FERC on Monday accepted most provisions in NYISO’s second attempt to comply with Order 841, which requires RTOs and ISOs to remove market barriers for energy storage resources (ESRs).

The decision specifically accepted proposed Tariff revisions to subject ESRs to transmission charges, effective no later than Sept. 30, but ordered the ISO within 90 days to clarify its proposed exemptions to such charges (ER19-467). The commission faulted the initial compliance filing for failing to apply those charges to ESRs when they are charging in the wholesale market for later retail sale but not providing services to the grid.

The commission also deemed NYISO’s Jan. 21 request for rehearing to be denied by operation of law.

Issued in 2018, Order 841 requires market participation rules to recognize the unique physical and operational characteristics of storage resources. The commission last December partially accepted NYISO’s compliance filing but faulted the ISO for lack of details on its metering methodology and accounting practices for ESRs located behind a customer meter. (See FERC Partially Accepts NYISO Storage Compliance.)

In its second compliance filing in February, the ISO proposed not to assess transmission charges to ESRs when the resource receives a real-time operating reserves schedule; receives a real-time regulation service schedule; is operating and is a qualified supplier of voltage support service; or is dispatched as out-of-merit to meet New York Control Area (NYCA) or local system reliability.

FERC accepted those provisions, but required NYISO to provide clarifications, saying that because these services are typically scheduled on top of a resource’s base energy schedule, it is unclear what portion of a resource’s megawatt withdrawals the ISO proposes to exempt from transmission charges, in particular of withdrawals during an interval when the resource is self-scheduled at a fixed megawatt quantity.

Pumped up

In its request for rehearing, NYISO argued that its proposed approach to not assess transmission charges aligns with its existing rate structure for transmission charges assessed to resources in the NYCA that withdraw energy at a node for later injection into the grid.

Specifically, NYISO said for more than 20 years it has applied a separate rate structure for transmission charges applicable to the 1,134-MW Blenheim-Gilboa Hydroelectric Power Station in the Catskills, a pumped storage facility owned by the New York Power Authority. The ISO argued that the station is located at a single generator bus that pays the nodal locational based marginal price (LBMP) to withdraw energy as a “negative injection” for later injection back into the grid.

NYISO sought to apply the same separate rate structure to all nodal ESRs in in its jurisdiction and said that under Order 841, when such resources are marginal in the ISO’s dispatch of energy, loads in the NYCA would effectively be paying the related charges twice — once as part of the energy component of LBMP and again when NYISO and the relevant New York transmission owner assess charges to the loads.

But the commission said it was not persuaded by NYISO’s request for rehearing and continued to find the ISO has not demonstrated, as required in Order 841-A, that its proposal not to apply transmission charges to all ESRs is reasonable given how it assesses transmission charges to wholesale load under its existing rate structure.

“As a general matter, NYISO assesses transmission charges to all wholesale load, and it only declines to assess transmission charges to the withdrawals by one specific pumped storage facility when that facility is participating under the energy limited resource (ELR) model,” the commission said. “Thus, NYISO’s proposal not to apply transmission charges to any energy storage resource is not consistent with or reasonable given its existing rate structure, as contemplated by Order No. 841-A.”

The commission also said that NYISO’s double payment argument “is, in essence, a late-filed request for rehearing of Order No. 841 and is statutorily barred. Notwithstanding this procedural flaw, NYISO’s argument is also unpersuasive on the merits.”

Two different transactions occur, the commission said: “One that entails the electric storage resource purchasing charging energy at wholesale from the RTO/ISO market, and another that entails wholesale load purchasing energy from the electric storage resource via the RTO/ISO energy market. As such, we find that it is reasonable to apply transmission charges to both the electric storage resource and the loads associated with those separate transactions and for load to ultimately pay the two transmission charges.”

NYISO also argued that FERC’s rejection of its proposal was inconsistent with the commission’s acceptance of a CAISO proposal to exempt all ESRs from transmission charges when charging, consistent with CAISO’s existing rate structure.

Not so, said the commission.

“Unlike CAISO’s non-generator resource model, which was designed for electric storage resources, NYISO’s ELR model is designed for and primarily used by generators. Indeed, NYISO withdrew its ELR model from consideration for compliance with Order No. 841 because, according to NYISO, the ELR model could not accommodate withdrawals from ESRs.”

NYISO’s treatment of one pumped storage facility under the ELR model is thus a limited exception and not representative of how the ISO assesses transmission charges to wholesale load under its existing rate structure, the commission said.