FERC questions ancillary services, storage technology policies

The Federal Energy Regulatory Commission has issued a Notice of Inquiry seeking comments how to improve competition in markets for ancillary services and how to remove barriers to expanded use of electricity storage technologies.

"The NOI asks some key questions that involve the development of vibrant markets for ancillary services, not just for storage resources, but for all potential providers of ancillary services," FERC Chairman Jon Wellinghoff said upon issuance of the notice (RM11-24) on June 16. "In particular, the NOI asks whether the Avista policy should be modified to allow greater competition in the provision of ancillary services."

In the 1999 Avista Corp. case, FERC prohibited third-party market-based sales of ancillary services to transmission providers without a market study showing the seller lacks monopoly market power.

Ancillary services, such as voltage regulation, spinning reserves, frequency regulation, and black-start capability, can be provided by hydropower, as well as electricity storage provided by pumped-storage plants. FERC said it has established methods of accounting, reporting, and rate recovery for pumped-storage plants and is not seeking comments on revising pumped-storage accounting and reporting.

FERC issued proposed rules in February intended to ensure just and reasonable rates for frequency regulation service provided to organized wholesale electricity markets by generators, including hydropower, and some emerging technologies. In 2010, it requested comments on rates, accounting, and financial reporting for new electricity storage technologies as well as traditional pumped-storage hydropower.

In response to the 2010 inquiry, commenters said the Avista Corp. restriction is unnecessary and serves as a barrier to the use of storage technologies to provide ancillary services.

"Recognizing the concerns that some sellers have about being unable to conduct formal market power studies, the NOI requests comment on how to modify the restriction for all non-traditional providers of ancillary services, not just those using storage technologies, while ensuring just and reasonable rates," FERC said.

Comments are due 60 days after the notice is published in the Federal Register. FERC's announcement of the inquiry may be obtained from the commission Internet site at www.ferc.gov/media/news-releases/2011/2011-2/06-16-11-E-9.asp. The Notice of Inquiry may be obtained at www.ferc.gov/whats-new/comm-meet/2011/061611/E-9.pdf.

For more FERC news, click here.

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