On June 11, 2010, FERC released its Request for Comments Regarding Rates, Accounting, and Financial Reporting for New Electric Storage Technologies (the “Request”).  In particular, FERC wants comments on how to develop a rate policy that allows storage technologies flexibility while complying with the Federal Power Act. 

Until recently many electric storage technologies were not widely developed, with pumped storage hydropower being the exception.  That specific technology however, was built when most utilities were vertically integrated.  Now many organizations, other than vertically-integrated load-serving entities, would like to build and own electric storage assets.  While new storage technologies such as flywheels and chemical batteries are already being tested at the pilot level or are in commercial use, FERC has little precedent on how the industry should proceed regarding the jurisdiction, rates, accounting, and financial reporting of storage assets.

In terms of categorizing storage services, the Request asks for comments on the following issues:
1. The classification of storage technologies and when the owner may receive compensation for that storage technology as a transmission asset;
2. The circumstances that should trigger compensation for both transmission and enhancing the value of merchant generation or ancillary services;
3. Whether FERC should consider stand-alone contract storage service, and if so, should the storage provider be limited to providing electricity storage while leaving it to customers to determine how to best use their share of the storage asset; and
4. If new accounting and reporting requirements should be developed to support cost of service ratemaking.

FERC does recognize the option to create stand-alone storage contracts, but believes the primary ways FERC jurisdiction will be triggered are:
1. When electric storage is used to maintain service to unbundled transmission customers;
2. When storage will increase generation value; and
3. When storage will provide ancillary services, exclusive of service for retail load.

With regard to rate treatment and the multiple uses of the storage facilities, the Request also seeks comment on:
1. Whether cost-recovery should be conditioned on a showing that the intended use of the storage asset is being used for transmission and whether there really is enough of a difference between un-bundled transmission load and retail load to trigger jurisdiction;
2. What is necessary to address cross-subsidization, competition, and discrimination when serving a transmission function with cost-based rates;
3. How Regional Transmission Organizations/Independent System Operator will maintain their independence, if they are responsible for storage facilities; and
4. How FERC should apply the Avista policy, which usually prevents third-party provisions of ancillary services at market-based rates to transmission providers seeking to meet their own ancillary service requirements.

All comments are to be submitted to FERC within forty-five days of the publication of the Notice in the Federal Register.  A copy of the Request for Comments is available at FERC’s website at http://ferc.gov/news/headlines/2010/2010-2/06-14-10-notice.pdf.