More Recent FERC Decisions: Week of May 30th, 2016

June 17th, 2016 by John Bullock and Taylor Jones, NRDC Summer Interns

FERC rejects PJM’s proposed tariff revisions, ensuring that the tariff incentivizes resource flexibility, which helps integrate clean energy  

May 31st, 2016 — FERC rejected PJM Interconnection’s proposed amendment to its tariff that would have exempted resources (such as some coal and nuclear units) with slow ramp-up rates from charges incurred for failing to meet PJM’s capacity performance obligations. In reaching its decision, FERC expressed concern that any exemptions to its capacity performance program could negatively impact the tariff’s incentive structure, providing undue compensation for energy providers with slow ramp-up rates, and muting the market signals the capacity performance incentive structure is designed to provide. Although we oppose PJM’s capacity performance rules because they are skewed against clean energy resources (as we explain here), FERC’s rejection of PJM’s tariff amendment here is positive development because it ensures that the tariff’s compensation structure incents resource flexibility. Flexible resources can help integrate variable clean energy resources into the system, while non-flexible resources do not.

FERC approves California ISO proposal to facilitate wholesale market access for distributed energy resources

June 2nd, 2016 — FERC approved the California ISO’s proposed tariff changes to allow distributed energy resources (DER), including generation, electric vehicles, and energy storage, to be aggregated and bid into its organized wholesale markets. Under the new tariff provisions, aggregations can be made up of different types of DER, but no individual resource in such an aggregation can be larger than 1 MW. An owner of such an aggregation must combine a total of at least 0.5 MW of DERs to bid them into the wholesale market.  Any given DER resource is not eligible for aggregation under this program if it receives credit under a net-metering or other retail program. Resources can be aggregated across different pricing nodes but must be located at nearby nodes so that the aggregated resources can be dispatched to address location-specific grid constraints. While more needs to be done to provide DER owners with access to the organized wholesale markets, FERC’s order approving California ISO’s proposal is a great first step that should help further DER development in the region.

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