Overview
Two ISOs, CAISO and NYISO, filed their Order No. 2222 compliance filings in July, as they had largely already had DER aggregation programs even before the effective date of the Final Rule. Their filings garnered relatively few protests, which is not surprising as they only made minor modifications to their existing programs. But, their filings also garnered quite lengthy deficiency letters (NYISO and CAISO), which inform us as to FERC’s primary concerns with Order No. 2222 compliance and will prove instructive as to the other ISOs still working on their compliance efforts. This two-part post examines the letters and FERC’s concerns. As the letters somewhat mirror one another on topics, the examination follows the order of the letters’ inquiries.
Interconnection. Only NYISO was questioned on its interconnection proposal in that it did not address DERs connecting to the Transmission System. This question is odd because DERs are defined as being connected to distribution, rendering the purpose of the question unclear unless referring to distribution facilities already used by wholesale customers. That said, such facilities are still distribution facilities and not transmission.
Small Utility Opt-In. Only CAISO was asked about its process for small utilities to opt-in and/or what happens if they later decide to opt out. The questions largely relate to process or omissions of process for opting-in and out. That said, the Commission is re-examining these issues in any event, such that future changes may be required. Future filers should be comprehensive in explaining all processes related to small utility opt-in/out processes.
Definition of DER. The Commission was concerned as to both ISOs as to whether their DER definitions were broad enough to encompass any resource and whether they could identify any resources that would not be eligible to participate. (Presumably the Commission meant whether any resource could participate in a DER Aggregation if it met the minimum/maximum size threshold and was connected to distribution, as all non-DER resources are ineligible and some DER resources are too large). The questions posed are somewhat difficult to answer as they seem to be addressing unknown future types of resources, but in any case, future filers should clearly indicate any excluded resources.
Participation Model. As to the CAISO, the Commission wondered whether a heterogenous DER Aggregation that never injected energy over a certain interval could be reclassified as demand response. There appears to be no reason for such an reclassification, as long as the injectable resource remains ready to inject, nor would Order No. 222 indicate such an action is appropriate. The NYISO received many questions on the participation subject, as the Commission was concerned with NYISO’s separation of heterogenous and homogenous DER Aggregations as well as its rules for addressing DER Aggregations comprised of solely Intermittent Power Resources and the impacts of these categories. The NYISO had expressed concerns over DER Aggregations made up solely of Intermittent Power Resources, as to the risks such DER Aggregations were taking in not being able to meet certain operational requirements. The Commission sought to understand why such risks did not apply to DER Aggregations made up of largely solar DERs. Presumably, the risks for any DER Aggregation that cannot perform 24/7 are similar; the clear lesson is that if an ISO (which term includes an RTO) is going to comment on such risks, it should explain the risks.
Also as to the NYISO, FERC was concerned with how NYISO would perform analysis to enforce its requirement that DER Aggregations that seek to qualify as Installed Capacity Suppliers needing Capacity Resource Interconnection Service (CRIS) for each of their injecting DERs. Although the NYISO indicated that the process would be comparable as to any other resource, FERC requested an overview of the process. Future filers should be careful if indicating a process already exists, to cite to specific sections of their Tariffs that would be applied to DERs or DER Aggregations.
The NYISO was questioned about DER Aggregations seeking to sell Ancillary Services, as the NYISO requires that all DERs in such an Aggregation be able to abide by various reliability standards. FERC questioned whether this requirement was necessary if the DER Aggregation as a whole can meet its obligations. This may be an issue that relates only to NYISO, but indicates that any limits on DER Aggregation participation in any market should be well-supported and explained.
Types of Technologies. NYISO was questioned about the exclusion of a fairly broad array of resource types that participate in its markets under other models/programs. It may have been unclear to FERC that some of these resources can be in a DER Aggregation, if they do not participate under another model/program. Again, participation restrictions should be explained.
CAISO drew questions about its varying programs for demand response resources inside and outside of a DER Aggregation, particularly as it relates to the net benefits test of Order No. 845. Although the CAISO explained there is no mechanism for CAISO to apply the net benefits test to only a portion of a DER Aggregation, the Commission had many follow-up question presumably to affirm the veracity of and technical support for the CAISO position. The takeaway would be once again very detailed explanations of any limitations on DER Aggregation participation.
Double Counting of Services. The questions surrounding double-counting largely relate to who is doing the verifying and exactly how it will be done. This area is quite complex given the dueling jurisdictions, innumerable possible retail programs; it may require multiple filings to sufficiently clarify such rules.
Minimum and Maximize Size/Capacity Requirements of Aggregation. The Commission seemingly caught a discrepancy in the CAISO Tariff as to the size minimum for storage devices providing ancillary services. Another concern was the cap on the size of a DER in an Aggregation in CAISO of 1 MW, which is based on CAISO’s view that DERs above such size can and should be subject to all CAISO Tariff requirements. This issue perhaps reflects a potential substantive dispute between the CAISO and FERC over managing DERs generally, which management is simplified if DERs are not aggregated.
