UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION ) Southwest Power Pool, Inc. ) Docket No. ER13-1748 ) ) MOTION TO INTERVENE AND COMMENTS OF THE ELECTRICITY STORAGE ASSOCIATION Pursuant to Rules 212 and 214 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission ( FERC or the Commission ), 18 C.F.R. 385.212 and 385.214, and the Commission s Combined Notice of Filings #1, dated June 24, 2013, the Energy Storage Association d/b/a Electricity Storage Association ( ESA ), on behalf of its Advocacy Council, 1 hereby submits its Motion to Intervene and offers comments on Southwest Power Pool, Inc s ( SPP ) Open Access Transmission Tariff ("Tariff") that was submitted in compliance with FERC s mandates as outlined in Order No. 755. 2 As detailed below, ESA supports SPP s filing as it complies with Order No. 755. The Tariff, as proposed provides for a two-part payment, including both a capacity and a performance payment that should ensure just and reasonable frequency regulation rates. However, SPP s market rules have barriers that could preclude advanced energy storage resources from entering SPP s market. Thus, in addition to approving SPP s Compliance Filing, ESA respectfully requests that FERC encourage SPP to work with storage providers to ensure that its market rules are modified to remove barriers to advanced energy storage resources. 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 include: A123 Systems, Inc., AES Energy Storage, Aquion Energy, Beacon Power, LLC, East Penn Manufacturing Co., FIAMM, NextEra Energy, S&C Electric Company, Saft America Inc., Temporal Power. 2 Frequency Regulation Compensation in the Organized Wholesale Power Markets, Order No. 755, 137 FERC 61,064 (2011) ( Order No. 755 ). 61284134 FINAL 1
ESA members have been active participants in the FERC Order No. 755 rulemaking and compliance dockets. Accordingly, as outlined below, ESA will be directly and substantially affected by the Commission s decision in this proceeding and thus, seeks intervenor status. I. COMMUNICATIONS Communications and correspondence related to this filing should be directed as follows: Andrew O. Kaplan Brown Rudnick LLP One Financial Center Boston, MA 02111 Tel: 617.856.8369 Fax: 617.289.0724 Akaplan@brownrudnick.com II. INTERVENTION Pursuant to 18 C.F.R. 385.214, ESA s members of manufacturers, developers and operators of energy storage technologies that are used to provide fast-responding, environmentally friendly Frequency Regulation service to the nation s grids and looking to do business in SPP s market, have a direct and substantial interest in this proceeding and in FERC s decision in this docket. Moreover, as no other party to this proceeding can adequately represent ESA s interests, it is in the public interest to allow intervention in this docket. Once approved, the proposed tariff will implement a mechanism by which regulation providers in SPP will be compensated. ESA s opinion as to how regulation resources should be compensated was included in FERC s rulemaking and thus, ESA respectfully submits that its recommendations regarding SPP s pay-for-performance tariff will be equally beneficial in FERC s decisionmaking in this proceeding. Accordingly, ESA respectfully requests that it be allowed to intervene as a party. 61284134 FINAL 2
III. ABOUT THE ELECTRICITY STORAGE ASSOCIATION AND ITS ADVOCACY COUNCIL The ESA is an international trade association that was established over 20 years ago to foster development and commercialization of electricity storage technologies. Since then its mission has always been the promotion, development and commercialization of competitive and reliable energy storage delivery systems for use by electricity suppliers and their customers. ESA members represent a diverse group of entities, including electric utilities, energy service companies, independent power producers, technology developers involved with advanced batteries, flywheels, compressed air energy storage, pumped hydro, supercapacitors and component suppliers, such as power conversion systems. ESA s members also include researchers who are committed to advancing state-of-the-art energy storage solutions. The ESA s Advocacy Council engages in regulatory, legislative and policy advocacy efforts on