FERC on Thursday accepted NYISO’s Order 2222 compliance filing but directed the ISO to file revisions related to small utility opt-in requirements, interconnection rules and other issues (ER21-2460).

The commission also asked NYISO to propose an effective date for its compliance filing in the fourth quarter of 2022 and further propose a reasonable effective date by which it will comply with the requirement to allow DERs to provide all the ancillary services they are technically capable of providing through aggregation while also addressing NYISO’s reliability and visibility concerns.

In its filing submitted last November, NYISO maintained that its existing distributed energy resources (DER) and aggregation participation model satisfactorily complies with the majority of directives in Order 2222. (See NYISO Shares Order 2222 Response with Stakeholders.)

The commission found that NYISO’s existing rules comply with Order 2222 requirements to establish a 100-kW minimum size requirement for DER aggregations (DERA); to propose a maximum capacity requirement for individual DERs participating in its markets through an aggregation; allow a single qualifying DER to avail itself of the proposed DERA rules by serving as its own aggregator; and address distribution factors and bidding parameters for DERAs.

Small Utility Opt-in

The commission found that NYISO complied with the requirement that it accept bids from a DERA if its aggregation includes resources that are customers of utilities that distributed more than 4 million MWh in the previous fiscal year.

However, it found the ISO only partially complied with the “small utility opt-in” provision, a requirement to reject bids from DERA’s that include customers of utilities that distributed less than 4 million MWh in the previous year, unless the relevant electric retail regulatory authority (RERRA) permits those customers to bid into RTO/ISO markets.

Protestors found fault with the ISO’s proposal to apply the opt-in rule to “load serving entities,” which in New York includes small competitive retail suppliers knows as “energy service companies.” The protestors argued that RERRA approvals would be complicated for those suppliers because they have no technical role in distribution system operations. FERC agreed with their argument and ordered NYISO to replace the term LSE with “distribution utility.”

FERC also required NYISO to clarify the aggregator’s responsibilities associated with changes to a RERRA’s opt-in determination and clarify the timing of a resource’s ineligibility when the small utility decides to prohibit its participation.

FERC additionally found that, in complying with Order 2222’s directive for RTOs/ISOs to exempt distribution-connected DERs from their interconnection rules, NYISO inadvertently exempted the interconnections of DERs on both the distribution and transmission system. The commission directed the ISO to fix that error and clarify that interconnection of DERA through the distribution system is exempt from the ISO’s small generator interconnection procedures.

Participation Model

The commission found that NYISO’s proposal complies with the requirement to establish DER aggregators as a type of market participant, but only partially complies with the requirement to allow such aggregators to register an aggregation under one or more participation models in NYISO’s tariff that accommodate its physical and operational characteristics.

FERC acknowledged NYISO’s reliability concerns related to allowing an aggregation to participate through a particular model when some of its resources may not satisfy all the requirements of that model.

“We believe, however, that NYISO could address its reliability concerns by means other than requiring that all individual DERs within the aggregation satisfy the relevant reliability requirements, such as the one-hour sustainability requirement. Therefore, so long as some of the DERs in the aggregation can satisfy the relevant requirements to provide certain ancillary services (e.g., the one-hour sustainability requirement), we find that those DERs should be able to provide those ancillary services through aggregation…” FERC said.

The commission agreed with NYISO that it should not be required to change its capacity market qualification requirements to enable energy efficiency resources or any other resource type that currently does not qualify to participate in its capacity market. Further, because Order 2222 does not require RTOs/ISOs to model energy efficiency in a certain way, FERC rejected as out of scope the arguments raised by various parties on whether energy efficiency should be modeled as supply- or demand-side participation.

Double Counting

NYISO’s existing model affords DERs the opportunity to participate simultaneously in one or more retail programs and the wholesale markets, and its proposal complies with the requirement to allow DERs to provide multiple wholesale services, the commission said.

But the ISO’s proposal only partially complies with the requirement to include appropriate restrictions on the participation of DERs through aggregations, if narrowly designed to avoid counting more than once the services provided by DERs, the commission said, directing a further compliance filing that specifies relevant tariff language.

The commission found that NYISO complied with the requirement to provide a detailed, technical explanation for the geographical scope of its proposed locational requirements.

“However, we find that NYISO does not comply with the requirement to revise its tariff to establish locational requirements for [DERs] to participate in a [DERA] that are as geographically broad as technically feasible,” FERC said regarding the compliance filing to specify the criteria NYISO will use to establish a set of transmission nodes at which individual DERs may aggregate.

The commission also found that NYISO did not comply with the requirement to require the DER aggregator to update its list of individual resources and associated information as it changes; the commission directed the ISO to revise the relevant tariff section, as well as include information and data requirements.

Metering and Telemetry

The commission found that NYISO’s proposal only partially complied with the requirement to establish market rules that address metering and telemetry hardware and software requirements necessary for DERAs to participate in RTO/ISO markets because its tariff lacks the deadline for meter data submission for settlements and does not include references to the specific documents that contain further technical details.

In addition, FERC found the ISO partially complied with the requirement to explain why its proposed metering and telemetry requirements for DERAs are just and reasonable and do not pose an unnecessary and undue barrier to individual DERs joining an aggregation.

“NYISO’s filing lacks clarity regarding its protocols for sharing metering and telemetry data and the meter data submission deadline,” the commission said, requesting the ISO to revise its tariff to include the meter data submission deadline for settlement and specify which entity must submit meter data.

FERC also directed a further compliance filing to include references to specific documents that contain further technical details with respect to telemetry.

