FERC: Renewable Energy Integration Rule Eliminates Undue Burdens

Renew Grid, Friday June 22, 2012 - 12:02:28

The Federal Energy Regulatory Commission (FERC) has issued a final rule that promotes the more efficient operation of the transmission system amid increasing integration of variable energy resources and benefits electric consumers by ensuring that services are provided at just and reasonable rates.

The rule adopts two reforms from a November 2010 notice of proposed rulemaking (NOPR) by requiring transmission providers to offer customers the option of scheduling transmission service at 15-minute intervals and by requiring generators using variable energy resources to provide transmission owners with certain data to support power production forecasting. Although the rule does not require the standard approach to generator regulation service proposed in the NOPR, it gives guidance on how FERC will evaluate proposed charges for that service.

"Variable energy resources make up an increasing share of new capacity coming online," says Jon Wellinghoff, chairman of FERC. "This final rule eliminates undue burdens on these resources and will help transmission providers and their customers effectively manage the costs of integration."

The rule finds that transmission customers are exposed to excessive imbalance service charges because they cannot adjust their service schedules within each operating hour. Intra-hour scheduling gives customers the tool they need to manage that exposure when generation output changes within the hour.

The rule 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.

The final rule finds that while power production forecasts help transmission providers manage reserves more efficiently, the forecasts are only as good as the data on which they rely. By requiring new interconnection customers whose generating facilities are variable energy resources to provide meteorological and operational data to transmission providers engaging in power production forecasting, transmission providers will better be able to manage resource variability, FERC says.

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

FERC will continue to evaluate proposed charges for that service on a case-by-case basis, and the rule provides a framework for transmission providers to develop proposed charges. The rule notes that public utility transmission providers that decide to file with the commission to impose such a reserve capacity charge should, as part of any filing, account for the reserve costs savings associated with the reforms FERC adopts in this final rule.

The final rule takes effect 12 months after publication in the Federal Register.

In addition, FERC is seeking comment on proposals designed to bring greater competition and transparency to markets for services needed to ensure reliable operation of the transmission grid.

FERC's NOPR seeks to revise its policies governing the sale of ancillary services at market-based rates. It also 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.

The proposed changes are based on comments in response to a June 2011 notice of inquiry. Those comments argued that the current accounting and reporting requirements do not adequately support energy-storage assets and operations, and that 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.

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.

The NOPR makes a preliminary finding that the proposal to require transmission providers to account for resource speed and accuracy in determining regulation and frequency-response reserve requirements is needed to prevent potential undue discrimination against customers that choose to meet their own needs for that ancillary service. It does not mandate a method for meeting this requirement, but rather proposes that FERC evaluate those determinations on a case-by-case basis.

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

FERC has also issued a proposal that would approve the North American Electric Reliability Corp.'s (NERC) 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.

In response to a FERC directive, NERC filed revisions in January that would to the following:

- establish a "core" definition that includes all transmission, real-power and reactive-power facilities operated or connected at 100 kV or higher;

- eliminate the discretion that regional entities now have to define the system in their region without any oversight from FERC or NERC; and

- identify specific facility configurations that are included in or excluded from the definition.

The NOPR also proposes 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 on certain issues, including the exclusion of certain facility configurations from the definition.

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

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