On October 20, 2020, Voltus, Inc. (“Voltus”) filed a complaint with FERC against the Midcontinent Independent System Operator, Inc. (“MISO”) and requested fast track processing pursuant to the Commission’s regulations. The complaint asked FERC to: 1. Find that MISO tariff provisions prohibiting third party demand response providers from participating in MISO’s wholesale markets are inconsistent with jurisdictional provisions of the Federal Power Act (“FPA”) and are unjust, unreasonable, unduly discriminatory, and preferential; 2. Find that certain electric retail regulatory authorities (“RERRAs”) in MISO issued prohibitions against third party demand response providers in a manner inconsistent with the terms of 18 C.F.R. § 35.28(g)(iii) and that such prohibitions are therefore void; and 3. Issue a notice of proposed rulemaking to repeal the provisions in 18 C.F.R. § 35.28(g)(iii) that allow RERRAs to bar third party demand response aggregators from participating in wholesale markets.

Voltus is an Aggregator of Retail Customers (“ARC”) who provides demand response services to commercial and industrial customers across the United States and Canada. As an ARC, Voltus enables its customers to deliver certain benefits from behind-the-meter assets—including load curtailment, energy storage, and distributed generation—into wholesale and retail markets. In return, Voltus receives market revenues for these assets. Voltus’s complaint focuses on the alleged harm of state opt-outs in MISO, which were authorized under FERC’s Order No. 719 and implemented through MISO’s tariff. Order No.719, which was issued by FERC in 2008 and affirmed in 2009, requires the nation’s regional grid operators to allow demand response aggregators to bid customers’ energy-use reductions into wholesale power markets for compensation and attempts to avoid undue burden by allowing states to opt-out from retail regulatory authority. Voltus argues that, pursuant to Order No. 719, a state may only bar demand response aggregations where such a prohibition is found in the states’ “laws or regulations”; and that while twelve out of fifteen MISO states have barred distributed energy resources from participating in the direct wholesale market, only one—Arkansas—has codified its opt-out rules restricting ARC participation in wholesale markets.

Voltus further argues that the opt-out is unlawful because:

1. jurisprudence since the adoption of Order No. 719 has changed and now supports the notion that the opt-out approach is inconsistent with the FPA’s jurisdictional divide because states do not possess the authority to directly determine if resources can participate in RTO/ISO markets;
2. Order No. 719’s opt-out approach is a “significant” barrier to market competition; and
3. the opt-out is unduly discriminatory.

Voltus alleges that if these state opt-out rules were removed, it could deliver more than 9,000 MWs of demand response in MISO states and provide $130 million in annual savings for ratepayers. Voltus further alleges that since FERC issued Order No. 719, FERC has changed its stance and the D.C. Circuit Court of Appeals has issued a ruling eliminating the legal basis for the opt-out provision. As a result, the complaint seeks reversal of the opt-out through rulemaking and immediate redress of what Voltus alleges are the unjust, unreasonable, and unduly discriminatory rates in MISO that adversely impact Voltus.

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