Fourth post on the Order No. 2222 compliance filings issued on June 17, 2022: “CAISO 2222 Order” and the “NYISO 2222 Order.” The post covers the topic: Coordination between the RTO/ISO, Aggregator, and Distribution Utility.

Topic 9: Coordination between the RTO/ISO, Aggregator, and Distribution Utility (DU)

Role of Distribution Utilities

Under Order No. 2222, RTOs/ISOs must establish market rules that address coordination between the RTO/ISO, the DER Aggregator, the DU, and the retail regulator (RERRA) that should not create undue barriers to entry for Aggregations but must consider the substantial role of DUs and RERRAs. The rules have to include a comprehensive and non-discriminatory process for timely review by a DU of the DER Aggregation, triggered by initial registration of the DER Aggregation or changes to a DER Aggregation already participating in the markets. RTOs/ISOs have to coordinate with DUs to develop a DU review process that includes criteria by which the DUs would determine whether: (1) each proposed DER is capable of participation in a DER Aggregation; and (2) the participation of each proposed DER in a DER Aggregation will not pose significant risks to the reliable and safe operation of the DU’s distribution system.

FERC expected RTOs/ISOs to include potential impacts on distribution system reliability as a criterion in the DU review process, referring specifically to any incremental impacts from a DER’s participation in a DER Aggregation that were not previously considered by the DU during the interconnection study process for that DER (if any). To the extent a DU recommends the removal of a DER from an Aggregation due to a reliability concern, an RTO/ISO should not remove the DER without a demonstration by the DU that the DER’s market participation presents a threat to distribution system reliability. Dispute resolution provisions also had to be included in compliance filings.

These requirements have proven somewhat divisive and difficult to implement, due to jurisdictional issues and RTO’s/ISO’s lack of experience with distribution system operations.

The CAISO largely complied with the many requirements imposed, but flaws were found (one “flaw” regarding dual NEM and DER Aggregation participation was addressed by a prior posting). More generally, FERC found that the CAISO did not have the expertise and jurisdiction to set DU safety and reliability criteria but encouraged the CAISO to coordinate with stakeholders to develop guidance documents that list relevant criteria and operating parameters. The CAISO also needed to clarify that the scope of DU review of an Aggregation is limited to any incremental impacts that the DU has not previously considered in interconnection analysis.

The CAISO also was required to share with each DER Aggregator any information regarding a DER that is provided by a DU to the CAISO as part of the DU review process. Likewise, each RTO/ISO must share any necessary information and data on each DER with the DU.

Lastly, the CAISO’s deferral of disputes to the DU and RERRA was rejected because it did not provide a formal mechanism for interested parties to attempt to resolve any issues related to the DU review process with the CAISO. That said, FERC recognized that the CAISO cannot resolve issues that are beyond its authority.

NYISO was ordered to clean up some minor wording issues and several other flaws were identified with its DU review process. NYISO did not address the requirement that the results of a DU’s review be incorporated into the DER Aggregation registration process. NYISO did not include in its tariff the capability criteria by which DUs will determine whether each proposed DER is capable of participating in a DER Aggregation. Also lacking were criteria by which the DUs will determine whether the participation of each proposed DER in a DER Aggregation will not pose significant risks to the reliable and safe operation of the distribution system, but FERC found that NYISO is not in a position to dictate the specific evaluation criteria to be considered by the DU because NYISO lacks the expertise and authority to do so. FERC encouraged NYISO to develop guidance documents that could include a set of illustrative review criteria. Like CAISO, NYISO had to ensure DU review criteria focused on incremental impacts that the DU had not previously considered in any interconnection studies.

NYISO failed to propose to require that the DU provide a showing that explains any reliability findings. FERC also clarified that a DU could not indefinitely toll expiration of the 60-day review period by being non-responsive. The NYISO data sharing process also had to be clarified. FERC indicated that as to disputes over the substantive determinations that a DU makes about reliability and safety on the distribution system, parties must resolve such specific disputes before RERRA, not before NYISO, a ruling that seems somewhat at odds with the ruling on dispute resolution in the CAISO 2222 Order.

Ongoing Operational Coordination

Order No. 2222 required each RTO/ISO to revise its tariff to: (1) establish a process for ongoing coordination, including operational coordination; and (2) require the DER Aggregator to report to the RTO/ISO any changes to its offered quantity and related distribution factors that result from distribution line faults or outages. It also required each RTO/ISO to revise its tariff to include coordination protocols and processes for the operating day that allow DUs to override RTO/ISO dispatch of a DER Aggregation in circumstances where such override is needed to maintain the reliable and safe operation of the distribution system. The order required each RTO/ISO to revise its tariff to apply any existing resource non-performance penalties to a DER Aggregation when the Aggregation does not perform because a DU overrides the RTO’s/ISO’s dispatch.

The CAISO did not sufficiently address data flows and communication between the DER Aggregator and the DU. This finding was a bit confusing because the CAISO had explained that communication would be between the DU and the Scheduling Coordinator for the DER Aggregation. FERC also found it unclear whether CAISO’s reference to DUs’ limitations or operating orders only include planned or forced outages, or a broader range of potential actions such as limiting injections into the grid for a particular time.

As to the NYISO, it neglected to specify the existing non-performance penalties that would apply to an Aggregation when a DU overrode NYISO’s dispatch. The NYISO, like the CAISO, did not sufficiently address data flows and communication between NYISO, the Aggregator, and the DU.

Given the often real-time nature of operational issues, some of FERC’s requirements appear unimplementable as drafted, an issue not really addressed by the filings or orders.

Role of Relevant Electric Retail Regulatory Authorities

Through Order No. 2222, FERC required each RTO/ISO to specify in its tariff how each RTO/ISO will accommodate and incorporate voluntary RERRA involvement in coordinating the participation of aggregated DERs. Possible roles and responsibilities of RERRAs in coordinating the participation of DER Aggregations in RTO/ISO markets could include: developing interconnection agreements and rules; developing local rules to ensure distribution system safety and reliability, data sharing, and/or metering and telemetry requirements; overseeing DU review of DER participation in Aggregations; establishing rules for multi-use applications; and resolving disputes between DER Aggregators and DUs over issues such as access to individual DER data. To the extent that metering and telemetry data comes from or flows through DUs, the Commission required that RTOs/ISOs coordinate with DUs and the RERRAs to establish protocols for sharing metering and telemetry data that minimize costs and other burdens and address concerns raised with respect to customer privacy and cybersecurity.

As to the CAISO, FERC found that that requiring DER Aggregations to comply with RERRA rules and regulations as the sole means for fulfilling the voluntary participation in coordination requirement was sufficient for compliance.

NYISO also requires each Aggregator to ensure that its Aggregation and the individual DERs within the Aggregation comply with all applicable rules and regulations promulgated by the RERRA. NYISO, however, was also directed to ensure that any information provided by the RERRA to NYISO about a specific DER Aggregation must be shared with the Aggregator.