The commission found that NYISO sufficiently supported the need for aggregations to provide six-second telemetry, consistent with its requirements for other suppliers, to meet the New York-specific local reliability rule that requires NYISO to respond to thermal overloads in under five minutes.

But the commission also directed a further compliance filing that establishes protocols for sharing metering and telemetry data and ensuring that such protocols minimize costs and other burdens and address privacy and cybersecurity concerns.

Market Rules

Order 2222 requires RTOs and ISOs to revise their tariffs to establish market rules that address coordination between the RTO/ISO, the DER aggregator, the distribution utility and the RERRAs.

NYISO’s proposal only partially complied with those requirements with respect to the role of distribution utilities, the commission found, directing the ISO to continue to coordinate with utilities in developing the further compliance filing.

Furthermore, given that NYISO’s tariff provides utilities with 60 days to review risks to the reliable and safe operation of the distribution system from DERA participation, the commission said it agreed with New York transmission owners that the tariff language lacks clarity regarding the circumstances in which the utility review process applies, directing a further compliance filing with tariff revisions consistent with the suggested alternative language that NYISO proposes in its answer.

The commission found that NYISO must address six of seven coordination requirements to ensure a fully comprehensive, non-discriminatory and transparent distribution utility review process.

First, the results of a distribution utility’s review must be incorporated into the DERA registration process and second, the tariff should include criteria by which the utilities will determine whether each proposed DER is able to participate in a DERA.

Third, the commission directed NYISO to clarify that the scope of distribution utility review of distribution system reliability impacts is limited to incremental impacts from a resource’s participation in an aggregation that were not previously considered by the utility during the interconnection study process for that resource.

Fourth, NYISO must propose in its tariff that a distribution utility provide a showing that explains any reliability findings as required by Order 2222, the commission said.

Fifth, FERC found that NYISO only partially complies with the Order 2222 requirement that a distribution utility have the opportunity to request that the RTO/ISO place operational limitations on an aggregation, or that the removal of a DER from an aggregation be based on specific significant reliability or safety concerns that the distribution utility clearly demonstrates to the RTO/ISO and DERA on a case-by-case basis.

Finally, the commission found that NYISO’s proposed distribution utility review process is only partially compliant with the information sharing requirements of Order 2222.

Coordination Requirements

The commission found that NYISO’s proposal partially complies with the operational coordination requirements of Order 2222 and fully complies with the requirement that the DER aggregator must report to the RTO/ISO any changes to its offered quantity and related distribution factors that result from distribution line faults or outages.

NYISO’s proposal complies with the requirement to revise its tariff to include coordination protocols and processes for the operating day that allow distribution utilities to override RTO/ISO dispatch of a DERA in circumstances where such override is needed to maintain the reliable and safe operation of the distribution system, the commission found.

“We recognize concerns that NYISO’s proposal may subject an aggregator to risk of penalties for situations beyond its control; however, … this requirement will incent [DER] aggregators to register individual [DERs] on less-constrained portions of distribution networks in order to minimize the likelihood of incurring non-performance penalties,” the commission said.

However, NYISO’s proposed tariff revisions lack specificity regarding the existing resource non-performance penalties that would apply to an aggregation when a utility overrides NYISO’s dispatch, prompting request for a further tariff revision to specify the existing non-performance penalties.

In addition, the commission found that NYISO’s tariff does not sufficiently address data flows and communication between NYISO, the aggregator and the distribution utility, and thus directed tariff revisions to describe what data and information will be communicated and to define more clearly the communication that will occur in this coordination process.

The commission also directed a further tariff revision to require that any information provided to NYISO by a RERRA about a specific aggregation must be shared with the aggregator, along with another revision to allow distribution utilities to review the reliability and safety impact of “any change to an aggregation.”

The commission found that NYISO’s proposal does not comply with the requirement that the DER aggregator must attest that its aggregation complies with the tariffs and operating procedures of the distribution utilities and the rules and regulations of any RERRA, and directed a further compliance filing that revises the tariff to specify that the aggregator must attest to its compliance with the tariffs and operating procedures of the distribution utilities and the rules and regulations of any RERRA.

The commission also directed NYISO to file a further compliance filing proposing an effective date by which it will allow DERs in heterogeneous aggregations to provide all of the ancillary services that they are technically capable of providing through aggregation, and to propose an effective date for its compliance filing in the fourth quarter of 2022 at least two weeks prior to the proposed effective date.

Separate Statements

Commissioner James P. Danly concurred with Thursday’s order in a separate statement, saying that NYISO made a good faith effort to comply with Order 2222, which he continues to disagree with, though he agreed that the ISO “failed to fully comply with its scores of dictates.”

“I do not envy NYISO the compliance task we imposed upon it. One hundred percent compliance probably is impossible in a first, or perhaps even second, attempt,” Danly said. “We shall see.”

Danly said NYISO’s failure to fully comply underscores his original concern about the commission’s interference in the administration of RTO markets and distribution-level systems, with Order 2222 not only supplanting many state powers but also permitting RTOs “extremely limited discretion to do anything other than step in line with the commission’s directives for how every little thing should work,” Danly said.

Commissioner Allison Clements issued a partial dissent, expressing concern that the commission allowed NYISO to exclude energy efficiency from DER aggregations because it does not meet the ISO’s general eligibility rules.

Clements argued that the finding “erodes the rule’s plain requirement that an RTO/ISO’s rules may not ‘prohibit any particular type of [DER] technology from participating in [DER] aggregations.’ It sets precedent that may, in the future, allow RTO/ISOs to prevent the participation of other resource types.”

“I remain hopeful that, as the commission evaluates future compliance filings of Order No. 2222, it will strike the right balance between offering flexibility and upholding its requirements as written,” she wrote.