FERC, the top energy regulator had a busy 2021. FERC was involved in the investigation into Texas’ winter event. The joint report with NERC didn’t find fault with renewables. FERC has opened many lines of inquiry to build the future grid. FERC should do more in 2022.
First, FERC must address interregional transmission cost allocation. This is the lesson from SPP queue reform and MISO. PJM’s current proposal is missing this. Second, FERC issued order 2222 to bring DERs in the transmission fold. They provide grid services like utility scale technologies. Distribution utilities are building barriers to protect safety and reliability. FERC needs to step in here and leverage partnerships with state regulators to clarify the aggregator’s role. The final step is to remove the state opt out for demand response. This will give certainty to aggregators in the marketplace, allowing them bid heterogeneous aggregations including DR with rooftop solar/storage.
The 2021 busy year for FERC was a busy one
The new office for public participation was opened by FERC in 2021. Another key development included the addition of Commissioner Phillips as the fifth Commissioner after Commissioner Chatterjee’s term ended.
The issuance in 2021 of an Advanced Notice Of Proposed Rules (ANOPR) regarding transmission planning and generator-interconnection reform is FERC’s greatest achievement. Industry can expect NOPRs for individual pieces of ANOPR, such as participant funding for generator interconnections and cost allocations for network upgrades related renewable projects located at the RTO seams.
FERC also issued NOPRs on transmission line rating and electric transmission incentives to encourage Grid Enhancing Technologies (GETs). FERC issued an Order 881 directing RTOs to include Ambient Adjusted Ratios (AARs), as part of their transmission planning and operational planning protocols. While FERC did NOT mandate Dynamic Line Ratings (DLRs), FERC opened a new docket for establishing the record of DLR applications and business cases. The DLR docket is a good thing for renewable developers, as it allows them to avoid costly network upgrades like transmission line rebuilds.
The top issue for 2022 – interregional transmission
There is a problem with PJM’s queue reform process. While most PJM members and renewable developers have voted in favor of PJM’s queue transition proposal, a comprehensive reform around “Affected Systems” studies is not in the package. Both at MISO and SPP these affected system studies create a jam for completing interconnection studies. FERC must clarify how costs are allocated for network upgrades, when, for example, a MISO Project creates a need to upgrade PJM and vice versa.
A session on transmission reform will be presented at DISTRIBUTECH Connect in Dallas, Texas, January 25, 2022. Qualified utilities can connect for free! Learn about DISTRIBUTECH Connect here.
This topic on affected systems is becoming a problem because SPP queue delays can exceed 2-3 years in certain instances, while MISO has delays greater than a year even when using cluster-based queued Reforms. PJM is also experiencing queue reform delays. PJM is more dependent on renewable energy because of its capacity market. SPP and MISO both have not attempted what PJM will do during the queue transition in the coming years. PJM already has a backlog that consists of 140 GW study requests. FERC must fix the cost allocation for interregional transmitting, as it is the key to unlocking this issue.
Second – Compliance filings for FERC Order 2222
Developers are not limited to utility-scale projects in order to meet corporate demand. Distributed-scale solar and storage projects have a proven track record of reliability and affordability. This is what state regulators most worry about. FERC has created a framework for working closely with state commissioners to allocate transmission costs.
This framework can be used to address the tricky situations surrounding distribution utility dispatch override and RTO dispatch underride for interconnecting distributable energy resources (DER). Because the aggregator is responsible for any nonperformance at the market operator, the uncertainty stems from the inability to know the potential situations that could warrant a DU dispatch override RTO day ahead dispatch in real-time.
FERC already has NYISO and CAISO compliance filings for Order 22222. PJM, ISO-NE and MISO filings are due February. SPP and MISO filings are due April. FERC must address the DU dispatch issue sooner rather than later due to safety and reliability concerns raised by the DUs. Energy aggregators do NOT want DU barriers to DER entry in wholesale energy markets.
Third issue – State Opt-Out for Demand Response programs
FERC should take up the state opt-out issue in 2022 when it comes to energy aggregators. DERs are a great asset to the transmission grid. States like Illinois, which allow third-party aggregaters, benefit from retail demand response program participation on the wholesale markets. This is why there is no state option to elect out of Electric Storage Resource (ESR), Order 841, and DERs, Order 2222. The problem is with DR Compensation Order 745.
Aggregators must remove this opt-out provision for DR programs. This will allow them to bundle different technologies, such as rooftop solar and ESR, with consumers. Otherwise, more DR cannot participate in wholesale markets as the recent FERC annual report shows (Table 3-3) – the ratio of MWs of demand resources to peak demand is constant 6% year over year at RTOs. These data indicate that incentives are needed to encourage more DR participation in wholesale energy markets. RTOs require DR resources to reduce resource shortages in emergency situations. After the California blackout of August 2020, the California Public Utility Commission directed its 3 IOUs (CPUC) to procure more demand side resources for 2021-2022.
Conclusion
FERC is the US’ top energy regulator and plays a key role in shaping the energy industry. While FERC’s responsibilities include “Regulation of rates and practices of oil pipeline companies,” reviewing “applications for construction and operation of interstate natural gas pipelines” and hydro plant licensing, the actions outlined above in the RTOs are a must for faster interconnection of renewables to build the future grid.
Rao Konidena will be speaking at a session on Interconnecting Renewable Sources To The Grid, part of DISTRIBUTECH Connect. The session is set for Dallas Texas on January 25, 2022. Qualified utilities are eligible to connect for no cost! Learn about DISTRIBUTECH Connect here.
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