UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION

Transcription

1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION ) ISO New England Inc. ) Docket No. ER Order No. 755 Compliance Filing ) ) MOTION TO ACCEPT COMMENTS FILED OUT OF TIME AND COMMENTS OF ELECTRICITY STORAGE ASSOCIATION Pursuant to Rules 211 and 212 of the Federal Energy Regulatory Commission s ( FERC or the Commission ) Rules and Regulations, 18 CFR and , and the Combined Notice of Filings #1 dated February 6, 2013, the Energy Storage Association d/b/a Electricity Storage Association ( ESA ), on behalf of its Advocacy Council, 1 hereby submits its Comments in response to ISO New England, Inc. s ( ISO- NE ) proposed Regulation Market Changes that were submitted on February 6, 2013 to comply with FERC s Order No In its filing, ISO-NE modifies its tariffs to include uniform prices and separate payments for capacity and service as required by Order No Additionally, ISO-NE s tariff proposal makes the necessary changes to enable storage and other non-generation resources to participate in the regulation market which they are currently restricted from doing. As detailed below, ESA supports ISO-NE s modified tariffs as they comply with FERC s directives in its November 8, 2012 Order and in Order No However, ESA 1 The ESA s Advocacy Council engages in legislative, regulatory, and policy advocacy efforts on behalf of its members and the ESA. The Advocacy Council members (individually listed below) include energy storage entities that use batteries, flywheels, and compressed air and have firsthand industry knowledge of the challenges that must be overcome to successfully finance and operate commercial-scale energy storage facilities. Advocacy Council Members include: A123 Systems, Inc., AES Energy Storage; Altairnano; Aquion Energy; Beacon Power LLC; FIAMM; NextEra Energy; S&C Electric Company; Saft America Inc.; Temporal Power; and Xtreme Power. 2 Frequency Regulation Compensation in the Organized Wholesale Power Markets, Order No. 755, 137 FERC 61,064 (2011) ( Order No. 755 ). 3 ISO-NE Transmittal Letter dated February 6, 2013 at FINAL 1

2 is opposed to ISO-NE s January 1, 2015 implementation date. As is well documented, ISO-NE has yet to open its regulation market to non-generation storage resources per FERC s February 2007 mandates in Order No. 890 and does not plan to do so until it implements the tariff changes proposed in this filing. 4 Waiting to open ISO-NE s market to storage resources until sometime in 2015 is unacceptable as it precludes ESA s members from participating in ISO-NE s market and from being compensated in a just and reasonable manner. Accordingly, ESA respectfully requests that FERC approve the tariffs as ISO-NE proposed and mandate implementation within the timeline allowed by FERC in Order No. 755, which is 180 days from the filing of the compliance tariff (i.e. by August 5, 2013). Moreover, ESA respectfully requests that the Commission grant ESA s Motion and accept its Comments out of time. I. COMMUNICATIONS Kindly provide all communications concerning this proceeding to: Andrew O. Kaplan, Esq. Brown Rudnick LLP One Financial Center Boston, MA Telephone: Fax: akaplan@brownrudnick.com II. COMMENTS A. ESA supports ISO-NE s proposed tariffs because they modify the original compliance proposal to include uniform prices and separate payments for capacity and service (i.e., mileage). As such, ISO-NE s proposed tariffs now comply with Order No Pursuant to FERC s November 8 th Order on ISO-NE s original Order 755 compliance filing, ISO-NE s February 6, 2013 compliance filing now includes a 4 Today storage resources may only supply regulation through the Alternative Technologies Regulation Pilot Program ( Pilot Program ) which limits total participation to 13 MW FINAL 2

3 mechanism to calculate uniform clearing prices for both regulation service (mileage) and capacity. 5 The ISO-NE filing also includes a proposal for regulation compensation to be based on separate payments for regulation capacity and service. 6 Given that the regulation service payment is based on the regulation service prices and the actual amount of mileage provided in that interval, ESA agrees that ISO-NE s proposed tariff satisfy the requirements of Order No. 755 for market-based, uniform clearing prices and for two-part payments where the service payment is based on the actual mileage. Accordingly, ESA respectfully requests that the Commission accept this filing to become effective imminently. B. ISO-NE s proposal to delay implementation of its Order No. 755 compliance until January 2015, at the earliest, is more than two years longer than allowed by FERC in Order No Additionally, it will continue to prevent the participation of non-generating storage resources in ISO-NE s market. ISO-NE s proposed schedule for compliance of Order No. 755, on or after January 1, 2015, is not in the interest of ratepayers and maintains the barrier to the participation of energy storage resources in this market. 1. Waiting until 2015 to implement Order No. 755 is not in the interest of ratepayers. ISO-NE currently compensates unit-specific opportunity costs out of market which the Commission found in Order No. 755 can result in committing units with higher costs resulting in rates that are not just and reasonable. 7 Specifically FERC found that, paying an out-of-market unit-specific opportunity cost, rather than a uniform clearing price, can result in the market basing the commitment of regulating units on bids that do 5 See Filing letter at See Filing letter at 4. 7 ISO-NE Transmission, Markets & Services Tariff, Section III, Market Rule 1, subsection III FINAL 3

