By William Opalka

The Federal Energy Regulatory Commission last week approved rule changes allowing New England grid operators to fully integrate demand response into their wholesale markets, including their reserve markets (ER15-257).

The changes were proposed by ISO-NE and the New England Power Pool to bring their rules into conformance with FERC Order 745.

Some changes became effective on Jan. 12 in advance of the ninth Forward Capacity Auction, scheduled for Feb.2. Others will take hold on June 1, 2017.

FERC turned aside objections from power generators who want any rulings related to Order 745 deferred until a successful challenge to FERC jurisdiction over DR in a federal appeals court is resolved.

The New England Power Generators Association has argued that the D.C. Circuit Court of Appeals ruling in Electric Power Supply Association v. FERC says that FERC lacks jurisdiction to regulate rates for supply-side demand response resources and could extend to the forward capacity and forward reserve markets.

“We find it appropriate at this time to proceed with these market enhancements until further action is taken,” FERC wrote.

In 2011, ISO-NE and NEPOOL proposed a two-stage process to incorporate DR into the wholesale markets. Stage one defined an initial transition period that began in June 2012. Stage two rules were proposed in this docket in October 2014.

ISO-NE currently models a single DR asset that can both reduce its load and inject energy into the electric grid as two separate assets, according to FERC. ISO-NE and NEPOOL say the changes will allow DR to provide operating reserves as other resources without altering the existing co-optimized energy and real-time operating reserves market. “These changes include revisions to demand response resources’ energy market offer parameters to allow such resources to provide 10-minute and/or 30-minute reserves,” FERC said.

NEPGA also said the revisions discriminate against generation resources in the compensation of DR for avoided line losses.

FERC rejected that argument, saying that “under a common market structure, all resources will have comparable obligations and be paid the comparable price for delivery.”