Overview
A recent post in this blog explained why Order No. 2222 is not necessary given FERC's fuel-neutral markets in which DERs, whether or not aggregated, will find it hard to compete. But, until and unless the regulation is repealed, the show will go on. (Reports of a forthcoming Notice of Inquiry from FERC in response to the Executive Order on sunsetting energy regulations may present an opportunity for recission of the order.) The Maryland PSC recently issued an order (91674) that adopted an "Application for a License to Operate as a Distributed Energy Resource Aggregator [DERA] in the State of Maryland." A License to Operate would be needed by DERAs that want to aggregate to: 1) provide (distribution) grid support services; 2) participate in state and utility programs; or, as most relevant here, 3) participate in wholesale markets operated by PJM in accordance with Order No. 2222. The Application for a License to Operate raises the issue as to whether FERC's intended role for relevant electric retail regulatory authorities (RERRAs) was so broad as to include licensing requirements and if so, the acceptable scope of such a licensing requirement.
The Maryland Application for a License to Operate includes, among other things, provisions aimed at: protecting consumers; discerning the type of aggregating planned; requiring commitments to abide by various laws and regulations; the provision of evidence of technical competence; the willingness to abide by a code of conduct; and paying a one-time licensing fee. Affidavits of both tax and general compliance are required. Given that Order No. 2222 is not yet in effect in PJM, the licensing process will first be used for state/utility programs and may be updated in the future as lessons are learned.
In Order No. 2222, FERC said that RERRAs "have a role in coordination, i.e., in setting rules at the distribution level and in RTO/ISO stakeholder discussions." FERC also noted that possible roles and responsibilities of RERRAs in coordinating the participation of DERAs "may include, but are not limited to: developing interconnection agreements and rules; developing local rules to ensure distribution system safety and reliability, data sharing, and/or metering and telemetry requirements; overseeing distribution utility review of distributed energy resource participation in aggregations; establishing rules for multi-use applications; and resolving disputes between distributed energy resource aggregators and distribution utilities over issues such as access to individual distributed energy resource data." FERC determined that that any such role for RERRAs "be included in the RTO/ISO tariffs." PJM's DERA Participation Service Agreement requires the DERA to attest that it is full compliance with any RERRA rules and regulations. But, a DERA and/or industry groups may try to claim some or all of the Application for License to Operate is preempted by the FPA and FERC regulation of DERAs. A state imposing a fee on an entity to participate in a FERC-jurisdictional market is unusual.
It will be interesting to see if other states follow suit with regard to DERAs and licensing requirements. No indication has been found to date that other states are considering a licensing requirement, but Order No. 2222 implementation remains years away in many states. Neither the California nor New York commissions appear to impose such a requirement on DERAs already doing business.
