As energy storage facilities ("ESFs") are developed and deployed in the Northeast, questions about how ESFs will be charged for use of the electric distribution system while participating in wholesale markets have become increasingly pressing. In the current regulatory paradigm, the Federal Energy Regulatory Commission ("FERC") has jurisdiction over wholesale transactions, such as transmission service, while states have jurisdiction over retail sales. Some ESFs in the Northeast are shaking up this established dichotomy by interconnecting to the distribution system—the costs of which are usually recovered through state-jurisdictional rates—but participating in wholesale markets. In this situation, ESFs draw power from the distribution grid not as an end use (retail), but in order to later provide services back into wholesale energy markets.
In Order No. 841, FERC determined that it had jurisdiction over the rates charged to ESFs when they charge for later resale into energy or ancillary service markets. FERC also noted in the Order that it may be appropriate, on a case-by-case basis, for distribution utilities to assess a charge to ESFs for the use of distribution systems. While tariffs for wholesale distribution service ("WDS") exist and have been used in various contexts, the distribution utilities in the Northeast generally lack appropriate tariffs to serve ESFs or have tariffs that are ill-suited to the types of ESFs looking to interconnect.
Through various processes, distribution utilities in Maine, New York, Massachusetts, and Connecticut, are now attempting (or will soon attempt) to establish WDS tariffs applicable to ESFs. How these tariffs set charges, and the amount of those charges, will be key to the economics of ESFs in the region—and it is looking like such tariffs may be in place across the region soon. Here is a status update on some of the important proceedings underway:
Maine – Central Maine Power
In August 2021, Central Maine Power ("CMP"), which serves customers in central and southern Maine, sought permission from the Maine Public Utility Commission ("MPUC") to apply a WDS rate to ESFs interconnected to CMP's distribution system and participating in wholesale markets. At the time, there was only one ESF customer that would have been subject to the rate. After initially approving the rate in May 2022, the MPUC changed tack in September 2023, ordering CMP to cease assessing charges under the WDS rate until obtaining FERC's approval.
In an order issued on April 1, 2024, FERC sided with the
protestors, finding that CMP had not adequately justified
the WDS rate and referring the matter to hearing and settlement
judge procedures. Those procedures are now underway.
New York – Central Hudson Gas & Electric
A similar showdown is underway at FERC for Central Hudson Gas & Electric ("CHG&E"), a New York distribution company. CHG&E filed proposed tariff revisions seeking FERC approval to apply a WDS rate to ESFs in its service territory in March 2024. The rates CHG&E is pursuing at FERC are based on rates it is simultaneously litigating before the New York Public Service Commission ("PSC"). CHG&E has not had a fully-litigated rate case at the PSC since 2009, and the cost data and methodology that inform the retail rates underlying CHG&E's proposed WDS rate are hotly contested at the PSC.
As in the CMP case, protestors to CHG&E's proposed tariff revisions at FERC argue that CHG&E's WDS rate is inadequately supported by cost data and unreasonable in its treatment of ESFs. The simultaneous state and federal proceedings make this situation complex: for instance, as one protestor pointed out, CHG&E filed a correction with the PSC in April that rendered obsolete the rate on which CHG&E's FERC filing was based.
FERC determined that CHG&E's initial filing was deficient on May 6, 2024, and CHG&E filed a deficiency response on June 5, 2024. It is likely that this response will invite another round of protests and that resolution is still some ways off.
Massachusetts – National Grid, Eversource and Unitil
A 2022 Massachusetts law (St. 2022, c. 179, § 72) required the Massachusetts electric distribution companies ("EDCs") to file a notice of intent to file a WDS rate schedule for standalone energy storage systems interconnected to their distribution network with the Massachusetts Department of Public Utilities ("DPU") by Oct. 31, 2023. All three Massachusetts EDCs—National Grid, Eversource, and Unitil—filed such a notice with the DPU at the deadline, but none has yet filed a proposed WDS rate with FERC. Those filings are expected soon.
Connecticut – Eversource and United Illuminating Company
In December 2022, the Connecticut Public Utilities Regulatory Authority ("PURA") issued, as part of its two-year annual review of the Connecticut Energy Storage Solutions program, a decision directing the Connecticut EDCs, Eversource and United Illuminating Company, to convene a working group with the objective of establishing WDS tariffs that would support development of front-of-the-meter ESFs. That Order explicitly required that the WDS charges enable revenue stacking and be similar to a specific FERC tariff used by ComEd. Eversource and United Illuminating filed a working group report with PURA in December 2023. That report included specific rate design proposals. Both Eversource and United Illuminating indicated in February 2024 submissions that they were anticipating filing WDS tariffs at FERC in the first half of 2024, so those filings may soon land with FERC as well.
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