behalf of the ESA. These member companies have firsthand knowledge of the regulatory challenges that need to be overcome to finance and operate commercial-scale energy storage facilities and are working to promote the continuing development and commercialization of competitive and reliable electricity storage systems within the United States. IV. THE BENEFITS OF STORAGE AND GROWTH OF THE INDUSTRY Storage technologies are a valuable new source of supply for frequency regulation services that offer many key advantages over the conventional generation resources now used to provide frequency regulation in the SPP region. When commercially deployed, storage technologies will assist FERC s efforts to enhance system reliability, lower costs to ratepayers, integrate renewable resources, reduce CO2 greenhouse gas emissions and increase regional generation capacity. Furthermore, their speed and accuracy at responding to system imbalances 61284134 FINAL 3
can lower the overall amount of frequency regulation that needs to be purchased by ratepayers to maintain system reliability. The energy storage industry has already demonstrated success. As listed in the table below, there are a number of energy storage entities that are either operational and/or developing facilities in those ISO/RTO regions that implemented market reforms and removed barriers to the participation of storage technologies in their markets. Facility (Location) Developer/Owner Technology COD MW Stephentown Spindle (NY) Beacon Power* Flywheel Beacon 2011 20 Laurel Mountain AES* Battery A123 2011 32 Hazle Spindle (PA) Beacon Power Flywheel - Beacon 2013 20 Kahuku (HI) First Wind Battery Xtreme 2011 15 Various U.S. Projects AEP Battery NGK 2006-10 13 Auwahi (HI) Sempra Generation Battery A123 2012 11 East Penn (PA) East Penn/Ecoult Battery -- Ecoult 2012 3 Notrees Duke Battery Xtreme 2013 36 San Jose (CA) PG&E Battery NGK 2013 4 Westminster (CA) Southern Ca. Edison Battery A123 2011 4 Vaca Dixon (CA) PG&E Battery NGK 2013 2 Borrego Springs (CA) SDG&E Battery Dow Kokam 2013 1 Catalina Island (CA) Southern Ca. Edison Battery NGK 2011 1 Borrego Springs (CA) California Utility Battery Saft 2012 0.5 San Diego (CA) California Utility Battery Saft 2012 0.07 Philadelphia (PA) SEPTA Battery Saft 2012 1.5 Kona (HI) HELCO Battery Saft 2012 0.2 New York City (NY) Con Edison Battery Saft 2012 1 Wailea (HI) MECO Battery A123 2013 1 * ESA Advocacy Council member Under Construction 61284134 FINAL 4
V. COMMENTS A. ESA Supports SPP s Tariff Provisions as they Comply with FERC s mandates in Order No. 755. The Tariff, as proposed provides for a two-part payment, including both a capacity and a performance payment that should ensure just and reasonable frequency regulation rates. ESA is pleased to support SPP s proposed tariff and notes that SPP s filing is in compliance with FERC Order No. 755. As required by FERC, SPP includes a performance payment that compensates resources based on the actual amount of regulation up and down (i.e., mileage) that SPP dispatches a resource to provide. Under SPP s tariffs, regulation resources would be compensated based on both mileage and capacity which complies with FERC s directives. Also in accordance with FERC s Order No. 755 mandates, SPP will pay all cleared frequency regulation resources a uniform clearing price that includes the marginal resource s opportunity cost. As SPP has designed a two-part payment mechanism for regulation providers in accordance with FERC s directives, ESA recommends that FERC approve the Tariff. B. SPP s Current Tariffs, Appear to Maintain Barriers to Entry into the Market by Advanced Energy Storage Resources, such as flywheels and batteries. As those technologies are specifically designed to operate as fastresponding, accurate regulation resources, FERC should encourage SPP to work with those resources to ensure that no barriers to the regulation market exist by the time that the compensation mechanism is effective. While FERC Order No. 755 came about largely to ensure that fast-ramping storage technologies were compensated fairly, SPP s market design currently has barriers to these technologies providing service. In order to integrate these technologies into their market, other ISO/RTOs (including the Midwest ISO whose design SPP most resembles) made changes to the market rules, including creating a storage resource category to (a) allow resources to both inject and withdraw energy from the system, (b) enabling storage resources to manage their stored 61284134 FINAL 5
