At its October Open Meeting, FERC approved ISO-NE’s proposal to permit energy storage resources to operate as transmission resources, issued a final rule mandating the adoption of reliability standards for Inverter-Based Resources, considered FERC Order No. 881 compliance filings, and took several other actions of note to generation developers and operators. We explore each of these items, below.

Acceptance of ISO-NE Storage as Transmission-Only Asset (“SATOA”) Proposal

FERC accepted a Section 205 filing by ISO New England Inc. (“ISO-NE”) to amend its Transmission, Markets and Services Tariff and Transmission Operating Agreement (“ISO-NE Tariff”) to permit electric storage resources to operate as transmission-only assets. The SATOA concept has been gaining support in recent years due to its ability to delay or prevent the need for expensive transmission system upgrades, but most current transmission tariffs are not designed to facilitate this arrangement.

As accepted, the technology-neutral tariff revisions will allow electric storage resources to be considered as regulated transmission solutions in ISO-NE’s Solutions Study and competitive solution process to address transmission system needs. ISO-NE will allow SATOA to: (i) address system needs for which it was selected; (ii) avoid or mitigate load shed after all other dispatchable resources have been used; or (iii) provide support during system restoration. Critically, the resources are prohibited from participating in the markets for purposes other than the limited transmission activity for which they have been approved, which will prevent dual cost recovery under both cost-of service rates and market-based rates. SATOA resources will be compensated through ISO-NE’s Annual Transmission Revenue Requirements in the ISO-NE Tariff and net costs and revenues received by the SATOA will be charged or credited to ratepayers through the same.

SATOA resources will be owned and maintained by transmission companies but operated by ISO-NE. ISO-NE’s SATOA tariff provision will limit the aggregate amount of SATOAs to 300 MW each of charging and discharging capability, with the maximum total amount of SATOAs at one substation limited to 30 MW each of charging and discharging capability. This limitation is intended in part to minimize the burden on ISO-NE’s operators, who will be dispatching SATOA resources manually.

While FERC’s issued its first order on storage as transmission in 2010, FERC did not issue a policy statement on SATOA until 2017. Since that time, FERC has accepted two other SATOA proposals by Midcontinent Independent System Operator, Inc. and Southwest Power Pool, Inc. (“SPP”).  ISO-NE’s SATOA regime thus represents only the fourth such regime to receive FERC’s acceptance.

ISO-NE must submit a compliance filing 30 days before the effective date of the tariff detailing when the tariff will take effect. Additional information is available in Docket Nos. ER23-739 and ER23-743.

Final Rule Mandates Reliability Standards Addressing Inverter-Based Resources

FERC issued a final rule to address opportunities and potential reliability gaps posed by the increasing penetration of inverter-based resources (“IBRs”) – such as wind, solar, battery, and some natural gas units – on the bulk-power system. The final rule aims to enhance the data quality, modeling accuracy, study comprehensiveness, and performance consistency of IBRs, and to foster coordination among the entities involved in planning and operating the grid with IBRs.

The final rule directs the North American Electric Reliability Corporation (“NERC”) to develop new or modified reliability standards within 24 months with respect to four areas, including (i) data sharing: standards must ensure the timely and consistent sharing of data among relevant entities, including generator owners, transmission owners, and distribution providers, transmission planners, balancing authorities, and others; (ii) data and model validation: standards must ensure the accuracy and timeliness of data and models used to predict behavior of IBRs and their potential reliability impacts; (iii) planning and operational studies: standards must require studies to use validated models to assess IBRs and potential impacts under both normal and contingency event conditions; and (iv) performance requirements: the standards “must ensure that IBRs provide frequency and voltage support during frequency and voltage excursions” and contribute to the overall system need for essential reliability services.

NERC must submit a comprehensive standards development plan within 90 days that provides for the development and filing with FERC of new or modified reliability standards by November 24, 2026, with interim standards development deadlines by November 4, 2024, and November 4, 2025. More information is available in Docket No. RM22-12.

Other Items of Note to Generation Developers and Operators

• FERC Order No. 881 Compliance Filings. FERC accepted compliance filings from MATL LLP and Western Interconnect LLC with respect to FERC Order No. 881 addressing dynamic line ratings, subject to further compliance requirements. FERC found both filings were consistent with the order with respect to the use of ambient-adjusted line ratings in near-term transmission service and the use of seasonal line ratings, but the filings did not comply with the order’s requirement to explain timelines for calculating or submitting ambient-adjusted line ratings. More information is available in Docket Nos. ER22-2318 and ER22-2883.
• Supply Chain Shocks and Commercial Operation Deadline Extensions. FERC approved a request by Twelvemile Solar Energy, LLC, to allow for a 28-month extension of its Commercial Operation deadline listed in its Large Generator Interconnection Agreement (“LGIA”). In August, the company filed a request for a limited waiver of certain sections of its LGIA and the SPP Open Access Transmission Tariff to provide a 28-month extension to its Commercial Operation deadline. The company’s petition stated the extension was necessary due to supply chain disruptions, which have prevented the company from securing the photovoltaic panels for its 100 MW solar facility in time to achieve commercial operation by December 1, 2023. FERC granted the waiver request, finding that the entity satisfied the necessary criteria, including that (1) the applicant acted in good faith; (2) the waiver is of limited scope; (3) the waiver addresses a concrete problem; and (4) the waiver does not have undesirable consequences, such as harming third parties. More information is available in Docket No. ER23-2603.
• Revisions to Process for EQRs. FERC issued a Notice of Proposed Rulemaking (“NOPR”) detailing proposed changes to filing and data collection processes for Electric Quarterly Reports (“EQRs”) filed by jurisdictional entities including generator with market-based rate authority. The NOPR states the changes are “designed to update the data collection, improve data quality, increase market transparency, decrease costs, over time, of preparing the necessary data for submission, and streamline compliance with any future filing requirements.” FERC now seeks comment on the NOPR; comments are due 60 days after the NOPR is published in the federal register. More information is available in Docket No. RM23-9.