characteristics of electric storage resources through bidding
parameters or other means.\189\ Specifically, the Commission required
that each RTO's/ISO's participation model for electric storage
resources must account for 13 different physical and operational
characteristics, as defined in the final rule.\190\ In adopting this
requirement, the Commission noted that it was persuaded by commenters'
arguments that there may be other means of accounting for the physical
and operational characteristics of electric storage resources than
bidding parameters and that greater regional flexibility than the
Commission proposed in the Notice of Proposed Rulemaking (NOPR) is
appropriate.\191\ In particular, the Commission stated that different
RTOs/ISOs may be able to more effectively account for the physical and
operational characteristics of electric storage resources through
different mechanisms given their unique market designs.
---------------------------------------------------------------------------

    \189\ Id. P 191.
    \190\ Id. P 236. Those physical and operating characteristics
are as follows: (1) State of Charge, (2) Maximum State of Charge,
(3) Minimum State of Charge, (4) Maximum Charge Limit, (5) Maximum
Discharge Limit, (6) Minimum Charge Time, (7) Maximum Charge Time,
(8) Minimum Run Time, (9) Maximum Run Time, (10) Minimum Discharge
Limit, (11) Minimum Charge Limit, (12) Discharge Ramp Rate, and (13)
Charge Ramp Rate. Relevant to the discussion of MISO's request for
clarification below, the final rule defined State of Charge as ``the
amount of energy stored in proportion to the limit on the amount of
energy that can be stored, typically expressed as a percentage. It
represents the forecasted starting State of Charge for the market
interval being offered into.'' Minimum Charge Limit is the ``minimum
[megawatt] level that a resource using the participation model for
electric storage resources can receive from the grid'' and Minimum
Discharge Limit is the ``minimum [megawatt] output level that a
resource using the participation model for electric storage
resources can inject onto the grid.'' Discharge Ramp Rate and Charge
Ramp Rate are the speed at which a resource using the participation
model for electric storage resources can move from zero output to
its Maximum Discharge Limit and Maximum Charge Limit, respectively.
Id.
    \191\ Id. P 190; NOPR (Docket Nos. RM16-23-000; AD16-20-000), 81
FR 86522.
---------------------------------------------------------------------------

b. Requests for Rehearing or Clarification
    87. MISO requests clarification on whether it may require electric
storage resources to submit their State of Charge forecasts at the
beginning of a particular market interval. MISO contends that such a
requirement will allow it to derive the charging or discharging status
of a resource for every interval, eliminating the need for MISO to
introduce a binary variable to determine the charging or discharging
mode of a resource in its co-optimization process and in turn avoiding
potential adverse impacts on its market clearing and commitment
processes.\192\
---------------------------------------------------------------------------

    \192\ MISO Request for Rehearing at 6.
---------------------------------------------------------------------------

    88. MISO also requests clarification that, if an electric storage
resource does not provide minimum charge and discharge limits and can
be moved smoothly between negative and positive, MISO may require the
resource to submit a single hourly ramp rate for the day-ahead market
and for its Look Ahead Commitment process. According to MISO, it has
currently adopted this practice with respect to other resources. MISO
argues that such a requirement would allow it to avoid the nonlinearity
caused by a megawatt dependent ramp curve and additional integer
variables. MISO also asks the Commission to clarify that it may apply
its current practice of allowing three ramp rates and ramp rate curves
for regulating, up, and down movement to electric storage
resources.\193\
---------------------------------------------------------------------------

    \193\ Id. at 6-7.
---------------------------------------------------------------------------

    89. PJM seeks clarification that the final rule allows for
flexibility in how RTOs/ISOs account for the physical and operational
characteristics of electric storage resources, including State of
Charge.\194\ Specifically, PJM argues that there are different
approaches to

implementing Order No. 841's requirement that an electric storage
resource participation model account for electric storage resources'
physical and operational characteristics, which involve different
degrees of modeling and operational changes and challenges.\195\
---------------------------------------------------------------------------

    \194\ PJM Motion for Clarification at 1 (citing Order No. 841,
162 FERC ] 61,127 at PP 189-194, 211-216, 220-224).
    \195\ Id. at 2-3.
---------------------------------------------------------------------------

c. Commission Determination
    90. In response to MISO's request for clarification, we clarify
that, on compliance, MISO may propose to require a resource using the
electric storage resource participation model to submit its forecasted
State of Charge at the beginning of any market interval in which it
intends to participate. With that said, we make no findings on the
proposal that MISO outlines in its request for clarification. Order No.
841 provided flexibility to the RTOs/ISOs on how to account for the
physical and operational characteristics of electric storage
resources.\196\ We will not prejudge any particular approach to
implementing Order No. 841's requirement that each RTO/ISO establish a
participation model for electric storage resources that accounts for
the physical and operational characteristics of electric storage
resources through bidding parameters or other means; rather, we will
evaluate MISO's proposal on compliance with the full record before us.
---------------------------------------------------------------------------

    \196\ See Order No. 841, 162 FERC ] 61,127 at P 191.
---------------------------------------------------------------------------

    91. Similarly, in response to MISO's clarification request
regarding ramp rates, we clarify that MISO may propose for an electric
storage resource that does not provide minimum charge and discharge
limits and can be moved smoothly between negative and positive to
submit a single hourly ramp rate for the day-ahead market and for its
Look Ahead Commitment process. However, we also make no findings on the
merits of the proposal that MISO outlines in its request for
clarification.
    92. Order No. 841 also states that, to the extent that an RTO/ISO
proposes to comply with the final rule using its existing bidding
parameters or other market mechanisms, it must demonstrate in its
compliance filing how its existing market rules account for these
characteristics of electric storage resources.\197\ We therefore
clarify that MISO may propose to apply its current practice of allowing
three ramp rates and ramp rate curves for regulating, up, and down
movement to resources using the electric storage resource participation
model, but that it must demonstrate in its compliance filing how this
practice accounts for Discharge Ramp Rate and Charge Ramp Rate. The
Commission will determine on compliance whether MISO's proposal
complies with the requirements of Order No. 841.
---------------------------------------------------------------------------

    \197\ Id. P 229.
---------------------------------------------------------------------------

    93. We also grant PJM's request for clarification. The Order No.
841 requirement that each RTO/ISO establish tariff provisions providing
a participation model for electric storage resources that accounts for
the physical and operational characteristics of electric storage
resources through bidding parameters or other means, allows for
regional flexibility.\198\ Specifically, in Order No. 841, the
Commission noted that it was persuaded by commenters' arguments that
there may be other means of accounting for the physical and operational
characteristics of electric storage resources than bidding parameters
and that greater regional flexibility than the Commission proposed in
the NOPR was appropriate. In particular, the Commission stated that
different RTOs/ISOs may be able to more effectively account for the
physical and operational characteristics of electric storage resources
through different mechanisms given their unique market designs.\199\
That said, we make no findings on the proposed approaches that PJM
outlines in its request for clarification. We will not prejudge any
particular approach to implementing the final rule's requirement that
each RTO/ISO establish a participation model for electric storage
resources that accounts for the physical and operational
characteristics of electric storage resources through bidding
parameters or other means; rather, we will evaluate PJM's proposal on
compliance with a full record before us.
---------------------------------------------------------------------------

    \198\ See id. P 191.
    \199\ Id. P 190.
---------------------------------------------------------------------------

F. Minimum Size Requirement

1. Final Rule
    94. In Order No. 841, the Commission added Sec.  35.28(g)(9)(i)(D)
to the Commission's regulations to require each RTO/ISO to revise its
tariff to include a participation model for electric storage resources
that establishes a minimum size requirement for participation in the
RTO/ISO markets that does not exceed 100 kW.\200\ The Commission stated
that this minimum size requirement includes all minimum capacity
requirements, minimum offer to sell requirements, and minimum bid to
buy requirements for resources participating in these markets under the
participation model for electric storage resources. In support of the
requirement, the Commission found that requiring the RTOs/ISOs to
establish a minimum size requirement not to exceed 100 kW for the
participation model for electric storage resources balances the
benefits of increased competition with the potential need to update
RTO/ISO market clearing software to effectively model and dispatch
smaller resources.\201\
---------------------------------------------------------------------------

    \200\ Id. P 270.
    \201\ Id. P 271.
---------------------------------------------------------------------------

    95. The Commission further found that the record shows that all
RTOs/ISOs are already accommodating the participation of smaller
resources in their markets.\202\ For example, the Commission stated
that the record shows that all RTOs/ISOs already have the modeling and
dispatch software capabilities to accommodate the participation of
resources that are as small as 100 kW. Specifically, the Commission
noted that both PJM and SPP have a minimum size requirement of 100 kW
for all resources, and all of the RTOs/ISOs have at least one
participation model that allows resources as small as 100 kW to
participate in their markets.\203\
---------------------------------------------------------------------------

