It has been more than a month since FERC proposed eliminating the state opt-out with regard to retail customer participation in demand response programs in organized wholesale markets. In its NOPR, Participation of Aggregators of Retail Demand Response Customers in Markets Operated by Regional Transmission Organizations and Independent System Operators, FERC proposed elimination of the state opt-out. In the concurrently issued Order No. 2222-A, FERC set aside its earlier finding that the participation of demand response in distributed energy resource aggregations is subject to the opt-out and opt-in requirements of Order Nos. 719 and 719-A. Those states that had opted out are none too pleased, as evidenced by NARUC’s rehearing request filed in response to Order No. 2222-A. The NOPR certainly will draw objections. In contrast, demand response supporters have sought clarification of Order No. 2222-A to ensure that “double counting” does not occur when a DER demand response resource is compensated for acting as a provider of a service, whether procured on a forward-looking basis or in real-time, and reduces an end-use customer’s load on the bulk power system, resulting in retail savings for the customer. These entities seek assurance that a behind-the-meter DER providing wholesale demand response service through serving is own on-site load be compensated at full LMP under Order No. 745.
FERC will certainly defend its change in position based on its view that “the terms of wholesale market participation are a matter under exclusive Commission jurisdiction,” such that its orders “do not infringe upon or otherwise diminish state authority.” It would appear that Order No. 2222-A and the effectively pre-ordained outcome of the new NOPR, would be the death knell of the state opt-out. The question raised here is, does it have to be? Continue Reading The Death of the Demand Response Opt-Out?