Business group files petition raising concerns about New England grid operator’s proposed changes to rules for energy efficiency resources

WASHINGTON, D.C., Feb. 13, 2019 – Today national business group Advanced Energy Economy (AEE) announced it has filed a petition with the Federal Energy Regulatory Commission (FERC) regarding concerns about recent changes suggested by independent regional grid operator ISO New England Inc.’s (ISO-NE) staff to the process for measurement and verification of energy efficiency resources that participate in ISO-NE’s markets. The petition, filed jointly with Sustainable FERC Project, can be downloaded here. 

AEE and Sustainable FERC filed the petition in response to suggestions from ISO-NE staff that it may, outside of established processes, change how already-qualified energy efficiency resources would be measured and included in its Forward Capacity Markets (FCM). AEE and Sustainable FERC are concerned that these changes were suggested just days before last week’s FCM auction, that such changes could be applied retroactively to energy efficiency resources that were already qualified to participate in that auction, and that they could be implemented without seeking FERC approval.

“We felt it was important to raise our concerns with FERC now, since this unusual action by ISO New England has created significant market uncertainty for energy efficiency resource providers who have justifiably relied on the market rules currently in place” said Jeff Dennis, managing director and general counsel at AEE. “Energy efficiency resources were qualified for last week’s auction under long-standing measurement and verification rules and practices, and to ensure fair market competition and that consumer needs are met at the lowest cost, appropriate processes must be followed to change those rules and practices.”

Specifically, ISO-NE staff indicated to market participants that the ISO may apply new “net-to-gross” conversion factors to reevaluate energy efficiency resources. The ISO-NE Forward Capacity Market has traditionally defined and evaluated energy efficiency resources based on their total reduction to energy consumption from baseline federal and state standards. In other words, efficiency projects are evaluated on their adjusted gross reduction to load. ISO-NE suggests now that it has the discretion to require energy efficiency resources to offer in (and be compensated for) only their net energy savings, including retroactively to energy efficiency resources already qualified to participate and prospectively, without FERC approval. 

The AEE and Sustainable FERC filing argues that “…uncertainty [created by ISO-NE] is causing real and continuing harm to the capacity market [b]ecause energy efficiency providers may be unable to rely on the Tariff and their approved Measurement and Verification Documents…” and that introducing “new factors to convert from gross to net would be a material change in a well-established, appropriate, and beneficial policy of the ISO-NE Forward Capacity Market, which has, both historically and at present, evaluated energy efficiency resources based on their total load reduction.”

The filing asks FERC to issue declaratory rulings confirming that ISO-NE may not retroactively revise approved FCA 13 Qualification Packages to introduce new Measurement and Verification standards, and that to change the requirements for energy efficiency resources going forward, including imposing any requirement to convert from adjusted gross to net, ISO-NE must follow the appropriate process for changing its tariff, including submitting the proposed change to the Commission for approval pursuant to Section 205 of the Federal Power Act.

“To foster robust, reliable, and competitive wholesale energy markets that provide a platform for advanced energy innovation, we need strong, consistent, transparent, and predictable market rules that work for all technologies," said Dennis. 

“FERC and independent RTO/ISO leadership is necessary to ensure that appropriate procedures are followed when changing market rules," added Dennis. "In this case, if ISO New England wants to change the rules for energy efficiency resources it must consult with all stakeholders and seek FERC approval."

About Advanced Energy Economy 
Advanced Energy Economy (AEE) is a national association of businesses that are making the energy we use secure, clean, and affordable. Advanced energy encompasses a broad range of products and services that constitute the best available technologies for meeting energy needs today and tomorrow. AEE’s mission is to transform public policy to enable rapid growth of advanced energy businesses. Engaged at the federal level and in more than a dozen states around the country, AEE represents more than 100 companies in the $200 billion U.S. advanced energy industry, which employs more than 3 million U.S. workers. Learn more at www.aee.net and follow the latest industry news @AEEnet.

Media Contact
Monique Hanis, mhanis@aee.net, 202-391-0884