FERC approved an uncontested settlement between Southern California Edison (NYSE:EIX) and a coalition of clean-energy developers and trade associations that reduces potential costs and smooths the way for interconnecting battery storage resources on the utility’s distribution system (ER19-2505).
The parties reached the agreement over SCE’s Wholesale Distribution Access Tariff (WDAT) in July after two years of negotiations, which resulted in a 60% reduction in the utility’s proposed wires charges for standalone energy storage, the Solar Energy Industries Association said in a statement.
“By securing this reduced charge, we’ve helped preserve the regulatory intent of FERC orders 841 and 2222, which pave the way for distribution resources to have fair access to wholesale markets,” SEIA Director of Regulatory Affairs Gizelle Wray said in a statement. “SEIA will continue its work to ensure that utilities don’t attempt to add more unnecessary and onerous fees for market participants to use their wires.”
FERC Administrative Law Judge Stephanie Nagel wrote in her certification of the settlement that it “represents the first tariffed rates, terms and conditions for inbound charging distribution service applicable to energy storage resources interconnected at the distribution-system level and participating in the wholesale market. However, trial staff asserts that this does not constitute an issue of first impression because the establishment of rates, terms and conditions for such service has been approved by the commission in the past.”
The case began in March 2018, when SCE, California’s second largest utility, filed proposed revisions to its WDAT intended to accommodate storage interconnection on its distribution system. The filing included only an “as-available charging distribution service to account for the needs of energy storage resources” and a “provision that SCE would, when necessary to maintain distribution system reliability, curtail charging demand for energy storage resources ahead of retail and wholesale distribution load,” Nagel wrote.
As-available battery charging is allowed when a utility has enough capacity to serve its retail and wholesale customers at the same time.
FERC rejected SCE’s proposed approach, saying the utility had failed to show it was just and reasonable and not unduly discriminatory. It urged SCE to come up with a plan to give storage resources the same curtailment priority as the utility’s other wholesale loads.
In response, “SCE elected to provide free as-available charging distribution service to customers on a case-by-case, off-tariff basis,” Nagel wrote. “However, as a result of the rapidly growing demand for storage and the consequent increased demand for interconnection requests received by SCE for inbound charging distribution service, SCE again filed proposed amendments to its WDAT in July 2019.”
SCE proposed to offer both an as-available charging distribution service and a firm-charging distribution service, which is available absent a grid emergency, under different rate plans.
FERC accepted the plan in January 2020 but suspended the proposed WDAT amendments and rates, subject to refund, and established settlement procedures.
In addition to SCE and SEIA, parties to the proceeding included the California Public Utilities Commission, the Energy Storage Alliance, Calpine, NextEra Energy Resources, Tesla and 10 others. They reached a settlement with SCE under which “more customers are eligible for exemption from the charges applicable to the as-available charging distribution service, and therefore the settlement provides value to more customers,” Nagel wrote. “The settlement rates are meaningfully reduced from SCE’s as-filed rates for both the as-available and firm-charging distribution services.”
The settlement also provides for customers taking firm-charging distribution service to be subject to either a monthly demand charge or the actual cost of facilities, whichever is higher. The parties agreed to the “higher-of” method, the judge said.
Higher-of pricing methods have been approved by the commission in past proceedings, Nagel wrote.
“Therefore, trial staff finds the settled as-available and firm-charging distribution service rates and the higher-of pricing terms fair, reasonable and in the public interest,” she said.