4 not reflect the true cost of providing capacity, potentially leading to committing units with higher costs than other units not committed and is therefore not in the interest of ratepayers. 8 Further, as noted in Order No. 755, ISO-NE s current pricing scheme of paying unit-specific opportunity costs results in artificial and inaccurate prices paid to all resources providing regulation in ISO-NE and thus, does not send an efficient price signal to current and potential market participants. 9 As the Commission points out in Order No. 755, the market inefficiencies created by unit-specific opportunity costs is particularly acute for resources that have no opportunity costs, such as new storage resources. 10 Therefore, continuing the current market design until sometime in 2015 is not in the best interests of market participants, consumers, or the grid. 2. Delaying the implementation of Order No. 755 is particularly problematic to Alternative Resources because ISO-NE has tied its compliance with Order No. 890 to the implementation of Order No Such delay causes uncertainty for investors in new storage technologies and denies ratepayers the benefit of innovative storage technologies in the market. The benefits of energy storage include fast and accurate response, reduced fuel consumption from displaced fossil plants, reduced emissions, increased flexibility, and increased reliability. Delaying the implementation of Order No. 755 is particularly problematic to alternative resources like storage technologies because ISO-NE has tied its compliance with Order No. 890 to the implementation of Order No Such delay causes uncertainty for investors in storage technologies and denies ratepayers the benefit of market innovations. Today, ISO-NE is the only jurisdictional grid operator that has failed to allow non-generation resources to participate in its regulation market, as FERC mandated in Order No Non-generation resources are currently only allowed to 8 Order No. 755 at P Id. 10 Id., P FINAL 4

5 provide regulation in ISO-NE through its Pilot Program, which limits cumulative participation to a total of 13 MW. 11 Although the Pilot Program was set to terminate with the opening of the new market in May 2010, ISO-NE has continuously delayed the implementation of the new tariffs and kept the Pilot Program in place. In its April 30, 2012 transmittal letter with its Order No. 755 compliance filing, 12 ISO-NE stated that the proposed rule changes that were submitted to comply with Order No. 755 also addressed the incorporation of nongeneration resources directly into the regulation market (and would therefore result in the termination of the Pilot Program). Therefore, granting an extension to ISO-NE to comply with Order No. 755 until on or after January 1, 2015 allows ISO-NE to continue to bar storage resources from participating in its regulation market. Given that there are storage and other non-generation resources actively providing regulations service in other ISO/RTO markets today, waiting until 2015 to allow storage resources to supply regulation service in ISO-NE is unfair and discriminatory to these technologies. The following table is a list of storage projects that are either providing service or under development in regions where there are open markets for storage. For example, in the neighboring NYISO regulation market, Beacon Power LLC has been operating with a 20 MW flywheel energy storage facility since 2011 and AES Energy Storage has been selling services with an 8 MW battery project since In PJM, AES Energy Storage has been providing regulation in the market with a 32 MW battery project since It is time for ISO-NE to open its market to storage. 11 See Market Rule 1. Appendix J. 12 ISO-NE Transmittal Letter dated April 30, 2012 at FINAL 5

