RTO Insider

By Jon Lamson

FERC has approved filings by a pair of Massachusetts utilities establishing distribution fees for standalone electric energy storage systems (ESS) that connect to the distribution system but participate in ISO-NE wholesale markets (ER24-2795-001, ER24-2796-001.)

The filing comes in the wake of FERC Order 2222, which requires RTOs to eliminate obstacles for the participation of distributed energy resource aggregations in wholesale markets. FERC approved key aspects of ISO-NE’s compliance proposal for the order in 2023 (ER22-983-004). (See FERC Accepts ISO-NE Order 2222 Compliance Filing.)

The utilities, both subsidiaries of National Grid, wrote that ESS fees will be based on three rate components: an as-used peak demand charge; a contract demand charge; and an access charge, “reflecting different types of costs incurred by National Grid.”

The peak demand charge reflects “direct costs of owning and operating its distribution system.” The contract demand charge covers operations and maintenance expenses “for line transformers and meters, load dispatching, supervision and engineering, and allocated portions of labor-related overhead.” The access charge incorporates “costs incurred to provide WDS [wholesale distribution service] to specific customers.”

The Alliance for Climate Transition (ACT, previously named the Northeast Clean Energy Council) and the Massachusetts Attorney General’s Office (AGO) filed concerns about National Grid’s proposal.

ACT made the case that the distribution fees should not apply “when an energy storage system is providing ancillary services in response to ISO-NE dispatch instructions.”

The trade group wrote that FERC Order 841 exempts storage systems from transmission delivery fees when they are dispatched to provide ancillary services, and said the commission “should apply that same policy rationale to the corresponding issue of distribution charges.”

The group also asked FERC to remove or revise the proposed definition of distributed energy resource management systems (DERMS), writing that “the technology is not yet utilized on the company’s system,” and the timeline for implementation is unclear.

It also expressed concern that additional provisions in the proposed wholesale distribution tariffs (WDTs) would result in double charging distribution costs to ESS customers. ACT also opposed language directing ESS customers to be disconnected automatically if actual demand exceeds the contract demand value.

Meanwhile, the AGO requested that National Grid update its filing to account for the effects of recent orders by the Massachusetts Department of Public Utilities on National Grid’s state-jurisdictional wholesale distribution service rate calculations. The AGO asked National Grid to submit the orders to FERC with underlying data to support the calculations.

Responding to the protests, National Grid updated its filing to comply with the AGO’s request and removed the automatic disconnection provision highlighted by ACT.

National Grid defended its definition of DERMS in the tariffs, writing that it is “actively implementing DERMS through its ongoing grid modernization efforts and related pilot programs,” and that it will only use DERMS “when such product is a company standard offer and operational at the customer site.”

The company opposed ACT’s request to exempt ESS discharging for ancillary services from distribution fees.

“The impact of ESS imports and exports for ancillary services on the distribution system is the same as any other load or exports and loads exceeding system parameters can result in exceedance of system capacity,” National Grid wrote. “It is appropriate and necessary for ESS to pay for the use of the distribution system to provide ancillary services to ISO-NE.”

On March 28, FERC approved National Grid’s updated filing, writing that the changes to the utilities’ WDTs “are a just and reasonable rate design that allows ESS connected to the distribution system to participate in wholesale markets,” adding that the “rates reasonably reflect the costs of serving these customers.”

The commission wrote the changes made and additional evidence and clarifications provided by National Grid “address the concerns raised by the protesting parties.”

FERC agreed with National Grid’s argument that ESS discharging for ISO-NE ancillary services should not be subject to distribution fees.

“While the commission found it appropriate to exempt electric storage resources from transmission charges when they are dispatched to provide a wholesale service, the commission made no such finding with respect to wholesale distribution charges,” FERC wrote.

FERC directed National Grid to submit the effective date for the changes “no less than seven days prior to the date that the filing parties implement the proposed WDTs.”