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.