    \202\ Id. P 272.
    \203\ Id. (citing CAISO Data Request Response at 10-11; ISO-NE
Data Request Response at 13-14; MISO Data Request Response at 10;
NYISO Data Request Response at 9; PJM Data Request Response at 10;
SPP Data Request Response at 5).
---------------------------------------------------------------------------

    96. Moreover, in response to concerns about potential impacts on
the distribution systems and related costs, the Commission noted that
there are resources located on the distribution system that are already
participating in the RTO/ISO markets.\204\ The Commission stated that
establishing a standard minimum size requirement for resources using
the participation model for electric storage resources may potentially
result in more resources on the distribution systems participating in
the RTO/ISO markets. However, the Commission stated that it does not
change the responsibilities of the RTOs/ISOs or the distribution
utilities, and it does not change the ability of distribution utilities
to allocate any costs that they incur in operating and maintaining
their respective power systems.
---------------------------------------------------------------------------

    \204\ Id. P 274.
---------------------------------------------------------------------------

    97. With respect to concerns about the need to upgrade RTO/ISO
software to manage the potentially large number of resources using the
participation model for electric storage resources under the proposed
minimum size requirement, the Commission found that it was

providing the RTOs/ISOs with adequate time to develop the requisite
tariff language and update their modeling and dispatch software to
comply with Order No. 841.\205\ The Commission was also not concerned
about the potential availability of software solutions as multiple
RTOs/ISOs already provide a minimum size requirement of 100 kW for all
resources and have not expressed similar concerns regarding the minimum
size requirement. However, the Commission recognized that there are
currently fewer 100 kW resources than there may be in the future and
stated that it will consider future requests to increase the minimum
size requirement to the extent an RTO/ISO can show that it is
experiencing difficulty calculating efficient market results and there
is not a viable software solution for improving such calculations.
---------------------------------------------------------------------------

    \205\ Id. P 275.
---------------------------------------------------------------------------

2. Requests for Rehearing or Clarification
    98. In its rehearing request, EEI states that the Commission should
allow the RTOs/ISOs, in conjunction with the electric distribution
utilities, to establish a minimum size requirement for electric storage
resources that would be manageable for their markets while maintaining
reliability on both the bulk electric power system and the relevant
distribution systems.\206\ EEI argues that the Commission has provided
insufficient support for its proposed minimum size requirement, stating
that the evidence that the Commission cites is inadequate given the
concerns expressed in the record that the 100 kW minimum size
requirement may be too small due to software, settlement, and other
infrastructure limitations. For example, EEI contends that the
Commission does not provide evidence in the form of numbers of 100 kW
resources directly participating in the RTO/ISO markets or the number
of tariff provisions that permit participation at such size.\207\
---------------------------------------------------------------------------

    \206\ EEI Rehearing Request at 9-10.
    \207\ Id. at 8-9.
---------------------------------------------------------------------------

    99. EEI argues that the number of electric storage resources that
could potentially seek to participate in the wholesale market at the
proposed threshold could become so voluminous that they (1) exceed the
ability of RTOs/ISOs to manage this volume of resources, (2) exceed the
ability of distribution utilities to address various reliability,
operational, and interconnection matters given that smaller resources
are far more likely to interconnect to the distribution system, and (3)
impose implementation costs significantly greater than corresponding
benefits, particularly in regions where resources of the 100 kW size
have other compensation options such as net energy metering. EEI argues
that allowing the RTOs/ISOs to make an after-the-fact showing of
difficulties in calculating efficient market outcomes does not
adequately account for these concerns or address the software and other
costs on both the transmission and distribution system of complying
with the final rule.\208\
---------------------------------------------------------------------------

    \208\ Id. at 9 (citing Order No. 841, 162 FERC ] 61,127 at P
275).
---------------------------------------------------------------------------

    100. MISO requests clarification or, in the alternative, rehearing
that it may phase in the implementation of the minimum size
requirement. Specifically, MISO seeks clarification that it may cap the
number of very small electric storage resources that can participate in
its markets at the number of such resources that its initial software
and system changes can handle in the first year of implementation.
According to MISO, it will increase the number of small electric
storage resources that it will allow in its market as it improves its
software's capability to manage them. MISO argues that this phased
approach is a reasonable precaution to proactively address the
potential for large numbers of small electric storage resources, rather
than waiting to react to adverse impacts of future high volumes of
small electric storage resources.\209\
---------------------------------------------------------------------------

    \209\ MISO Rehearing Request at 4-5.
---------------------------------------------------------------------------

    101. MISO also requests clarification or, in the alternative,
rehearing, that the 100 kW limit applies to the Maximum Charge Limit or
Maximum Discharge Limit and not to the Minimum Charge Limit or Minimum
Discharge Limit. MISO contends that small electric storage resources
can offer a smaller Minimum Charge Limit or Minimum Discharge Limit,
such as 0.0001 MW. MISO adds that, if the offered minimum limit is too
small, an RTO/ISO can round it to zero and assume that the resource can
smoothly move between the negative Maximum Charge Limit and positive
Maximum Discharge Limit. MISO argues that this rounding can avoid
unnecessarily limiting the range for clearing energy or reserve
products.\210\
---------------------------------------------------------------------------

    \210\ Id. at 4 (citing Order No. 841, 162 FERC ] 61,127 at P
236).
---------------------------------------------------------------------------

3. Commission Determination
    102. We deny EEI's request for clarification and rehearing. We
continue to find that requiring each RTO/ISO to establish a minimum
size requirement not to exceed 100 kW for the participation model for
electric storage resources balances the benefits of increased
competition with the potential need to update RTO/ISO market clearing
software to effectively model and dispatch smaller resources.\211\ We
disagree with EEI that the Commission lacked sufficient evidence to
support a minimum size requirement of 100 kW. As the Commission stated
in Order No. 841, both PJM and SPP have a minimum size requirement of
100 kW for all resources, and all of the RTOs/ISOs have at least one
participation model that allows resources as small as 100 kW to
participate in their markets.\212\ We continue to find this evidence
sufficient to demonstrate that all RTOs/ISOs already have the modeling
and dispatch software capabilities to accommodate the participation of
resources that are as small as 100 kW.
---------------------------------------------------------------------------

    \211\ See Order No. 841, 162 FERC ] 61,127 at P 271.
    \212\ Id. P 272 (citing CAISO Data Request Response at 10-11;
ISO-NE Data Request Response at 13-14; MISO Data Request Response at
10; NYISO Data Request Response at 9; PJM Data Request Response at
10; SPP Data Request Response at 5).
---------------------------------------------------------------------------

    103. EEI argues that the implementation costs of the minimum size
requirement will outweigh any benefits and RTOs/ISOs and distribution
utilities may not be able to manage the volume of smaller resources to
participate in RTO/ISO markets and interconnect to the distribution
system. We disagree. As stated in the final rule, we acknowledge that
the 100 kW minimum size requirement is a balance between the benefits
of increased competition fostered by the opportunity for smaller
resources to participate in the RTO/ISO markets using the electric
storage resource participation model and the potential need to update
RTO/ISO market clearing software to effectively model and dispatch
these smaller resources.\213\ Based on the record before us, we find
that the benefits of increased competition will outweigh implementation
costs, especially given that all RTOs/ISOs are already accommodating
the participation of smaller resources in their markets, as
demonstrated in the final rule.\214\
---------------------------------------------------------------------------

    \213\ See id. P 271.
    \214\ See id. P 272 (citing CAISO Data Request Response at 10-
11; ISO-NE Data Request Response at 13-14; MISO Data Request
Response at 10; NYISO Data Request Response at 9; PJM Data Request
Response at 10; SPP Data Request Response at 5).
---------------------------------------------------------------------------

    104. With respect to EEI's and MISO's concerns about the volume of
smaller resources that may seek to participate in RTO/ISO markets and
interconnect to the distribution system, in the final rule,

the Commission recognized that there are currently fewer 100 kW
resources than there may be in the future. While we recognize that EEI
argues for greater flexibility for each RTO/ISO to establish its own
minimum size requirement as an initial matter, for the reasons
discussed above,\215\ we continue to find that it is reasonable to
establish a minimum size requirement not to exceed 100 kW for the
participation model for electric storage resources.
---------------------------------------------------------------------------

    \215\ See supra P 103.
---------------------------------------------------------------------------

