• Framework and Roadmap Needed Soon. Most DER commenters see no valid reasons for any significant delay in implementing DER participation through aggregation (e.g., Advanced Energy Economy (AEE), Advanced Energy Management Alliance (AEMA), Direct Energy, Energy Storage Association (ESA), NRG, Solar Energy Industries Association (SEIA), Stem, Sunrun, Tesla). Many want a framework or roadmap laid out quickly. Generally, issues they favor to be included in such guidance would include the limited need for telemetry (AEE, AEMA) and for FERC to permit multi-nodal aggregations. (Sunrun, AEE, AEMA, NRG) Microgrid Resources Coalition (MRC), however, does see a need for substantial gird architecture changes and a new control architecture.

 

• There Are Legitimate Questions About State/Distribution Owner (DO) Reliability-Impact Claims. One key argument from the DER commenters is that there already are plenty of DERs operating today (e.g., under net metering, aggregated demand response) without adverse distribution system impacts and without the distribution grid knowing whether kilowatts are sold at wholesale (AEMA). Sunrun points out that many DERs are being built today without the expectation of wholesale market revenues and distribution system impacts will occur regardless of wholesale participation. Although some DER commenters acknowledge that DERs acting in an aggregated manner may have some differing impact, several express sincere doubts that reliability review is required beyond the initial interconnection (AEE). ICETEC Energy Services (ICETEC), Tesla and NRG, for example, seek to limit the ability of the DO or RTO/ISO to study or re-study DERs once interconnected simply because they are later aggregated. Stem asks, where reliability claims are made, that they be supported by factual evidence and points out that aggregations can have the same impacts on a distribution system as instructions issued to multiple resources under retail programs.

 

• No State Opt-Out Provision Should Be Adopted. DER commenters are opposed to the notion of a state-opt out provision. Such an opt-out provision would harm wholesale markets, grid resilience, innovative enhancements, and other benefits in their view. Sunrun, Stem, SEIA and others provide legal support for the position that there is no legal basis for an opt-out. Many also see no legitimate reliability argument that could support an opt out. ICETEC effectively asks that all distribution interconnection authority be returned to the states, which would increase state authority to ensure reliability if that is the states’ primary concern. (Current rules divide interconnection jurisdiction between FERC and the state based on a variety of factors.)

 

• Dual Participation in Wholesale and Retail Programs Should Be Permitted. The DERs community uniformly rejects the need to ban participation in both wholesale and retail programs. They argue that the means to prevent double compensation exists through registration procedures. Stem provides extensive examples of how double compensation can be prevented. AEE claims that simultaneously calls for service by wholesale and retail markets will be rare. Tesla argues that an aggregation could be paid for peak capacity by a DO and receive an RTO/ISO capacity payment for the very same service because it creates two different value streams. Sunrun makes a similar argument as to resource adequacy services. Sunrun also seeks the adoption of a rebuttable presumption that state and federal programs aim to compensate different values. Direct Energy, NRG, and others point to the example of demand response providers being able to participate in the NYISO and state-jurisdictional demand response programs. (As discussed below, the DER commenters generally neglect to address the jurisdictional issue raised by sales of FERC-jurisdictional services in wholesale markets.)

 

• Opinions on the Role of the Distribution Owner Vary Somewhat; There Is Agreement that They Should Not Be Gatekeepers. Several DERs commenters fear FERC will allow DOs to be gatekeepers to their participation. NRG argues that FERC should not permit DOs to serve in such role. AEMA and Sunrun do not want DOs to have any authority other than to raise objections as to participation. AEE is concerned that state-jurisdictional IAs or tariffs will be used by DOs to prevent participation. Although there is general agreement concerning the issue of DOs potentially being a barrier to participation, opinions on the role of the DO vary to some degree. NRG suggests that all dispatch should be centralized through the RTO/ISO, that DOs learn all information about the operation of DERs in aggregations from the RTO/ISO, and there be one single channel for communication (the RTO/ISO). Stem also supports the DO having no ability to impact a dispatch order although it also states that the local regulatory authority jurisdiction over the physical dispatch of activity on the distribution system. AEE in contrast envisions RTOs/ISOs having visibility as to the aggregator only and states that coordination and awareness among the aggregators, RTOs/ISOs, and DOs is crucial.

