FERC issues Order No. 2222-B, setting the exclusion of the response to the request for further consideration

On June 17, 2021, FERC overturned its previous ruling in Order No. 2222-A which authorized state regulatory authorities to prohibit demand response resources from participating in distributed energy resource aggregations (“DER” ) on wholesale energy markets when the DER aggregation contains only demand response resources. Therefore, on the effective date of Ordinance 2222-B, state regulatory authorities will be able to prohibit demand response resources from participating in all wholesale DER aggregations. However, FERC has also stated that it will further consider the matter under the Notice of Investigation (“NOTICE”) procedure set out in Order No. 2222-A to consider whether it is appropriate. to revise its regulations in order to remove the option to withdraw the response to the request established in Orders Nos 719 and 719-A. FERC has also extended the comment period under the Notice of Intent process to provide interested parties with an adequate opportunity to comment on these matters. Finally, Decree No. 2222-B clarified the appropriate restrictions to avoid double counting of services and compensation for demand response resources that participate in DER aggregations. Commissioners Neil Chatterjee and James Danly wrote separate concurring opinions; Commissioner Mark Christie partly agreed and partly dissented.

In Ordinance No.2222, published in September 2020, FERC asked regional transport organizations and independent grid operators (“RTO / ISO”) to modify their tariffs to include DER aggregations as a type of market participant, and to revise the market rules that FERC has determined. were unfair and unreasonable barriers to the participation of DERs in wholesale markets (see September 22, 2020 edition of WER). However, FERC has made it clear that Order 2222 would not affect the ability of state regulatory authorities to prohibit DER aggregators from bidding on customer demand response resources. retail market RTO / ISO, in other words, to withdraw, in accordance with the requirements of the ordinance. Nos. 719 and 719-A. Ordinance 2222-A set aside this aspect of Ordinance 2222, stating that the withdrawal capacity of state regulatory authorities would only apply to DER aggregations that contained only resources. demand response (that is, the aggregation is only composed of retail clients’ resources), but not when the DER aggregation includes a mixture of demand response and other DERs. See March 24, 2021 edition of WER. Instead, at the time, FERC ruled that DER aggregations made up of both demand response and other types of resources – called “heterogeneous DER aggregations” – did not fall under the requirements. withdrawal of Ordinance 719, and the application of to these types of resources would inhibit innovation by preventing DER aggregators from taking advantage of the operational attributes and capabilities of the various DER resources.

In Order No. 2222-B, the FERC overturned its decision in Order No. 2222-A and restored the withdrawal capacity of state regulatory authorities for all demand-side response resources. , including those which participate in “heterogeneous” aggregations of DER. However, FERC rejected arguments that it was legally bound to grant the opt-out, citing the Supreme Court ruling in FERC v. Electric Power Supply Association that FERC’s regulation of participation in demand response in wholesale markets does not infringe the APP as it directly affects wholesale rates. FERC recognized that many states broadly prohibited participation in demand response in wholesale markets when implementing the opt-out of Order 719, and these states could not – not foresee that the procedures of Ordinance No. 2222 would call into question these general prohibitions. FERC stated that “given the importance of these matters, which affect both federal and state regulatory interests, we believe it is best to give them full consideration through the notice of survey published at the same time as Ordinance No. 2222-A ”.

Ordinance No. 2222-B also clarified that a resource behind the meter that is used only to facilitate the response to demand, that is, deployed only to reduce the customer load compared to the expected consumption , will itself be considered a demand response resource for the purposes of determining whether the opt-out applies. Finally, Ordinance No. 2222-B clarified under what circumstances DERs behind the participating meter as distributed energy resources in DER aggregates can be paid the full location marginal price.

Commissioners Chatterjee, Danly and Christie each wrote separate statements. Commissioner Chatterjee said he agreed with the Board’s Order because it continues to find that FERC has no legal obligation to provide the option to opt out of Order # 719, which he described as “obsolete” and irreconcilable with “the principles of competition which underlie the ordinance n. 2222. Commissioner Danly’s endorsement stated his position that Ordinance No. 2222-B properly returns authority over demand response resources to states by allowing states to choose to prohibit demand response resources. application to participate in wholesale DER programs. Commissioner Christie agreed with the provisions of Order No. 2222-B that preserved the opt-out provisions of Order No. 719, but opposed the remainder of the Order.

Order No. 2222-B is available here.

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