FERC Reconsiders Limits of Retail Regulators’ Control of Demand Response Aggregation

In one recent order, FERC has, for now, withdrawn its decision to severely limit the ability of retail regulators to ban Distributed Energy Resource Aggregators (DERs) from bidding on Response to Retail Customer Demand (DR) on wholesale markets. Instead, the issue will be considered in an ongoing investigation to determine whether to completely eliminate the ability of retail regulators to keep retail DR resource offerings out of FERC’s jurisdictional wholesale markets.

Providing R&D to retail customers in wholesale markets raises sensitive jurisdictional issues at the federal state level. While the five commissioners voted to overturn the previous decision, the three Republican commissioners issued separate statements with different views on retail regulators’ control of DR offers in wholesale markets. Commissioner Chatterjee would not allow retail regulators to keep DR resources out of wholesale markets, unlike Commissioners Danly and Christie.

The FERC order is expected to be of interest to a wide range of electricity market participants, including utilities, generation companies, investors in storage and other electricity resources, and electricity customers. .


The historic FERC Decree No. 2222 requires that the tariffs of regional transport organizations (“RTO”) and independent network operators (“ISO”) include provisions aimed specifically at allowing DER aggregators to participate in the markets. big organized. As discussed in a previous post on this blog, a March 2021 rehearing order broadly upheld Order 2222 but reduced a provision that allowed retail regulators to prohibit DER aggregators from bidding on response to demand from retail customers in the markets of large. The FERC has removed this “retirement” provision with respect to aggregations that include a mixture of recovery resources and other types of resources (the “heterogeneous aggregations”), but allowed the opt-out clause of continue to apply to demand response resource pools only. However, FERC also issued a Notice of Investigation (IA) solicit comments on the potential impacts of completely removing the opt-out provision from the response to the request.

The basis for the opt-out provision is FERC Order No. 719 of 2008, which required RTO / ISOs to allow aggregators to submit response offers to demand from retail customers directly into their markets. wholesale. Participation in FERC’s wholesale markets for resources located on a distribution network or behind a retail customer’s meter raises sensitive federal-state jurisdictional issues. In order to alleviate the concerns of retail regulators, FERC has authorized retail regulators to ban aggregators from serving retail customer demand in RTO / ISO markets.

Excluding the heterogeneous aggregations which include the response to the request of the opt-out provision, the order of March 2021 found that they “do not fall directly under the opt-out of the order No. 719 … Because they are not just aggregations of retail customers ”, and they leverage the operational attributes and complementary capabilities of different resources. On the other hand, the DER aggregations of the demand suppression resources alone are “materially indistinct” from the aggregations of retail customers authorized by opt-out n ° 719.

The recent repeat order

In response to requests for a rehearing of the March 2021 order, FERC reversed its decision not to extend the opt-out to DR resources that participate in heterogeneous DER aggregations. The Board recognized that some States which implemented Ordinance 719 by broadly banning DR participation in RTO / ISO contracts may not have anticipated that these blanket bans would be called into question in this proceeding. regrouping. Therefore, questions regarding the opt-out provision in the merger proceeding will be fully addressed in the pending Notice of Intent which examines whether to remove the opt-out provisions completely from Order 719. The FERC has extended the date for the first comments in the Notice of Intent to July 23, 2021.

Further, FERC rejected arguments by retail regulators that removing the opt-out provision was beyond FERC’s jurisdiction under the Federal Power Act. The FERC continued to find that it was not legally bound to grant the exclusion in Order 719 or in this proceeding.

Separate declarations by the commissioners

In a deal, Commissioner Chatterjee expressed support for removing the exclusion from Order 719, saying it has prevented DR resources in many states from participating in wholesale markets and cannot be reconciled with FERC’s legal obligation to ensure fair and reasonable rates.

In their statements, Commissioners Danly and Christie support the rehearing order’s decision to allow retail regulators to retain their authority over their retail customers’ R&D and would not consider removing that authority.

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