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APPA: Energy Storage Rule Should Focus on Benefits to Consumers

In comments it filed with the Federal Energy Regulatory Commission on Feb. 13, the American Public Power Association said it generally supports FERC’s efforts to allow storage and distributed energy resources to participate in wholesale markets, but urged the commission to keep its main focus on the end result to electricity consumers, and offered a number of recommendations.

The Association joined the National Rural Electric Cooperative Association in filing the comments on FERC’s recent notice of proposed rulemaking, or NOPR, on participation in organized wholesale markets by electric storage resources and distributed energy resource aggregators.

The notice of proposed rulemaking, issued on Nov. 17, 2016, would require regional transmission organizations and independent system operators to revise their wholesale power tariffs to better remove barriers to RTO-run wholesale market participation by energy storage resources such as large battery systems. It also would also require RTOs and ISOs to allow aggregators of distributed energy resources “to participate directly in the organized wholesale electric markets,” and similarly remove barriers to DER aggregator participation, FERC staff explained when the draft rule was issued.

“We urge the commission to maintain as its primary focus, efforts to allow electric storage and distributed energy resources to participate in organized wholesale markets for the benefit of end-use consumers,” said the Association and NRECA in their Feb. 13 comments.

The two groups noted that, in June 2016, APPA suggested four guiding principles with respect to electricity storage resources. Those principles “are applicable to the instant NOPR with respect to electric storage resources as well s distributed energy resource aggregation,” they said.

Those principles are:

  1. Maintain a focus on end-use customers. In removing barriers to entry for storage and distributed energy resources, FERC must move toward markets that produce just and reasonable rates for customers.
  2. Accommodate existing technology. FERC’s efforts should not threaten existing projects or hamper technological advances.
  3. Respect state and local regulatory authority. The final rule must not undermine the ability of state and local bodies to regulate existing and future storage and/or distributed energy projects. This issue “is of paramount importance to APPA and NRECA,” the two associations emphasized.
  4. Protect against double-recovery and cross-subsidies. Providers of storage or distributed energy resources must not be able to doubly recover their costs — at both cost- and market-based rates — or gain access to cross-subsidies, the two trade groups told FERC. One class of customers should not be put in a position of subsidizing another — e.g. wholesale customers should not subsidize retail customers, they said.

The comments also offer recommendations on specific proposals and requests for comment on FERC’s notice of proposed rulemaking.

Among those recommendations, APPA and NRECA said that, in order to abide by the statutory limits on its jurisdiction and authority, and in order to honor roles reserved for state and local authorities, the commission should clarify that the final rule will be “limited to RTO/ISO rules, and include a role for state and local authorities, similar to the Relevant Electric Retail Regulatory Authority (“RERRA”) for demand response aggregation” under FERC Orders No. 719 and 719-A.

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