FERC policy statement upholds concurrent cost recovery for energy storage resources
- The Federal Energy Regulatory Commission yesterday issued a policy statement clarifying that electric storage resources may concurrently recover their costs through cost-based and market-based rates, while also outlining possible approaches for avoiding double recovery.
- FERC said it found allowing the concurrent recovery would not impact other market participants, and also offered coordination guidance between grid operators and storage assets.
- FERC Commissioner Cheryl LaFleur issued a dissent, saying the commission's "sweeping conclusions" regarding multiple payment streams on pricing in wholesale electric market appeared to be unfounded.
A new wave of energy storage resources are creating revenue opportunities and helping make markets more efficient, but along the way they've opened up new concerns over how they are compensated and how to protect ratepayers and market participants.
"Because they can almost instantaneously provide multiple services and switch from providing one service to another, these resources may fit into one or more of the traditional asset functions of generation, transmission and distribution," FERC said in a statement.
FERC has taken steps to address some questions, issuing a policy statement for storage resources looking to concurrently recover their costs through cost-based and market-based rates. The commission confirmed resources can recover costs concurrently, but said questions that must be addressed include: double recovery of costs to the detriment of cost-based ratepayers; the potential for adverse competitive impacts in wholesale electric markets to the detriment of other competitors; and the need for independence of regional grid operators from market participants.
FERC's statement included guidance on coordination between grid operators and storage owners, but with regard to adverse impacts, the commission said it is "not convinced there will be a detriment to other market competitors."
Commissioner LaFleur, however, wrote in a dissent that the commission was too quick to dismiss market impacts — particularly in light of the guidance's potential relevance to other resources.
“I particularly disagree with the Policy Statement’s sweeping conclusions about the potential impacts of multiple payment streams on pricing in wholesale electric market," LaFleur wrote.
She continued to say that while the commission's policy statement is "nominally limited to storage resources," it could also be read to reflect FERC's take on the impacts of multiple payment streams on market pricing more generally, "thus implicating broader regional discussions on state policy initiatives and their interaction with competitive markets."
- U.S. Federal Energy Regulatory Commission FERC Issues Policy Statement on Cost Recovery by Electric Storage Resources
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