The Federal Energy Regulatory Commission (FERC) recently issued a Notice of Proposed Rulemaking (the NOPR) that contemplates revisions to its decade-old Avista policy, which restricts sales of ancillary services at marketbased rates outside organized markets. In order to narrow the applicability of the stringent Avista restrictions, the NOPR proposes a variety of ways for sellers to justify market-based rate sales of ancillary services outside organized markets, including allowing such sales when the seller passes the market power screens for sales of energy and capacity, and establishing new screens specifically for ancillary services. In addition, the NOPR proposes cost-based mitigation methods for sellers that do not pass the applicable market power screens.

In the same NOPR, FERC proposes to amend its accounting and reporting requirements to better account for the use of energy storage devices in public utility operations. These proposed amendments reflect FERC’s determination that existing accounting and reporting requirements do not provide sufficiently transparent information about the activities and costs of new energy storage operations. The proposed amendments also include one change, apparently applicable not only to storage providers but to public utilities more generally, that market-based rate sellers seeking recovery of a portion of their costs under cost-based rates be required to forego previously granted waivers of FERC’s accounting and reporting requirements.