    105. For these reasons, we also deny MISO's request for
clarification or, in the alternative, rehearing that it may phase in
the implementation of the minimum size requirement. We continue to
believe that, given the record showing that all RTOs/ISOs are already
accommodating the participation of smaller resources in their markets
\216\ and the Commission's willingness to consider requests to increase
the minimum size requirement in the future, we are providing the RTOs/
ISOs with adequate time to develop the requisite tariff language and
update their modeling and dispatch software to comply with Order No.
841.\217\ MISO's arguments on rehearing do not convince us otherwise.
As the Commission stated in the final rule, upon implementation, if an
RTO/ISO, including MISO, finds that it is experiencing difficulty
calculating efficient market results and there is not a viable software
solution for improving such calculations, it may file with the
Commission demonstrating such and proposing to increase the minimum
size requirement for its electric storage resource participation
model.\218\ Further, as stated in the final rule, a minimum size
requirement that does not exceed 100 kW does not change the
responsibilities of the RTOs/ISOs or the distribution utilities, and it
does not change the ability of distribution utilities to allocate any
costs that they incur in operating and maintaining their respective
power systems.\219\
---------------------------------------------------------------------------

    \216\ See Order No. 841, 162 FERC ] 61,127 at P 272 (citing
CAISO Data Request Response at 10-11; ISO-NE Data Request Response
at 13-14; MISO Data Request Response at 10; NYISO Data Request
Response at 9; PJM Data Request Response at 10; SPP Data Request
Response at 5).
    \217\ See id. P 275. The Commission provided RTOs/ISOs with 270
days after the publication of the final rule in the Federal Register
to file the tariff changes (i.e., December 3, 2018) and a further
365 days from that date to implement the tariff provisions.
    \218\ See id.
    \219\ Id. P 274.
---------------------------------------------------------------------------

    106. Finally, in response to MISO's request for clarification that
the 100 kW limit does not apply to the Minimum Charge Limit or Minimum
Discharge Limit, we clarify that the minimum size requirement does not
prohibit an RTO/ISO from establishing a minimum size limit that is
lower than 100 kW on any minimum capacity requirements, minimum offer
to sell requirements, or minimum bid to buy requirements. Therefore, it
is possible that the quantities for the Minimum Charge Limit and
Minimum Discharge Limit may be smaller than 100 kW for resources using
the participation model for electric storage resources. However, we do
not specify how the minimum size requirement may affect the quantities
submitted for some of the physical and operational characteristics of
electric storage resources, and will not prejudge how the RTOs/ISOs may
propose any such relationships between the minimum size requirement and
the physical and operational characteristics of resources using the
participation model for electric storage resources.

G. Energy Used To Charge Electric Storage Resources (Charging Energy)

1. Price for Charging Energy
a. Final Rule
    107. In Order No. 841, the Commission added Sec.  35.28(g)(9)(ii)
to the Commission's regulations to require that the sale of electric
energy from the RTO/ISO markets to an electric storage resource that
the resource then resells back to those markets be at the wholesale
LMP.\220\ The Commission stated that this requirement will apply
regardless of whether the electric storage resource is using the
participation model for electric storage resources or another
participation model to participate in the RTO/ISO markets, as long as
the resource meets the definition of an electric storage resource set
forth in Order No. 841. The Commission noted that it found that the
sale of energy from the grid that is used to charge electric storage
resources for later resale into the energy or ancillary service markets
constitutes a sale for resale in interstate commerce.\221\ The
Commission stated that, as such, the just and reasonable rate for that
wholesale sale of energy used to charge that electric storage resource
is the RTO/ISO market's wholesale LMP, regardless of whether the
electric storage resource uses the participation model for electric
storage resources.\222\
---------------------------------------------------------------------------

    \220\ Id. P 294.
    \221\ Id. (citing Norton Energy Storage, 95 FERC at 62,701-02).
    \222\ Id.
---------------------------------------------------------------------------

    108. In addition, the Commission disagreed with some commenters'
contention that transmission charges that apply to load should not
apply to electric storage resources.\223\ The Commission stated that,
when an electric storage resource is charging to resell energy at a
later time, then its behavior is similar to other load-serving entities
and applicable transmission charges should apply. However, in response
to the concern that transmission charges should not apply when an
electric storage resource is dispatched by an RTO/ISO, the Commission
found that electric storage resources that are dispatched to consume
electricity to provide a service in the RTO/ISO markets (such as
frequency regulation or a downward ramping service) should not pay the
same transmission charges as load during the provision of that
service.\224\ The Commission found that this would be consistent with
the treatment afforded traditional generation resources that provide
ancillary services because they are not charged for their impacts on
the transmission system when they reduce their output to provide a
service such as frequency regulation down. Therefore, the Commission
found that electric storage resources should not be charged
transmission charges when they are dispatched by an RTO/ISO to provide
a service because (1) their physical impacts on the bulk power system
are comparable to traditional generators providing the same service and
(2) assessing transmission charges when they are dispatched to provide
a service would create a disincentive for them to provide the service.
---------------------------------------------------------------------------

    \223\ Id. P 297.
    \224\ Id. P 298.
---------------------------------------------------------------------------

    109. With respect to concerns about electric storage resources' use
of the distribution system, the Commission noted that, in PJM
Interconnection LLC, the Commission permitted a distribution utility to
assess a wholesale distribution charge to an electric storage resource
participating in the PJM markets.\225\ Consistent with this precedent,
the Commission found that it may be appropriate, on a case-by-case
basis, for distribution utilities to assess a charge on electric
storage resources similar to those assessed to the market participant
in that proceeding.
---------------------------------------------------------------------------

    \225\ Id. P 301 (citing PJM Interconnection L.L.C., 149 FERC ]
61,185 at P 12 (wholesale distribution charge that ComEd will assess
to Energy Vault is a weighted average carrying charge that is
applied on a case-by-case basis, depending on the distribution
facilities expected to be used in providing wholesale distribution
service), order on reh'g, 151 FERC ] 61,231 at PP 16-18).

---------------------------------------------------------------------------

b. Requests for Rehearing or Clarification
    110. Pacific Gas and Electric requests that the Commission clarify
that nothing in Order No. 841 is intended to suggest that the state no
longer has jurisdiction to determine how power flowing from the
distribution grid, through the customer meter, and then into the
electric storage resource located behind the customer meter is to be
split between retail consumption and wholesale charging for later
discharge into the wholesale markets.\226\ Pacific Gas and Electric
argues that the final rule implies that the state has the authority to
determine whether the power flowing through the customer meter, or some
fraction of it, is appropriately categorized as wholesale charging or
whether all of it must be determined to be retail usage.\227\ Pacific
Gas and Electric asserts that, if the Commission were to conclude that
the state no longer has this authority, then a retail customer could
use its behind-the-retail-meter electric storage resource as a means to
completely bypass retail rates for its on-site electricity consumption
by claiming that the electricity is for later discharge into the
wholesale markets, whether or not that discharge actually occurs.\228\
---------------------------------------------------------------------------

    \226\ Pacific Gas and Electric Rehearing Request at 2.
    \227\ Id. (citing Order No. 841, 162 FERC ] 61,127 at P 325 (To
the extent that the host distribution utility is unable--due to a
lack of the necessary metering infrastructure and accounting
practices--or unwilling to net out any energy purchases associated
with a resource using the participation model for electric storage
resources' wholesale charging activities from the host customer's
retail bill, the RTO/ISO would be prevented from charging that
resource using the participation model for electric storage
resources electric wholesale rates for the charging energy for which
it is already paying retail rates.)).
    \228\ Id. at 2-3.
---------------------------------------------------------------------------

    111. Both California Energy Storage Alliance and CAISO contend that
the final rule presents conflicting positions on whether transmission
charges should apply to wholesale charging energy purchased for later
resale.\229\ Specifically, they note that, in paragraph 298 of Order
No. 841, the Commission found that ``electric storage resources should
not be charged transmission charges when they are dispatched by an RTO/
ISO to provide a service. . . .'' \230\ They point out that, in
contrast, in paragraph 297 of the final rule, the Commission stated
that ``[w]hen an electric storage resource is charging to resell energy
at a later time, then its behavior is similar to other load-serving
entities, and we find that applicable transmission charges should
apply.'' \231\
---------------------------------------------------------------------------

    \229\ California Energy Storage Alliance Rehearing Request at 2;
CAISO Rehearing Request at 11.
    \230\ California Energy Storage Alliance Rehearing Request at 2
(citing Order No. 841, 162 FERC ] 61,127 at P 298); CAISO Rehearing
Request at 11 (citing Order No. 841, 162 FERC ] 61,127 at P 298).
    \231\ California Energy Storage Alliance Rehearing Request at 2
(citing Order No. 841, 162 FERC ] 61,127 at 297); CAISO Rehearing
Request at 11 (citing Order No. 841, 162 FERC ] 61,127 at P 297).
---------------------------------------------------------------------------

    112. According to California Energy Storage Alliance, transmission
charges should not apply to wholesale charging energy that an electric
storage resource later resells. In support of its position, California
Energy Storage Alliance argues that applying transmission charges in
CAISO would result in an unreasonable ``double-application'' of those
charges: Once to the electric storage resource purchasing its charging
energy at wholesale and once to the load that the energy is used to
serve or the export transaction that it is needed to support.
California Energy Storage Alliance further contends that this double-
billing would be unduly and financially burdensome for electric storage
resources.\232\
---------------------------------------------------------------------------

