FERC, CFTC, and State Energy Law Developments

Interest in microgrids is on the rise in the United States as over half of states explore ways to modernize the grid and promote distributed energy resources (DER), including innovative renewable energy, storage, and demand response technologies. However, microgrids are not defined by law or regulation in most states and are more complex than other types of DER because they involve both the generation and distribution of energy. This raises several policy questions, including who should pay for microgrid development and use and whether microgrid operators that technically distribute energy to retail customers should be classified as public utilities and subject to regulations ordinarily imposed on such entities. California is currently exploring the potential benefits of microgrids and the role of state regulation.

FERC issued a notice of proposed rulemaking (NOPR) on September 19 announcing its intent to revise key rules governing the status and rights of Qualifying Facilities (QFs). These revisions include proposed changes to the rules for measuring QF size that could make it more difficult for certain projects to maintain QF status. The NOPR also proposes to provide greater flexibility to states in regulating the rates that QFs can receive from their interconnected utilities, as well as a number of other fundamental changes in the regulation of QFs.

Consolidated Edison Company of New York, Inc. (Con Edison) and Orange and Rockland Utilities, Inc. (O&R) issued a draft joint Request for Proposals (RFP) on May 31 to competitively procure scheduling and dispatch rights from new energy storage projects. Through this initial solicitation, Con Edison and O&R are targeting at least 300 megawatts (MW) and 10 MW, respectively, of new energy storage facilities to meet the in-service deadline of December 31, 2022, set by the New York Public Service Commission (NYPSC) in its December 2018 Order (Storage Order) establishing New York’s three gigawatt (GW) energy storage deployment goal.

Both utilities will accept bids only for new storage projects sized over five MW and connected to the transmission or distribution system that can directly participate in New York Independent System Operator (NYISO) markets and provide distribution benefits, if applicable. These front-of-meter systems must be able to discharge for at least four hours 100 to 350 times per year, have at least 85% roundtrip efficiency, and maintain 98% availability for dispatch each contract year.

As we reported in December 2018, to jumpstart the energy storage market as envisioned by Governor Andrew M. Cuomo, the New York Public Service Commission (NYPSC) issued an order establishing an aggressive 3 GW energy storage goal by 2030, with an interim target of 1.5 GW by 2025, and directing investor-owned electric utilities (IOUs) to engage in competitive procurements for energy storage. The IOUs will issue draft requests for proposals (RFPs) this summer following a stakeholder process that kicks off on March 29.

In response to state legislation enacted last year, the New Jersey Board of Public Utilities (BPU) is seeking comments concerning the state of and prognosis for energy storage development within the State of New Jersey. New Jersey enacted the Clean Energy Act on May 23, 2018. Among other things, the act requires the BPU, in consultation with the regional grid operator, PJM Interconnection, LLC, and other stakeholders, to conduct an energy storage analysis and submit a written report on energy storage to the governor and legislature by May 23, 2019.

The New Jersey Board of Public Utilities (BPU) recently released its first annual report on the development of offshore wind in New Jersey (the Report). The Report comes one year after Governor Phil Murphy released Executive Order No. 8, which directed the BPU and other agencies to implement the Offshore Wind Economic Development Act (OWEDA).

The New York State Public Service Commission (PSC) has issued an order establishing a statewide goal of 3.0 GW of energy storage deployments by 2030—with an interim target of 1.5 GW by 2025—and related reforms to encourage that development.

The order is the latest step in a broader plan being implemented by state authorities to dramatically boost the presence of energy storage in New York. In November 2017, the state legislature enacted a law directing the PSC to establish a statewide energy storage goal for 2030. In January 2018, Governor Andrew M. Cuomo announced a target of 1.5 GW of deployed energy storage by 2025. In mid-2018, PSC staff and the New York State Energy Research Development Authority (NYSERDA) jointly developed the New York State Energy Storage Roadmap (Roadmap) to provide the PSC with recommendations on the policies, regulations, and initiatives needed to meet those targets.

On February 17, 2017, California Senate President pro Tempore Kevin de León (D-Los Angeles) proposed legislation (SB 584) that would require California to generate 100% of its electricity from renewable sources by 2045. The bill also would require California to reach an interim goal of 50% renewable by the end of 2025, accelerating the 50%-by-2030 mandate currently in place. If approved, SB 584 would match Hawaii’s renewable portfolio standard (RPS), which is currently the most aggressive RPS in the United States.

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At its last open meeting on Jan. 19, 2017, the Federal Energy Regulatory Commission (FERC) issued a policy statement that serves to reaffirm FERC’s efforts to encourage the development of electric storage resources. Of all the publications from FERC so far in calendar year 2017, this policy statement is one of the most important for entities in the electric power sector.

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