extensive system of high - voltage transmission facilities and markets federally generated hydroelectric power in the Pick - Sloan Missouri - Basin Program - Eastern Division of Western.
• Basin Electric Power Cooperative: serves 2.8 million customers in territories covering approximately 540,000 square miles using nearly 2,100 miles of transmission lines and 70 switch yards
• Heartland Consumers Power District: a public corporation and political subdivision of the State of South Dakota. It provides wholesale power to 28 municipalities in eastern South Dakota, southwest Minnesota, and northwest Iowa, to six South Dakota state agencies, and to one electric cooperative in South Dakota.

These entities proposed to join SPP as transmission owning members, to place their respective transmission facilities under the functional control of SPP, and to begin taking transmission service under the SPP Tariff.  Their stated motivation was increasing market size and thus opportunities for both consumers and producers of energy.

By order dated November 10, 2014, the FERC accepted SPP's proposal.  Together, these new SPP members provide the backbone of the bulk electric transmission system across seven states in the Upper Great Plains region consisting of approximately 9,500 miles of transmission lines rated 115 kV through 345 kV.  The FERC order directed SPP to take certain interim steps, and SPP has announced plans to integrate the three new utilities by October 2015.