FERC Clears PJM, SPP Proposals Establishing Energy Storage Market Participation Models

The Federal Energy Regulatory Commission on Oct. 17 largely approved plans filed by PJM Interconnection LLC and Southwest Power Pool Inc. addressing electric storage participation in their wholesale markets. The orders mark the agency’s first move to implement the landmark Order No. 841, which directed grid operators to establish a market model that recognizes the unique characteristics of storage. The agency found that the tariffs generally satisfy the directive with regard to allowing the resources to de-rate their capacity to meet minimum run-time requirements, but do not include resource adequacy and capacity. As these requirements affect service rates, terms, and conditions, the agency opened proceedings to investigate rules and practices regarding minimum run-time requirements.

The agency found that both the plans generally enable these resources to provide all services they are capable of providing, allow compensation for those services in the same manner as other resources, and appropriately recognize the unique physical and operational characteristics of electric storage resources. FERC adopted the order in February 2018 because it found that current tariffs do not recognize the operational characteristics of electric storage resources and limit their participation. Regional grid operators filed proposals in December 2018 to comply with the order, paving the way for broader participation of storage resources in wholesale power markets.

Commissioner Bernard McNamee issued statements concurring with the orders, but expressed his continuing concern that the commission exceeded its statutory authority by not allowing states to opt out of the participation model created by the orders. In May, McNamee filed a partial dissent when FERC declined requests to allow state regulatory authorities to decide whether or not storage resources connected to distribution facilities or located behind a retail meter may participate in the wholesale power markets. The agency acknowledged that states have the authority to dictate the terms of their own retail programs, allowing resources to choose between participating in retail or wholesale markets, but may not broadly prohibit all retail customers from selling into wholesale markets.

The agency approved a Dec. 3 effective date for PJM’s plan, but allowed the grid operator to propose a new date for further compliance directives including a hearing to investigate whether PJM’s 10-hour minimum run-time requirement is unjust or preferential as applied to capacity storage resources. SPP will implement its plan in nine months, as FERC allowed more time to implement a new settlement management system.

Provisions reflecting rules and practices regarding resource adequacy and capacity minimum run-time requirements are due within 45 days after notification in the Federal Register. Further compliance filings are due within 60 days.