Commentary: Many DER commenters fail to acknowledge the jurisdictional implications of some of their positions. For example most do not acknowledge that compensating DERs for net output is highly different from a jurisdictional perspective than compensating DERs only for demand response. ESA, AEE, ICETEC, AEMA, Sunrun, and Tesla all raise the issue of the lack of compensation for net supply under many demand response programs despite the Commission making it quite clear in EnergyConnect, Inc., that compensation for suppling energy, as opposed to reducing demand, can result in a resource becoming a public utility. Sunrun fully recognizes and provides legal support for the position that any wholesale seller, even if located behind the retail meter, is making sale subject to FERC jurisdiction, yet it complains that DERs participating in most existing wholesale demand response programs cannot obtain compensation for injecting energy into the grid. That prohibition, however, was adopted in some cases to prevent such resources, as well as their aggregators, from potentially becoming FERC-regulated utilities. Tesla and SEIA indicate that the ISO-NE permits wholesale sales by demand response resources, but this raises the question whether all of the selling resources are QFs exempt from FERC rate regulation or whether some non-QF resources are selling wholesale power without FERC authorization and thus may be violating the Federal Power Act.

Although not concerned with the ability of DOs and states to address double compensation with dual participation, some comments demonstrate how such problems could arise. For example, Tesla explains how a solar system paired with a battery could have the solar facility participate in net metering and the battery sell at wholesale. Tesla does not explain how, if these resources are located behind a single retail meter (which is how “paired” is typically interpreted), the DO, aggregator, and RTO/ISO would know whether any net energy exiting the retail meter is coming from the solar system and should be netted under the NEM program or is from the battery and being sold at wholesale. Ensuring that double compensation does not occur may be a difficult problem to solve under some scenarios.

Some commenters complain about DERs having to be interconnected under a FERC-jurisdictional interconnection agreement if selling to the market, but they do not acknowledge that it is FERC case law that requires this result. Many DERs are QFs and FERC has asserted jurisdiction over any QF interconnection involving even the potential for market sales. These are jurisdictional mandates—not DO-imposed requirements. Several comments (Tesla, Stem, SEIA) complain that the California wholesale distribution tariffs’ interconnection process is onerous, but the state-jurisdictional interconnection process (Rule 21) applied to resources selling power directly to the host utility (i.e., under PURPA contracts) is almost identical.

Other DERs commenters oppose DOs having any role in an aggregation, while ignoring DOs’ role in providing wholesale distribution service. For example, ICETEC and AEMA recommend severe limits on DOs with regard to aggregation formation, including no DO agreements with the DERs or the DER aggregator beyond an interconnection agreement with the DER. This approach begs the question that since interconnection agreements do not provide for delivery service, how delivery service over the distribution system will be provided by a DO, if such DO cannot contract with the DER or the DER aggregator for such service.

Finally, one of the oddities revealed by the DER comments is that PJM evidently has provided the advice that if a homeowner wants to place a third-party owned DER behind its retail meter, it must file an OATT for its internal wiring before the third party can apply to PJM for an interconnection. Given that even DOs do not need to file OATTs to allow third parties to use their distribution systems, this advice (if given) about an OATT seems questionable. Delivery service that occurs behind the retail customer meter has no generally been subject to FERC jurisdiction and FERC has never required an OATT for wholesale distribution service even where DERs participate in markets (only a handful of utilities (in California) have such OATTs, other DOs simply use individualized agreements). Moreover, PJM seems to be the only ISO that requires DERs to interconnect through the RTO/ISO rather than bilaterally through the local DO where the interconnection FERC-jurisdictional.