- The Opt-Out a Must-Have for Small (Largely Non-FERC and Non-State –Jurisdictional) DOs. The DOs with the greatest concerns about the NOPR are small, typically self-regulating utilities, as reflected in the comments of the American Public Power Association (APPA), the National Rural Electric Cooperative Association (NRECA), and the Transmission Access Policy Study Group (TAPS). All three entities support, at the very least, an opt out option for smaller DOs, if the opt-out is not granted to all state and local regulatory authorities. Some FERC-/state-jurisdictional utilities prefer an opt out (e.g., Southern Company (Southern), Xcel, and/or the small group of DOs that filed as the PJM Utilities Coalition). The concerns of the DOs seeking an opt out are many and include: rate design challenge; load forecast accuracy; operational technological and administrative challenges; incremental costs; lack of coordination with RTOs/ISOs; dispatches that would harm distribution reliability; issues with override and protection settings; and the timetable for implementing necessary controls. Many individual DOs who commented do not see a need for an opt out (e.g., Indicated NY TOs; Southern California Edison Company (SCE), Pacific Gas and Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E)). Those DOs who do not propose an opt out are located in states that are supportive of aggregation.
- The DOs Must Be Able to Override Dispatch Directions from the RTOs/ISOs. An issue addressed by almost all DOs is which entity should ultimately determine whether a DER in an aggregation may operate – the DO or the RTO/ISO. Uniformly, DO commenters weighing in on this subject indicated that the DOs must have this authority. The Indicated NY TOs explained that if a DO has a known constraint, it must be permitted to require a DER to come offline to preserve safety and reliability. The APPA insists that DOs must have the ability to manage the reliable operation of their systems and that a transmission system can readily deal with an override of a distribution-level dispatch. NRECA explains that coordination agreements must give the DO an override authority. TAPS notes that DOs must be able to override dispatch decisions of RTOs/ISOs or require the disconnection of DERs if their dispatch would undermine local distribution reliability. EEI, Eversource, and Duquesne Light Company (Duquesne) support DO control over resources connected to their systems. Several commenters also indicate that such override authority must not result in liability to the DO.
- Eligibility Determinations for DERs an DER Aggregations—DOs Must Have Some Authority. The role of DOs in determining eligibility to join an aggregation is another area where there is a fair amount of unity among Dos, although with several different flavors. APPA and NRECA support DOs having binding input into allowing a DER to join an aggregation. EEI also supports DOs having to consent to participation in an aggregation. The PJM Utilities Coalition states the decision of DER participation rests with the state regulator but DOs also must consent to ensure reliability. PG&E, SCE, SDG&E, and Eversource seek to be able to review any registrations and to be able to ensure upgrades are installed as needed. The Indicated NY TOs view eligibility determinations as a cooperative endeavor involving all stakeholders.
- Interconnection Agreement Studies Are Insufficient to Analyze Reliability Impacts of Aggregations. The notion that the study performed to interconnect a DER (recognizing a DER could be providing only demand response in which case its interconnection is not studied) is sufficient to permit the “injecting” DERs in an aggregation to reliably and safely operate as an aggregation is widely rejected by the DOs. EEI summarizes that an aggregation is likely to have differing impacts on a distribution system than would an individual DER. Several sets of comments include specific examples. PG&E and NRECA mention a concern with reverse flows causing voltage violations. NRECA also expresses a concern over voltage stability, particularly if a DO is trying to curtail DERs while an aggregator is getting a signal for DERs to produce power. NCPA mentions DERs masking system faults. TAPS points to an example from Europe involving DERs causing serious reliability issues.
- State-Jurisdictional Utilities Have Varying Views of the Role of State Commissions. Although the FERC-jurisdictional utilities almost all mention the need for federal-state agency coordination, the specific roles they see for their state commissions do vary. The Indicated NY TOs and PG&E discuss the role of the states with regard to multi-usage DERs, but do not mention very much of a role in other respects other than in generalities. SDG&E, Eversource, and SCE do not discuss any significant role of the state with regard to aggregations. EEI sees a role for the states in addressing various cost allocation issues. Southern, PJM Utilities Coalition, and Xcel generally claim that it is imperative that FERC coordinate with states in any aggregation proposal, if the state has not exercised the opt-out power that they favor. Duquesne notes that state commissions should be the entities coordinating with DOs on aggregation criteria and impacts on state programs. It also believes the states should respond to DO concerns if participation in an aggregation might adversely impact a distribution system. The PJM Utilities Coalition also notes that state regulators are uniquely positioned to deal with DER aggregation including such issues as cost effectiveness.
Commentary: The DO comments were notable in that the primary individual commenters were the New York and California DOs and the trade associations representing largely non-jurisdictional DOs. Very few PJM, ISO-NE, MISO DOs, and SPP individual companies submitted comments. The reason that this absence of individual DOs from such regions is notable is that DERs-friendly states–like New York and California–may be among the least likely to have significant aggregation efforts because more remunerative retail programs are available. It is states that provide lesser retail opportunities in which aggregators may have more opportunities.
Another interesting aspect of the DO comments is the variations in the level of concern over DER aggregation impacts on the distribution system. DERs generally are not aggregated by third parties today, but there are plenty of DERs injecting power into distribution systems. Today, in some states many DERs are operating, but they are participating in non-FERC-jurisdictional programs, such as net metering, or are large enough to participate in markets directly. Most net metered DERs are non-dispatchable and their energy flows per the laws of physics, sometimes with little visibility. This situation is somewhat difficult to reconcile with the parade of horribles some allege could occur due to DER aggregation. That said, the issue is one of size and scope of both the aggregation and the topology of the portion of the distribution system to which an aggregated set of DERs are connected. The DOs are in the best position to assess such impacts, but must do so in light of what they have found acceptable as to DERs not in aggregations or they may run into discrimination claims.
The strong opt-out push from small DOs is actually quite understandable when one understands that aggregation may appeal to their customers. Some cooperatives and towns are so small that they cannot offer generous retail programs such as net energy metering with credits at retail rate levels (i.e., programs that often keep DERs out of wholesale markets). Although a large municipal system may be able to offer net metering with credits at retail rates, such an offering in a rural area with abundant wind or solar, could decimate a rural cooperative. If, residential and commercial customers may only serve their on site load when their DER (e.g., solar PV) is operating and are not compensated through net metering for their excess energy, they are left with two primary options for selling any excess energy: aggregation or PURPA. Since PURPA compensation can be relatively low (particularly if there is no need for capacity), aggregation may provide a better revenue stream.