By Christen Smith

State regulators, utilities and public power groups have asked the D.C. Circuit Court of Appeals to overturn part of FERC’s landmark rulemaking on energy storage participation, challenging the commission’s refusal to allow states to opt out.

The National Association of Regulatory Utility Commissioners’ (NARUC) petition seeks an order that portions of Order 841 and its rehearing order (841-A) “are arbitrary and capricious” and “not in accordance with law.” The Edison Electric Institute, the American Public Power Association, the National Rural Electric Cooperative Association and American Municipal Power filed a separate petition Monday also challenging the orders.

In a press release Tuesday, NARUC said it hopes states and “relevant electric retail regulatory authorities” (RERRAs) will be permitted to manage electric storage resources (ESRs) in the same way they oversee demand response aggregation. NRECA told the House Energy and Commerce Committee in June FERC had overstepped its authority and local regulating authorities should be able to determine when and how ESRs join the marketplace.

In May, FERC ruled 3-1 to reject requests it allow RERRAs the ability to opt out of its storage provisions, as the commission did for demand response under Order 719. Commissioner Bernard McNamee was the lone dissent. (See FERC Upholds Electric Storage Order.)

The majority said the Federal Power Act gives FERC clear jurisdiction over storage, citing the Supreme Court’s 2016 EPSA ruling. EPSA upheld FERC’s jurisdiction over the participation in RTO markets of DR resources, which are generally located on the distribution system. “The court did not find the commission’s authority to be lessened by the location of demand response resources behind the retail customer meter,” the commission said.

“We disagree with assertions by petitioners and the dissent that, unless the commission adopts an opt-out, the commission’s regulation of the RTO/ISO market participation of distribution-connected and behind-the-meter electric storage resources violates FPA Section 201. We find the Supreme Court’s jurisdictional findings in EPSA regarding wholesale demand response apply with at least as much force to participation in RTO/ISO markets by electric storage resources engaged in wholesale sales in interstate commerce, even where those resources are interconnected on a distribution system or located behind a retail meter.”

McNamee said the majority “fails to recognize the states’ interests in ESRs located behind a retail meter (behind-the-meter) or connected to distribution facilities.”

“I believe Order Nos. 841 and 841-A are on solid footing when they deal with ESRs connected to the transmission system and how ESRs may participate in the wholesale market, and I concur in those aspects of today’s order. I am troubled, however, that the storage orders do not fully respect or consider the impact they may have on local distribution systems, the states that regulate those local distribution systems and local retail customers,” McNamee wrote.

NARUC’s criticism echoes comments from RTOs, utilities and states who said FERC’s order exceeded the commission’s authority. (See States, Utilities, RTOs Push Back on Storage Order.) NARUC spokeswoman Regina Davis said the group’s petition won’t impact implementation of new rules because no stay was requested. There is no official timeline for court action, either, she said.

All six jurisdictional RTOs and ISOs are facing a December deadline for compliance with Order 841, which requires them to revise their market participation models to allow storage resources 100 kW and larger to provide capacity, energy and ancillary services within their technical ability. In April, the commission sought more information on the grid operators’ plans that were submitted five months prior. (See FERC Asks RTOs for more Details on Storage Rules.)

Supporters of FERC Order 841 said some of the submitted plans currently under review are impractical and burdensome.

Astrape Consulting released a study Monday — funded by the U.S. Energy Storage Association (ESA) and the National Resources Defense Council (NRDC) — that concluded PJM’s proposal requiring a storage asset to run for 10 continuous hours in order to qualify its full output for the capacity market “is unnecessary and unduly restrictive.”

“Energy storage is being installed on electric grids across the country at a rapid pace, helping transform our electric system to a more resilient, efficient, sustainable and affordable one,” said ESA CEO Kelly Speakes-Backman. “We stand behind the leadership at FERC to modernize energy rules to enable this transition. This study clearly affirms FERC’s judgement to include a broader set of technologies to participate, saving consumers money and supporting a diverse supply of clean energy generation.”

PJM spokesman Jeff Shields said Tuesday the RTO is awaiting FERC’s order on its Order 841 compliance filing. “Subject to FERC’s order, we are planning to implement in December 2019 as Order No. 841 proposed,” Shields said. “We will monitor any court developments in the meantime.”

FERC Chairman Neil Chatterjee last month described Order 841-A as one of the commission’s most important rulings it issued this year, calling it “one of the most significant federal actions we took to reduce carbon emissions.”