FERC Accepts ISO-NE’s Proposal to Treat Electric Storage Facilities as Transmission-Only Assets | Troutman Pepper

On October 19, 2023, FERC accepted ISO New England Inc.’s (“ISO-NE”) proposal to allow electric storage facilities to be planned and operated as transmission-only assets (“SATOAs”) to address system needs identified in the regional system planning process. FERC determined that the ISO-NE’s proposal established a just and reasonable framework for electric storage resources to be considered a transmission asset for regional planning purposes and thus be eligible for cost-based rate recovery.

ISO-NE proposed the SATOA revisions to address the cost allocation and recovery, transmission planning, operation, and market participation issues surrounding SATOAs in the ISO-NE region. ISO-NE explained that the SATOA revisions will allow for electric storage facilities to be considered as a regulated transmission solution in the solution study and competitive solution processes to address transmission system needs pursuant to Attachment K of the Tariff. If selected as a transmission solution, ISO-NE will use its operating authority to manually dispatch the SATOA for the limited purposes of addressing the transmission system needs for which it was planned, to mitigating load shedding, or providing support during system restoration. According to ISO-NE, the proposed revisions will prohibit SATOAs from participating in ISO-NE’s markets other than for the limited purposes specified in the rules, which will minimize market impacts and prevent double recovery of its costs via cost-of-service and market-based rates. Rather, SATOAs will be considered Pool Transmission Facilities and will therefore be eligible for compensation through the Annual Transmission Revenue Requirements in Attachment F of the Tariff.

FERC accepted ISO-NE’s proposal, determining that, because the SATOA revisions result in the selection of SATOAs only when those resources perform a transmission function, the proposal was consistent with Commission precedent. FERC explained that the proposal ensured that a SATOA will serve a transmission function for a variety of reasons: (1) the SATOA definition requires that a SATOA be connected to the transmission system as a transmission facility and be capable of receiving energy and storing energy from and to Pool Transmission Facilities; (2) a proposed SATOA must be identified or selected in ISO-NE’s transmission planning processes as the preferred solution to resolve a transmission issue; (3) there must be a need to resolve the transmission issue through a SATOA and cannot be addressed by a market solution; (4) a SATOA will operate only as necessary to address the applicable system needs or concerns for which the SATOA was identified to address; and (5) the SATOA will be under ISO-NE’s operational control. Accordingly, FERC found that SATOAs are properly characterized as transmission assets, and the costs of a SATOA are appropriately recoverable through transmission rates.

In addition, the Commission determined that ISO-NE’s proposal to evaluate and select real power from a SATOA only to resolve post-second contingency thermal issues is just and reasonable because it will allow ISO-NE to use a SATOA to resolve thermal system needs by injecting stored real power into the system. Lastly, FERC determined that the limitation to (1) aggregate the amount of SATOAs as regulated transmission solutions to 300 MW each of charging and discharging capability and (2) total amount of SATOAs at one substation to 30 MW each of charging and discharging capability is just and reasonable.

The order can be found here.

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