Energy Law Alert: FERC Creates New Opportunities for Energy Storage and Sales of Ancillary Services

by Stoel Rives LLP
Contact

At last week's open meeting, the Federal Energy Regulatory Commission (FERC) issued Order No. 784, which creates new opportunities for energy storage technologies to cost effectively help customers self-supply their own Regulation and Frequency Response service requirements and also opens certain ancillary services markets to all generators selling at market-based rates.

Energy Storage

Until Order No. 784, as an alternative to a transmission customer's purchasing Regulation and Frequency Response service under an Open Access Transmission Tariff (OATT), the customer could self-supply those services from resources that are comparable to those the public utility transmission provider uses to provide the same service. However, the self-supply option often lacked material financial benefit to customers, because regardless of the resources that a customer procured for self-supply, the customer was required to purchase a volume of Regulation and Frequency Response Service that was based on the mix of regulation resources used by the transmission provider in supplying that service. As a result, there was little benefit to the customer in choosing resources that were faster and/or more accurate than the transmission provider's resources. This sometimes led the customer to either over- or under-purchase its own regulation resources.

Order No. 784 now requires each transmission provider to revise Schedule 3 of its OATT to include a statement that the transmission provider will take into account the "speed and accuracy" of regulation resources in its determination of reserve requirements for Regulation and Frequency Response service -- two attributes where energy storage excels. This requirement will also apply to a transmission provider's determinations of whether a customer who self-supplies its own regulation service has made alternative comparable arrangements for such services.

As a result of the reforms in Order No. 784, a self-supplying customer may be allowed to purchase a smaller volume of regulation resources (as compared to purchasing all reserves through OATT service) by utilizing energy storage resources that are faster and/or more accurate than the transmission provider's resources. For self-supplying customers, the real impact of this opportunity will come down to a clear comparison between a self-supplying customer's regulation resources and those of the transmission provider, and the balance between the cost of the customer's resources and the savings that result from having to carry a smaller volume of reserves.

Ancillary Services

Order No. 784 also removes barriers that have prevented third parties from selling ancillary services at market-based rates to a transmission provider that is purchasing ancillary services to satisfy its own OATT requirements. Previously, FERC's Avista policy generally restricted third parties from selling ancillary services at market-based rates in these circumstances, absent a third party making the complicated showing that it lacks market power in that particular service and in that particular market. But Order No. 784 lifts many of those restrictions.

Specifically, under Order No. 784, generators with market-based rate authority for sales of energy and capacity will be permitted to sell Energy and Generator Imbalance services and Operating Reserves services to transmission providers in the same balancing authority area, or a different balancing authority area, provided those areas have adopted intra-hour scheduling for transmission service. (Transmission providers are required to begin offering intra-hour transmission scheduling on November 13, 2013, which is also the effective date for Order No. 784.)

Generators that currently have market-based rate authority for sales of energy and capacity and who desire to sell imbalance services may do so without any additional approvals from FERC. However, a generator seeking to sell Operating Reserves services at market-based rates must first explain to FERC how scheduling practices in its region support Operating Reserves. For example, 15-minute transmission schedules may not occur often enough to satisfy the timeframe in which a particular region requires a response from the resources providing Spinning Reserve Service.

In addition, generators may also sell Reactive Supply and Voltage Control service and Regulation and Frequency Response service to a public utility either (a) at rates that do not exceed the buying public utility's OATT rate for the same service, or (b) at market-based rates where the buying public utility acquires the service(s) through competitive solicitation. Order No. 784 also requires that competitive solicitations be reviewed by independent third parties where one of the parties participating in the solicitation is an affiliate of the buying public utility.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Stoel Rives LLP | Attorney Advertising

Written by:

Stoel Rives LLP
Contact
more
less

Stoel Rives LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!