FERC Issues Order to Open Wholesale Electric Markets to Distributed Energy Resources

On September 17, 2020, the Federal Energy Regulatory Commission (FERC) issued its Order 2222. FERC’s News Release describes Order 2222 as a “historic final rule … enabling distributed energy resource (DER) aggregators to compete in all regional organized wholesale electric markets.” DERs may include distributed generation, electric storage, demand response, energy efficiency, and certain other types of resources. DERs may be located on the distribution system or behind a customer meter.

FERC’s News Release describes the new rule as building on the recent federal appellate court decision affirming FERC’s Order 841 on the participation of electric storage in wholesale electric markets. National Association of Regulatory Utility Commissioners v. FERC, No. 19-1142 (U.S. Ct. App. D.C. Cir. July 10, 2020).

FERC’s published Fact Sheet states in part: “FERC Order No. 2222 will help usher in the electric grid of the future and promote competition in electric markets by removing the barriers preventing distributed energy resources (DERs) from competing on a level playing field in the organized capacity, energy and ancillary services markets run by regional grid operators.”

The Fact Sheet also states that the Order “will help provide a variety of benefits including: lower costs for consumers through enhanced competition, more grid flexibility and resilience, and more innovation within the electric power industry.”

FERC Chairman Neil Chatterjee in his individual statement, said, in part: “FERC broke new ground towards creating the grid of the future by knocking down barriers to entry for emerging technologies.” He added: “By relying on simple market principles and unleashing the power of innovation, this order will allow us to build a smarter, more dynamic grid that can help America keep pace with our ever-evolving energy demands. I am honored to be at the helm of the agency as we bring this critical rule across the finish line and continue to navigate our nation’s energy transition.”

According to FERC’s News Release, regional grid operators must make revisions to their tariffs in order to establish DER aggregators as a type of market participant.

Order 2222 goes into effect 90 days after publication in the Federal Register. Grid operators are required to submit a compliance filing and plan with FERC within 270 days of the effective date. The compliance filings must propose an implementation plan tailored for the appropriate regions, including an outline on how the rule will be implemented in a timely manner.

See FERC’s News Release here: https://www.ferc.gov/news-events/news/ferc-opens-wholesale-markets-distributed-resources-landmark-action-breaks-down

That FERC web page also has links to Order 2222, the Fact Sheet, and the Staff Presentation.

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