    \232\ California Energy Storage Alliance Rehearing Request at 2-
3.
---------------------------------------------------------------------------

    113. CAISO argues that requiring an RTO/ISO to assess transmission
charges on an electric storage resource's charging demand could blunt
electric storage resources' market effectiveness and financial
viability and inappropriately shifts transmission costs into energy
markets, which is inconsistent with Commission precedent.\233\
According to CAISO, unlike load-serving entities with firm load and
little to no ability to curb or curtail demand, electric storage
resources can charge during periods of excess generation and low
prices, thereby shifting demand to combat over-generation, providing
ramping flexibility, addressing negative prices, and mitigating
potential reliability issues in systems like CAISO that operate with a
high degree of supply and demand variability. CAISO argues that
requiring RTOs/ISOs to assess transmission charges on electric storage
devices will force such resources to include those costs in their
market bids, thus affecting energy market prices.\234\
---------------------------------------------------------------------------

    \233\ CAISO Rehearing Request at 5-6, 11-13 (citing Cal. Indep.
Sys. Operator Corp., 132 FERC ] 61,211 (2010); Reform of Generator
Interconnection Procedures and Agreements, 157 FERC ] 61,212, at PP
226-230 (2017)).
    \234\ Id. at 5-6, 11-13.
---------------------------------------------------------------------------

    114. With respect to Commission precedent on this issue, CAISO
claims that requiring electric storage resources to pay transmission
charges would contravene prior Commission precedent, such as CAISO's
Commission-accepted non-generator resource model, which treats non-
generator resource demand as negative generation and does not require
it to pay transmission charges.\235\ CAISO maintains that, since the
acceptance of the non-generator resource model, the Commission has
noted in other proceedings that the negative generation model is a best
practice that ``may allow transmission providers to better account for
the transitions of electric storage resources between generation and
load and may better enable the use of existing generator
interconnection procedures and agreements due to their treatment as
negative generation instead of load.'' \236\
---------------------------------------------------------------------------

    \235\ Id. at 12 (citing Cal. Indep. Sys. Operator Corp., 132
FERC ] 61,211 (2010)).
    \236\ Id. (citing Reform of Generator Interconnection Procedures
and Agreements, 157 FERC ] 61,212 at PP 226-230).
---------------------------------------------------------------------------

    115. For these reasons, CAISO asks the Commission to clarify that
RTOs/ISOs may, but are not required to, impose transmission charges on
electric storage resources when they are charging pursuant to RTO/ISO
dispatch. Alternatively, CAISO asks the Commission to clarify that each
RTO/ISO may determine (1) what types of charging activities would not
cause an electric storage resource to incur transmission charges, (2)
that those services are not limited to ancillary services, and (3) that
charging pursuant to economic dispatch may qualify as such a
service.\237\ According to CAISO, charging an electric storage resource
when it is economic to do so as instructed by the RTO/ISO to help
balance the system is a critically important ``service'' that electric
storage resources provide the grid.\238\
---------------------------------------------------------------------------

    \237\ Id. at 5.
    \238\ Id. at 5, 11.
---------------------------------------------------------------------------

    116. Finally, CAISO seeks clarification that electric storage
resources participating as transmission resources under the
Commission's Policy Statement should not incur transmission charges for
their charging demand.\239\ CAISO notes that it may soon approve a
proposal to allow electric storage resources to provide reliability/
transmission services in its transmission planning process and that
these resources would then be eligible to recover some of their costs
through regulated transmission rates and the remainder through
participation in the wholesale markets. CAISO explains that whether
these resources will incur transmission charges for charging will
significantly affect their projected costs

in competitive solicitations, as well as how the resource intends to
recover those costs.\240\
---------------------------------------------------------------------------

    \239\ Id. at 12-13 (referencing Utilization of Electric Storage
Resources for Multiple Services When Receiving Cost-Based Rate
Recovery, 158 FERC ] 61,051 (2017)).
    \240\ Id. at 13.
---------------------------------------------------------------------------

    117. EEI seeks clarification and Xcel Energy Services seeks
rehearing of the Commission's finding in Order No. 841 that it may be
appropriate, on a case-by-case basis, for distribution utilities to
assess a charge on electric storage resources similar to those assessed
to the market participant in PJM Interconnection LLC. They explain
that, in PJM Interconnection LLC, the Commission permitted the
distribution utility to establish a wholesale distribution rate that
was based on the carrying charges associated with the distribution
facilities that would be used to provide wholesale distribution service
to a particular electric storage resource. According to EEI and Xcel
Energy Services, a customer-specific methodology for assessing
wholesale distribution charges may no longer be appropriate when there
are a large number of distribution-connected electric storage resources
participating in the wholesale markets.\241\ EEI further argues that it
would be unduly burdensome to require a distribution utility to
establish a separate, facility-specific rate for each individual
electric storage resource's use of the distribution system,\242\ while
Xcel Energy Services contends that establishing such rates would
involve significant regulatory development and filing costs and could
even be unworkable given that the distribution system is periodically
reconfigured based on system conditions.\243\
---------------------------------------------------------------------------

    \241\ EEI Rehearing Request at 12; Xcel Energy Services
Rehearing Request at 27-28.
    \242\ EEI Rehearing Request at 12.
    \243\ Xcel Energy Services Rehearing Request at 29.
---------------------------------------------------------------------------

    118. Therefore, EEI seeks clarification on what the Commission
meant by ``case-by-case basis,'' stating that the Commission should not
dismiss as per se unreasonable a proposal to establish a non-facility-
specific rate for wholesale distribution service to charging load.\244\
Similarly, Xcel Energy Services asks the Commission to grant rehearing
of its decision to permit wholesale distribution charges on only a
``case-by-case basis'' and permit more generic wholesale distribution
rates or tariffs.\245\
---------------------------------------------------------------------------

    \244\ EEI Rehearing Request at 11-12.
    \245\ Xcel Energy Services Rehearing Request at 28, 30.
---------------------------------------------------------------------------

c. Commission Determination
    119. We deny Pacific Gas and Electric's request to clarify that
states have jurisdiction to determine how power flowing from the
distribution grid into the electric storage resource located behind the
customer meter is split between retail consumption and wholesale
charging for later discharge into the wholesale markets. In the final
rule, the Commission noted that it found that the sale of energy from
the grid that is used to charge electric storage resources for later
resale into the energy or ancillary service markets constitutes a sale
for resale in interstate commerce; as such, the just and reasonable
rate for that wholesale sale of energy used to charge that electric
storage resource is the RTO/ISO market's wholesale LMP.\246\ However,
we reiterate that the Commission's finding regarding charging energy
did not address payment of the retail rate for energy. Thus, Order No.
841 does not authorize electric storage resources to bypass retail
rates for its on-site electricity consumption, as Pacific Gas &
Electric suggests.\247\
---------------------------------------------------------------------------

    \246\ Order No. 841, 162 FERC ] 61,127 at P 294.
    \247\ See id. PP 323-324.
---------------------------------------------------------------------------

    120. In response to CAISO's arguments, we acknowledge that the
participation of electric storage resources in RTO/ISO markets may
convey a range of benefits, particularly under certain system
conditions, but we cannot conclude based on the record before us that
an electric storage resource charging when it is economic to do so
necessarily constitutes the provision of a service in the RTO/ISO
markets, though it may provide a service in some specific
circumstances. Thus, we decline to grant clarification that charging
pursuant to economic dispatch always qualifies as a service. However,
we clarify that services do not need to be limited to ancillary
services; they could include any service defined in an RTO/ISO tariff.
To the extent that an RTO/ISO seeks to create a new service that would
involve charging pursuant to economic dispatch under certain system
conditions, the RTO/ISO may propose such revisions to its tariff
through a separate FPA section 205 filing.\248\
---------------------------------------------------------------------------

    \248\ See 16 U.S.C. 824d.
---------------------------------------------------------------------------

