AEE Applauds FERC for Preserving Access to Wholesale Markets for Energy Efficiency Resources 

Decision prevents states from barring low-cost energy efficiency and other resources from competing in regional wholesale electricity markets without FERC permission 

WASHINGTON, D.C., Dec. 5, 2017 — Today, national business group Advanced Energy Economy released the following statement in response to a ruling by the Federal Energy Regulatory Commission (FERC) on access to wholesale energy markets for energy efficiency resources.

“We applaud FERC for this important decision that encourages open competition in the electricity markets it regulates, which account for more than half the country," said Maria Robinson, director of wholesale markets at AEE. “We look forward to working with states to ensure that consumers benefit from advanced energy technology participation in markets, driving adoption of clean, secure and lowest-cost energy resources.”

“In its ruling, FERC confirmed that state utility commissions cannot bar particular technologies – in this case, energy efficiency – from participating in wholesale energy markets without its approval. This standard is critical for maintaining free and open competition, with all technologies competing on price and performance, to deliver the best electric power services at the most reasonable cost to businesses and households. This is a win for advanced energy innovators and consumers alike,” added Robinson. 

Background:
Earlier this year, regional grid operator PJM Interconnection proposed a rule change that would have given states in the PJM territory the right to bar or restrict energy efficiency resources from entering the wholesale market in their states. The proposal stemmed from the East Kentucky Power Cooperative’s application to the Kentucky Public Service Commission (PSC) asking to restrict energy efficiency resources from the wholesale market. This move came as part of an effort by Kentucky utilities to reduce their spending on demand-side management programs in the face of declining electricity sales.

On June 2, AEE filed a petition of declaratory order with the Federal Energy Regulatory Commission (FERC), pointing out that while state commissions have authority on retail energy decisions, the Federal Power Act gives sole jurisdiction in the wholesale markets to FERC and the associated regional transmission organizations (RTOs).

AEE argued that allowing states and their regulators of the retail market to bar energy efficiency resources from the wholesale market would result in unjust and unreasonable rates – a direct violation of the Federal Power Act. On that basis, AEE called on FERC to clarify that it has sole jurisdiction on this matter, and declare that it has not granted authority to restrict the participation of energy efficiency resources in wholesale markets.

In its decision released on Friday, FERC approved a narrow, Kentucky-specific exemption allowing that state to restrict EERs, on the grounds that, in its approval of Kentucky utilities entering PJM, it had approved a settlement with the Kentucky Public Service Commission stipulating that no PJM “demand side response or load interruption programs” would be made available to Kentucky customers unless authorized by the Kentucky Commission.

But FERC also declared that it, alone, had authority to grant state regulators permission to limit market access for particular technologies or services. Apart from the Kentucky exception, neither state regulators nor regional grid operators (RTOs and ISOs) are allowed to exclude or restrict resources like energy efficiency from wholesale electricity markets without express approval by FERC.    

Background Resources:

• Can Energy Efficiency Resources Be Unfairly Excluded from Wholesale Electricity Markets? AEE Says ‘No’: this Nov. 29 Advanced Energy Perspectives blog post summarizes the issue and AEE’s petition to FERC on the matter.
• AEE’s Petition to FERC is here.
• PJM’s proposed change allowing states to bar energy efficiency resources (opt-out) from wholesale energy markets is here.
• FERC decision (docket EL17-75) is here.

About Advanced Energy Economy
Advanced Energy Economy 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. AEE and its State and Regional Partner organizations are active in 27 states across the country, representing more than 1,000 companies and organizations in the advanced energy industry. Visit AEE online at www.aee.net.