energy level (state-of-charge) through the 5-minute energy market, and (c) allow storage resources to net their injections and withdrawals at the wholesale price of energy. Similar changes are necessary in SPP in order to remove barriers to the participation of advanced storage resources in its frequency regulation market. Additionally, Order No. 755 is designed to incent resources to offer as much ramping capability into the market as possible, so as to provide the greatest benefit to the system. However, for SPP to receive these benefits, it must utilize ramp-rate in the dispatch of regulation resources. Although SPP will have the capability to prioritize Regulation dispatch by ramp rate, 3 it currently is not planning to do so. The other ISO/RTOs have all prioritized their regulation dispatch (allocation of ACE correction) to utilize the faster-ramping resources first. Unless SPP utilizes the ramping capability of its fleet of regulation resources, the ultimate benefit of enabling less regulation procurement and faster more accurate system control will not be realized. The physics of controlling frequency is analogous to a car that rolls downhill gaining momentum -- the longer the car rolls before the driver applies the brake, the more pressure he/she will need to exert to stop the car. Likewise, the faster the system operator responds to frequency, the less Regulation that will need to be deployed to correct the deviation. Upon commercial deployment, fast-responding, accurate, environmentally-friendly energy storage regulation providers are capable of enhancing system reliability, lowering costs to ratepayers, integrating renewable resources, reduce CO2 greenhouse gas emissions and increasing regional generation capacity. First, ESA member technologies have demonstrated successfully nationwide that they respond to an ISO/RTO dispatch signal within seconds, which is significantly faster than the resources currently participating in SPP s market. Second, because advanced energy storage providers recycle power from the grid and do not burn fossil 3 See Market Protocol Revision Request (MPRR) 72 Regulation Deployment Priority Assignment. 61284134 FINAL 6
fuel, it has zero direct greenhouse gas emissions. Third, because of its high operating efficiency and low maintenance needs, advanced energy storage technologies are ideal as a low-cost regulation provider. Fourth, the existing fossil fuel-powered plants displaced by advanced energy storage providers can be shifted to provide a corresponding amount of added peak generation capacity. Therefore, ESA respectfully requests that FERC encourage SPP to work with storage providers to ensure that its market rules are modified to remove barriers to advanced energy resources by the time that the Compensation mechanism is effective. VI. CONCLUSION ESA appreciates the opportunity to offer comments in support of SPP's Order No. 755 compliance filing. ESA also looks forward to working with stakeholders to modify tariffs so that advanced energy storage resources can provide services to SPP. As detailed above, ESA also seeks intervenor status in this proceeding. 61284134 FINAL 7
Respectfully submitted, THE ELECTRICITY STORAGE ASSOCIATION By its attorney, Andrew O. Kaplan BROWN RUDNICK LLP One Financial Place Boston, MA 02111 Telephone: 617.856.8369 Fax: 617.856.8201 Email: akaplan@brownrudnick.com On behalf of the members of its Advocacy Council A123 Systems, Inc. AES Energy Storage Aquion Energy Beacon Power, LLC East Penn Manufacturing Co. FIAMM NextEra Energy S&C Electric Company Saft America Inc. Temporal Power Dated: July 12, 2013 61284134 FINAL 8
CERTIFICATE OF SERVICE I, Patricia A. Muse, hereby certify that the foregoing Motion to Intervene and Comments were served via electronic mail to the service list. Dated in Boston, MA this 12th day of July 2013. Patricia A. Muse, Legal Executive Assistant BROWN RUDNICK LLP One Financial Center Boston, MA 02111 Phone: 617.856.8200 pmuse@brownrudnick.com 61284134 FINAL 9