6 Facility (Location) Developer/Owner Technology COD MW Notrees (TX) Duke Energy Battery Xtreme* Laurel Mountain (WV) AES* Battery A123* Wind Firming EnergyFarm Modesto Irrigation Dist. Battery Primus Fairbanks BESS (AK) GVEA Battery Saft* Stephentown Spindle (NY) Beacon Power* Flywheel Beacon Angamos (Chile) AES Battery A Hazle Spindle (PA) Beacon Power Flywheel - Beacon Oahu (HI) First Wind Battery Xtreme Various U.S. Projects AEP Battery NGK Maui (HI) First Wind Battery - Xtreme Poner Los Andes (Chile) AES Battery A Auwahi (HI) Sempra Generation Battery A Johnson City (NY) AES Battery A San Jose (CA) PG&E Battery NGK Vaca Dixon (CA) PG&E Battery NGK Borrego Springs (CA) SDG&E Battery Dow Kokam Catalina Island (CA) Southern Ca. Edison Battery NGK * ESA Advocacy Council member Under Construction Given that ISO-NE has yet to open its market to new fast-ramping, environmentally-friendly storage technologies, we respectfully request that FERC require that ISO-NE imminently implement the tariff changes proposed in this filing. ISO-NE states that the schedule to complete the work required to comply with Order No. 755 must be delayed to 2015 due to the projects it is prioritizing over the next several years to address significant reliability concerns arising from the growing dependence on natural gas and the flexibility needed to balance intermittent wind. 13 What ISO-NE fails to recognize is that these are exactly the grid challenges that advanced energy storage resources are designed to mitigate. Therefore, it is in ISO-NE s interest to prioritize the development of market rules that not only remove barriers for storage but also encourage the participation of storage. Complying with Order No. 755 and Order 13 ISO-NE Transmittal Letter at FINAL 6

7 No. 890 are among the market changes that will enable the development of advanced energy storage resources in New England and the benefits they provide to the grid. Therefore, ESA respectfully requests that the Commission direct ISO-NE to comply with the principles of Order No. 755 and Order No. 890 within 180 days of the filing date of the proposed tariffs (i.e. by August 6, 2013), as per the requirements of Order No C. ESA supports ISO-NE s offer to include the energy opportunity cost in the regulation market price as soon as possible. As discussed in its Transmittal Letter, ISO-NE is developing an interim shortterm change to the regulation market designed to include the energy opportunity cost in the regulation market clearing price. 14 Such a change would achieve one of the major components of Order No. 755, which is to include the marginal unit s energy opportunity cost in the regulation market price. ESA fully supports ISO-NE s efforts to become a step more compliant with Order No Including the energy opportunity cost in the regulation market clearing price will send the right market signals to participants and will ensure the selection of the lowest total cost regulation resources. Moreover, such a change will apply to both resources in the market and resources in the Pilot Program. It is important to note, however, that this effort to include the energy opportunity cost has not yet completed the stakeholder process, as it has not yet been voted on by the NEPOOL Markets Committee nor has the Participants Committee considered the proposal yet. As such, it cannot be assumed that ISO-NE will undergo this near-term effort. Therefore, ESA respectfully requests that in this proceeding, the Commission direct ISO-NE to comply with the principles of Order No. 755 as soon as possible. 14 Id. at FINAL 7

8 III. MOTION TO ACCEPT COMMENTS OUT OF TIME ESA moves that the Commission accept these Comments filed out of time. The Commission requested that Comments be submitted by February 27, Thus, ESA s Comments are submitted 48 hours late. ESA has actively participated in this proceeding and, because its members are currently banned from offering the grid use of their fast-responding, environmentallyfriendly regulation technologies, the Commission will benefit from the invaluable perspective included in ESA s Comments. Moreover, ESA s members are looking to enter ISO-NE s regulation market and are current participants in ISO-NE s Pilot Program,. Thus, ESA will be directly impacted as a result of FERC s ruling in this proceeding and no other party can represent ESA s interests in this docket. Given its extensive knowledge of the workings of the regulation market and how entities are compensated for providing regulation to the grid, ESA s Comments are in the public interest. Additionally, submitting these Comments out of time will not cause disruption or delay in FERC s consideration of ISO-NE s proposed tariffs. For all of these reasons, ESA respectfully requests that Commission find that good cause exists to admit these Comments into the record in this proceeding and accept these Comments for consideration in the instant docket. IV. CONCLUSION As discussed above, ESA respectfully requests that the Commission (1)_accept these Comments for consideration in this docket, (2) approve ISO-NE s February 6, 2013 filing as compliant with Order No. 755 and (3) mandate that ISO-NE effectuate the tariffs within 180 days FINAL 8

9 By its attorney, Andrew O. Kaplan BROWN RUDNICK LLP One Financial Place Boston, MA Telephone: Fax: On behalf of the members of its Advocacy Council A123 Systems, Inc. AES Energy Storage Altairnano Aquion Energy Beacon Power, LLC FIAMM NextEra Energy S&C Electric Company Saft America Inc. Temporal Power Xtreme Power Dated: March 1, FINAL 9

10 CERTIFICATE OF SERVICE I hereby certify that I have this day served electronically the foregoing document upon each person designated on the official service list compiled by the Secretary in this proceeding. Dated in Boston, MA this 1 st day of March Patricia A. Muse Legal Executive Assistant BROWN RUDNICK LLP One Financial Center Boston, MA Telephone: FINAL 10