    121. We also grant clarification of the Commission's finding in
paragraph 297 that applicable transmission charges should apply when an
electric storage resource is charging to resell energy at a later time.
In response to the concerns of CAISO and California Energy Storage
Alliance, we clarify that, in paragraph 297 of the final rule, the
Commission's use of the phrase ``applicable transmission charges'' was
intended to convey that an RTO/ISO may propose to apply its existing
rate structure for transmission charges to an electric storage resource
that is charging at wholesale but is not being dispatched by the RTO/
ISO to provide a service in the RTO/ISO markets. Thus, each RTO/ISO may
on compliance propose that any electric storage resource that is
charging at wholesale but is not being dispatched by the RTO/ISO to
provide a service should be assessed charges consistent with how the
RTO/ISO assesses transmission charges to wholesale load under its
existing rate structure. We further clarify that, if an RTO/ISO
proposes not to apply transmission charges to an electric storage
resource that is charging at wholesale but is not being dispatched by
the RTO/ISO to provide a service, then the RTO/ISO must demonstrate
that exempting such a resource from these charges is reasonable given
its existing rate structure for transmission charges.
    122. We find that CAISO's request for clarification that electric
storage resources participating as transmission resources, as described
in the Commission's Policy Statement,\249\ should not incur
transmission charges for charging demand is premature because CAISO has
not yet filed a proposal to allow electric storage resources to provide
transmission or reliability services under the Policy Statement. We
find that it is appropriate to address CAISO's concerns related to
resources that might seek to recover their costs through both regulated
transmission rates and the wholesale markets in the context of a
specific proposal involving resources that provide multiple services
and seek to recover their costs through both cost-based and market-
based rates concurrently. We therefore deny clarification that such
resources should not incur transmission charges for charging demand and
decline to address CAISO's concerns here.
---------------------------------------------------------------------------

    \249\ See Utilization of Electric Storage Resources for Multiple
Services When Receiving Cost-Based Rate Recovery, 158 FERC ] 61,051.
---------------------------------------------------------------------------

    123. In response to concerns regarding the Commission's finding
that it may be appropriate, on a case-by-case basis, for distribution
utilities to assess a charge on electric storage resources similar to
those assessed to the market participant in PJM Interconnection
L.L.C.,\250\ we grant EEI's requested clarification. Specifically, we
clarify that the Commission will not dismiss as per se unreasonable any
proposal to establish a non-facility-specific rate for wholesale
distribution service to an electric storage resource for its charging.
Rather, the Commission will consider any proposal

to establish a rate for providing wholesale distribution service to an
electric storage resource for its charging (whether a facility-specific
rate, a wholesale distribution service rate that applies to all or some
subset of electric storage resources, a generally applicable wholesale
distribution service tariff, or any other rate mechanism) on a case-by-
case basis in light of the record evidence. Accordingly, we find that
Xcel Energy Services' request for rehearing of this issue is moot.
---------------------------------------------------------------------------

    \250\ See Order No. 841, 162 FERC ] 61,127 at P 301 (citing PJM
Interconnection L.L.C., 149 FERC ] 61,185 at P 12, order on reh'g,
151 FERC ] 61,231 at PP 16-18).
---------------------------------------------------------------------------

2. Metering and Accounting Practices for Charging Energy
a. Final Rule
    124. To help implement the new requirement in Sec.  35.28(g)(9)(ii)
of the Commission's regulations, in Order No. 841, the Commission
required each RTO/ISO to implement metering and accounting practices as
needed to address the complexities of implementing the requirement that
the sale of electric energy from the RTO/ISO markets to an electric
storage resource that the resource then resells back to those markets
be at the wholesale LMP.\251\ To this end, the Commission required each
RTO/ISO to directly meter electric storage resources, so all the energy
entering and exiting the resources is measured by that meter. However,
the Commission recognized that some electric storage resources (such as
those located on a distribution system or behind a customer meter) may
be subject to other metering requirements that could be used in lieu of
a direct metering requirement by an RTO/ISO. Therefore, the Commission
stated that it will consider, in the individual RTO/ISO compliance
filings, alternative proposals that may not entail direct metering but
nonetheless address the complexities of implementing the requirement
that the sale of electric energy from the RTO/ISO markets to an
electric storage resource that the resource then resells back to those
markets be at the wholesale LMP.
---------------------------------------------------------------------------

    \251\ Id. P 322.
---------------------------------------------------------------------------

    125. The Commission was not persuaded by commenters who argued that
developing metering practices that distinguish between wholesale and
retail activity is impractically complex.\252\ The Commission noted
that CAISO provided two examples of how it has achieved market rules
that accurately account for wholesale and retail activities by using
direct metering. Additionally, the Commission stated that retail
metering infrastructure, which is subject to state jurisdiction, may be
able to work in concert with the RTO/ISO requirements to lower the
overall metering costs for electric storage resources. Therefore, the
Commission provided each RTO/ISO with the flexibility to propose in its
compliance filing other reasonable metering solutions that may help
reduce costs for developers.
---------------------------------------------------------------------------

    \252\ Id. P 323.
---------------------------------------------------------------------------

    126. The Commission further found that developing new accounting
practices for electric storage resources in response to this
requirement will be complex, but nonetheless found that they are
feasible to develop.\253\ The Commission recognized that it may be
beneficial for each RTO/ISO to coordinate accounting requirements in
cooperation with the distribution utilities and RERRAs in its footprint
to help identify workable accounting solutions for distribution-
interconnected or behind-the-meter electric storage resources to
participate in the RTO/ISO markets. The Commission also found that
metering and accounting rules may need to differ based on whether the
resource is located on the transmission system, the distribution
system, or behind the meter.
---------------------------------------------------------------------------

    \253\ Id. P 324.
---------------------------------------------------------------------------

    127. As a related matter, the Commission found that electric
storage resources should not be required to pay both the wholesale and
retail price for the same charging energy because doing so would create
market inefficiencies due to the double payment.\254\ Therefore, the
Commission required each RTO/ISO to prevent electric storage resources
from paying twice for the same charging energy. The Commission stated
that, to the extent that the host distribution utility is unwilling or
unable--due to a lack of the necessary metering infrastructure and
accounting practices--to net out any energy purchases associated with
an electric storage resource's wholesale charging activities from the
host customer's retail bill, the RTO/ISO would be prevented from
charging that resource electric wholesale rates for the same charging
energy that it is already paying for through retail rates.
---------------------------------------------------------------------------

    \254\ Id. P 326. Paragraph 326 of the preamble of Order No. 841
used the term ``resources using the participation model for electric
storage resources'' with respect to the requirements set forth
therein (e.g., ``we require each RTO/ISO to prevent resources using
the participation model for electric storage resources from paying
twice for the same charging energy''). However, Sec.
35.28(g)(9)(ii) of the Commission's regulations (as modified by
Order No. 841), which these requirements are intended to implement,
specifies that it applies to electric storage resources. Thus, the
Commission used the incorrect term in paragraph 326 of Order No.
841. In this order, we use the correct term throughout.
---------------------------------------------------------------------------

    128. Finally, the Commission stated that it was not persuaded by
commenters' suggestion that electric storage resources must choose to
participate in either wholesale or retail markets due to the complexity
of the metering and accounting practices.\255\ The Commission found
that it is possible for electric storage resources that are selling
retail services also to be technically capable of providing wholesale
services, and it would adversely affect competition in the RTO/ISO
markets if these technically capable resources were excluded from
participation.
---------------------------------------------------------------------------

    \255\ Id. P 325.
---------------------------------------------------------------------------

b. Requests for Rehearing or Clarification
    129. Several petitioners request rehearing or clarification with
respect to Order No. 841's requirements related to metering and
accounting practices. First, CAISO requests that the Commission clarify
or, in the alternative, grant rehearing that the RTO/ISO does not need
to be the entity that directly meters electric storage resources. CAISO
explains that it is a common and useful practice in RTOs/ISOs for third
parties, such as a scheduling coordinator, to perform the metering,
validation, estimation, and editing to submit settlement quality meter
data to the RTO/ISO, which the RTO/ISO then ensures is accurate. CAISO
argues that a requirement for the RTO/ISO to be the sole entity
directly metering electric storage resources is inconsistent with
previous precedent, inconsistent with RTOs'/ISOs' current just and
reasonable metering practices, and unnecessarily restrictive for
electric storage resources and RTOs/ISOs.\256\
---------------------------------------------------------------------------

    \256\ CAISO Rehearing Request at 6-8 (citing Cal. Indep. Sys.
Operator Corp., Docket No. ER17-949-000 (Mar. 31, 2017) (delegated
order)).
---------------------------------------------------------------------------

    130. With respect to Order No. 841's requirement that, to the
extent that the host distribution utility is unable or unwilling to net
out any energy purchases associated with an electric storage resource's
wholesale charging activities from the host customer's retail bill, the
RTO/ISO may not charge that resource for the charging energy for which
it is already paying retail rates, CAISO states that it is unclear what
constitutes a utility that is unwilling or unable to net out wholesale
charging energy from an electric storage resource's total demand.
Therefore, CAISO asks the Commission to clarify or, in the alternative,
grant rehearing that an RTO/ISO could require verification from the
host distribution utility that it is unable or unwilling to

net wholesale demand from retail settlement before the RTO/ISO ceases
to settle an electric storage resources' wholesale demand at the
wholesale LMP. CAISO contends that this clarification is especially
critical for electric storage resources that are located on the
distribution system or behind the meter and participating in the CAISO
market because they may be providing services to other entities.\257\
---------------------------------------------------------------------------

    \257\ Id. at 9-11.
---------------------------------------------------------------------------

