FERC Finalizes Variable Energy Resource Integration Rule, Proposes Several Others

The Federal Energy Regulatory Commission (FERC) finalized a key rule that intends to facilitate the integration of variable energy resources (VERs) and proposed another that clarifies the reporting of transactions involving energy storage facilities. The body also announced in the past week that it would soon eliminate the current system used by public utilities to report required electricity data on a quarterly basis, as well as approve the North American Electric Reliability Corp.’s (NERC’s) revisions to the definition of the bulk electric system.

FERC Issues Final Rule on Integration of Variable Energy Resources

FERC last week issued Order No. 764, a final rule intended to promote more efficient operation of the transmission system as integration of variable energy resources, such as wind and solar, with the bulk power system increases.

According to FERC, the rule finds that "transmission customers are exposed to excessive imbalance service charges because they cannot adjust their service schedules within each operating hour.” The rule essentially mandates that public utility transmission providers allow intra-hourly scheduling of transmission rights at 15-minute intervals to reduce imbalance charges. Intra-hour scheduling gives customers the tool they need to manage that exposure when generation output changes within the hour,” the regulatory body said.

It also allows transmission providers to submit alternative proposals that are consistent with or superior to the 15-minute scheduling reform. “Any alternative proposal will need to provide equivalent or greater opportunities for transmission customers to mitigate generator imbalance penalties and for the public utility transmission provider to lower its reserve-related costs,” FERC said.

Additionally, the rule requires generators of VERs that interconnect with transmission facilities report meteorological and operational data to the public utility transmission provider in real time, to support power production forecasting of generator output. “FERC finds that transmission providers will better be able to manage resource variability” with that data, it said.

Order 764 stems from two reforms of a November 2010 Notice of Proposed Rulemaking (NOPR). Order 764 does not require the standard approach to generator regulation service proposed in the 2010 notice, though it provides guidelines on how the commission would evaluate proposed charges for that service.

“Variable energy resources make up an increasing share of new capacity coming on-line,” FERC Chairman Jon Wellinghoff said. “This final rule eliminates undue burdens on these resources and will help transmission providers and their customers effectively manage the costs of integration.”

In response to comments calling for flexibility in the design of reserve capacity services needed to efficiently integrate VERs, FERC said it decided not to require transmission providers to add to their tariffs a new schedule for generator regulation service.

According to experts from law firm Van Ness Feldman, the “limited scope of the Final Rule and the suggestions for … negotiations between transmission providers and [variable energy resource (VER)] owners about the scope of data requirements and … the factors a transmission provider must consider in designing integration charges or different scheduling regimes, appear to reflect FERC’s recognition that it is premature to impose too many rigid rules because the technology and the terms of VER integration are still works in progress.”

The rule is expected to take effect a year after publication in the Federal Register.

FERC Proposes Regulations for Energy Storage Accounting, Ancillary Services

Last week, FERC also issued a Notice of Proposed Rulemaking that proposes to amend the Uniform System of Accounts used by utilities to clarify accounting and reporting of transactions involving energy storage facilities as well as to revise the commission’s policies governing the sale of ancillary services at market-based rates.

The proposal stems from comments received by FERC after its June 2011-issued Notice of Inquiry, which argued that current accounting and reporting requirements do not adequately support energy storage assets and operations. According to FERC, commentators also predominantly said, "the policy requiring competitive ancillary services providers to either prove they lack market power or be subject to certain market power mitigation measures before selling their services at market-based rates presents a barrier to the sale of these services outside the organized markets."

The NOPR proposes to require transmission providers outside of the organized energy markets to explain in their tariffs how they will determine regulation and frequency response reserve requirements, taking into account the speed and accuracy of the resources. Finally, the NOPR proposes revisions to FERC’s Uniform System of Accounts and its annual and quarterly forms, statements, and reports to better account for and report transactions involving energy storage technologies.

Under the NOPR, sellers that pass FERC’s existing market-based rate analyses for energy and capacity would be presumed to lack market power for energy and generator imbalance services in that geographic market. The NOPR also seeks comment on a reporting requirement that would give potential sellers of other ancillary services the information needed to develop market power analyses based on an optional screen designed solely for ancillary services, and it proposes the use of price caps or competitive solicitations to mitigate market power.

Comments are due 60 days after publication in the Federal Register.

FERC to Redesign EQR System

In another NOPR issued last week, FERC proposed to eliminate, by the third quarter of 2013, the current Electronic Quarterly Reports (EQR) system used by public utilities to report required electricity data on a quarterly basis and replace it with two options, both which are web-based and not dependent on specific software.

Utilities began using current EQR system about a decade ago, filing with FERC contracts, rates, terms, conditions, and transaction information for wholesale power sales via an electronic filing system instead of paper. FERC developed a special software that reporting utilities are expected to download. The software, however, runs only on Windows OS and requires users to enter a FERC-issued PIN number.

But, according to FERC, software limitations are making the current filing process “outmoded, ineffective, and unsustainable.” The new system would give the reporting utility two options: Data could be entered either via web interface on FERC’s website, allowing filers to continue using a comma-delimited text format, or via XML-formatted files. The NOPR also proposed to eliminate the need for the PIN number when submitting quarterly reports, replacing it with the FERC-issued “company identifier,” which is already required for making tariff filings.

The commission will hold a conference to demonstrate the proposed system on July 11, and it is accepting written comments on the proposed rule until 60 days after publication in the Federal Register.

FERC to Approve NERC’s Revision of Bulk Electric System

FERC last week said it would approve NERC’s revisions to the definition of the bulk electric system to “provide greater clarity and ensure consistency in identifying system elements across the nation’s reliability regions.”

The proposal stems from a NERC filing with the commission in January that proposed to establish a “core” definition that includes all transmission, real power, and reactive power facilities that operate or are connected at 100 kV or higher. NERC also asked FERC to eliminate the discretion that regional grid-operating entities currently have to define the system in their region without any oversight from FERC or the NERC.

In an NOPR, FERC proposed to approve NERC’s new rules of procedure for adding elements to and removing them from the definition on a case-by-case basis. While proposing to approve the revisions to the definition of bulk electric system, the NOPR also seeks comment—due 60 days after publication in the Federal Register—on certain issues, including the exclusion of certain facility configurations from the definition.

Sources: POWERnews, FERC, Van Ness Feldman
—Edited by Sonal Patel, Senior Writer (@POWERmagazine)

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