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FERC Rules Storage In RTOs Should Be Charged LMPs For Energy Charging For Resale

February 16,2018



FERC issued a final order governing the participation of storage resources in organized markets.

FERC's final rule requires each jurisdictional RTO to revise its tariff to establish a participation model for electric storage resources that consist of market rules that properly recognize the physical and operational characteristics of electric storage resources.

FERC said in a news release, "The participation model must ensure that a resource using the model is eligible to provide all capacity, energy and ancillary services that it is technically capable of providing, can be dispatched, and can set the wholesale market clearing price as both a seller and buyer consistent with existing market rules. The model also must account for the physical and operational characteristics of electric storage resources through bidding parameters or other means, and it must set a minimum size requirement that does not exceed 100 kilowatts. The final rule also requires that the sale of electric energy from the wholesale electricity market to an electric storage resource that the resource then resells back to those markets must be at the wholesale locational marginal price."

Regarding a concern raised by NRG, FERC clarified, "that an electric storage resource’s wholesale energy purchases should take place at the applicable nodal LMP, and not the zonal price. Using the applicable nodal LMP will prevent any potential arbitrage between nodal and zonal prices and allows for consistent evaluation of a resource’s impacts on the energy, congestion, and loss components of LMP when it is both receiving and injecting energy."

"In response to concerns about an electric storage resources being compelled to purchase all of its energy for future use from the RTO/ISO markets, we clarify that we impose no such requirement. Our finding regarding charging energy does not address payment of the retail rate for energy or charging a device off of co-located generation resources, as suggested by commenters. Also, while this finding requires each RTO/ISO to allow electric storage resources to be able to pay the wholesale LMP for their charging energy, it does not address whether they can pay some other rate, such as a retail rate or charging off of co-located generation. Finally, like other market participants that purchase energy from the RTO/ISO markets, an electric storage resource that pays the wholesale LMP for charging energy may enter into bilateral financial transactions to hedge the purchase of that energy," FERC said

FERC broadly asserted jurisdiction over storage, even where not interconnected to the transmission system.

"We disagree with commenters who argue that the requirement to pay LMP for charging energy should only apply to electric storage resources that are interconnected to the transmission system. As discussed above, this Final Rule applies to electric storage resources that are capable of receiving electric energy from the grid and storing it for later injection of electric energy back to the grid, irrespective of where the resource is interconnected. The sale of charging energy to an electric storage resource that the resource then resells into the RTO/ISO markets is a sale for resale in interstate commerce and thus subject to the Commission’s jurisdiction," FERC said

FERC will require each RTO/ISO to implement metering and accounting practices as needed to address the complexities of implementing the requirement 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 be at the wholesale LMP. "To help accomplish this, we require each RTO/ISO to directly meter electric storage resources, so all the energy entering and exiting the resources is measured by that meter. However, we recognize some electric storage resources (such as those located on a distribution system or behind a customer meter) may be subject to other metering requirements that could be used in lieu of a direct metering requirement by an RTO/ISO. Therefore, the Commission will consider, in the individual RTO/ISO compliance filings, alternative proposals that may not entail direct metering but nonetheless address the complexities of implementing the requirement that the sale of electric energy from the RTO/ISO markets to a resource using the participation model for electric storage resources that the resource then resells back to those markets be at the wholesale LMP," FERC said

Regarding other charges to storage, FERC said, "We disagree with Energy Storage Association and NextEra that transmission charges that apply to load should not apply to electric storage resources. When an electric storage resource is charging to resell energy at a later time, then its behavior is similar to other load-serving entities, and we find that applicable transmission charges should apply."

However, "In response to the concern that transmission charges should not apply when an electric storage resources is dispatched by an RTO/ISO, we find that electric storage resources that are dispatched to consume electricity to provide a service in the RTO/ISO markets (such as frequency regulation or a downward ramping service) should not pay the same transmission charges as load during the provision of that service," FERC said

See FERC's final order here

An original NOPR in the proceeding from FERC has also proposed changes related to distributed energy resource aggregations.

"While the Commission continues to believe that removing unnecessary barriers to market participation by these resources is important, today’s rule concludes that more information is needed with respect to those proposed reforms," FERC said in a news release

In light of that, the Commission issued a Notice of an April 10-11 Technical Conference (RM18-9-000), that identifies questions to help gather additional information to determine what action to take on the distributed energy resource aggregation reforms proposed in the NOPR. Commission staff also will use the technical conference as an opportunity to discuss other technical considerations for the bulk power system related to distributed energy resources.

Technical Conference Notice, Questions

Staff Presentation on DER Issues

Tags:
FERC   Wholesale   Storage   Distributed generation  

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