    131. Relatedly, CAISO asks the Commission to clarify or, in the
alternative, grant rehearing that, when an RTO/ISO cannot verify that
the host distribution utility is unable or unwilling to net wholesale
demand from retail settlement, the RTO/ISO can either (1) require the
electric storage resource to use a participation model designed for
retail customer participation (such as demand response) or (2) continue
settling the electric storage resource's charging demand at the
wholesale LMP. According to CAISO, this clarification is necessary
because prohibiting certain electric storage resources from having
their demand settled at the wholesale LMP (1) will require new
participation models, modeling, and software upgrades; (2) could
materially affect how that resource bids, potentially distorting the
market; and (3) could negatively affect the host utility distribution
company's settlement charges, in the form of unaccounted for energy,
for example.\258\
---------------------------------------------------------------------------

    \258\ Id. at 10-11.
---------------------------------------------------------------------------

    132. Both TAPS and Xcel Energy Services request rehearing of the
Commission's decision in Order No. 841 to decline to require electric
storage resources located on the distribution system or behind the
meter to participate exclusively either in the wholesale markets or at
retail.\259\ Xcel Energy Services contends that it is difficult to see
how an RTO/ISO can differentiate between the wholesale and retail
activities of an electric storage resource located on the distribution
system or behind the meter without compelling entities that are not
Commission jurisdictional, such as loads and distribution utilities, to
provide information on their sales to and purchases from such a
resource.\260\
---------------------------------------------------------------------------

    \259\ TAPS Rehearing Request at 12; Xcel Energy Services
Rehearing Request at 17, 20.
    \260\ Xcel Energy Services Rehearing Request at 20.
---------------------------------------------------------------------------

    133. TAPS states that, to ensure that an electric storage resource
that is located on the distribution system or behind the meter does not
``improperly evade the distribution utility's retail service'' through
its participation in the RTO/ISO markets, the Commission must ensure
that any energy that such resources purchase from the RTO/ISO markets
is resold.\261\ TAPS further argues that allowing an electric storage
resource located on the distribution system or behind the meter to
participate both in the wholesale markets and at retail could provide
its owner with the opportunity to simultaneously purchase energy at
retail and sell energy to the wholesale market at a higher price, thus
shifting costs to other retail customers without ever changing the
physical State of Charge of its electric storage resource.\262\
---------------------------------------------------------------------------

    \261\ TAPS Rehearing Request at 13.
    \262\ Id. at 14.
---------------------------------------------------------------------------

    134. According to TAPS, normal revenue-quality metering is
inadequate to address these concerns because it requires knowledge of
two separate energy level balances (one for wholesale energy and one
for retail energy) rather than simply the total energy balance. TAPS
contends that maintaining and auditing a system to track this
information would be complicated and expensive.\263\ TAPS adds that the
market rules in CAISO that the Commission claimed accurately account
for wholesale and retail activities do not address the issues that TAPS
has identified.\264\
---------------------------------------------------------------------------

    \263\ Id. at 14-15.
    \264\ Id. at 15 (citing Order No. 841, 162 FERC ] 61,127 at P
318).
---------------------------------------------------------------------------

    135. Similarly, Xcel Energy Services argues that the Commission's
reliance on CAISO's market rules to support its decision not to
preclude electric storage resources located on the distribution system
or behind the meter from participating both in the wholesale markets
and at retail was misplaced. Specifically, Xcel Energy Services
contends that CAISO's market rules do not provide for tracking retail
purchases, retail sales, wholesale purchases, and wholesale sales all
at the same time, and thus they do not allow an RTO/ISO to distinguish
between the wholesale and retail activities of electric storage
resources located on the distribution system or behind the meter that
seek to participate in its markets. Xcel Energy Services states that,
instead, CAISO's market rules only account for resources that are
selling exclusively at wholesale or at retail at a given point in time
(as opposed to providing services at wholesale and at retail during the
same time period). According to Xcel Energy Services, CAISO's market
rules also fail to account for multiple resources and retail loads
behind a single meter. Xcel Energy Services adds that, even if CAISO's
market rules were sufficient, they do not support a finding that other
RTOs/ISOs, whose member utilities all have their own requirements for
metering, billing systems, and other supporting software and
Information Technology (IT) platforms, could necessarily adopt
them.\265\
---------------------------------------------------------------------------

    \265\ Xcel Energy Services Rehearing Request at 17-20.
---------------------------------------------------------------------------

    136. Finally, TAPS also argues that the Commission's decision on
TAPS's proposal to require distribution-connected electric storage
resources to choose between wholesale and retail participation was
premature given that the issues that TAPS raised are within the scope
of the distributed energy resource aggregation-related issues which the
Commission determined in Order No. 841 that it did not have sufficient
information to act upon. Therefore, TAPS argues that the Commission
should have deferred its decision until after the technical conference
in Docket No. RM18-9-000.\266\
---------------------------------------------------------------------------

    \266\ TAPS Rehearing Request at 16-17.
---------------------------------------------------------------------------

    137. EEI asks the Commission to clarify that it is the
responsibility of the electric storage resource located on the
distribution system or behind the meter to pay for any metering or
other costs associated with distinguishing between its wholesale and
retail activities; if they are not given that responsibility, then EEI
argues that the entire load can and should be treated as retail load.
EEI contends that this clarification reflects the statement in Order
No. 841 that the finding regarding charging energy does not address
payment of the retail rate for energy or charging a device off of co-
located generation resources.\267\
---------------------------------------------------------------------------

    \267\ EEI Request for Rehearing and Clarification at 12 (citing
Order No. 841, 162 FERC ] 61,127 at P 299).
---------------------------------------------------------------------------

c. Commission Determination
    138. As an initial matter, we clarify, in response to CAISO, that
the RTO/ISO itself does not need to be the entity that directly meters
electric storage resources. We also grant CAISO's request to clarify
that an RTO/ISO could require verification from the host distribution
utility that it is unable or unwilling to net wholesale demand from
retail settlement before the RTO/ISO ceases to settle an electric
storage resource's wholesale demand at the wholesale LMP. While Order
No. 841 stated that each RTO/ISO must prevent electric storage
resources from paying twice for the same charging energy,\268\ it did
not specify how each RTO/ISO must implement this requirement.
Therefore, we clarify that the Commission will consider on compliance
each RTO's/

ISO's proposal to identify whether a distribution utility is unable or
unwilling to net out from a host customer's retail bill the wholesale
energy purchases associated with charging an electric storage resource
that is participating in the RTO/ISO market from the host customer's
retail bill.
---------------------------------------------------------------------------

    \268\ Order No. 841, 162 FERC ] 61,127 at P 326.
---------------------------------------------------------------------------

    139. However, we deny CAISO's request for clarification or, in the
alternative, rehearing that when an RTO/ISO cannot verify the host
distribution utility's inability or unwillingness to net out wholesale
charging energy, the RTO/ISO can require the electric storage resource
to use a participation model designed for retail customer
participation. In Order No. 841, the Commission stated that each RTO/
ISO must prevent electric storage resources from paying twice for the
same charging energy.\269\ While the Commission provided flexibility
with respect to how each RTO/ISO implements that requirement, we find
it inappropriate for an RTO/ISO to meet that requirement by requiring
an electric storage resource to use a participation model designed for
retail customer participation. Consistent with Order No. 841, we
reiterate that, to the extent that the host distribution utility is
unable or unwilling to net out any energy purchases associated with a
resource using the participation model for electric storage resources'
wholesale charging activities from the host customer's retail bill, the
RTO/ISO must determine how it will prevent an electric storage resource
participating in its markets from being charged wholesale rates for
charging energy for which it already is paying retail rates.\270\
---------------------------------------------------------------------------

    \269\ Id.
    \270\ Id.
---------------------------------------------------------------------------

    140. We deny TAPS' and Xcel Energy Services' requests for rehearing
regarding the Commission's decision to decline to require electric
storage resources to choose to participate exclusively in either
wholesale or retail markets due to the complexity of the metering and
accounting practices. While we agree with TAPS and Xcel Energy Services
that appropriate metering and accounting practices will be necessary to
distinguish between wholesale and retail activity, we disagree that
these practices would be prohibitively complex or costly to develop and
implement given the flexibility provided to the RTOs/ISOs to propose
reasonable approaches.\271\ As the Commission stated in Order No. 841,
retail metering infrastructure also may be able to work in concert with
the RTO/ISO requirements to lower the overall metering costs.\272\
---------------------------------------------------------------------------

    \271\ See id. PP 323-324.
    \272\ Id. P 323.
---------------------------------------------------------------------------

