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FERC finally weighs in on SPP’s DER plan

FERC finally weighs in on SPP’s DER plan
SPP Coordination Center (Courtesy: SPP)

The Federal Energy Regulatory Commission (FERC) has finally weighed in on a plan from Southwest Power Pool, the central U.S. grid operator, to facilitate wholesale market participation by aggregated distributed energy resources.

The decision comes nearly two years after SPP’s initial filing in response to FERC Order 2222, a monumental action the nation’s regional grid operators are still grappling to implement. FERC found that SPP partially complied with Order 2222, hence I think SPP must immediately restart a task force designed to engage stakeholders.

At several points, FERC found SPP complied with requirements at the outset but partially complied on a specific nuance, like not allowing compensation for demand response in a heterogeneous aggregation. In a victory for protestors, FERC agreed that SPP’s attestation requirements could result in distribution utilities becoming the gatekeepers for retail programs to provide wholesale services. If SPP had initiated a robust stakeholder process with the utilities and state regulatory authorities before filing with FERC, it could have met most of the compliance requirements. Let’s hope SPP corrects that mistake this year.

Non-controversial requirements

FERC found SPP compiled with small utility opt-in requirements. However, the commission took issue with the Demand Response Opt-Out provision. Specifically, FERC found that by imposing an attestation requirement on aggregators that a RERRA did not prohibit demand response participation in aggregation from a large utility, SPP conflicted with 719 and 719-A. FERC, as a result, directed SPP to remove this conflict. Additionally, FERC found SPP partially complied with the interconnection requirement because SPP stated in a data response that the DER interconnection requirement applies to DERs interconnected on both the distribution and transmission systems. FERC found that this requirement should apply only to DERs on the distribution system. Hence, FERC directed SPP to clarify this interconnection requirement.

On multiple requirements, FERC found SPP complied with the requirement at the outset but partially complied on a specific nuance. For example, SPP complied with the Market Participation Model requirement because it allows an aggregator to choose a valid resource type, including the market storage resource. But there was an exception: FERC found SPP did not appropriately compensate demand response participating in heterogenous DER aggregations.

Similarly, FERC found that SPP complied with the requirement to allow multiple DER technologies to participate in markets if they choose a valid resource type. However, SPP also partially complied because SPP’s proposal does not allow compensation for demand response in a heterogeneous aggregation per Order 745. Specifically, FERC found that, under SPP’s proposal, a heterogeneous aggregation containing injecting and demand-curtailing resources cannot register as a dispatchable demand response or a block demand response resource. Hence, FERC directed SPP to apply the requirements of Order 745 to heterogeneous DER Aggregations.

Double counting of services

If the implementation date was a big ticket item for MISO’s filing, FERC found double counting services problematic for SPP. SPP’s proposal to comply with double counting requirements was to force attestations on aggregators. FERC found that SPP complies with this requirement and allows DERs to provide multiple services. SPP’s proposal also allows DERs that participate in one or more retail program to participate in markets as long as they provide a different service.

However, FERC agreed with protestors that SPP’s attestation requirements could result in distribution utilities becoming the gatekeepers for retail programs to provide wholesale services. Hence, FERC directed SPP to provide further explanation for the use of the term “same MWh” because FERC found that phrase is too broad and SPP did not provide enough guidance to retail providers on how that phrase should be applied to DERs providing ancillary services for example.

FERC also directed SPP to provide specific guidance on net energy metering programs – whether those NEM programs could provide the MW capacity portion of ancillary services in SPP as a distinct service and provide any associated MWh of energy settled at the retail rate without constituting a double counting concern. SPP has much work to comply with this double counting requirement.

SPP ends up with many compliance requirements regarding the role of distribution utilities

SPP complied with the requirement in Order No. 2222 that the results of a distribution utility’s review will be incorporated into the aggregation registration process. However, FERC found SPP did not comply with the requirement to include criteria in its tariff by which the distribution utilities will determine whether each proposed DER is capable of participating in a DER aggregation. So, FERC directed SPP to incorporate any distribution utility verification of a DER aggregation’s capability to participate in SPP’s markets, including any double counting review and affirmations, into the 60-day distribution utility review process.

FERC also found SPP partially complied with the requirement to include criteria for distribution utility review; hence, it directed SPP to revise its tariff to clarify that the scope of the review of distribution system reliability impacts is limited to incremental impacts from a resource’s participation in a DER aggregation that the utility did not previously consider during the interconnection study process for that resource.

Additionally, FERC directed SPP to revise its tariff to allow distribution utilities the opportunity to request that SPP place operational limitations on a DER aggregation or remove a DER from a DER aggregation based on specific significant reliability or safety concerns that it demonstrates to SPP and the DERA, on a case-by-case basis. FERC also found that SPP partially complied with its distribution utility information-sharing requirements. FERC directed SPP to share with the DERA the information regarding a DER that the distribution utility provides to SPP as part of the review process.

Finally, FERC found that SPP partially complied with the dispute resolution process for the review process. FERC said SPP did not demonstrate how its proposal would appropriately address disputes involving distribution utilities, such as timing of review and information sharing requirements. So, FERC directed SPP to revise its tariff to explain how SPP will resolve conflicts within its authority in the tariff.

Next steps

SPP proposed Q3 2025 as the implementation date for Order 2222. FERC directed SPP to file a progress report indicating the milestones toward the implementation date.

FERC has given SPP a clear direction on the next steps. However, SPP is likely to seek an extension based on how PJM and MISO have responded when they received similar directions from FERC. If FERC approves SPP’s likely 6-month extension request, the revised compliance plan from SPP will be due on October 1, 2024. It remains to be seen how SPP plans to meet its proposed implementation date of the third quarter in 2025. SPP has much work to do in multi-nodal aggregation technical explanation, double counting concerns, and the role of distribution utilities.