FERC Issues New Rules on Selling Ancillary Services to Promote Energy Storage

13 September 2013 Renewable Energy Outlook Blog

To promote use and development of energy storage technologies, FERC recently revised its market-based rate regulations, OATT ancillary services requirements, and accounting and reporting requirements. Order No. 784 revises regulations affecting certain sales of ancillary services at market-based rates to FERC-jurisdictional transmission providers. Now, with some restrictions, without submitting a market power screen, sellers of ancillary services who have market-based rate authority for sales of energy and capacity will also be able to sell certain ancillary services at market-based rates to transmission providers in balancing authority areas with intra-hour scheduling. Intra-hour scheduling is required by November 12, 2013 for all FERC-jurisdictional transmission providers. Previously, sellers were required to submit market power studies demonstrating a lack of market power for the particular ancillary service in the particular geographic market the service was sold.

The rule does not apply to Reactive Supply and Voltage Control service and Regulation and Frequency Response service. FERC plans to initiate a new proceeding to examine these services separately. Until then, these services can only be sold at market-based rates if they are purchased through a competitive solicitation or do not exceed the transmission provider’s OATT rate for the same service.

The driving force behind the rule is to promote energy storage technologies. FERC believes it can achieve this goal by providing customers better information as to the type and amount of regulation resources they must purchase. This transparency will make decisions regarding self-supply, including through the use of storage technologies, easier and should foster competition and promote investment in energy storage technologies. Specifically, Order No. 784 requires transmission providers to consider the speed and accuracy of regulation resources when determining reserve requirements for Regulation and Frequency Response service including when reviewing alternative arrangements proposed by a customer. Transmission providers must also include additional OASIS Area Control Error data, and O&M data that accounts for and reports transactions associated with energy storage devices.

Prior to this rule, there was little practical benefit to self-supplying and investing in storage technologies. Rather customers were effectively required to purchase bundled regulation resources because they lacked the information necessary to demonstrate the resources they self-supplied were comparable to the public utility transmission provider.

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