    141. Further, TAPS and Xcel Energy Services argue that CAISO's
metering and accounting practices are insufficient to allow for the
implementation of Order No. 841's requirement that the sale of electric
energy from the RTO/ISO markets to an electric storage resource that
the resource then resells back to those markets be at the wholesale
LMP. Therefore, TAPS and Xcel Energy Services argue that the
Commission's reliance on these practices as evidence that establishing
such metering and accounting practices is possible is misplaced. We
disagree. The Commission relied on CAISO's metering and accounting
practices to demonstrate that direct metering for behind-the-meter
resources can remove barriers to their participation in RTO/ISO
markets, not necessarily as an example of metering and accounting that
would comply with the requirements of the final rule. Moreover, in
Order No. 841, the Commission chose not to prescribe particular
metering and accounting practices that each RTO/ISO must adopt, instead
providing flexibility for each RTO/ISO to develop practices that
reflect its unique market rules and its member utilities' requirements
for metering, billing systems, and other supporting software and IT
platforms.
    142. TAPS also argues that the Commission's decision not to require
electric storage resources to choose to participate exclusively in
either wholesale or retail markets will allow resources using the
participation model for electric storage resources to evade the
distribution utility's retail service or simultaneously buy electricity
at the retail rate and sell it at the wholesale LMP. While we
acknowledge these concerns, we believe that each RTO/ISO can address
these issues by developing its metering and accounting requirements in
cooperation with the distribution utilities and RERRAs in its
footprint, as the Commission recognized in Order No. 841.\273\ In
addition, we note that, when the Commission stated in Order No. 841
that the sale of electric energy from the RTO/ISO markets to an
electric storage resource that the resource then resells back to those
markets be at the wholesale LMP, it was referring to the sale of energy
from the grid that is used to charge electric storage resources for
later resale into the energy or ancillary service markets.\274\ To the
extent that TAPS has concerns that a particular RTO's/ISO's proposed
metering and accounting practices do not address these issues, TAPS may
raise these concerns in response to the RTO's/ISO's compliance filing.
---------------------------------------------------------------------------

    \273\ Id. P 324.
    \274\ Id. P 294.
---------------------------------------------------------------------------

    143. Finally, we disagree with TAPS' contention that the Commission
should have deferred action on this issue until after the technical
conference in Docket No. RM18-9-000. The technical conference in Docket
No. RM18-9-000 focused on issues relating to distributed energy
resource aggregations, while Order No. 841 addresses the participation
of non-aggregated electric storage resources in RTO/ISO markets. We
find that the Commission had sufficient record evidence before it to
determine whether to require electric storage resources to choose to
participate exclusively in either wholesale or retail markets,
regardless of its decision to gather more information with respect to
its proposals to remove barriers to the participation of distributed
energy resource aggregations in RTO/ISO markets in Docket No. RM18-9-
000.\275\
---------------------------------------------------------------------------

    \275\ Id. P 5.
---------------------------------------------------------------------------

    144. In response to EEI, we decline to clarify whether an electric
storage resource located on the distribution system or behind the meter
is responsible for paying for any metering or other costs associated
with distinguishing between its wholesale and retail activities. While
EEI contends that its requested clarification relates to the
Commission's statement in Order No. 841 that its finding regarding
charging energy does not address payment of the retail rate for energy
or charging a device off of co-located generation resources, Order No.
841 did not establish any requirement with respect to which entity
should bear the costs of metering. Therefore, we find that this issue
is outside the scope of this proceeding.

III. Compliance Requirements

A. Final Rule

    145. In the final rule, the Commission required each RTO/ISO to
file the tariff changes needed to implement the requirements of Order
No. 841 within 270 days of the publication date of Order No. 841 in the
Federal Register.\276\ The Commission also allowed each RTO/ISO a
further 365 days from that date to implement the tariff provisions. The
Commission found that, given the modifications and clarifications to
the NOPR made in Order No. 841, particularly the omission of the
reforms relevant to distributed energy resource aggregations, and the

record in this proceeding in support of the reforms that the Commission
finalized therein, the implementation schedule was reasonable.\277\
---------------------------------------------------------------------------

    \276\ Id. P 348.
    \277\ Id. P 349.
---------------------------------------------------------------------------

    146. Additionally, the Commission noted that many of the RTOs/ISOs
already have rules in place to enable the participation of electric
storage resources in their markets.\278\ The Commission further stated
that the additional time that it provided for the RTOs/ISOs to make
their compliance filings, along with the ability of the RTOs/ISOs to
use existing tariff provisions to demonstrate compliance with aspects
of the final rule, would mean that the RTOs/ISOs can meet the deadlines
established therein. Finally, the Commission noted that it was allowing
regional flexibility to the extent possible throughout the final rule,
which it believed would assist the RTOs/ISOs in meeting the compliance
and implementation deadlines.
---------------------------------------------------------------------------

    \278\ Id. P 350.
---------------------------------------------------------------------------

B. Requests for Rehearing or Clarification

    147. MISO, AMP/APPA/NRECA, and EEI raise issues relating to the
relationship between the implementation of Order No. 841 and the
Commission's decision therein to defer consideration of its proposals
with respect to the participation of distributed energy resource
aggregations in RTO/ISO markets. Both AMP/APPA/NRECA and EEI assert
that, because some electric storage resources may be distributed energy
resources, and a single electric storage resource may constitute a
distributed energy resource aggregation, many of the issues raised at
the technical conference in Docket No. RM18-9-000 are applicable to
electric storage resources located on the distribution system or behind
the meter.\279\ They contend that it is unclear how the Commission can
reasonably adopt final rules governing the participation of electric
storage resources located on the distribution system or behind the
meter in RTO/ISO markets while finding that additional information is
needed prior to allowing distributed energy resource aggregations,
which can include electric storage resources, to participate in those
same markets.\280\
---------------------------------------------------------------------------

    \279\ APPA/NRECA Rehearing Request at 16; EEI Rehearing Request
at 10.
    \280\ APPA/NRECA Rehearing Request at 16; EEI Rehearing Request
at 11.
---------------------------------------------------------------------------

    148. MISO asks the Commission to grant rehearing of the compliance
date and extend Order No. 841's implementation timetable by at least
six months with respect to matters that affect the potential
participation of electric storage resources as distributed energy
resources in RTO/ISO markets.\281\ Moreover, MISO contends that it
wishes to avoid devoting significant effort and expense to develop
software and system adjustments to address the participation of
distribution-connected electric storage resources, which may be
significantly impacted by a final rule in Docket No. RM18-9-000.\282\
According to MISO, the cost and time needed to ``ensure the synergy of
[electric storage resource] and [distributed energy resource]-related
software changes are likely to be significant.'' \283\ Therefore, MISO
ask the Commission to further adjust the implementation timeframe for
Order No. 841 if necessitated by any electric storage-resource related
requirements in a final rule in Docket No. RM18-9-000.\284\
---------------------------------------------------------------------------

    \281\ MISO Rehearing Request at 13.
    \282\ Id. at 9-10.
    \283\ Id. at 11.
    \284\ Id. at 11, 13.
---------------------------------------------------------------------------

    149. To ensure consistency, AMP/APPA/NRECA ask the Commission to
clarify that the wholesale market participation by electric storage
resources located on a distribution system or behind a retail meter
will be subject to any final rule in Docket No. RM18-9-000.\285\
Likewise, EEI asks the Commission to clarify that rules on the
participation in the RTO/ISO markets of electric storage resources
located on the distribution system or behind the meter should be
informed by the discussion in Docket No. RM18-9-000.\286\ Both AMP/
APPA/NRECA and EEI also ask the Commission to determine that the RTO/
ISO tariff revisions related to electric storage resources located on a
distribution system or behind a retail meter made in compliance with
Order No. 841 will not become effective until the effective date of the
RTO/ISO tariff revisions related to distributed energy resource
aggregations made in compliance with any final rule in Docket No. RM18-
9-000.\287\
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    \285\ AMP/APPA/NRECA Rehearing Request at 17.
    \286\ EEI Rehearing Request at 11.
    \287\ AMP/APPA/NRECA Rehearing Request at 17; EEI Rehearing
Request at 11.
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    150. Xcel Energy Services contends that the Commission offered no
evidence in Order No. 841 explaining why it chose a period of 270 days
for each RTO/ISO to submit a compliance filing and a further 365 days
to implement the tariff revisions proposed therein.\288\ Xcel Energy
Services argues that Order No. 841's inflexible compliance schedule
appears inconsistent with other provisions in in Order No. 841 that
acknowledge that each RTO/ISO will have to revise its tariff in a
manner that recognizes the unique physical and operational
characteristics of their markets and the effects of integrating
electric storage resources.\289\ Xcel Energy Services adds that, while
the Commission acknowledged that the tariff revisions could require
significant work on the part of the RTOs/ISOs, it did not explain what
that significant work would encompass, the expected timeframe for
completion, or why a longer time period may not be necessary to
comply.\290\ Xcel Energy Services also contends that implementing Order
No. 841 will require IT systems that tie together transmission and
distribution systems, along with wholesale and retail markets and
metering. Thus, Xcel Energy Services asks the Commission to grant
rehearing to permit RTO/ISOs to propose their own implementation
schedules that more appropriately reflect the unique characteristics of
their systems.\291\
---------------------------------------------------------------------------

