On March 1, 2023, FERC partially approved ISO New England’s (“ISO-NE”) proposed tariff revisions in compliance with Order No. 2222, which removed barriers to the participation of distributed energy resource (“DER”) aggregations in the capacity, energy, and ancillary services markets operated by Regional Transmission Organizations and Independent System Operators (“RTO/ISO”). In the order, FERC directed ISO-NE to revise its proposal regarding small utility opt-in requirements, capacity market participation, information and data requirements, and metering and telemetry system requirements. Commissioner Christie dissented from the order arguing that ISO-NE’s proposed metering and telemetry requirements for DER aggregations are reasonable and should be encouraging RTO/ISOs to adopt rigorous measurement and verification (“M&V”) measures, not undercutting them. Commissioner Danly concurred with a separate statement, expressing how this decision underscores his original concerns with Order No. 2222, namely that FERC is interfering in managing RTO activities that, in his view, should be under state jurisdiction. Commissioner Clements also concurred with a separate statement urging ISO-NE to make its proposal open to all DERs, such as behind-the-meter DERs.

In Order No. 2222, FERC found current RTO/ISO DER aggregation market rules to be unjust and unreasonable, established new definitions for DERs and DER aggregations, and detailed RTO/ISO tariff revisions that will allow DER aggregations to participate in RTO/ISO markets. RTO/ISOs were required to file tariff changes needed to comply with Order No. 2222 within 270 days from the publication of the order. (see the September 22, 2020 edition of the WER). On February 2, 2022, ISO-NE submitted its compliance filing regarding its proposed tariff revisions to implement the Commission’s directive in Order No. 2222. In its proposal, ISO-NE stated that it included tariff modifications to create a pathway for DER aggregations to participate in New England markets by: creating new, and modifying existing, market participation models for DER aggregation use; establishing eligibility requirements for DER aggregation participation, including size, location, information and data requirements; setting bidding parameters for DER aggregation; requiring metering and telemetry arrangements for DER aggregation and individual DER; and providing for coordination with distribution utilities and relevant electric retail regulatory authorities (“RERRAs”) for DER aggregation, registration, operations, and dispute resolution purposes.

In its March 1 order, FERC determined that ISO-NE’s proposal complied with Order No. 2222 regarding the following: (1) definitions for distributed energy resource and distributed energy resource aggregator that are consistent in scope and applicability with the Commission’s definitions; (2) participation of resources in RTO/ISO markets through a distributed energy resource aggregator that are receiving compensation for the same services as part of another program; (3) minimum size requirement for distributed energy resource aggregations that does not exceed 100 kW; (4) maximum capacity requirement for individual distributed energy resources participating in its markets through a distributed energy resource aggregation; (5) allowing a single qualifying distributed energy resource to avail itself of the proposed distributed energy resource aggregation rules by serving as its own distributed energy resource aggregator; (6) locational requirements for distributed energy resources to participate in a distributed energy resource aggregation that are as geographically broad as technically feasible; (7) market rules that address distribution factors and bidding parameters for distributed energy resource aggregations; (8) voluntary RERRA involvement in coordinating the participation of aggregated distributed energy resources in RTO/ISO markets; and (9) market rules that address market participation agreements for distributed energy resource aggregators.

However, FERC rejected ISO-NE’s proposed tariff revisions regarding (1) small utility opt-in requirements, (2) capacity market participation, (3) information and data requirements; and (4) metering and telemetry system requirements and directed ISO-NE to submit additional compliance filings regarding each of these items. First, regarding ISO-NE’s proposal for its small utility opt-in requirements, FERC determined that ISO-NE’s proposed language in its tariff conflicted with its own explanation of how it will implement the small utility opt-in, and therefore did not comply with Order No. 2222. Next, FERC determined that ISO-NE’s proposal regarding capacity market participation did not comply with Order No. 2222 because it did not address how ISO-NE’s existing capacity market mitigation rules would apply to distributed energy capacity resources participating in forward capacity auction (“FCA”) 18, nor did it address how the capacity market mitigation rules for FCA 19 and beyond would apply to distributed energy capacity resources. Additionally, FERC determined that ISO-NE’s proposal for maintaining and submitting aggregate settlement data for each DER aggregation did not comply with Order No. 2222 and directed ISO-NE to revise its tariff to require that each DER aggregator maintain and submit aggregate settlement data for the DER aggregation, so that the RTO/ISO can regularly settle with the DER aggregator for its market participation. Lastly, FERC determined that ISO-NE failed to demonstrate that its proposed metering and telemetry requirements for DER aggregation comprised of behind-the-meter DERs are just and reasonable and do not pose an unnecessary and undue barrier to individual DERs joining a DER aggregation.

In his concurrence, Commissioner Danly restated his primary concern with Order No. 2222, that FERC overstepped its jurisdictional authority and should not micro-manage the RTO/ISO’s activities that affect the electric distribution system, which is primarily under state jurisdiction. Commissioner Clements, in her concurrence, noted the grid reliability issues facing ISO-NE and urged it to “genuinely open its markets to DERs like behind-the-meter resources” in order to pursue “all possible options to increase electricity supply and reduce demand.” In his dissent, Commissioner Christie contended that ISO-NE’s proposal was reasonable and made commendable efforts to ensure that its M&V procedures were accurate to prevent double counting, but he argued that the Commission should encourage RTO/ISOs to adopt rigorous M&V measures, and not undercut them when they try to do so.

A copy of the order can be found here.