    \288\ Xcel Energy Services Rehearing Request at 21.
    \289\ Id. at 21.
    \290\ Id. at 22 (citing Order No. 841, 162 FERC ] 61,127 at P
343).
    \291\ Id. at 22.
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    151. Xcel Energy Services also asks the Commission to grant
rehearing to require RTOs/ISOs to collaborate with distribution
utilities to develop a cost recovery mechanism for distribution utility
upgrades and improvements required to implement Order No. 841.\292\
Xcel Energy Services argues that, for distribution utilities, Order No.
841's implementation costs are disproportionate to the benefits they
will receive, given that the beneficiaries of Order No. 841 are the
RTO/ISO markets and their market participants.\293\ Xcel Energy
Services argues that, under FPA section 205, the costs that the
distribution utilities incur must be commensurate with the benefits
that they receive.\294\ Xcel Energy Services argues that Order No. 841
will burden distribution utilities and their ratepayers because they
will need to harden the underlying distribution system to support
bidirectional power flows and pay for substantial metering upgrades for
electric storage resources.\295\ Xcel Energy Services adds that IT
improvements to allow electric storage resources to engage in retail
and wholesale transactions and to

communicate with the RTO/ISO and distribution utility will be costly
and will be of comparatively little benefit to distribution ratepayers
and their utility.\296\
---------------------------------------------------------------------------

    \292\ Id. at 24-25.
    \293\ Id. at 22-23.
    \294\ Id. at 23 (citing Ill. Commerce Comm'n v. FERC, 576 F.3d
470, 477 (7th Cir. 2009); El Paso Elec. Co. v. FERC, 832 F.3d 495,
506 (5th Cir. 2016) (explaining that the Commission ``need only
roughly correlate costs to benefits'')).
    \295\ Id. at 23-24.
    \296\ Id. at 24.
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    152. AES Companies ask the Commission to clarify that Order No.
841's compliance timeframe aligns with the Commission's compliance
directive in Docket No. EL17-8-000.\297\ AES Companies explain that, on
February 1, 2017, the Commission issued an order \298\ in Docket No.
EL17-8-000 granting in part and denying in part a complaint filed by
Indianapolis Power & Light Company, a member of AES Companies.\299\ AES
Companies explain that the Commission found in the February 1 Order
that MISO's tariff ``unreasonably restricts competition by preventing
electric storage resources from providing all the services that they
are technically capable of providing, which could lead to unjust and
unreasonable rates.'' \300\ AES Companies note that the Commission
required MISO to submit a compliance filing proposing tariff revisions,
within 60 days of the date of that order.\301\ AES Companies therefore
ask the Commission to clarify the scope and timing of MISO's existing
compliance obligation resulting from the February 1 Order, given that
Order No. 841's requirements are similar to the compliance directive
that the Commission issued in the February 1 Order.\302\
---------------------------------------------------------------------------

    \297\ AES Companies Rehearing Request at 1-2.
    \298\ Indianapolis Power & Light Co. v. Midcontinent Indep. Sys.
Operator, Inc., 158 FERC ] 61,107 (2017) (February 1 Order).
    \299\ AES Companies Rehearing Request at 2.
    \300\ Id. (citing February 1 Order, 158 FERC ] 61,107 at P 69).
    \301\ Id. at 2-3 (citing February 1 Order, 158 FERC ] 61,107 at
P 72).
    \302\ Id. at 4-5.
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    153. If the Commission determines that Order No. 841's requirements
supersede the tariff changes that the Commission directed in the
February 1 Order, such that MISO need not comply with the directives of
the February 1 Order until the implementation date for Order No. 841's
requirements, AES Companies argue that the Commission should direct
MISO to examine and asses any modifications to its business practice
manuals or software that could accommodate existing, presently-
interconnected electric storage resources. AES Companies further ask
the Commission to direct MISO to submit quarterly informational filings
describing these efforts.\303\
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    \303\ Id. at 5-6.
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C. Commission Determination

    154. We deny the rehearing requests that seek to change the
compliance deadlines established in Order No. 841. We continue to find
that the timeline for compliance and implementation is reasonable.\304\
Moreover, in establishing Order No. 841's compliance and implementation
schedule, the Commission indicated that it was already ``[t]aking into
account that the Commission is not implementing the distributed energy
resource aggregation reforms [proposed in the NOPR] at this time. . .
.'' \305\ Also, because we find that Order No. 841's compliance
timeframe is reasonable, we will not allow the individual RTOs/ISOs to
propose their own timeframes.
---------------------------------------------------------------------------

    \304\ Order No. 841, 162 FERC ] 61,127 at P 349.
    \305\ Id. P 348. See also id. P 349 (noting that some commenters
provided feedback on the NOPR indicating that acting on only the
electric storage components would expedite compliance and
implementation).
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    155. We also decline to adjust the compliance timeframe to consider
matters that affect distributed energy resources. In Order No. 841, the
Commission found that more information was needed with respect to
certain proposed reforms related to distributed energy resource
aggregations and decided to continue to explore those proposed reforms
in a separate proceeding in Docket No. RM18-9-000.\306\ While Order No.
841 addresses the participation model for non-aggregated electric
storage resources participating directly in the RTO/ISO markets, the
proceeding in Docket No. RM18-9-000 involves issues related to RTO/ISO
market rules for distributed energy resources participating through
aggregations. Thus, no topic addressed in Docket No. RM18-9-000 limits
the ability of the RTOs/ISOs to move forward with implementation of
Order No. 841, and we do not find that it is necessary to delay the
implementation of the reforms for electric storage resources located on
the distribution system or behind the meter in Order No. 841 pending
the outcome of the proceeding on distributed energy resource
aggregations in Docket No. RM18-9-000.
---------------------------------------------------------------------------

    \306\ Id. P 5.
---------------------------------------------------------------------------

    156. Additionally, we deny Xcel Energy Services' request for
rehearing regarding a cost recovery mechanism for distribution utility
upgrades and improvements required to implement Order No. 841. The
requirements of Order No. 841 apply to the RTOs/ISOs, not distribution
utilities, and therefore this request is outside the scope of this
proceeding. As stated in Order No. 841, we are not changing the
responsibilities of the distribution utilities or their ability to
allocate any costs that they incur in operating and maintaining their
respective power systems.\307\
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    \307\ Id. P 274.
---------------------------------------------------------------------------

    157. We find that AES Companies' concerns regarding the February 1
Order are moot. Since AES Companies requested rehearing in this docket,
the Commission has issued orders \308\ addressing these rehearing
requests and MISO's compliance obligations in that separate proceeding.
Any concerns AES Companies may have regarding MISO's compliance
obligations in that separate proceeding are appropriately addressed in
that proceeding and accordingly the Commission will not consider them
here.
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    \308\ Indianapolis Power & Light Co. v. Midcontinent Indep. Sys.
Operator, Inc., 162 FERC ] 61,266 (2018); Midcontinent Indep. Sys.
Operator, Inc., 164 FERC ] 61,109 (2018).
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IV. Document Availability

    158. In addition to publishing the full text of this document in
the Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE, Room 2A,
Washington, DC 20426.
    159. From the Commission's Home Page on the internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number of this document, excluding the last three digits, in
the docket number field.
    160. User assistance is available for eLibrary and the Commission's
website during normal business hours from the Commission's Online
Support at<PHONE_NUMBER> (toll free at 1-866-208-3676) or email at
<EMAIL_ADDRESS>or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. Email the Public Reference Room at
<EMAIL_ADDRESS>
List of Subjects in 18 CFR Part 35

    Electric power rates, Electric utilities.

    Issued: May 16, 2019.
Kimberly D. Bose,
Secretary.

    In consideration of the foregoing, the Commission amends part 35,
chapter I, title 18 of the Code of Federal Regulations as follows:

PART 35--FILING OF RATE SCHEDULES AND TARIFFS

0
1. The authority citation for part 35 continues to read as follows:

    Authority:  16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.

0
2. In Sec.  35.28, paragraph (g)(9)(i)(B) is revised as follows:

Sec.  35.28  Non-discriminatory open access transmission tariff.

* * * * *
    (g) * * *
    (9) * * *
    (i) * * *
    (B) Enables a resource using the participation model for electric
storage resources to be dispatched and ensures that such a dispatchable
resource can set the wholesale market clearing price as both a
wholesale seller and wholesale buyer consistent with rules that govern
the conditions under which a resource can set the wholesale price;
* * * * *
[FR Doc. 2019-10742 Filed 5-22-19; 8:45 am]
 BILLING CODE 6717-01-P